Banner Corporation Reports Net Income of $46.4 Million, or $1.34 Per Diluted Share, for Fourth Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share

Banner Corporation Reports Net Income of $46.4 Million, or $1.34 Per Diluted Share, for Fourth Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share

WALLA WALLA, Wash.–(BUSINESS WIRE)–
Banner Corporation (NASDAQ:BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $46.4 million, or $1.34 per diluted share, for the fourth quarter of 2024, compared to $45.2 million, or $1.30 per diluted share, for the preceding quarter and $42.6 million, or $1.24 per diluted share, for the fourth quarter of 2023. Net interest income was $140.5 million in the fourth quarter of 2024, compared to $135.7 million in the preceding quarter and $138.4 million in the fourth quarter a year ago. The increase in net interest income compared to the preceding quarter reflects a decrease in funding costs and an increase in interest-earning assets, partially offset by a decrease in yields on interest earning assets. The increase in net interest income compared to the prior year quarter reflects an increase in both the yield and average balance of interest earning assets, partially offset by an increase in funding costs. Fourth quarter 2024 results included a $3.0 million provision for credit losses, up from $1.7 million in the preceding quarter and $2.5 million in the fourth quarter of 2023.

Net income was $168.9 million, or $4.88 per diluted share, for the year ended December 31, 2024, compared to $183.6 million, or $5.33 per diluted share, for the year ended December 31, 2023. Net interest income for the year ended December 31, 2024 decreased to $541.7 million from $576.0 million for the year ended December 31, 2023, primarily due to the rise of deposit costs of $99.3 million, partially offset by a $77.7 million increase in interest income on loans. Results for the year ended December 31, 2024 included a $7.6 million provision for credit losses, a $5.2 million net loss on the sale of securities and a $1.0 million net decrease in the valuation of financial instruments carried at fair value, compared to a $10.8 million provision for credit losses, a $19.2 million net loss on the sale of securities and a $4.2 million net decrease in the valuation of 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 February 14, 2025, to common shareholders of record on February 4, 2025.

“Banner’s fourth quarter financial performance reflects 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 fourth quarter of 2024 benefited from our solid year over year loan growth as well as margin expansion during the fourth quarter as a result of lower funding costs. This benefit was partially offset by the declining interest rate environment and its effect on loan yields. 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 134 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 December 31, 2024, Banner, on a consolidated basis, had $16.20 billion in assets, $11.20 billion in net loans and $13.51 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.

Fourth Quarter 2024 Highlights

• Revenue was $160.6 million for the fourth quarter of 2024, compared to $153.7 million in the preceding quarter and $152.5 million in the fourth 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 $160.1 million in the fourth quarter of 2024, compared to $153.7 million in the preceding quarter and $157.1 million in the fourth quarter a year ago.

• Net interest income was $140.5 million in the fourth quarter of 2024, compared to $135.7 million in the preceding quarter and $138.4 million in the fourth quarter a year ago.

• Net interest margin, on a tax equivalent basis, was 3.82%, compared to 3.72% in the preceding quarter and 3.83% in the fourth quarter a year ago.

• Mortgage banking operations revenue was $3.7 million for the fourth quarter of 2024, compared to $3.2 million in the preceding quarter and $5.4 million in the fourth quarter a year ago.

• Return on average assets was 1.15%, compared to 1.13% in the preceding quarter and 1.09% in the fourth quarter a year ago.

• Net loans receivable increased 1% to $11.20 billion at December 31, 2024, compared to $11.07 billion at September 30, 2024, and increased 5% compared to $10.66 billion at December 31, 2023.

• Non-performing assets were $39.6 million, or 0.24% of total assets, at December 31, 2024, compared to $45.2 million, or 0.28% of total assets, at September 30, 2024 and $30.1 million, or 0.19% of total assets, at December 31, 2023.

• The allowance for credit losses – loans was $155.5 million, or 1.37% of total loans receivable, as of December 31, 2024, compared to $154.6 million, or 1.38% of total loans receivable, as of September 30, 2024 and $149.6 million, or 1.38% of total loans receivable, as of December 31, 2023.

• Total deposits were $13.51 billion at December 31, 2024, compared to $13.54 billion at September 30, 2024, and $13.03 billion at December 31, 2023.

• Core deposits represented 89% of total deposits at December 31, 2024.

• Dividends paid to shareholders were $0.48 per share in the quarter ended December 31, 2024.

• Common shareholders’ equity per share decreased 1% to $51.49 at December 31, 2024, compared to $52.06 at the preceding quarter end, and increased 7% from $48.12 at December 31, 2023.

• Tangible common shareholders’ equity per share* decreased 1% to $40.57 at December 31, 2024, compared to $41.12 at the preceding quarter end, and increased 9% from $37.09 at December 31, 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 $140.5 million in the fourth quarter of 2024, compared to $135.7 million in the preceding quarter and $138.4 million in the fourth quarter a year ago. Net interest margin on a tax equivalent basis increased ten basis points to 3.82% for the fourth quarter of 2024, compared to 3.72% in the preceding quarter, and decreased compared to 3.83% in the fourth quarter a year ago. Net interest margin for the current quarter, compared to the preceding quarter, benefited from decreased funding costs, partially offset by lower yields on interest earning assets, primarily due to decreases in the targeted federal funds rate in the third and fourth quarters of 2024.

Average yields on interest-earning assets decreased two basis points to 5.31% for the fourth quarter of 2024, compared to 5.33% for the preceding quarter, and increased compared to 5.06% in the fourth quarter a year ago. On September 18, 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve System lowered the target range for the federal funds rate 50 basis points, followed by a 25 basis-point decrease on November 7, 2024 and another 25 basis-point decrease on December 18, 2024, resulting in a target range of 4.25% to 4.50% at December 31, 2024. Average loan yields decreased two basis points to 6.02%, compared to 6.04% in the preceding quarter, and increased compared to 5.77% in the fourth quarter a year ago. The decrease in average loan yields during the current quarter primarily reflects the decrease in interest rates, partially offset by the benefits of a balance sheet hedge that matured during the quarter.

