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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 16, 2024

Banner Corporation
(Exact name of registrant as specified in its charter)

Washington
    000-26584
  91-1691604
(State or other jurisdiction of incorporation) (Commission File Number)(I.R.S. Employer Identification No.)
10 S. First Avenue, Walla Walla, Washington 99362
(Address of principal executive offices) (Zip Code)

Registrant's telephone number (including area code) (509) 527-3636

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.01 per shareBANRThe NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 Results of Operations and Financial Condition.*

On October 16, 2024, Banner Corporation issued its earnings release for the quarter ended September 30, 2024. A copy of the earnings release is furnished herewith as Exhibit 99.1, and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.*

Banner Corporation intends to review the investor presentation attached as Exhibit 99.2 to this Current Report on Form 8-K in conjunction with its earnings release conference call on October 17, 2024, and from time to time in presentations to investors and other stakeholders.

Item 8.01 Other Events.

On October 16, 2024, Banner Corporation announced its Board of Directors declared a regular quarterly cash dividend on Banner Corporation common stock of $0.48 per share, payable on November 15, 2024 to stockholders of record as of the close of business on November 5, 2024.

Item 9.01 Financial Statements and Exhibits.*

(d)    Exhibits

104     Cover Page Interactive Data File (embedded within the Inline XBRL document)


*    The information furnished under Item 2.02, Item 7.01 and Item 9.01 of this Current Report on Form 8-K, including the exhibits, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of Banner Corporation under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.




BANNER CORPORATION
Date: October 16, 2024
By: /s/ Robert G Butterfield
Robert G Butterfield
Executive Vice President, Treasurer and
Chief Financial Officer




Exhibit 99.1

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imagea.jpg
CONTACT:MARK J. GRESCOVICH,
PRESIDENT & CEO
ROBERT G. BUTTERFIELD, CFO
(509) 527-3636
NEWS RELEASE

Banner Corporation Reports Net Income of $45.2 Million, or $1.30 Per Diluted Share, for Third Quarter 2024;
Declares Quarterly Cash Dividend of $0.48 Per Share

Walla Walla, WA - October 16, 2024 - Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $45.2 million, or $1.30 per diluted share, for the third quarter of 2024, compared to $39.8 million, or $1.15 per diluted share, for the preceding quarter and $45.9 million, or $1.33 per diluted share, for the third quarter of 2023. Net interest income was $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago. The increase in net interest income compared to the preceding quarter reflects an increase in interest-earning assets and net interest margin. The decrease in net interest income compared to the prior year quarter reflects an increase in funding costs, partially offset by an increase in yields on earning assets. Banner’s results for the preceding quarter included a $562,000 net loss on the sale of securities and for the third quarter a year ago a $2.7 million net loss recorded on the sale of securities, compared to no gain or loss during the current quarter as no securities were sold during the third quarter of 2024. Third quarter 2024 results included a $1.7 million provision for credit losses, down from $2.4 million in the preceding quarter and $2.0 million in the third quarter of 2023.
Net income was $122.5 million, or $3.54 per diluted share, for the nine months ended September 30, 2024, compared to $141.0 million, or $4.09 per diluted share, for the nine months ended September 30, 2023. Results for the nine months ended September 30, 2024 included a $4.6 million provision for credit losses, a $5.5 million net loss on the sale of securities and a $1.1 million net decrease in the fair value adjustments on financial instruments carried at fair value, compared to an $8.3 million provision for credit losses, a $14.4 million net loss on the sale of securities and a $4.4 million net decrease in the fair value adjustments on financial instruments carried at fair value during the same period in 2023.
Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share payable November 15, 2024, to common shareholders of record on November 5, 2024.
“Banner’s third quarter operating results reflect the continued successful execution of our super community bank strategy, which emphasizes growing new client relationships, maintaining our core funding position, promoting client loyalty and advocacy through our responsive service model, and sustaining a moderate risk profile,” said Mark Grescovich, President and CEO. “Our earnings for the third quarter of 2024 benefited from our solid year over year loan growth coupled with our expanded net interest margin. Additionally, Banner's credit metrics continue to be strong, our reserve for loan losses remained solid, and our capital base continues to be robust. We continue to benefit from a strong core deposit base that has been resilient in a highly competitive environment, with core deposits representing 89% of total deposits at quarter end. Banner has upheld its core values for the past 133 years, which are to do the right thing for our clients, communities, colleagues, company and shareholders; and to provide consistent and reliable strength through all economic cycles and change events.”
At September 30, 2024, Banner, on a consolidated basis, had $16.19 billion in assets, $11.07 billion in net loans and $13.54 billion in deposits. Banner operates 135 full-service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.




BANR - Third Quarter 2024 Results
October 16, 2024
Page 2
Third Quarter 2024 Highlights
Revenue was $153.7 million for the third quarter of 2024, compared to $149.7 million in the preceding quarter and $154.4 million in the third quarter a year ago.
Adjusted revenue* (the total of net interest income and total non-interest income adjusted for the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $153.7 million in the third quarter of 2024, compared to $150.5 million in the preceding quarter and $157.7 million in the third quarter a year ago.
Net interest income was $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago.
Net interest margin, on a tax equivalent basis, was 3.72%, compared to 3.70% in the preceding quarter and 3.93% in the third quarter a year ago.
Mortgage banking operations revenue was $3.2 million for the third quarter of 2024, compared to $3.0 million in the preceding quarter and $2.0 million in the third quarter a year ago.
Return on average assets was 1.13%, compared to 1.02% in the preceding quarter and 1.17% in the third quarter a year ago.
Net loans receivable increased 1% to $11.07 billion at September 30, 2024, compared to $10.99 billion at June 30, 2024, and increased 6% compared to $10.46 billion at September 30, 2023.
Non-performing assets were $45.2 million, or 0.28% of total assets, at September 30, 2024, compared to $33.3 million, or 0.21% of total assets, at June 30, 2024 and $26.8 million, or 0.17% of total assets, at September 30, 2023.
The allowance for credit losses - loans was $154.6 million, or 1.38% of total loans receivable, as of September 30, 2024, compared to $152.8 million, or 1.37% of total loans receivable, as of June 30, 2024 and $147.0 million, or 1.38% of total loans receivable, as of September 30, 2023.
Total deposits increased to $13.54 billion at September 30, 2024, compared to $13.08 billion at June 30, 2024 and $13.17 billion at September 30, 2023.
Core deposits represented 89% of total deposits at September 30, 2024.
Dividends paid to shareholders were $0.48 per share in the quarter ended September 30, 2024.
Common shareholders’ equity per share increased 6% to $52.06 at September 30, 2024, compared to $49.07 at the preceding quarter end, and increased 18% from $44.27 at September 30, 2023.
Tangible common shareholders’ equity per share* increased 8% to $41.12 at September 30, 2024, compared to $38.12 at the preceding quarter end, and increased 24% from $33.22 at September 30, 2023.

