Banner Corporation (BANR): what the price requires
At today's price, Banner Corporation (BANR) is priced for 10.9% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BANR
Headline
| Field | Value |
|---|---|
| Ticker | BANR |
| Company | Banner Corporation |
| Current price | $68.71/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 10.9% |
| Return on equity now | 10.0% |
| ROE gap | +0.9pp |
| Price-to-book | 1.19x |
Solve inputs: computed at a 9.9% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.82σ |
| cohort percentile (of 119 peers) | 25 |
| sustained it ~10 years at this level | 73% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.00x | 3 | justifies |
| Earnings | 0.71x | 2 | justifies |
| Relative | 0.69x | 3 | justifies |
| Growth | 1.14x | 2 | expensive |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.1%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $56.45 | 1.22x | yes | TBVPS $46.52 × 1.21x (ROE (TTM) 10.4% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.39% allowance/loans → ×0.95) |
| Relative Valuation | Relative | $65.00 | 1.06x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.4x / 10.0x / 11.6x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $62.76 | 1.09x | yes | Stage 1: 17% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $64.69 | 1.06x | yes | BV/sh $57.41, ROE (TTM) 10.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $68.53 | 1.00x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $58.23 | 1.18x | yes | Rev $0.6B, growth 9% (input: historical growth; tapered), Terminal P/S: 3.3x / 3.9x / 4.6x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $98.97 | 0.69x | yes | EPS $5.94, growth 17% (input: historical EPS growth), PEG=0.69 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $87.60 | 0.78x | yes | √(22.5 × EPS $5.94 × BVPS $57.41) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $191.66 | 0.36x | yes | EPS $5.94 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $148.45 | 0.46x | yes | EPS $5.94 × (PEG 1.5 × growth 16.7% (input: historical EPS growth)) → PE 25.0x |
| Earnings Yield | Earnings | $64.22 | 1.07x | yes | EPS $5.94 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -0.2% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- Banner is a Pacific Northwest community bank whose strength is a deposit base management deliberately keeps low-cost, with core deposits at 89% of total funding and a strong net interest margin of 4.11%.
- The biggest structural risk is commercial real estate concentration, which the filing notes regulators are told to scrutinize at banks with "significant commercial real estate loan concentration risk", a category Banner sits squarely within.
- What moves the stock next is whether the bank holds its return: it earned a 14% return on tangible common equity in the first quarter and raised its dividend 4%, with EPS of $1.60 up from $45.1 million in net income a year ago.
Bull Case
The balance sheet is where Banner earns its keep, and the deposit side is the foundation. Banner's stated strategy is to fund itself with cheap, sticky money: the filing describes "emphasizing core deposit activity in non-interest-bearing and other transaction and savings accounts with less reliance on higher cost certificates o"f deposit. That discipline shows in the mix. Core deposits represent 89% of total deposits, an unusually high proportion that means the bank is funded mostly by relationship customers rather than rate-shopping money. When most of your funding is in checking and savings accounts that pay little, your cost of funds stays low even as rates move, which is the single biggest advantage a community bank can have.
That funding advantage produces an excellent margin. Net interest margin expanded to 4.11% in the first quarter of 2026, up from 4.03% the prior quarter, as deposit and funding costs fell while asset yields held steady. A 4.11% margin is well above typical for a bank this size, and it flows straight to profitability: return on average assets reached 1.37% and return on average tangible common equity hit 14.00%, both strong marks for a community lender. Net income rose to $54.7 million, or $1.60 per diluted share, up from $45.1 million a year earlier, and core earnings climbed to $66.3 million.
The capital position lets management reward holders without stretching. The share count is essentially flat, the bank raised its core dividend 4% to $0.52 per share, and the strong return on tangible equity means it generates capital faster than it needs to fund growth. The valuation reflects a fair, not stretched, price: at roughly 1.1 times book, the market assumes Banner sustains a return on equity around 10.6%, which is barely above the roughly 10% it earns on book today and well within its record. A bank with a 4.11% margin, 89% core deposits, a 14% tangible return, and a flat share count, available at a modest premium to book, is the kind of steady compounder that does not need a re-rating to deliver, because the per-share book value and dividend grow on their own.
Bear Case
The structural truth a holder should face is the one Banner shares with most community banks: its loan book leans on commercial real estate, and that is the category bank regulators are now told to watch most closely. The filing is explicit that supervisory guidance "directs the FDIC and other bank regulatory agencies to focus their supervisory resources on institutions that may have significant commercial real estate loan concentration risk". Banner is one of those institutions. Commercial real estate values have been under pressure as rates stayed elevated, and a bank concentrated in that asset class faces two pressures at once: higher provisions if borrowers struggle, and tighter regulatory scrutiny that can constrain how much it lends. The bank also lends to commercial businesses and carries multifamily construction exposure, areas that soften quickly in a regional downturn.