Total deposit costs decreased eight basis points to 1.53% in the fourth quarter of 2024, compared to 1.61% in the preceding quarter, and increased compared to 1.18% in the fourth quarter a year ago. The decrease in deposit costs in the current quarter was primarily due to a decrease in interest rates, partially offset by an increase in the average balance of interest-bearing deposits. The average rate paid on borrowings decreased 51 basis points to 4.57% in the fourth quarter of 2024, compared to 5.08% in the preceding quarter, and decreased compared to 4.77% in the fourth quarter a year ago due to lower wholesale borrowings in the current quarter. The total cost of funding liabilities decreased 13 basis points to 1.60% in the fourth quarter of 2024, compared to 1.73% in the preceding quarter, and increased compared to 1.31% in the fourth quarter a year ago.

A $3.0 million provision for credit losses was recorded in the current quarter (comprised of a $3.2 million provision for credit losses – loans, a $203,000 recapture of provision for credit losses – unfunded loan commitments and a $16,000 recapture of provision for credit losses – held-to-maturity debt securities). This compares to a $1.7 million provision for credit losses in the prior 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) and a $2.5 million provision for credit losses in the fourth quarter a year ago (comprised of a $3.8 million provision for credit losses – loans, a $526,000 recapture of provision for credit losses – unfunded loan commitments, a $750,000 recapture of provision for credit losses – available for sale securities and a $23,000 recapture of provision for credit losses – held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflected risk rating downgrades as well as growth in loan balances.

Total non-interest income was $20.0 million in the fourth quarter of 2024, compared to $18.1 million in the preceding quarter and $14.1 million in the fourth quarter a year ago. The increase in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $506,000 increase in mortgage banking operations revenue and a $1.1 million increase in miscellaneous income, primarily due to a gain recognized on the sale of a non-performing loan during the fourth quarter of 2024. The increase in non-interest income during the current quarter compared to the prior year quarter was primarily due to a $5.1 million decrease in the net loss recognized on the sale of securities. Total non-interest income was $66.9 million for the year ended December 31, 2024, compared to $44.4 million a year earlier related mostly to the losses on the sale of investment securities in 2023.

Mortgage banking operations revenue was $3.7 million in the fourth quarter of 2024, compared to $3.2 million in the preceding quarter and $5.4 million in the fourth quarter a year ago. While the volume of one- to four-family loans sold during the current quarter increased compared to both the preceding and prior year quarters, volumes remained low due to reduced refinancing and purchase activity in the current rate environment. The increase from the preceding quarter reflects a $508,000 gain related to the pooled loan sale of $34.8 million of one- to four-family loans during the fourth quarter of 2024. The decrease from the prior year quarter primarily reflects a $3.5 million reversal of the lower of cost or market adjustment on multifamily loans held for sale, recognized during the fourth quarter of 2023, partially offset by higher pricing and volumes of one- to four-family loans sold during the current quarter compared to the fourth quarter of 2023. The reversal was due to the transfer of all remaining multifamily loans held for sale to the held for investment loan portfolio during the same period. Home purchase activity accounted for 79% of one- to four-family mortgage loan originations in the fourth quarter of 2024, 88% in the preceding quarter and 92% in the fourth quarter of 2023.

Total non-interest expense was $99.5 million in the fourth quarter of 2024, compared to $96.3 million in the preceding quarter and $96.6 million in the fourth quarter of 2023. The increase in non-interest expense for the current quarter compared to the prior quarter reflects a $691,000 increase in salary and employee benefits, primarily resulting from increased incentive accruals, partially offset by decreased medical premiums expense, a $923,000 increase in professional and legal expenses, primarily due to increased consultant expenses, and a $550,000 increase in advertising and marketing expenses, primarily due to increases in printed media marketing and community development expenses. 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 professional and legal expenses. For the year ended December 31, 2024, total non-interest expense was $391.5 million, compared to $382.5 million for the year ended December 31, 2023. Banner’s efficiency ratio was 61.95% for the fourth quarter of 2024, compared to 62.63% in the preceding quarter and 63.37% in the same quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP financial measure, was 60.74% for the fourth quarter of 2024, compared to 61.27% in the preceding quarter and 60.04% 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 $16.20 billion at December 31, 2024, compared to $16.19 billion at September 30, 2024, and $15.67 billion at December 31, 2023. Securities and interest-bearing deposits held at other banks totaled $3.40 billion at December 31, 2024, compared to $3.50 billion at September 30, 2024 and $3.48 billion at December 31, 2023. The decrease compared to the prior quarter was primarily due to a decrease in securities – available for sale. The average effective duration of the securities portfolio was approximately 6.6 years at December 31, 2024, compared to 6.5 years at December 31, 2023.

Total loans receivable increased to $11.35 billion at December 31, 2024, compared to $11.22 billion at September 30, 2024, and $10.81 billion at December 31, 2023. Commercial real estate loans increased 2% to $3.86 billion at December 31, 2024, compared to $3.79 billion at September 30, 2024, and increased 6% compared to $3.64 billion at December 31, 2023. The increase in commercial real estate loans from September 30, 2024 and December 31, 2023 was primarily the result of new loan production and the conversion of commercial construction loans to the commercial real estate portfolio upon the completion of the construction phase. Commercial business loans increased 2% to $2.42 billion at December 31, 2024, compared to $2.37 billion at September 30, 2024 and increased 6% compared to $2.28 billion at December 31, 2023, primarily due to new loan production. One- to four-family residential loans increased 1% to $1.59 billion at December 31, 2024, compared to $1.58 billion at September 30, 2024, and increased 5% compared to $1.52 billion at December 31, 2023. The increase in one- to four-family residential loans 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 1% to $894.4 million at December 31, 2024, compared to $889.9 million at September 30, 2024, and increased 10% compared to $811.2 million at December 31, 2023. The increase in multifamily real estate loans from September 30, 2024 and December 31, 2023 was primarily the result of the conversion of multifamily construction loans to the multifamily portfolio upon the completion of the construction phase.

Loans held for sale were $32.0 million at December 31, 2024, compared to $78.8 million at September 30, 2024 and $11.2 million at December 31, 2023. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $153.2 million, compared to $95.0 million in the preceding quarter and $65.6 million in the fourth quarter a year ago. The decrease in loans held for sale compared to the prior quarter was primarily the result of the pooled loan sale of $34.8 million of one- to four-family residential loans during the current quarter.