*Non-GAAP (Generally Accepted Accounting Principles) financial measure; See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Income Statement Review
Net interest income was $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago. Net interest margin on a tax equivalent basis increased two basis points to 3.72% for the third quarter of 2024, compared to 3.70% in the preceding quarter, and decreased compared to 3.93% in the third quarter a year ago. Net interest margin for the current quarter benefited from increased yields on loans due to new loans being originated at higher interest rates and adjustable rate loans repricing higher, partially offset by increased funding costs. On September 18, 2024, the Federal Open Market Committee of the Federal Reserve System decreased the target range for the federal funds rate by 50 basis points, and as the change occurred late in the third quarter of 2024, it had minimal impact on our current quarter net interest margin.
Average yields on interest-earning assets increased eight basis points to 5.33% for the third quarter of 2024, compared to 5.25% for the preceding quarter, and increased compared to 4.94% in the third quarter a year ago. Average loan yields increased eight basis points to 6.04%, compared to 5.96% in the preceding quarter, and increased compared to 5.65% in the third quarter a year ago. The increase in average yields, especially loans, during the current quarter reflects the benefit of originating new loans at higher interest rates as well as adjustable rate loans repricing higher.
Total deposit costs increased 11 basis points to 1.61% in the third quarter of 2024, compared to 1.50% in the preceding quarter, and increased compared to 0.94% in the third quarter a year ago. The increase in deposit costs was due to a larger percentage of growth in higher costing deposits during the quarter. The average rate paid on borrowings increased one basis-point to 5.08% in the third quarter of 2024, compared to 5.07% in the preceding quarter, and increased compared to 4.64% in the third quarter a year ago. The total cost of funding liabilities increased seven basis points to 1.73% during the third quarter of 2024, compared to 1.66% in the preceding quarter, and increased compared to 1.08% in the third quarter a year ago.
A $1.7 million provision for credit losses was recorded in the current quarter (comprised of a $2.0 million provision for credit losses - loans, a $262,000 recapture of provision for credit losses - unfunded loan commitments and a $13,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $2.4 million provision for credit losses in the prior quarter (comprised of a $2.0 million provision for credit losses - loans, a $430,000 provision for credit losses - unfunded loan commitments and a $14,000 recapture of provision for credit losses - held-to-maturity debt securities) and a $2.0 million provision for credit losses in the third quarter a year ago (comprised of a $2.9 million provision for credit losses - loans, a $346,000 provision for credit losses - unfunded loan commitments, a $1.3 million recapture of provision for credit losses - available for sale securities and a $12,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflected an increase in the reserve for non-performing collateral dependent loans.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 3
Total non-interest income was $18.1 million in the third quarter of 2024, compared to $17.2 million in the preceding quarter and $12.7 million in the third quarter a year ago. The increase in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $562,000 decrease in the net loss recognized on the sale of securities. The increase in non-interest income during the current quarter compared to the prior year quarter was primarily due to a $1.1 million increase in mortgage banking operations revenue, a $2.7 million decrease in the net loss recognized on the sale of securities and a $693,000 decrease in the net loss recognized for fair value adjustments on financial instruments carried at fair value. Total non-interest income was $46.9 million for the nine months ended September 30, 2024, compared to $30.4 million for the same period a year earlier.
Mortgage banking operations revenue was $3.2 million in the third quarter of 2024, compared to $3.0 million in the preceding quarter and $2.0 million in the third quarter a year ago. The volume of one- to four-family loans sold during the current quarter increased compared to the preceding and prior year quarters, although overall volumes remained low due to reduced refinancing and purchase activity in the current rate environment. The increase in mortgage banking operations revenue from the preceding quarter was also impacted by increases in the pricing on the one- to four-family loans sold during the current quarter. Home purchase activity accounted for 88% of one- to four-family mortgage loan originations in the third quarter of 2024, 89% in the preceding quarter and 90% in the third quarter of 2023.
Total non-interest expense was $96.3 million in the third quarter of 2024, compared to $98.1 million in the preceding quarter and $95.9 million in the third quarter of 2023. The decrease in non-interest expense for the current quarter compared to the prior quarter reflects a $2.0 million decrease in salary and employee benefits, primarily resulting from decreased medical premiums expense and unemployment and workers compensation expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits and real estate operations, net expenses, partially offset by a decrease in professional and legal expenses. For the nine months ended September 30, 2024, total non-interest expense was $292.1 million, compared to $285.9 million for the nine months ended September 30, 2023. Banner’s efficiency ratio was 62.63% for the third quarter of 2024, compared to 65.53% in the preceding quarter and 62.10% in the same quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP financial measure, was 61.27% for the third quarter of 2024, compared to 63.60% in the preceding quarter and 59.00% in the year ago quarter. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.
Balance Sheet Review
Total assets increased to $16.19 billion at September 30, 2024, compared to $15.82 billion at June 30, 2024, and $15.51 billion at September 30, 2023. Securities and interest-bearing deposits held at other banks totaled $3.50 billion at September 30, 2024, compared to $3.27 billion at June 30, 2024 and $3.44 billion at September 30, 2023. The increase compared to the prior quarter was primarily due to an increase in interest-bearing deposit balances. The average effective duration of the securities portfolio was approximately 6.3 years at September 30, 2024, compared to 6.8 years at September 30, 2023.
Total loans receivable increased to $11.22 billion at September 30, 2024, compared to $11.14 billion at June 30, 2024, and $10.61 billion at September 30, 2023. One- to four-family residential loans decreased 2% to $1.58 billion at September 30, 2024, compared to $1.60 billion at June 30, 2024, and increased 9% compared to $1.44 billion at September 30, 2023. The decrease in one- to four-family residential loans from the prior quarter was primarily the result of the transfer of $47.5 million of one- to four-family residential loans from portfolio to held for sale. The increase in one- to four-family residential loans from the prior year was primarily the result of one- to four-family construction loans converting to one- to four-family portfolio loans upon the completion of the construction phase and new loan production. Multifamily real estate loans increased 24% to $889.9 million at September 30, 2024, compared to $717.1 million at June 30, 2024, and increased 16% compared to $766.6 million at September 30, 2023. The increase in multifamily real estate loans from June 30, 2024 and September 30, 2023 was primarily the result of the conversion of multifamily construction loans to the multifamily portfolio upon the completion of the construction phase. The increase from the prior year also reflects the transfer of $43.5 million of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023, partially offset by the transfer of certain affordable housing loans to small balance commercial real estate loans. Construction, land and land development loans decreased 9% to $1.53 billion at September 30, 2024, compared to $1.68 billion at June 30, 2024, and increased 1% compared to $1.50 billion at September 30, 2023. The decrease in construction, land and land development loans was primarily the result of multifamily construction loans converting to multifamily portfolio loans upon the completion of the construction phase. Agricultural business loans increased 4% to $346.7 million at September 30, 2024, compared to $334.6 million at June 30, 2024 and increased 4% compared to $334.6 million at September 30, 2023, primarily due to advances on agricultural lines of credit.
Loans held for sale were $78.8 million at September 30, 2024, compared to $13.4 million at June 30, 2024 and $54.2 million at September 30, 2023. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $95.0 million, compared to $75.0 million in the preceding quarter and $87.3 million in the third quarter a year ago. The increase in loans held for sale was primarily the result of the transfer of $47.5 million of one- to four-family residential loans from portfolio to held for sale during the current quarter. The increase from the prior year was partially offset by the previously mentioned transfer of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. There were no multifamily loans held for sale at September 30, 2024 or June 30, 2024.
Total deposits increased to $13.54 billion at September 30, 2024, compared to $13.08 billion at June 30, 2024 and $13.17 billion a year ago. Core deposits increased 4% to $12.02 billion at September 30, 2024, compared to $11.55 billion at June 30, 2024, and increased 3% compared to $11.72 billion at September 30, 2023. The increase in core deposits compared to the prior quarter primarily reflects normal seasonal increases primarily from agricultural clients. The increase in core deposits compared to the prior year quarter primarily reflects an increase in third-party insured sweep accounts. Core deposits were 89% of total deposits at September 30, 2024, compared to 88% of total deposits at June 30, 2024 and 89% of total deposits at September 30, 2023. Certificates of deposit decreased slightly to $1.52 billion at September 30, 2024, compared to $1.53 billion at June 30, 2024, and increased 4% compared to $1.46 billion a year earlier. The decrease in certificates of deposit during the current quarter compared to the preceding quarter was principally due to a $55.0 million decrease in brokered deposits. The increase in certificates of deposit during the current quarter compared to the third quarter a year ago was principally due to clients seeking higher yields moving funds from core deposit accounts to higher yielding certificates of deposits, partially offset by a $112.5 million decrease in brokered deposits.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 4
FHLB advances were $230.0 million at September 30, 2024, compared to $398.0 million at June 30, 2024 and $140.0 million a year ago. At September 30, 2024, off-balance sheet liquidity included additional borrowing capacity of $3.23 billion at the FHLB and $1.53 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.
At September 30, 2024, total common shareholders’ equity was $1.79 billion, or 11.08% of total assets, compared to $1.69 billion or 10.69% of total assets at June 30, 2024, and $1.52 billion or 9.81% of total assets at September 30, 2023. The increase in total common shareholders’ equity at September 30, 2024 compared to June 30, 2024 was due to a $28.4 million increase in retained earnings as a result of $45.2 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the third quarter of 2024, as well as a decrease in accumulated other comprehensive loss of $72.0 million as the result of an increase in the fair value of the security portfolio. At September 30, 2024, tangible common shareholders’ equity, a non-GAAP financial measure, was $1.42 billion, or 8.96% of tangible assets, compared to $1.31 billion, or 8.51% of tangible assets, at June 30, 2024, and $1.14 billion, or 7.54% of tangible assets, a year ago. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.
Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At September 30, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.30%, its estimated Tier 1 leverage capital to average assets ratio was 10.91%, and its estimated total capital to risk-weighted assets ratio was 14.92%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.
Credit Quality
The allowance for credit losses - loans was $154.6 million, or 1.38% of total loans receivable and 359% of non-performing loans, at September 30, 2024, compared to $152.8 million, or 1.37% of total loans receivable and 498% of non-performing loans, at June 30, 2024, and $147.0 million, or 1.38% of total loans receivable and 560% of non-performing loans, at September 30, 2023. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $13.8 million at September 30, 2024, compared to $14.0 million at June 30, 2024, and $15.0 million at September 30, 2023. Net loan charge-offs totaled $230,000 in the third quarter of 2024, compared to $245,000 in the preceding quarter and $663,000 in the third quarter a year ago. Non-performing loans were $43.0 million at September 30, 2024, compared to $30.7 million at June 30, 2024, and $26.3 million a year ago.
An increase in adversely classified loans, offset in part by payoffs and paydowns, resulted in total substandard loans of $150.1 million as of September 30, 2024. This compares to $122.0 million as of June 30, 2024 and $124.5 million a year ago.
Total non-performing assets were $45.2 million, or 0.28% of total assets, at September 30, 2024, compared to $33.3 million, or 0.21% of total assets, at June 30, 2024, and $26.8 million, or 0.17% of total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday October 17, 2024, at 8:00 a.m. PDT, to discuss its third quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 433614 to participate in the call. A replay of the call will be available at www.bannerbank.com.
About the Company
Banner Corporation is a $16.19 billion bank holding company operating a commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 5
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “potential,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banner’s operating and stock price performance.
Factors that could cause Banner’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: (1) adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a recession or slowed economic growth, or increased political instability due to acts of war; (2) changes in the interest rate environment, including increases or decreases in the Board of Governors of the Federal Reserve System (the “Federal Reserve”) benchmark rate and duration at which such interest rate levels are maintained, which could affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; (3) the impact of inflation and the current and future monetary policies of the Federal Reserve in response thereto; (4) the effects of any federal government shutdown; (5) the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; (6) expectations regarding key growth initiatives and strategic priorities; (7) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (8) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner’s activities; (9) competitive pressures among depository institutions; (10) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (11) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (12) fluctuations in real estate values; (13) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (14) the ability to access cost-effective funding; (15) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (16) changes in financial markets; (17) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (18) the costs, effects and outcomes of litigation; (19) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (20) changes in accounting principles, policies or guidelines; (21) future acquisitions by Banner of other depository institutions or lines of business; (22) future goodwill impairment due to changes in Banner’s business or changes in market conditions; (23) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (24) environmental, social and governance goals and targets; (25) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (26) other risks detailed from time to time in Banner’s other reports filed with and furnished to the Securities and Exchange Commission including Banner’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 6
RESULTS OF OPERATIONSQuarters EndedNine Months Ended
(in thousands except shares and per share data)Sep 30, 2024Jun 30, 2024Sep 30, 2023Sep 30, 2024Sep 30, 2023
INTEREST INCOME:    
Loans receivable$168,338 $161,191 $149,254 $486,004 $423,359 
Mortgage-backed securities16,357 16,708 17,691 49,999 54,954 
Securities and cash equivalents11,146 11,239 12,119 33,664 39,521 
Total interest income195,841 189,138 179,064 569,667 517,834 
INTEREST EXPENSE:    
Deposits53,785 48,850 31,001 147,248 60,784 
Federal Home Loan Bank (FHLB) advances2,263 3,621 2,233 8,856 8,654 
Other borrowings1,147 1,160 1,099 3,482 2,251 
Subordinated debt
2,971 2,961 2,965 8,901 8,549 
Total interest expense60,166 56,592 37,298 168,487 80,238 
Net interest income135,675 132,546 141,766 401,180 437,596 
PROVISION FOR CREDIT LOSSES1,692 2,369 2,027 4,581 8,267 
Net interest income after provision for credit losses133,983 130,177 139,739 396,599 429,329 
NON-INTEREST INCOME:    
Deposit fees and other service charges10,741 10,590 10,916 32,353 32,078 
Mortgage banking operations3,180 3,006 2,049 8,521 6,426 
Bank-owned life insurance2,445 2,367 2,062 7,049 6,636 
Miscellaneous1,658 1,988 942 5,538 4,010 
 18,024 17,951 15,969 53,461 49,150 
Net loss on sale of securities— (562)(2,657)(5,465)(14,436)
Net change in valuation of financial instruments carried at fair value39 (190)(654)(1,143)(4,357)
Total non-interest income18,063 17,199 12,658 46,853 30,357 
NON-INTEREST EXPENSE:    
Salary and employee benefits61,832 63,831 61,091 188,032 184,452 
Less capitalized loan origination costs(4,354)(4,639)(4,498)(12,669)(12,386)
Occupancy and equipment12,040 12,128 11,722 36,630 35,686 
Information and computer data services7,134 7,240 7,118 21,694 21,347 
Payment and card processing services5,346 5,691 5,172 16,747 14,459 
Professional and legal expenses2,102 1,201 3,042 4,833 7,563 
Advertising and marketing1,161 1,198 1,362 3,438 3,108 
Deposit insurance2,874 2,858 2,874 8,541 7,603 
State and municipal business and use taxes1,432 1,394 1,359 4,130 3,888 
Real estate operations, net103 297 (383)180 (585)
Amortization of core deposit intangibles590 724 857 2,037 2,898 
Miscellaneous6,031 6,205 6,175 18,467 17,884 
Total non-interest expense96,291 98,128 95,891 292,060 285,917 
Income before provision for income taxes55,755 49,248 56,506 151,392 173,769 
PROVISION FOR INCOME TAXES10,602 9,453 10,652 28,885 32,769 
NET INCOME$45,153 $39,795 $45,854 $122,507 $141,000 
Earnings per common share:    
Basic$1.31 $1.15 $1.33 $3.56 $4.11 
Diluted$1.30 $1.15 $1.33 $3.54 $4.09 
Cumulative dividends declared per common share$0.48 $0.48 $0.48 $1.44 $1.44 
Weighted average number of common shares outstanding:    
Basic34,498,830 34,488,163 34,379,865 34,459,662 34,331,458 
Diluted34,650,322 34,537,012 34,429,726 34,575,498 34,439,214 
Increase in common shares outstanding936 60,531 1,322 108,319 151,931 