The Pacific Northwest concentration compounds the credit risk. Banner's fortunes are tied to one regional economy, so it has no geographic diversification to cushion a local slowdown. If the regional economy weakens, loan demand and credit quality deteriorate together, and the strong margin the bull case celebrates gets eaten by provision expense before it reaches earnings.
The deposit advantage, while real today, is the thing most exposed to erosion. Banner's low cost of funds depends on customers leaving money in low-yielding accounts, and digital banking has made it trivial for a depositor to move balances to a higher-paying online bank. The bank's own disclosure shows it actively managing this, noting the average cost of interest-bearing deposits fell modestly in the period, but the direction of deposit competition over time is up, not down. The price already reflects some of this caution: Banner sits in the lower half of its peer group's price-to-book, which says the market is not paying a premium for the franchise. The return on equity near 10% sits only slightly above the cost of equity around 9.9%, so the margin of value creation is thin. The bear case is not that Banner is fragile. It is that it is a fairly-priced bank earning close to its cost of capital, concentrated in the exact loan category regulators are scrutinizing, with a deposit advantage that competition slowly chips at, leaving little upside if the credit cycle turns against the region.
Valuation
Banner is valued on price-to-book, the right lens for a bank, and on that basis it is fairly priced rather than cheap or expensive: roughly 1.1 times book. Inverting that price says the market assumes the bank sustains a return on equity around 10.6%, barely above the roughly 10% it earns on book today. The price is not asking Banner to transform; it is asking it to keep doing what it does, which is a low bar against the bank's record.
The methods land tightly around the price, which is the signature of a fairly-valued bank. The tangible-book-value model, the excess-return lenses, and the peer-multiple read all land within a narrow band of the current price, some just above and some just below. The earnings-power and growth-adjusted lenses land higher, crediting the bank's strong margin and earnings growth, but no major method calls the price stretched. The cleanest read is that Banner trades roughly where its return on equity and book value say it should, with the market neither paying up for the franchise nor discounting it heavily. The price-to-book in the lower half of the peer group reflects the commercial-real-estate concentration the market is keeping an eye on.
For a bank, solvency is capital and earnings power, not leverage, and Banner is solid here. The 89% core-deposit base is a stable, low-cost funding source, the 14% return on tangible common equity generates capital comfortably, and the bank just raised its dividend, a signal of confidence in the capital position. The most decisive point for the valuation is the modesty of the bet: at 1.1 times book the buyer underwrites a return on equity only slightly above the cost of capital, so the upside comes from steady book-value and dividend growth rather than a re-rating, and the main risk to even that modest case is the commercial-real-estate cycle in a single regional economy.
Catalysts
Banner's first-quarter 2026 results showed the franchise running well. Net income reached $54.7 million, or $1.60 per diluted share, up from $51.2 million the prior quarter and $45.1 million a year ago, with core earnings of $66.3 million on revenue of $169.3 million. The standout was the margin: net interest margin expanded to 4.11% from 4.03%, helped by falling deposit and funding costs while asset yields held, lifting return on average assets to 1.37% and return on average tangible common equity to 14.00%.
The near-term catalyst is the durability of that margin against deposit competition. Core deposits at 89% of total funding are the asset that keeps the cost of funds low, and the trajectory of deposit pricing is the metric that decides whether the 4.11% margin holds. The bank signaled confidence by raising its core dividend 4% to $0.52 per share, a direct read on management's view of the capital position.
The variable to watch on the other side is credit. Banner's commercial real estate concentration means provision expense, the money set aside for expected loan losses, is the swing factor that could absorb the margin gains if the Pacific Northwest credit cycle softens. The next quarterly reports, with the net interest margin on one side and provision expense and nonperforming loans on the other, are the cleanest read on whether the strong profitability continues or the regulatory-flagged commercial-real-estate exposure begins to weigh on results.
Peer Cohorts (Per Segment, With Filing Citations)
Banner (consolidated bank) (reported)
- TCBK (TriCo Bancshares)
- (no filing in the citation store)
- FRME (FIRST MERCHANTS CORP)
- (no filing in the citation store)
- BY (BYLINE BANCORP, INC.)
- (no filing in the citation store)
- FULT (FULTON FINANCIAL CORP)
- (no filing in the citation store)
- CVBF (CVB FINANCIAL CORP.)
- (no filing in the citation store)
- WSFS (WSFS FINANCIAL CORPORATION)
- (no filing in the citation store)
- ABCB (Ameris Bancorp)
- (no filing in the citation store)
- CATY (Cathay General Bancorp)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Banner Q1 2026 results