Total deposits were $13.51 billion at December 31, 2024, compared to $13.54 billion at September 30, 2024 and $13.03 billion a year ago. Core deposits decreased slightly to $12.01 billion at December 31, 2024, compared to $12.02 billion at September 30, 2024, and increased 4% compared to $11.55 billion at December 31, 2023. The increase in core deposits compared to the prior year quarter primarily reflects increases in interest-bearing transaction and savings accounts. Core deposits were 89% of total deposits at December 31, 2024, September 30, 2024 and December 31, 2023. Certificates of deposit decreased 1% to $1.50 billion at December 31, 2024, compared to $1.52 billion at September 30, 2024, and increased 2% compared to $1.48 billion a year earlier. The decrease in certificates of deposit during the current quarter compared to the preceding quarter was primarily the result of clients moving funds from certificates of deposits to interest-bearing transaction and savings accounts. The increase in certificates of deposit during the current quarter compared to the fourth quarter a year ago was principally due to clients seeking higher yields moving funds from core deposit accounts to higher yielding certificates of deposit, partially offset by a $57.7 million decrease in brokered deposits.

FHLB advances were $290.0 million at December 31, 2024, compared to $230.0 million at September 30, 2024 and $323.0 million a year ago. At December 31, 2024, off-balance sheet liquidity included additional borrowing capacity of $2.95 billion at the FHLB and $1.52 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At December 31, 2024, total common shareholders’ equity was $1.77 billion or 10.95% of total assets, compared to $1.79 billion or 11.08% of total assets at September 30, 2024, and $1.65 billion or 10.55% of total assets at December 31, 2023. The decrease in total common shareholders’ equity at December 31, 2024 compared to September 30, 2024 was due to an increase in accumulated other comprehensive loss of $51.7 million as the result of a decrease in the fair value of the security portfolio, partially offset by a $29.6 million increase in retained earnings as a result of $46.4 million in net income, partially offset by the accrual of $16.8 million of cash dividends during the fourth quarter of 2024. At December 31, 2024, tangible common shareholders’ equity, a non-GAAP financial measure, was $1.40 billion, or 8.84% of tangible assets, compared to $1.42 billion, or 8.96% of tangible assets, at September 30, 2024, and $1.27 billion, or 8.33% 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 December 31, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.44%, its estimated Tier 1 leverage capital to average assets ratio was 11.05%, and its estimated total capital to risk-weighted assets ratio was 15.04%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses – loans was $155.5 million, or 1.37% of total loans receivable and 421% of non-performing loans, at December 31, 2024, compared to $154.6 million, or 1.38% of total loans receivable and 359% of non-performing loans, at September 30, 2024, and $149.6 million, or 1.38% of total loans receivable and 506% of non-performing loans, at December 31, 2023. In addition to the allowance for credit losses – loans, Banner maintains an allowance for credit losses – unfunded loan commitments, which was $13.6 million at December 31, 2024, compared to $13.8 million at September 30, 2024, and $14.5 million at December 31, 2023. Net loan charge-offs totaled $2.3 million in the fourth quarter of 2024, compared to $230,000 in the preceding quarter and $1.1 million in the fourth quarter a year ago. Non-performing loans were $37.0 million at December 31, 2024, compared to $43.0 million at September 30, 2024, and $29.6 million a year ago.

An increase in adversely classified loans, offset in part by payoffs and paydowns, resulted in total substandard loans of $192.5 million as of December 31, 2024. This compares to $150.1 million as of September 30, 2024 and $125.4 million a year ago.

Total non-performing assets were $39.6 million, or 0.24% of total assets, at December 31, 2024, compared to $45.2 million, or 0.28% of total assets, at September 30, 2024, and $30.1 million, or 0.19% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, January 23, 2025, at 8:00 a.m. PST, to discuss its fourth 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 347551 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $16.20 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.

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, including repricing and competitors’ pricing initiatives, and their impact on Banner’s market position, loan, and deposit products; (10) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (11) fluctuations in real estate values; (12) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (13) the ability to access cost-effective funding; (14) 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; (15) changes in financial markets; (16) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (17) the costs, effects and outcomes of litigation; (18) 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; (19) the potential imposition of new tariffs or changes to existing trade policies that could affect economic activity or specific industry sectors including, but not limited to, our agriculture based lending; (20) changes in accounting principles, policies or guidelines; (21) future acquisitions by Banner of other depository institutions or lines of business, and associated risks of goodwill impairment due to changes in Banner’s business or market conditions; (22) 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; (23) environmental, social and governance goals and targets; (24) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (25) 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.