BANR - Third Quarter 2024 Results
October 16, 2024
Page 7
FINANCIAL CONDITION   Percentage Change
(in thousands except shares and per share data)Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023Prior QtrPrior Yr Qtr
ASSETS   
Cash and due from banks$226,568 $195,163 $209,634 $207,171 16 %%
Interest-bearing deposits252,227 52,295 44,830 44,535 382 %466 %
Total cash and cash equivalents
478,795 247,458 254,464 251,706 93 %90 %
Securities – trading— — — 25,268 nm(100)%
Securities - available for sale, amortized cost $2,523,968, $2,572,544, $2,729,980 and $2,774,972, respectively
2,237,939 2,197,693 2,373,783 2,287,993 %(2)%
Securities - held to maturity, fair value $879,278, $852,709, $907,514 and $853,653, respectively
1,013,903 1,023,028 1,059,055 1,082,156 (1)%(6)%
Total securities
3,251,842 3,220,721 3,432,838 3,395,417 %(4)%
FHLB stock19,751 27,311 24,028 15,600 (28)%27 %
Loans held for sale78,841 13,421 11,170 54,158 487 %46 %
Loans receivable11,224,606 11,143,848 10,810,455 10,611,417 %%
Allowance for credit losses – loans(154,585)(152,848)(149,643)(146,960)%%
Net loans receivable
11,070,021 10,991,000 10,660,812 10,464,457 %%
Accrued interest receivable66,981 67,520 63,100 61,040 (1)%10 %
Property and equipment, net125,256 126,465 132,231 136,504 (1)%(8)%
Goodwill373,121 373,121 373,121 373,121 — %— %
Other intangibles, net3,647 4,237 5,684 6,542 (14)%(44)%
Bank-owned life insurance310,400 307,948 304,366 303,347 %%
Operating lease right-of-use assets38,192 39,628 43,731 43,447 (4)%(12)%
Other assets371,829 397,364 364,846 402,541 (6)%(8)%
Total assets
$16,188,676 $15,816,194 $15,670,391 $15,507,880 %%
LIABILITIES   
Deposits:   
Non-interest-bearing$4,688,244 $4,537,803 $4,792,369 $5,197,854 %(10)%
Interest-bearing transaction and savings accounts7,328,051 7,016,327 6,759,661 6,518,385 %12 %
Interest-bearing certificates1,521,853 1,525,133 1,477,467 1,458,313 — %%
Total deposits13,538,148 13,079,263 13,029,497 13,174,552 %%
Advances from FHLB230,000 398,000 323,000 140,000 (42)%64 %
Other borrowings154,533 165,956 182,877 188,440 (7)%(18)%
Subordinated notes, net80,170 89,561 92,851 92,748 (10)%(14)%
Junior subordinated debentures at fair value66,257 66,831 66,413 66,284 (1)%— %
Operating lease liabilities42,318 44,056 48,659 48,642 (4)%(13)%
Accrued expenses and other liabilities237,128 235,515 228,428 231,478 %%
Deferred compensation46,401 46,246 45,975 45,129 — %%
Total liabilities14,394,955 14,125,428 14,017,700 13,987,273 %%
SHAREHOLDERS’ EQUITY   
Common stock1,304,792 1,302,236 1,299,651 1,297,307 — %%
Retained earnings714,472 686,079 642,175 616,215 %16 %
Accumulated other comprehensive loss
(225,543)(297,549)(289,135)(392,915)(24)%(43)%
Total shareholders’ equity1,793,721 1,690,766 1,652,691 1,520,607 %18 %
Total liabilities and shareholders’ equity$16,188,676 $15,816,194 $15,670,391 $15,507,880 %%
Common Shares Issued:   
Shares outstanding at end of period34,456,688 34,455,752 34,348,369 34,345,949 
Common shareholders’ equity per share (1)
$52.06 $49.07 $48.12 $44.27 
Common shareholders’ tangible equity per share (1) (2)
$41.12 $38.12 $37.09 $33.22 
Common shareholders’ equity to total assets11.08 %10.69 %10.55 %9.81 %
Common shareholders’ tangible equity to tangible assets (2)
8.96 %8.51 %8.33 %7.54 %
Consolidated Tier 1 leverage capital ratio10.91 %10.80 %10.56 %10.40 %
nmNot meaningful
(1)Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
(2)Common shareholders’ tangible equity and tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 8
ADDITIONAL FINANCIAL INFORMATION   
(dollars in thousands)   
Percentage Change
LOANSSep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023Prior QtrPrior Yr Qtr
   