RESULTS OF OPERATIONS		Quarters Ended												Year Ended
(in thousands except shares and per share data)		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
INTEREST INCOME:
Loans receivable		$	169,586			$	168,338			$	154,532			$	655,590			$	577,891
Mortgage-backed securities			16,086				16,357				17,398				66,085				72,352
Securities and cash equivalents			10,764				11,146				11,808				44,428				51,329
Total interest income			196,436				195,841				183,738				766,103				701,572
INTEREST EXPENSE:
Deposits			52,217				53,785				39,342				199,465				100,126
Federal Home Loan Bank (FHLB) advances			85				2,263				1,870				8,941				10,524
Other borrowings			817				1,147				1,125				4,299				3,376
Subordinated debt			2,781				2,971				2,992				11,682				11,541
Total interest expense			55,900				60,166				45,329				224,387				125,567
Net interest income			140,536				135,675				138,409				541,716				576,005
PROVISION FOR CREDIT LOSSES			3,000				1,692				2,522				7,581				10,789
Net interest income after provision for credit losses			137,536				133,983				135,887				534,135				565,216
NON-INTEREST INCOME:
Deposit fees and other service charges			11,018				10,741				9,560				43,371				41,638
Mortgage banking operations			3,686				3,180				5,391				12,207				11,817
Bank-owned life insurance			2,144				2,445				2,609				9,193				9,245
Miscellaneous			2,751				1,658				1,159				8,289				5,169
			19,599				18,024				18,719				73,060				67,869
Net gain (loss) on sale of securities			275				—				(4,806	)			(5,190	)			(19,242	)
Net change in valuation of financial instruments carried at fair value			161				39				139				(982	)			(4,218	)
Total non-interest income			20,035				18,063				14,052				66,888				44,409
NON-INTEREST EXPENSE:
Salary and employee benefits			62,523				61,832				60,111				250,555				244,563
Less capitalized loan origination costs			(4,188	)			(4,354	)			(3,871	)			(16,857	)			(16,257	)
Occupancy and equipment			12,141				12,040				12,200				48,771				47,886
Information and computer data services			7,471				7,134				7,098				29,165				28,445
Payment and card processing services			5,771				5,346				6,088				22,518				20,547
Professional and legal expenses			3,025				2,102				2,267				7,858				9,830
Advertising and marketing			1,711				1,161				1,686				5,149				4,794
Deposit insurance			2,857				2,874				2,926				11,398				10,529
State and municipal business and use taxes			1,518				1,432				1,372				5,648				5,260
Real estate operations, net			113				103				47				293				(538	)
Amortization of core deposit intangibles			589				590				858				2,626				3,756
Miscellaneous			5,947				6,031				5,839				24,414				23,723
Total non-interest expense			99,478				96,291				96,621				391,538				382,538
Income before provision for income taxes			58,093				55,755				53,318				209,485				227,087
PROVISION FOR INCOME TAXES			11,702				10,602				10,694				40,587				43,463
NET INCOME		$	46,391			$	45,153			$	42,624			$	168,898			$	183,624
Earnings per common share:
Basic		$	1.34			$	1.31			$	1.24			$	4.90			$	5.35
Diluted		$	1.34			$	1.30			$	1.24			$	4.88			$	5.33
Cumulative dividends declared per common share		$	0.48			$	0.48			$	0.48			$	1.92			$	1.92
Weighted average number of common shares outstanding:
Basic			34,501,016				34,498,830				34,381,780				34,470,057				34,344,142
Diluted			34,743,024				34,650,322				34,472,155				34,628,710				34,450,412
Increase in common shares outstanding			3,144				936				2,420				111,463				154,351

FINANCIAL CONDITION														Percentage Change
(in thousands except shares and per share data)		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Prior Qtr			Prior Yr Qtr
ASSETS
Cash and due from banks		$	203,402			$	226,568			$	209,634			(10	)%		(3	)%
Interest-bearing deposits			298,456				252,227				44,830			18	%		566	%
Total cash and cash equivalents			501,858				478,795				254,464			5	%		97	%
Securities – available for sale, amortized cost $2,460,262, $2,523,968, and $2,729,980, respectively			2,104,511				2,237,939				2,373,783			(6	)%		(11	)%
Securities – held to maturity, fair value $825,528, $879,278, and $907,514, respectively			1,001,564				1,013,903				1,059,055			(1	)%		(5	)%
Total securities			3,106,075				3,251,842				3,432,838			(4	)%		(10	)%
FHLB stock			22,451				19,751				24,028			14	%		(7	)%
Loans held for sale			32,021				78,841				11,170			(59	)%		187	%
Loans receivable			11,354,656				11,224,606				10,810,455			1	%		5	%
Allowance for credit losses – loans			(155,521	)			(154,585	)			(149,643	)		1	%		4	%
Net loans receivable			11,199,135				11,070,021				10,660,812			1	%		5	%
Accrued interest receivable			60,885				66,981				63,100			(9	)%		(4	)%
Property and equipment, net			124,589				125,256				132,231			(1	)%		(6	)%
Goodwill			373,121				373,121				373,121			—	%		—	%
Other intangibles, net			3,058				3,647				5,684			(16	)%		(46	)%
Bank-owned life insurance			312,549				310,400				304,366			1	%		3	%
Operating lease right-of-use assets			39,998				38,192				43,731			5	%		(9	)%
Other assets			424,297				371,829				364,846			14	%		16	%
Total assets		$	16,200,037			$	16,188,676			$	15,670,391			—	%		3	%
LIABILITIES
Deposits:
Non-interest-bearing		$	4,591,543			$	4,688,244			$	4,792,369			(2	)%		(4	)%
Interest-bearing transaction and savings accounts			7,423,183				7,328,051				6,759,661			1	%		10	%
Interest-bearing certificates			1,499,672				1,521,853				1,477,467			(1	)%		2	%
Total deposits			13,514,398				13,538,148				13,029,497			—	%		4	%
Advances from FHLB			290,000				230,000				323,000			26	%		(10	)%
Other borrowings			125,257				154,533				182,877			(19	)%		(32	)%
Subordinated notes, net			80,278				80,170				92,851			—	%		(14	)%
Junior subordinated debentures at fair value			67,477				66,257				66,413			2	%		2	%
Operating lease liabilities			43,472				42,318				48,659			3	%		(11	)%
Accrued expenses and other liabilities			258,070				237,128				228,428			9	%		13	%
Deferred compensation			46,759				46,401				45,975			1	%		2	%
Total liabilities			14,425,711				14,394,955				14,017,700			—	%		3	%
SHAREHOLDERS’ EQUITY
Common stock			1,307,509				1,304,792				1,299,651			—	%		1	%
Retained earnings			744,091				714,472				642,175			4	%		16	%
Accumulated other comprehensive loss			(277,274	)			(225,543	)			(289,135	)		23	%		(4	)%
Total shareholders’ equity			1,774,326				1,793,721				1,652,691			(1	)%		7	%
Total liabilities and shareholders’ equity		$	16,200,037			$	16,188,676			$	15,670,391			—	%		3	%
Common Shares Issued:
Shares outstanding at end of period			34,459,832				34,456,688				34,348,369
Common shareholders’ equity per share (1)		$	51.49			$	52.06			$	48.12
Common shareholders’ tangible equity per share (1) (2)		$	40.57			$	41.12			$	37.09
Common shareholders’ equity to total assets			10.95	%			11.08	%			10.55	%
Common shareholders’ tangible equity to tangible assets (2)			8.84	%			8.96	%			8.33	%
Consolidated Tier 1 leverage capital ratio			11.05	%			10.91	%			10.56	%

(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.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
LOANS														Percentage Change
		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Prior Qtr			Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied		$	1,027,426			$	990,516			$	915,897			4	%		12	%
Investment properties			1,623,672				1,583,863				1,541,344			3	%		5	%
Small balance CRE			1,213,792				1,218,822				1,178,500			—	%		3	%
Multifamily real estate			894,425				889,866				811,232			1	%		10	%
Construction, land and land development:
Commercial construction			122,362				124,051				170,011			(1	)%		(28	)%
Multifamily construction			513,706				524,108				503,993			(2	)%		2	%
One- to four-family construction			514,220				507,350				526,432			1	%		(2	)%
Land and land development			369,663				370,690				336,639			—	%		10	%
Commercial business:
Commercial business			1,318,333				1,281,615				1,255,734			3	%		5	%
Small business scored			1,104,117				1,087,714				1,022,154			2	%		8	%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland			340,280				346,686				331,089			(2	)%		3	%
One- to four-family residential			1,591,260				1,575,164				1,518,046			1	%		5	%
Consumer:
Consumer—home equity revolving lines of credit			625,680				622,615				588,703			—	%		6	%
Consumer—other			95,720				101,546				110,681			(6	)%		(14	)%
Total loans receivable		$	11,354,656			$	11,224,606			$	10,810,455			1	%		5	%
Loans 30 – 89 days past due and on accrual		$	26,824			$	13,030			$	19,744
Total delinquent loans (including loans on non-accrual), net		$	55,432			$	44,656			$	43,164
Total delinquent loans / Total loans receivable			0.49	%			0.40	%			0.40	%

LOANS BY GEOGRAPHIC LOCATION																	Percentage Change
		Dec 31, 2024							Sep 30, 2024				Dec 31, 2023				Prior Qtr			Prior Yr Qtr
		Amount				Percentage			Amount				Amount
Washington		$	5,245,886			46	%		$	5,203,637			$	5,095,602			1	%		3	%
California			2,861,435			25	%			2,796,965				2,670,923			2	%		7	%
Oregon			2,113,229			19	%			2,108,229				1,974,001			—	%		7	%
Idaho			665,158			6	%			652,148				610,064			2	%		9	%
Utah			82,459			1	%			85,316				68,931			(3	)%		20	%
Other			386,489			3	%			378,311				390,934			2	%		(1	)%
Total loans receivable		$	11,354,656			100	%		$	11,224,606			$	10,810,455			1	%		5	%

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
LOAN ORIGINATIONS	Quarters Ended												Year Ended
	Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Commercial real estate	$	124,554			$	114,372			$	76,277			$	408,546			$	309,022
Multifamily real estate		3,120				314				5,360				6,593				57,046
Construction and land		303,345				472,506				382,905				1,759,799				1,541,383
Commercial business		250,515				179,871				166,984				752,269				585,047
Agricultural business		17,177				5,877				15,058				79,715				84,072
One-to four-family residential		29,531				24,488				37,446				106,085				167,951
Consumer		73,791				96,137				57,427				356,543				300,913
Total loan originations (excluding loans held for sale)	$	802,033			$	893,565			$	741,457			$	3,469,550			$	3,045,434

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES – LOANS		Quarters Ended												Year Ended
		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Balance, beginning of period		$	154,585			$	152,848			$	146,960			$	149,643			$	141,465
Provision for credit losses – loans			3,219				1,967				3,821				8,563				11,097
Recoveries of loans previously charged off:
Commercial real estate			1,215				65				129				2,767				557
Construction and land			—				—				—				—				29
One- to four-family real estate			124				14				18				171				230
Commercial business			245				613				237				1,963				1,283
Agricultural business, including secured by farmland			2				1				16				304				146
Consumer			164				41				131				476				543
			1,750				734				531				5,681				2,788
Loans charged off:
Commercial real estate			(4	)			—				—				(351	)			—
Construction and land			(5	)			(145	)			(933	)			(150	)			(1,089	)
One- to four-family real estate			—				—				(8	)			—				(42	)
Commercial business			(3,595	)			(414	)			(310	)			(5,955	)			(2,650	)
Agricultural business, including secured by farmland			—				—				—				—				(564	)
Consumer			(429	)			(405	)			(418	)			(1,910	)			(1,362	)
			(4,033	)			(964	)			(1,669	)			(8,366	)			(5,707	)
Net charge-offs			(2,283	)			(230	)			(1,138	)			(2,685	)			(2,919	)
Balance, end of period		$	155,521			$	154,585			$	149,643			$	155,521			$	149,643
Net charge-offs / Average loans receivable			(0.020	)%			(0.002	)%			(0.011	)%			(0.024	)%			(0.028	)%

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES – LOANS		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Commercial real estate		$	40,830			$	40,040			$	44,384
Multifamily real estate			10,308				10,233				9,326
Construction and land			29,038				28,322				28,095
One- to four-family real estate			20,807				20,463				19,271
Commercial business			38,611				39,779				35,464
Agricultural business, including secured by farmland			5,727				5,340				3,865
Consumer			10,200				10,408				9,238
Total allowance for credit losses – loans		$	155,521			$	154,585			$	149,643
Allowance for credit losses – loans / Total loans receivable			1.37	%			1.38	%			1.38	%
Allowance for credit losses – loans / Non-performing loans			421	%			359	%			506	%

CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES – UNFUNDED LOAN COMMITMENTS		Quarters Ended												Year Ended
		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Balance, beginning of period		$	13,765			$	14,027			$	15,010			$	14,484			$	14,721
Recapture of provision for credit losses – unfunded loan commitments			(203	)			(262	)			(526	)			(922	)			(237	)
Balance, end of period		$	13,562			$	13,765			$	14,484			$	13,562			$	14,484

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
NON-PERFORMING ASSETS	Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Loans on non-accrual status:
Secured by real estate:
Commercial	$	2,186			$	2,127			$	2,677
Construction and land		3,963				4,286				3,105
One- to four-family		10,016				9,592				5,702
Commercial business		7,067				10,705				9,002
Agricultural business, including secured by farmland		8,485				7,703				3,167
Consumer		4,835				4,636				3,204
		36,552				39,049				26,857
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Commercial		—				2,258				—
Construction and land		—				380				1,138
One- to four-family		369				961				1,205
Commercial business		—				—				1
Consumer		35				359				401
		404				3,958				2,745
Total non-performing loans		36,956				43,007				29,602
REO		2,367				2,221				526
Other repossessed assets		300				—				—
Total non-performing assets	$	39,623			$	45,228			$	30,128
Total non-performing assets to total assets		0.24	%			0.28	%			0.19	%