Commercial real estate (CRE):   
Owner-occupied$990,516 $950,922 $915,897 $911,540 %%
Investment properties1,583,863 1,536,142 1,541,344 1,530,087 %%
Small balance CRE1,218,822 1,234,302 1,178,500 1,169,828 (1)%%
Multifamily real estate889,866 717,089 811,232 766,571 24 %16 %
Construction, land and land development:
Commercial construction124,051 173,296 170,011 168,061 (28)%(26)%
Multifamily construction524,108 663,989 503,993 453,129 (21)%16 %
One- to four-family construction507,350 490,237 526,432 536,349 %(5)%
Land and land development370,690 352,184 336,639 346,362 %%
Commercial business:
Commercial business1,281,615 1,298,134 1,255,734 1,263,747 (1)%%
Small business scored1,087,714 1,074,465 1,022,154 1,000,714 %%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland346,686 334,583 331,089 334,626 %%
One- to four-family residential1,575,164 1,603,266 1,518,046 1,438,694 (2)%%
Consumer:
Consumer—home equity revolving lines of credit622,615 611,739 588,703 579,836 %%
Consumer—other101,546 103,500 110,681 111,873 (2)%(9)%
Total loans receivable$11,224,606 $11,143,848 $10,810,455 $10,611,417 %%
Loans 30 - 89 days past due and on accrual$13,030 $11,850 $19,744 $6,108 
Total delinquent loans (including loans on non-accrual), net$44,656 $32,081 $43,164 $28,312 
Total delinquent loans / Total loans receivable0.40 %0.29 %0.40 %0.27 %

LOANS BY GEOGRAPHIC LOCATIONPercentage Change
Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023Prior QtrPrior Yr Qtr
AmountPercentageAmountAmountAmount
Washington$5,203,637 46 %$5,182,378 $5,095,602 $5,046,028 — %%
California2,796,965 25 %2,787,190 2,670,923 2,570,175 — %%
Oregon2,108,229 19 %2,072,153 1,974,001 1,929,531 %%
Idaho652,148 %641,209 610,064 600,648 %%
Utah85,316 %80,295 68,931 57,711 %48 %
Other378,311 %380,623 390,934 407,324 (1)%(7)%
Total loans receivable$11,224,606 100 %$11,143,848 $10,810,455 $10,611,417 %%





BANR - Third Quarter 2024 Results
October 16, 2024
Page 9

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)


LOAN ORIGINATIONSQuarters Ended
Sep 30, 2024Jun 30, 2024Sep 30, 2023
Commercial real estate$114,372 $102,258 $62,337 
Multifamily real estate314 2,774 12,725 
Construction and land472,506 546,675 421,656 
Commercial business179,871 167,168 157,833 
Agricultural business5,877 22,255 17,466 
One-to four-family residential 24,488 34,498 43,622 
Consumer96,137 120,470 70,043 
Total loan originations (excluding loans held for sale)$893,565 $996,098 $785,682 




BANR - Third Quarter 2024 Results
October 16, 2024
Page 10
ADDITIONAL FINANCIAL INFORMATION   
(dollars in thousands)   
 
  Quarters Ended
CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES – LOANSSep 30, 2024Jun 30, 2024Sep 30, 2023
Balance, beginning of period$152,848 $151,140 $144,680 
Provision for credit losses – loans1,967 1,953 2,943 
Recoveries of loans previously charged off:
Commercial real estate65 98 170 
Construction and land— — 29 
One- to four-family real estate14 17 59 
Commercial business613 324 403 
Agricultural business, including secured by farmland195 19 
Consumer41 112 126 
 734 746 806 
Loans charged off:
Commercial real estate— (347)— 
Construction and land(145)— — 
Commercial business(414)(137)(616)
Agricultural business, including secured by farmland— — (564)
Consumer(405)(507)(289)
 (964)(991)(1,469)
Net charge-offs(230)(245)(663)
Balance, end of period$154,585 $152,848 $146,960 
Net charge-offs / Average loans receivable(0.002)%(0.002)%(0.006)%
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES – LOANSSep 30, 2024Jun 30, 2024Sep 30, 2023
Commercial real estate$40,040 $39,064 $44,016 
Multifamily real estate10,233 8,253 8,804 
Construction and land28,322 31,597 29,389 
One- to four-family real estate20,463 20,906 17,925 
Commercial business39,779 38,835 34,065 
Agricultural business, including secured by farmland5,340 4,045 3,718 
Consumer10,408 10,148 9,043 
Total allowance for credit losses – loans$154,585 $152,848 $146,960 
Allowance for credit losses - loans / Total loans receivable1.38 %1.37 %1.38 %
Allowance for credit losses - loans / Non-performing loans359 %498 %560 %
 
  Quarters Ended
CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTSSep 30, 2024Jun 30, 2024Sep 30, 2023
Balance, beginning of period$14,027 $13,597 $14,664 
(Recapture) provision for credit losses - unfunded loan commitments(262)430 346 
Balance, end of period$13,765 $14,027 $15,010 



BANR - Third Quarter 2024 Results
October 16, 2024
Page 11
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
NON-PERFORMING ASSETS
 Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023
Loans on non-accrual status:   
Secured by real estate:   
Commercial$2,127 $2,326 $2,677 $1,365 
Construction and land4,286 3,999 3,105 5,538 
One- to four-family9,592 8,184 5,702 5,480 
Commercial business10,705 8,694 9,002 5,289 
Agricultural business, including secured by farmland7,703 1,586 3,167 3,170 
Consumer4,636 3,380 3,204 3,378 
 39,049 28,169 26,857 24,220 
Loans more than 90 days delinquent, still on accrual:   
Secured by real estate:   
Commercial2,258 — — — 
Construction and land380 — 1,138 — 
One- to four-family961 1,861 1,205 1,799 
Commercial business— — — 
Consumer359 692 401 245 
 3,958 2,553 2,745 2,044 
Total non-performing loans43,007 30,722 29,602 26,264 
REO2,221 2,564 526 546 
Total non-performing assets$45,228 $33,286 $30,128 $26,810 
Total non-performing assets to total assets0.28 %0.21 %0.19 %0.17 %

LOANS BY CREDIT RISK RATING
 Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023
Pass$11,022,014 $10,971,850 $10,671,281 $10,467,498 
Special Mention52,497 50,027 13,732 19,394 
Substandard150,095 121,971 125,442 124,525 
Total$11,224,606 $11,143,848 $10,810,455 $10,611,417 



BANR - Third Quarter 2024 Results
October 16, 2024
Page 12

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands) 
DEPOSIT COMPOSITIONPercentage Change
Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023Prior QtrPrior Yr Qtr
Non-interest-bearing$4,688,244 $4,537,803 $4,792,369 $5,197,854 %(10)%
Interest-bearing checking2,344,561 2,208,742 2,098,526 2,006,866 %17 %
Regular savings accounts3,339,859 3,192,036 2,980,530 2,751,453 %21 %
Money market accounts1,643,631 1,615,549 1,680,605 1,760,066 %(7)%
Total interest-bearing transaction and savings accounts7,328,051 7,016,327 6,759,661 6,518,385 %12 %
Total core deposits12,016,295 11,554,130 11,552,030 11,716,239 %%
Interest-bearing certificates1,521,853 1,525,133 1,477,467 1,458,313 — %%
Total deposits$13,538,148 $13,079,263 $13,029,497 $13,174,552 %%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023Percentage Change
AmountPercentageAmountAmountAmountPrior QtrPrior Yr Qtr
Washington$7,413,414 55 %$7,171,699 $7,247,392 $7,241,341 %%
Oregon2,997,843 22 %2,909,838 2,852,677 2,918,446 %%
California2,423,295 18 %2,331,793 2,269,557 2,342,345 %%
Idaho703,596 %665,933 659,871 672,420 %%
Total deposits$13,538,148 100 %$13,079,263 $13,029,497 $13,174,552 %%