LOANS BY CREDIT RISK RATING	Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Pass	$	11,118,744			$	11,022,014			$	10,671,281
Special Mention		43,451				52,497				13,732
Substandard		192,461				150,095				125,442
Total	$	11,354,656			$	11,224,606			$	10,810,455

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION														Percentage Change
		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Prior Qtr			Prior Yr Qtr
Non-interest-bearing		$	4,591,543			$	4,688,244			$	4,792,369			(2	)%		(4	)%
Interest-bearing checking			2,393,864				2,344,561				2,098,526			2	%		14	%
Regular savings accounts			3,478,423				3,339,859				2,980,530			4	%		17	%
Money market accounts			1,550,896				1,643,631				1,680,605			(6	)%		(8	)%
Total interest-bearing transaction and savings accounts			7,423,183				7,328,051				6,759,661			1	%		10	%
Total core deposits			12,014,726				12,016,295				11,552,030			—	%		4	%
Interest-bearing certificates			1,499,672				1,521,853				1,477,467			(1	)%		2	%
Total deposits		$	13,514,398			$	13,538,148			$	13,029,497			—	%		4	%

GEOGRAPHIC CONCENTRATION OF DEPOSITS		Dec 31, 2024							Sep 30, 2024				Dec 31, 2023				Percentage Change
		Amount				Percentage			Amount				Amount				Prior Qtr			Prior Yr Qtr
Washington		$	7,441,413			55	%		$	7,413,414			$	7,247,392			—	%		3	%
Oregon			2,981,327			22	%			2,997,843				2,852,677			(1	)%		5	%
California			2,392,573			18	%			2,423,295				2,269,557			(1	)%		5	%
Idaho			699,085			5	%			703,596				659,871			(1	)%		6	%
Total deposits		$	13,514,398			100	%		$	13,538,148			$	13,029,497			—	%		4	%

INCLUDED IN TOTAL DEPOSITS		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Public non-interest-bearing accounts		$	165,667			$	141,541			$	146,916
Public interest-bearing transaction & savings accounts			248,746				246,332				209,699
Public interest-bearing certificates			25,423				28,144				52,048
Total public deposits		$	439,836			$	416,017			$	408,663
Collateralized public deposits		$	336,376			$	317,960			$	305,306
Total brokered deposits		$	50,346			$	50,333			$	108,058
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Number of deposit accounts			460,004				459,127				463,750
Average account balance per account		$	30			$	30			$	29

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2024		Actual							Minimum to be categorized as “Adequately Capitalized”							Minimum to be categorized as “Well Capitalized”
		Amount				Ratio			Amount				Ratio			Amount				Ratio
Banner Corporation-consolidated:
Total capital to risk-weighted assets		$	2,024,046			15.04	%		$	1,076,652			8.00	%		$	1,345,814			10.00	%
Tier 1 capital to risk-weighted assets			1,760,065			13.08	%			807,489			6.00	%			807,489			6.00	%
Tier 1 leverage capital to average assets			1,760,065			11.05	%			636,913			4.00	%			n/a			n/a
Common equity tier 1 capital to risk-weighted assets			1,673,565			12.44	%			605,616			4.50	%			n/a			n/a
Banner Bank:
Total capital to risk-weighted assets			1,890,438			14.03	%			1,077,725			8.00	%			1,347,157			10.00	%
Tier 1 capital to risk-weighted assets			1,726,457			12.82	%			808,294			6.00	%			1,077,725			8.00	%
Tier 1 leverage capital to average assets			1,726,457			10.83	%			637,392			4.00	%			796,740			5.00	%
Common equity tier 1 capital to risk-weighted assets			1,726,457			12.82	%			606,221			4.50	%			875,652			6.50	%

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD	Quarters Ended
	Dec 31, 2024											Sep 30, 2024											Dec 31, 2023
	Average Balance				Interest and Dividends				Yield / Cost (3)			Average Balance				Interest and Dividends				Yield / Cost (3)			Average Balance				Interest and Dividends				Yield / Cost (3)
Interest-earning assets:
Held for sale loans	$	61,585			$	1,049			6.78	%		$	26,954			$	453			6.69	%		$	31,148			$	447			5.69	%
Mortgage loans		9,267,076				136,831			5.87	%			9,207,468				135,497			5.85	%			8,770,029				123,382			5.58	%
Commercial/agricultural loans		1,900,337				31,873			6.67	%			1,879,215				32,547			6.89	%			1,822,069				30,447			6.63	%
Consumer and other loans		124,726				2,078			6.63	%			128,548				2,154			6.67	%			138,049				2,237			6.43	%
Total loans (1)		11,353,724				171,831			6.02	%			11,242,185				170,651			6.04	%			10,761,295				156,513			5.77	%
Mortgage-backed securities		2,576,908				16,228			2.51	%			2,623,399				16,498			2.50	%			2,798,647				17,541			2.49	%
Other securities		919,742				10,281			4.45	%			943,310				11,120			4.69	%			1,035,842				11,993			4.59	%
Interest-bearing deposits with banks		107,404				1,043			3.86	%			51,604				493			3.80	%			45,286				506			4.43	%
FHLB stock		9,887				316			12.71	%			16,664				412			9.84	%			15,326				215			5.57	%
Total investment securities		3,613,941				27,868			3.07	%			3,634,977				28,523			3.12	%			3,895,101				30,255			3.08	%
Total interest-earning assets		14,967,665				199,699			5.31	%			14,877,162				199,174			5.33	%			14,656,396				186,768			5.06	%
Non-interest-earning assets		1,016,366											981,290											875,719
Total assets	$	15,984,031										$	15,858,452										$	15,532,115
Deposits:
Interest-bearing checking accounts	$	2,377,179				9,279			1.55	%		$	2,295,723				9,497			1.65	%		$	2,060,226				5,907			1.14	%
Savings accounts		3,441,196				19,447			2.25	%			3,268,647				19,299			2.35	%			2,885,167				12,560			1.73	%
Money market accounts		1,584,092				8,510			2.14	%			1,611,543				9,184			2.27	%			1,723,426				7,644			1.76	%
Certificates of deposit		1,513,966				14,981			3.94	%			1,540,637				15,805			4.08	%			1,477,474				13,231			3.55	%
Total interest-bearing deposits		8,916,433				52,217			2.33	%			8,716,550				53,785			2.45	%			8,146,293				39,342			1.92	%
Non-interest-bearing deposits		4,640,557				—			—	%			4,601,755				—			—	%			5,036,523				—			—	%
Total deposits		13,556,990				52,217			1.53	%			13,318,305				53,785			1.61	%			13,182,816				39,342			1.18	%
Other interest-bearing liabilities:
FHLB advances		7,522				85			4.50	%			161,413				2,263			5.58	%			129,630				1,870			5.72	%
Other borrowings		143,097				817			2.27	%			159,439				1,147			2.86	%			185,518				1,125			2.41	%
Junior subordinated debentures and subordinated notes		169,678				2,781			6.52	%			179,075				2,971			6.60	%			182,678				2,992			6.50	%
Total borrowings		320,297				3,683			4.57	%			499,927				6,381			5.08	%			497,826				5,987			4.77	%
Total funding liabilities		13,877,287				55,900			1.60	%			13,818,232				60,166			1.73	%			13,680,642				45,329			1.31	%
Other non-interest-bearing liabilities (2)		324,447											311,803											311,539
Total liabilities		14,201,734											14,130,035											13,992,181
Shareholders’ equity		1,782,297											1,728,417											1,539,934
Total liabilities and shareholders’ equity	$	15,984,031										$	15,858,452										$	15,532,115
Net interest income/rate spread (tax equivalent)					$	143,799			3.71	%						$	139,008			3.60	%						$	141,439			3.75	%
Net interest margin (tax equivalent)									3.82	%										3.72	%										3.83	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis						(3,263	)										(3,333	)										(3,030	)
Net interest income and margin, as reported					$	140,536			3.74	%						$	135,675			3.63	%						$	138,409			3.75	%
Additional Key Financial Ratios:
Return on average assets									1.15	%										1.13	%										1.09	%
Adjusted return on average assets (4)									1.15	%										1.13	%										1.18	%
Return on average equity									10.35	%										10.39	%										10.98	%
Adjusted return on average equity (4)									10.28	%										10.39	%										11.89	%
Average equity/average assets									11.15	%										10.90	%										9.91	%
Average interest-earning assets/average interest-bearing liabilities									162.05	%										161.42	%										169.55	%
Average interest-earning assets/average funding liabilities									107.86	%										107.66	%										107.13	%
Non-interest income/average assets									0.50	%										0.45	%										0.36	%
Non-interest expense/average assets									2.48	%										2.42	%										2.47	%
Efficiency ratio									61.95	%										62.63	%										63.37	%
Adjusted efficiency ratio (4)									60.74	%										61.27	%										60.04	%

(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 $2.2 million, $2.3 million and $2.0 million for the quarters ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million for each of the quarters ended December 31, 2024, September 30, 2024 and December 31, 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.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD	Year Ended
	Dec 31, 2024											Dec 31, 2023
	Average Balance				Interest and Dividends				Yield / Cost (3)			Average Balance				Interest and Dividends				Yield / Cost (3)
Interest-earning assets:
Held for sale loans	$	27,627			$	1,875			6.79	%		$	49,106			$	2,621			5.34	%
Mortgage loans		9,094,276				526,842			5.79	%			8,513,487				460,664			5.41	%
Commercial/agricultural loans		1,871,024				127,028			6.79	%			1,782,141				113,250			6.35	%
Consumer and other loans		129,929				8,584			6.61	%			138,196				8,715			6.31	%
Total loans (1)		11,122,856				664,329			5.97	%			10,482,930				585,250			5.58	%
Mortgage-backed securities		2,650,010				66,652			2.52	%			2,927,650				72,927			2.49	%
Other securities		951,515				44,083			4.63	%			1,173,637				52,148			4.44	%
Interest-bearing deposits with banks		65,650				2,573			3.92	%			46,815				2,200			4.70	%
FHLB stock		16,658				1,302			7.82	%			17,903				847			4.73	%
Total investment securities		3,683,833				114,610			3.11	%			4,166,005				128,122			3.08	%
Total interest-earning assets		14,806,689				778,939			5.26	%			14,648,935				713,372			4.87	%
Non-interest-earning assets		967,122											917,018
Total assets	$	15,773,811										$	15,565,953
Deposits:
Interest-bearing checking accounts	$	2,233,902				33,113			1.48	%		$	1,921,326				13,334			0.69	%
Savings accounts		3,231,631				71,225			2.20	%			2,674,936				27,739			1.04	%
Money market accounts		1,632,092				35,206			2.16	%			1,908,983				24,089			1.26	%
Certificates of deposit		1,514,726				59,921			3.96	%			1,209,261				34,964			2.89	%
Total interest-bearing deposits		8,612,351				199,465			2.32	%			7,714,506				100,126			1.30	%
Non-interest-bearing deposits		4,647,100				—			—	%			5,436,953				—			—	%
Total deposits		13,259,451				199,465			1.50	%			13,151,459				100,126			0.76	%
Other interest-bearing liabilities:
FHLB advances		159,954				8,941			5.59	%			196,819				10,524			5.35	%
Other borrowings		164,613				4,299			2.61	%			199,291				3,376			1.69	%
Junior subordinated debentures and subordinated notes		177,361				11,682			6.59	%			185,883				11,541			6.21	%
Total borrowings		501,928				24,922			4.97	%			581,993				25,441			4.37	%
Total funding liabilities		13,761,379				224,387			1.63	%			13,733,452				125,567			0.91	%
Other non-interest-bearing liabilities (2)		308,667											295,098
Total liabilities		14,070,046											14,028,550
Shareholders’ equity		1,703,765											1,537,403
Total liabilities and shareholders’ equity	$	15,773,811										$	15,565,953
Net interest income/rate spread (tax equivalent)					$	554,552			3.63	%						$	587,805			3.96	%
Net interest margin (tax equivalent)									3.75	%										4.01	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis						(12,836	)										(11,800	)
Net interest income and margin, as reported					$	541,716			3.66	%						$	576,005			3.93	%
Additional Key Financial Ratios:
Return on average assets									1.07	%										1.18	%
Adjusted return on average assets (4)									1.10	%										1.30	%
Return on average equity									9.91	%										11.94	%
Adjusted return on average equity (4)									10.19	%										13.17	%
Average equity/average assets									10.80	%										9.88	%
Average interest-earning assets/average interest-bearing liabilities									162.46	%										176.57	%
Average interest-earning assets/average funding liabilities									107.60	%										106.67	%
Non-interest income/average assets									0.42	%										0.29	%
Non-interest expense/average assets									2.48	%										2.46	%
Efficiency ratio									64.33	%										61.66	%
Adjusted efficiency ratio (4)									62.29	%										57.89	%