INCLUDED IN TOTAL DEPOSITS
Sep 30, 2024Jun 30, 2024Sep 30, 2023
Public non-interest-bearing accounts$141,541 $149,012 $169,058 
Public interest-bearing transaction & savings accounts246,332 250,136 188,831 
Public interest-bearing certificates28,144 29,101 46,349 
Total public deposits$416,017 $428,249 $404,238 
Collateralized public deposits$317,960 $326,524 $300,189 
Total brokered deposits$50,333 $105,309 $162,856 
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
Sep 30, 2024Jun 30, 2024Sep 30, 2023
Number of deposit accounts459,127 460,107 466,159 
Average account balance per account$30 $29 $28 





BANR - Third Quarter 2024 Results
October 16, 2024
Page 13
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF SEPTEMBER 30, 2024ActualMinimum to be categorized as "Adequately Capitalized"Minimum to be
categorized as
"Well Capitalized"
AmountRatioAmountRatioAmountRatio
Banner Corporation-consolidated:    
      Total capital to risk-weighted assets$1,988,948 14.92 %$1,066,549 8.00 %$1,333,186 10.00 %
      Tier 1 capital to risk-weighted assets1,725,690 12.94 %799,912 6.00 %799,912 6.00 %
      Tier 1 leverage capital to average assets1,725,690 10.91 %632,760 4.00 % n/a  n/a
      Common equity tier 1 capital to risk-weighted assets1,639,190 12.30 %599,934 4.50 % n/a  n/a
Banner Bank:    
      Total capital to risk-weighted assets1,862,242 13.95 %1,067,758 8.00 %1,334,697 10.00 %
      Tier 1 capital to risk-weighted assets1,698,984 12.73 %800,818 6.00 %1,067,758 8.00 %
      Tier 1 leverage capital to average assets1,698,984 10.74 %632,851 4.00 %791,063 5.00 %
      Common equity tier 1 capital to risk-weighted assets1,698,984 12.73 %600,614 4.50 %867,553 6.50 %

These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 14
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREADQuarters Ended
Sep 30, 2024Jun 30, 2024Sep 30, 2023
Average BalanceInterest and Dividends
Yield / Cost (3)
Average BalanceInterest and Dividends
Yield / Cost (3)
Average BalanceInterest and Dividends
Yield / Cost (3)
Interest-earning assets:
Held for sale loans
$26,954 $453 6.69 %$11,665 $206 7.10 %$56,697 $765 5.35 %
Mortgage loans
9,207,468 135,497 5.85 %9,006,857 129,230 5.77 %8,596,705 118,285 5.46 %
Commercial/agricultural loans
1,879,215 32,547 6.89 %1,874,039 31,761 6.82 %1,826,907 29,894 6.49 %
Consumer and other loans
128,548 2,154 6.67 %132,661 2,156 6.54 %138,723 2,226 6.37 %
Total loans (1)
11,242,185 170,651 6.04 %11,025,222 163,353 5.96 %10,619,032 151,170 5.65 %
Mortgage-backed securities
2,623,399 16,498 2.50 %2,672,187 16,850 2.54 %2,863,345 17,834 2.47 %
Other securities
943,310 11,120 4.69 %958,809 11,181 4.69 %1,071,389 12,128 4.49 %
Interest-bearing deposits with banks
51,604 493 3.80 %58,022 578 4.01 %43,594 529 4.81 %
FHLB stock
16,664 412 9.84 %21,080 365 6.96 %16,443 385 9.29 %
Total investment securities3,634,977 28,523 3.12 %3,710,098 28,974 3.14 %3,994,771 30,876 3.07 %
Total interest-earning assets
14,877,162 199,174 5.33 %14,735,320 192,327 5.25 %14,613,803 182,046 4.94 %
Non-interest-earning assets981,290   926,411 932,364   
Total assets
$15,858,452   $15,661,731 $15,546,167   
Deposits:      
Interest-bearing checking accounts
$2,295,723 9,497 1.65 %$2,156,214 7,621 1.42 %$1,971,179 4,190 0.84 %
Savings accounts
3,268,647 19,299 2.35 %3,147,522 17,200 2.20 %2,659,890 8,400 1.25 %
Money market accounts
1,611,543 9,184 2.27 %1,659,327 9,124 2.21 %1,793,953 6,639 1.47 %
Certificates of deposit
1,540,637 15,805 4.08 %1,503,597 14,905 3.99 %1,412,542 11,772 3.31 %
Total interest-bearing deposits
8,716,550 53,785 2.45 %8,466,660 48,850 2.32 %7,837,564 31,001 1.57 %
Non-interest-bearing deposits
4,601,755 — — %4,634,738 — — %5,316,023 — — %
Total deposits
13,318,305 53,785 1.61 %13,101,398 48,850 1.50 %13,153,587 31,001 0.94 %
Other interest-bearing liabilities:       
FHLB advances
161,413 2,263 5.58 %259,549 3,621 5.61 %161,087 2,233 5.50 %
Other borrowings
159,439 1,147 2.86 %175,518 1,160 2.66 %194,659 1,099 2.24 %
Junior subordinated debentures and subordinated notes
179,075 2,971 6.60 %179,178 2,961 6.65 %182,678 2,965 6.44 %
Total borrowings
499,927 6,381 5.08 %614,245 7,742 5.07 %538,424 6,297 4.64 %
Total funding liabilities
13,818,232 60,166 1.73 %13,715,643 56,592 1.66 %13,692,011 37,298 1.08 %
Other non-interest-bearing liabilities (2)
311,803   294,794 296,578   
Total liabilities
14,130,035   14,010,437 13,988,589   
Shareholders’ equity1,728,417   1,651,294 1,557,578   
Total liabilities and shareholders’ equity$15,858,452   $15,661,731 $15,546,167   
Net interest income/rate spread (tax equivalent)$139,008 3.60 %$135,735 3.59 %$144,748 3.86 %
Net interest margin (tax equivalent)3.72 %3.70 %3.93 %
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(3,333)(3,189)(2,982)
Net interest income and margin, as reported$135,675 3.63 %$132,546 3.62 %$141,766 3.85 %
Additional Key Financial Ratios:
Return on average assets1.13 %1.02 %1.17 %
Adjusted return on average assets (4)
1.13 %1.04 %1.25 %
Return on average equity10.39 %9.69 %11.68 %
Adjusted return on average equity (4)
10.39 %9.83 %12.51 %
Average equity/average assets10.90 %10.54 %10.02 %
Average interest-earning assets/average interest-bearing liabilities161.42 %162.27 %174.47 %
Average interest-earning assets/average funding liabilities107.66 %107.43 %106.73 %
Non-interest income/average assets0.45 %0.44 %0.32 %
Non-interest expense/average assets2.42 %2.52 %2.45 %
Efficiency ratio62.63 %65.53 %62.10 %
Adjusted efficiency ratio (4)
61.27 %63.60 %59.00 %

(1)Average balances include loans accounted for on a nonaccrual basis and accruing loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
(2)Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
(3)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $2.3 million, $2.2 million and $1.9 million for the quarters ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million for both the quarters ended September 30, 2024 and June 30, 2024 and $1.1 million for the quarter ended September 30, 2023.
(4)Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.