(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 $8.7 million and $7.4 million for the years ended December 31, 2024 and 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $4.1 million and $4.4 million for the years ended December 31, 2024 and 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.

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 REVENUE			Quarters Ended												Year Ended
			Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Net interest income (GAAP)			$	140,536			$	135,675			$	138,409			$	541,716			$	576,005
Non-interest income (GAAP)				20,035				18,063				14,052				66,888				44,409
Total revenue (GAAP)				160,571				153,738				152,461				608,604				620,414
Exclude:		Net (gain) loss on sale of securities		(275	)			—				4,806				5,190				19,242
		Net change in valuation of financial instruments carried at fair value		(161	)			(39	)			(139	)			982				4,218
Adjusted revenue (non-GAAP)			$	160,135			$	153,699			$	157,128			$	614,776			$	643,874

ADJUSTED EARNINGS			Quarters Ended												Year Ended
			Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Net income (GAAP)			$	46,391			$	45,153			$	42,624			$	168,898			$	183,624
Exclude:		Net (gain) loss on sale of securities		(275	)			—				4,806				5,190				19,242
		Net change in valuation of financial instruments carried at fair value		(161	)			(39	)			(139	)			982				4,218
		Banner Forward expenses (1)		—				—				—				—				1,334
		Related net tax expense (benefit)		105				9				(1,121	)			(1,481	)			(5,951	)
Total adjusted earnings (non-GAAP)			$	46,060			$	45,123			$	46,170			$	173,589			$	202,467
Diluted earnings per share (GAAP)			$	1.34			$	1.30			$	1.24			$	4.88			$	5.33
Diluted adjusted earnings per share (non-GAAP)			$	1.33			$	1.30			$	1.34			$	5.01			$	5.88
Return on average assets				1.15	%			1.13	%			1.09	%			1.07	%			1.18	%
Adjusted return on average assets (2)				1.15	%			1.13	%			1.18	%			1.10	%			1.30	%
Return on average equity				10.35	%			10.39	%			10.98	%			9.91	%			11.94	%
Adjusted return on average equity (3)				10.28	%			10.39	%			11.89	%			10.19	%			13.17	%

(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.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIO				Quarters Ended												Year Ended
				Dec 31, 2024				Sep 30, 2024				Dec 31, 2023				Dec 31, 2024				Dec 31, 2023
Non-interest expense (GAAP)				$	99,478			$	96,291			$	96,621			$	391,538			$	382,538
Exclude:		Banner Forward expenses (1)			—				—				—				—				(1,334	)
		CDI amortization			(589	)			(590	)			(858	)			(2,626	)			(3,756	)
		State/municipal tax expense			(1,518	)			(1,432	)			(1,372	)			(5,648	)			(5,260	)
		REO operations			(113	)			(103	)			(47	)			(293	)			538
Adjusted non-interest expense (non-GAAP)				$	97,258			$	94,166			$	94,344			$	382,971			$	372,726
Net interest income (GAAP)				$	140,536			$	135,675			$	138,409			$	541,716			$	576,005
Non-interest income (GAAP)					20,035				18,063				14,052				66,888				44,409
Total revenue (GAAP)					160,571				153,738				152,461				608,604				620,414
Exclude:		Net (gain) loss on sale of securities			(275	)			—				4,806				5,190				19,242
		Net change in valuation of financial instruments carried at fair value			(161	)			(39	)			(139	)			982				4,218
Adjusted revenue (non-GAAP)				$	160,135			$	153,699			$	157,128			$	614,776			$	643,874
Efficiency ratio (GAAP)					61.95	%			62.63	%			63.37	%			64.33	%			61.66	%
Adjusted efficiency ratio (non-GAAP) (2)					60.74	%			61.27	%			60.04	%			62.29	%			57.89	%

(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
		Dec 31, 2024				Sep 30, 2024				Dec 31, 2023
Shareholders’ equity (GAAP)		$	1,774,326			$	1,793,721			$	1,652,691
Exclude goodwill and other intangible assets, net			376,179				376,768				378,805
Tangible common shareholders’ equity (non-GAAP)		$	1,398,147			$	1,416,953			$	1,273,886
Total assets (GAAP)		$	16,200,037			$	16,188,676			$	15,670,391
Exclude goodwill and other intangible assets, net			376,179				376,768				378,805
Total tangible assets (non-GAAP)		$	15,823,858			$	15,811,908			$	15,291,586
Common shareholders’ equity to total assets (GAAP)			10.95	%			11.08	%			10.55	%
Tangible common shareholders’ equity to tangible assets (non-GAAP)			8.84	%			8.96	%			8.33	%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Shareholders’ equity (GAAP)		$	1,774,326			$	1,793,721			$	1,652,691
Tangible common shareholders’ equity (non-GAAP)		$	1,398,147			$	1,416,953			$	1,273,886
Common shares outstanding at end of period			34,459,832				34,456,688				34,348,369
Common shareholders’ equity (book value) per share (GAAP)		$	51.49			$	52.06			$	48.12
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)		$	40.57			$	41.12			$	37.09

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250122279800/en/

Mark J. Grescovich, President & CEO

Robert G. Butterfield, CFO

(509) 527-3636

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