BANR - Third Quarter 2024 Results
October 16, 2024
Page 15
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREADNine Months Ended
Sep 30, 2024Sep 30, 2023
Average BalanceInterest and Dividends
Yield/Cost (3)
Average BalanceInterest and Dividends
Yield/Cost (3)
Interest-earning assets:
Held for sale loans
$16,225 $826 6.80 %$55,157 $2,174 5.27 %
Mortgage loans
9,036,256 390,011 5.77 %8,427,034 337,282 5.35 %
Commercial/agricultural loans
1,861,182 95,155 6.83 %1,768,685 82,803 6.26 %
Consumer and other loans
131,676 6,506 6.60 %138,246 6,478 6.26 %
Total loans (1)
11,045,339 492,498 5.96 %10,389,122 428,737 5.52 %
Mortgage-backed securities
2,674,555 50,424 2.52 %2,971,124 55,386 2.49 %
Other securities
962,183 33,802 4.69 %1,220,074 40,155 4.40 %
Interest-bearing deposits with banks
51,630 1,530 3.96 %47,330 1,694 4.79 %
FHLB stock
18,931 986 6.96 %18,772 632 4.50 %
Total investment securities3,707,299 86,742 3.13 %4,257,300 97,867 3.07 %
Total interest-earning assets
14,752,638 579,240 5.24 %14,646,422 526,604 4.81 %
Non-interest-earning assets950,588  930,934 
Total assets
$15,703,226  $15,577,356 
Deposits:  
Interest-bearing checking accounts
$2,185,796 23,834 1.46 %$1,874,518 7,427 0.53 %
Savings accounts
3,161,266 51,778 2.19 %2,604,089 15,179 0.78 %
Money market accounts
1,648,208 26,696 2.16 %1,971,514 16,445 1.12 %
Certificates of deposit
1,514,982 44,940 3.96 %1,118,874 21,733 2.60 %
Total interest-bearing deposits
8,510,252 147,248 2.31 %7,568,995 60,784 1.07 %
Non-interest-bearing deposits
4,649,297 — — %5,571,896 — — %
Total deposits
13,159,549 147,248 1.49 %13,140,891 60,784 0.62 %
Other interest-bearing liabilities:      
FHLB advances
211,135 8,856 5.60 %219,461 8,654 5.27 %
Other borrowings
171,838 3,482 2.71 %203,932 2,251 1.48 %
Junior subordinated debentures and subordinated notes
179,941 8,901 6.61 %186,964 8,549 6.11 %
Total borrowings
562,914 21,239 5.04 %610,357 19,454 4.26 %
Total funding liabilities
13,722,463 168,487 1.64 %13,751,248 80,238 0.78 %
Other non-interest-bearing liabilities (2)
303,367  289,558 
Total liabilities
14,025,830  14,040,806 
Shareholders’ equity1,677,396  1,536,550 
Total liabilities and shareholders’ equity$15,703,226  $15,577,356 
Net interest income/rate spread (tax equivalent)$410,753 3.60 %$446,366 4.03 %
Net interest margin (tax equivalent)3.72 %4.07 %
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(9,573)(8,770)
Net interest income and margin, as reported$401,180 3.63 %$437,596 3.99 %
Additional Key Financial Ratios:
Return on average assets1.04 %1.21 %
Adjusted return on average assets (4)
1.08 %1.34 %
Return on average equity9.76 %12.27 %
Adjusted return on average equity (4)
10.16 %13.60 %
Average equity/average assets10.68 %9.86 %
Average interest-earning assets/average interest-bearing liabilities162.60 %179.07 %
Average interest-earning assets/average funding liabilities107.51 %106.51 %
Non-interest income/average assets0.40 %0.26 %
Non-interest expense/average assets2.48 %2.45 %
Efficiency ratio65.19 %61.10 %
Adjusted efficiency ratio (4)
62.84 %57.19 %

(1)Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
(2)Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
(3)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $6.5 million and $5.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.1 million and $3.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.
(4)Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.



BANR - Third Quarter 2024 Results
October 16, 2024
Page 16
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
* Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this earnings release contains certain non-GAAP financial measures. Tangible common shareholders’ equity per share and the ratio of tangible common equity to tangible assets, and references to adjusted revenue, adjusted earnings, the adjusted return on average assets, the adjusted return on average equity and the adjusted efficiency ratio represent non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
ADJUSTED REVENUEQuarters EndedNine Months Ended
Sep 30, 2024Jun 30, 2024Sep 30, 2023Sep 30, 2024Sep 30, 2023
Net interest income (GAAP)$135,675 $132,546 $141,766 $401,180 $437,596 
Non-interest income (GAAP)18,063 17,199 12,658 46,853 30,357 
Total revenue (GAAP)153,738 149,745 154,424 448,033 467,953 
Exclude: Net loss on sale of securities— 562 2,657 5,465 14,436 
Net change in valuation of financial instruments carried at fair value(39)190 654 1,143 4,357 
Adjusted revenue (non-GAAP)$153,699 $150,497 $157,735 $454,641 $486,746 

ADJUSTED EARNINGSQuarters EndedNine Months Ended
Sep 30, 2024Jun 30, 2024Sep 30, 2023Sep 30, 2024Sep 30, 2023
Net income (GAAP)$45,153 $39,795 $45,854 $122,507 $141,000 
Exclude: Net loss on sale of securities— 562 2,657 5,465 14,436 
Net change in valuation of financial instruments carried at fair value(39)190 654 1,143 4,357 
Banner Forward expenses (1)
— — 996 — 1,334 
Related net tax expense (benefit)(180)(1,033)(1,586)(4,830)
Total adjusted earnings (non-GAAP)$45,123 $40,367 $49,128 $127,529 $156,297 
Diluted earnings per share (GAAP)$1.30 $1.15 $1.33 $3.54 $4.09 
Diluted adjusted earnings per share (non-GAAP)$1.30 $1.17 $1.43 $3.69 $4.54 
Return on average assets1.13 %1.02 %1.17 %1.04 %1.21 %
Adjusted return on average assets (2)
1.13 %1.04 %1.25 %1.08 %1.34 %
Return on average equity10.39 %9.69 %11.68 %9.76 %12.27 %
Adjusted return on average equity (3)
10.39 %9.83 %12.51 %10.16 %13.60 %

(1)Included in miscellaneous expenses in results of operations.
(2)Adjusted earnings (non-GAAP) divided by average assets.
(3)Adjusted earnings (non-GAAP) divided by average equity.



BANR - Third Quarter 2024 Results
October 16, 2024
Page 17
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIOQuarters EndedNine Months Ended
Sep 30, 2024Jun 30, 2024Sep 30, 2023Sep 30, 2024Sep 30, 2023
Non-interest expense (GAAP)$96,291 $98,128 $95,891 $292,060 $285,917 
Exclude: Banner Forward expenses (1)
— — (996)— (1,334)
CDI amortization(590)(724)(857)(2,037)(2,898)
State/municipal tax expense(1,432)(1,394)(1,359)(4,130)(3,888)
REO operations(103)(297)383 (180)585 
Adjusted non-interest expense (non-GAAP)$94,166 $95,713 $93,062 $285,713 $278,382 
Net interest income (GAAP)$135,675 $132,546 $141,766 $401,180 $437,596 
Non-interest income (GAAP)18,063 17,199 12,658 46,853 30,357 
Total revenue (GAAP)153,738 149,745 154,424 448,033 467,953 
Exclude: Net loss on sale of securities— 562 2,657 5,465 14,436 
Net change in valuation of financial instruments carried at fair value(39)190 654 1,143 4,357 
Adjusted revenue (non-GAAP)$153,699 $150,497 $157,735 $454,641 $486,746 
Efficiency ratio (GAAP)62.63 %65.53 %62.10 %65.19 %61.10 %
Adjusted efficiency ratio (non-GAAP) (2)
61.27 %63.60 %59.00 %62.84 %57.19 %

(1)Included in miscellaneous expenses in results of operations.
(2)Adjusted non-interest expense (non-GAAP) divided by adjusted revenue.

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
Sep 30, 2024Jun 30, 2024Dec 31, 2023Sep 30, 2023
Shareholders’ equity (GAAP)$1,793,721 $1,690,766 $1,652,691 $1,520,607 
Exclude goodwill and other intangible assets, net376,768 377,358 378,805 379,663 
Tangible common shareholders’ equity (non-GAAP)$1,416,953 $1,313,408 $1,273,886 $1,140,944 
Total assets (GAAP)$16,188,676 $15,816,194 $15,670,391 $15,507,880 
Exclude goodwill and other intangible assets, net376,768 377,358 378,805 379,663 
Total tangible assets (non-GAAP)$15,811,908 $15,438,836 $15,291,586 $15,128,217 
Common shareholders’ equity to total assets (GAAP)11.08 %10.69 %10.55 %9.81 %
Tangible common shareholders’ equity to tangible assets (non-GAAP)8.96 %8.51 %8.33 %7.54 %
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Shareholders’ equity (GAAP)$1,793,721 $1,690,766 $1,652,691 $1,520,607 
Tangible common shareholders’ equity (non-GAAP)$1,416,953 $1,313,408 $1,273,886 $1,140,944 
Common shares outstanding at end of period34,456,688 34,455,752 34,348,369 34,345,949 
Common shareholders’ equity (book value) per share (GAAP)$52.06 $49.07 $48.12 $44.27 
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)$41.12 $38.12 $37.09 $33.22 

Photo by Salvador Saldana Photo by Yvonne McDonald Photo by Maria DeVecchio Photo by Siti Alimah Third Quarter 2024


 
Disclosure Statement 1 This presentation includes forward-looking statements. These statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook for economic and other conditions. Additional forward-looking statements may be made in the question-and-answer period following the presentation. These forward-looking statements are subject to several 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 from the earnings press release that was released October 16, 2024 as well as the Form 10-K for the year ended December 31, 2023 and Forms 10-Q filed quarterly thereafter. Forward-looking statements are effective only as of the date they are made, and Banner assumes no obligation to update information concerning its expectations.


 
Third quarter 2024 highlights 2 • Net income of $45.2 million, compared to $39.8 million for the prior quarter • Loan growth of $81 million (3% annualized) • Total loan originations (excluding HFS) were $894 million • Total deposits increased by $459 million (14% annualized); loan-to-deposit ratio remained at 83%, same as last quarter • Net interest margin (tax equivalent) increased 2 basis points to 3.72% • Efficiency ratio (adjusted, non-GAAP) decreased 233 basis points to 61.27% • Return on average assets of 1.13%, and return on average equity of 10.39%, compared to 1.02% and 9.69%, respectively, for the prior quarter • $1.7 million provision for credit losses driven by collateral dependent loans; Allowance for credit losses – loans was 1.38% of total loans • Non-performing assets remained low at 0.28% of total assets, up 7 basis points from last quarter • Announced dividend of $0.48 per share to be paid in November 2024


 
Building value at Banner Building value for stakeholders … by focusing on core banking competency … that is sustainable through change events … and scalable with acquisition growth Banner Corporation Assets $16.2B Deposits $13.5B Loans $11.3B Offices 135 Employees 1,961 3 Acquisition History 2019 Q4 2018 Q4 2015 Q4 2015 Q1 2014 Q2 AltaPacific Bank Skagit Bank AmericanWest Bank Siuslaw Bank SW Oregon Branches Assets $0.4B $0.9B $4.5B $0.4B $0.2B Deposits $0.3B $0.8B $3.6B $0.3B $0.2B Loans $0.3B $0.6B $3.0B $0.2B $0.1B Offices 6 11 98 10 6


 
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Growing revenue Take advantage of ideal geography Offer super community bank value proposition Guard and improve reputation Grow market share 4


 
Growing revenue … in a good place since 1890 5 Source: U.S. Census Bureau Moody’s Analytics Forecasted (June 2023) Population Estimate (millions) 2020 2030 Growth Washington 7.7 8.4 9%* Oregon 4.2 4.5 5% Idaho 1.8 2.2 20%* California 39.5 39.5 0% Region 53.3 54.6 2% United States 331.4 344.6 4% * Among the fastest growing in the country


 
Growing revenue … in an ideal geography Powerful and diverse economic drivers From Banner’s Pacific Northwest base to … Technology Manufacturing Consumer Logistics Natural Resources Agriculture Traditional, specialty crops, orchards, wineries, … California From Apple to from Silicon Valley to the Central Valley … the world’s 6th largest economy 6


 
Growing revenue Our super community bank value proposition Broad product offerings serving middle market, small business and consumer client base Decision-making as close to client as possible Delivery channels aligned to maximize tactical execution of strategic plan Community investment 7


 
Growing revenue Guard and improve reputation Outstanding CRA Rating FDIC 2021, most recent 3-year examination cycle Most Trustworthy Companies in America Newsweek 2023 & 2024 World’s Most Trustworthy Companies Newsweek 2023 & 2024 (Highest ranked U.S. based bank in 2024) America’s Best Regional Banks Newsweek 2024 Excellence Award for Bank of the Year Q2 Holdings 2023 5-Star rating™ (highest category) BauerFinancial; 10+ years America’s 100 Best Banks Forbes, 8 consecutive years (2017-2024) Top 50 U.S. Public Banks (assets of $10B+) S&P Global Market Intelligence 2021, 2022 & 2023 8


 
$ M ill io n s 20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0 5 10 15 20 25 30 0% 4% 8% 12% 16% 20% 24% 28% $ M ill io n s 20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0 25 50 75 100 125 150 175 200 Growing revenue Deposit Fees as % of Core Revenue 1 Other Fees Mortgage Banking Deposit Fees 9 1. Excludes net gain/loss on sale of securities and change in valuation of financial instruments carried at fair value. Core revenue1 Quarter Ending Quarter Last 12 Months Amount Amount 09/30/24 $154M $612M 12/31/09 $45M $177M Noninterest income1 Quarter Ending Quarter Last 12 Months Amount Amount 09/30/24 $18.0M $72.2M 12/31/09 $6.6M $31.1M Other Income Net Interest Income


 
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Protecting net interest margin Improve earning asset mix Improve funding mix Reduce deposit costs Maintain loan-to-deposit ratio 10


 
Protecting net interest margin $ Millions Avg Bal Cost (in bps) Non-Interest 4,602 0 Interest Bearing 7,175 211 CDs 1,541 408 Subtotal Deposits 13,318 161 FHLB & Other 500 508 Total 13,818 173 11 33% 52% 11% 4% 76% 24% 36% 28% 36% Non-Interest Bearing Certificates of Deposit Interest Bearing and Savings Securities & Int-bearing Deposits Loans Fixed: 4.69% Yield Floating: 8.30% Yield Low Cost Funding Mix 9/30/2024 Adjustable: 5.13% Yield Earning Asset Mix 9/30/2024 Loan Repricing Structure 9/30/2024 $ Millions Avg Bal Yield (in bps) Loans 11,242 604 Securities & Int- bearing Deposits 3,635 312 Total 14,877 533 64% of the loan portfolio is floating/adjustable 71% of the floating/adjustable loans have floors 26% of the loans that have floors are at the floor 15% of the loans that have floors are within 100 basis points of the floor FHLB, Sub Debt & Other


 
20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 —% 1% 2% 3% 4% 5% 6% 7% $ B ill io n s 20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0 2 4 6 8 10 12 14 16 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Protecting net interest margin Noncore Deposits Core Deposits Manage deposit costs Quarter Ending Quarter Last 12 Months Amount Rate Amount Rate 09/30/24 $53.8M 1.61% $186.6M 1.42% 12/31/09 $17.7M 1.83% $83.2M 2.21% 12 Focus on core deposits Quarter Ending Balance % of Total Deposits 09/30/24 $12,016M 89% 12/31/09 $1,924M 50% Loan Yield Deposit Cost Core Deposits % Loan–Deposit Spread


 
20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 -20% -10% 0% 10% 20% 30% 40% 50% Protecting net interest margin Peer Median Peer source: Group 1 ($10B and over), Bank Holding Company Performance Report (BHCPR), National Information Center, Federal Reserve System, Division of Banking Supervision and Regulation Net Noncore Funding Dependence Peer Top Quartile 13 $ B illio n s 20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 —% 20% 40% 60% 80% 100% 0 2 4 6 8 10 12 14 Banner Loan-to-Deposit Ratio Deposits Loans


 
20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0% 1% 2% 3% 4% 5% 6% 20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Protecting net interest margin Maintain top quartile net interest margin Quarter Ending Quarter Last 12 Months Amount Rate Amount Rate 09/30/24 $136M 3.63% $540M 3.66% 12/31/09 $39M 3.53% $146M 3.36% Peer source: Group 1 ($10B and over), Bank Holding Company Performance Report (BHCPR), National Information Center, Federal Reserve System, Division of Banking Supervision and Regulation 14 Peer Top Quartile Peer Median Net Interest Margin Banner Net Interest Margin Earning Asset Yield Funding Cost


 
Conservative investment portfolio 15 Assumes flat forward balance sheet, parallel and sustained shift in market rates ratably over a 12-month period (ramp) or immediate (shock); Base as of 9/30/24 CMO, $1,121, 34.5% MBS, $849, 26.1% CMBS, $477, 14.7% Municipal, $469, 14.4% ABS, $200, 6.1% Corp, $123, 3.8% Agency, $9, 0.3% Other, $3, 0.1% Y e ar s 9.59 3.41 2.15 0.19 6.67 6.57 6.49 6.33 Total Portfolio Effective Duration Duration on New Purchases Q4 2023 Q1 2024 Q2 2024 Q3 2024 0.00 2.00 4.00 6.00 8.00 10.00 12.00 5.91% 5.66% 6.58% 6.26% 3.10% 3.09% 3.12% 3.08% New Purchases Tax Effective Yield Total Portfolio Tax Effective Yield Q4 2023 Q1 2024 Q2 2024 Q3 2024 0% 2% 4% 6% 8% 12 Month Net Interest Income Sensitivity ($MM), % Change Quarterly New Purchases: Average Duration Investment Portfolio Composition ($3.25 billion) 79% of investments are Agency MBS/CMO or AAA rated 8.6% non-rated investments, principally CRA investments Portfolio is a diversified mix of asset types and blend of fixed and floating rate instruments. It remains moderately asset sensitive. Quarterly New Purchases: Average Yield $ MillionsRamp $MM Ramp % Change Shock $MM Shock % Change Up 200 573,086 0.3% 576,654 0.9% Up 100 573,851 0.4% 579,226 1.3% Base 571,638 0.0% 571,638 0.0% Down 100 565,419 (1.1)% 551,414 (3.5)% Down 200 559,561 (2.1)% 531,508 (7.0)%


 
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Spending carefully Benefit from scale Control core operating expense 16


 
$ M ill io n s 20 09- Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0 20 40 60 80 100 20% 30% 40% 50% 60% 70% 80% 90% 100% 20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 50% 60% 70% 80% 90% 100% Spending carefully Peer source: Group 1 ($10B and over), Bank Holding Company Performance Report (BHCPR), National Information Center, Federal Reserve System, Division of Banking Supervision and Regulation 17 Control core operating expense Quarter Ending Quarter Last 12 Months Amount Amount 09/30/24 $94M $380M 12/31/09 $31M $132M Peer Top Quartile Peer Median Banner Efficiency Ratio Occupancy Compensation Information Services Other Efficiency Ratio


 
Maintaining a moderate risk profile Embrace effective enterprise risk management Minimize nonperforming assets Maintain appropriate loan loss reserve Maintain appropriate risk capital Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely 18


 
Commercial RE 34% Multifamily 8% Construction 14% Commercial 21% Agricultural 3% 1-4 Family 14% Consumer 6% Diversified loan portfolio 19 Loan Composition 9/30/2024 CRE Breakout $MM % OO CRE 991 9 % Investment Properties 1,584 14 % Small Balance CRE 1,219 11 % Total Comm CRE 3,793 34 % Construction Breakout $MM % Commercial 124 1 % Multifamily 524 5 % 1-4 Family 507 5 % Land 371 3 % Total Construction 1,526 14 % Loan Originations (commitments, $MM) A ve rag e Y ie ld 7.41% 7.69% 8.27% 8.59%8.47% 8.47%8.23% Commercial RE Multifamily Construction Commercial Agricultural 1-4 Fam Consumer Avg Yield on New Loan Originations Q1 '23 Q2 '23 Q3 '23 Q4' 23 Q1 '24 Q2 '24 Q3 '24 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%


 
20 Characteristics of highlighted loan segments Office 1 Balances ($MM) $622.4 Percent of Total Loans 5.5% Total Investor Office $284.8 Total Owner Occupied $337.6 Average Loan Size $0.8 Largest Loan Size $18.9 30 + days Past Due $0.7 Adversely Classified $6.7 Retail 2 Balances ($MM) $1,340.3 Percent of Total Loans 11.9% Balance of Retail Loans Secured by CRE * $1,237.9 Average Loan Size $0.6 Average CRE Secured Loan Size $0.8 Largest Loan Size $19.7 30 + days Past Due $1.9 Adversely Classified $14.5 * No mall exposure Healthcare 3 Balances ($MM) $401.9 Percent of Total Loans 3.6% Balance Secured by Medical Office * $159.9 Medical Office as a % of Total Loans 1.4% Average Loan Size $0.5 Average Medical Office Size $0.7 Largest Loan Size $16.3 30 + days Past Due $0.2 Adversely Classified $0.2 * No hospital exposure 1 By collateral code 2 Retail business loans, both commercial and commercial real estate secured loans 3 All healthcare and social services, including both commercial and commercial real estate secured loans Multifamily Balances ($MM) $889.9 Percent of Total Loans 7.9% Total Affordable Housing $375.9 Total Market Rent/ Middle Income $513.9 Average Loan Size $1.8 Largest Loan Size $30.0 30 + days Past Due $0.0 Adversely Classified $2.1 CA 34% ID 6% OR 15% Other 3% WA 42% CA 28% ID 6%OR 15% Other 8% WA 43% CA 18% ID 4% OR 16% Other 4% WA 58% CA 29% ID 0% OR 26% Other 4% WA 41%


 
21 Origination Year Portfolio Segment Balance % Owner Occupied 2024 2023 2022 2021 and earlier Office $622.4 54% $17.7 $41.0 $78.0 $485.6 Retail (CRE Secured) $1,237.9 53% $139.3 $151.2 $193.8 $753.6 Medical Office $159.9 50% $8.9 $8.7 $24.8 $117.5 Multifamily $889.9 0% $34.1 $66.3 $206.0 $583.5 Scheduled Maturity or Next Reprice Date (excludes variable rate loans) Portfolio Segment Balance < 12 months 1 - 2 years 2 - 3 years 3 - 5 years > 5 years Office $622.4 $41.6 $111.3 $93.9 $172.4 $143.9 Retail (CRE Secured) $1,237.9 $90.9 $152.9 $174.3 $378.6 $217.2 Medical Office $159.9 $7.1 $23.0 $21.7 $39.2 $40.7 Multifamily $889.9 $86.6 $108.1 $140.6 $94.4 $381.4 Characteristics of highlighted loan segments


 
Allowance for credit losses 22 $ M ill io n s ACL Provision/Release $6.7 $6.8 $2.0 $2.5 $0.5 $2.4 $1.7 -$0.5 20 22 -Q 4 20 23 -Q 1 20 23 -Q 2 20 23 -Q 3 20 23 -Q 4 20 24 -Q 1 20 24 -Q 2 20 24 -Q 3 $ M ill io n s $108.4 $167.3 $132.1 $141.5 $149.6 $151.1 $152.8 $154.6 1.16% 1.90% 1.48% 1.39% 1.38% 1.39% 1.37% 1.38% ACL - Loans ACL - Loans as % of Loans, excluding PPP C EC L D ay 1 12 /3 1/ 20 20 12 /3 1/ 20 21 12 /3 1/ 20 22 12 /3 1/ 20 23 20 24 -Q 1 20 24 -Q 2 20 24 -Q 3 $167.2 $168.7 2024-Q 2 Portfolio Econom y N et C /O Provision 2024-Q 3 Net charge-offs Portfolio Economic factors Provision Change assessment: Changes to allowance: $ Millions ACL - Loans 152.8 1.1 0.6 (0.2) 2.0 154.6 ACL - Unfunded Commitments 14.0 — (0.2) — (0.3) 13.8 ACL - HTM Securities 0.3 — — — — 0.3 Total ACL 167.2 1.1 0.4 (0.2) 1.7 168.7 Allocation of Allowance for Credit Losses-Loans Allowance ($000) % coverage Non Performing % Coverage NPLs Commercial RE 40,040 1.06% 4,385 913% Multifamily 10,233 1.15% — —% Construction 28,322 1.86% 4,666 607% 1-4 Family 20,463 1.30% 10,553 194% Commercial 39,779 1.68% 10,705 372% Agricultural 5,340 1.54% 7,703 69% Consumer 10,408 1.44% 4,995 208% Total 154,585 1.38% 43,007 359%


 
$ M ill io n s 20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0 50 100 150 200 250 300 350Minimize nonperforming assets Quarter Ending NPAs REO Amount % of TA Amount % of TA 09/30/24 $45M 0.28% $2M 0.01% 12/31/09 $292M 6.11% $78M 2.01% Peer source: Group 1 ($10B and over), Bank Holding Company Performance Report (BHCPR), National Information Center, Federal Reserve System, Division of Banking Supervision and Regulation Maintaining a moderate risk profile ACLL Real Estate Owned Nonperforming Loans 20 09 -Q 4 20 10 -Q 4 20 11 -Q 4 20 12 -Q 4 20 13 -Q 4 20 14 -Q 4 20 15 -Q 4 20 16 -Q 4 20 17 -Q 4 20 18 -Q 4 20 19 -Q 4 20 20 -Q 4 20 21 -Q 4 20 22 -Q 4 20 23 -Q 4 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% Peer Top Quartile Peer Median Banner ACLL to Total Loans 23


 
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Employing capital wisely Maintain premium to tangible book value Pay appropriate dividends Prepare for future opportunities 24


 
Reconciliation of non-GAAP measures 25 $ Thousands Quarters Ended PRE-TAX PRE-PROVISION EARNINGS Sep 30, 2024 Jun 30, 2024 Sep 30, 2023 Income before provision for income taxes (GAAP) $ 55,755 $ 49,248 $ 56,506 Provision for credit losses 1,692 2,369 2,027 Pretax pre provision earnings (non-GAAP) 57,447 51,617 58,533 Exclude net loss/(gain) on sale of securities — 562 2,657 Exclude net change in valuation of financial instruments carried at fair value (39) 190 654 Exclude Banner Forward expenses — — 996 Adjusted pretax pre provision earnings (non-GAAP) $ 57,408 $ 52,369 $ 62,840


 
Building value at Banner Building value for … Shareholders by delivering top quartile financial performance Clients by delivering super community bank service and products Employees by offering opportunity and reward Communities by providing capital and staying involved 26


 
v3.24.3
Cover
Oct. 16, 2024
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Oct. 16, 2024
Entity Registrant Name Banner Corporation
Entity Incorporation, State or Country Code WA
Entity File Number 000-26584
Entity Tax Identification Number 91-1691604
Entity Address, Address Line One 10 S. First Avenue,
Entity Address, City or Town Walla Walla
Entity Address, State or Province WA
Entity Address, Postal Zip Code 99362
City Area Code 509
Local Phone Number 527-3636
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $.01 per share
Trading Symbol BANR
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000946673
Amendment Flag false

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