Banner Corporation Reports Net Income of $42.6 Million, or $1.24 Per Diluted Share, for 4th Quarter 2023; Earns $183.6 Million in Net Income, or $5.33 Per Diluted Share, for the Full Year of 2023; Declares Quarterly Cash Dividend of $0.48 Per Share

Banner Corporation (NASDAQ: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $42.6 million, or $1.24 per diluted share, for the fourth quarter of 2023, a 7% decrease compared to $45.9 million, or $1.33 per diluted share, for the preceding quarter and a 22% decrease compared to $54.4 million, or $1.58 per diluted share, for the fourth quarter of 2022. Net interest income was $138.4 million in the fourth quarter of 2023, compared to $141.8 million in the preceding quarter and $159.1 million in the fourth quarter a year ago. The decrease in net interest income compared to the preceding quarter and prior year quarter reflects an increase in funding costs, partially offset by an increase in yields on earning assets. Banner’s fourth quarter 2023 results include a $4.8 million net loss on the sale of securities, compared to a $2.7 million net loss on the sale of securities in the preceding quarter and a $3.7 million net loss on the sale of securities in the fourth quarter of 2022. Banner’s fourth quarter 2023 results also include a $2.5 million provision for credit losses, compared to a $2.0 million provision for credit losses in the preceding quarter and a $6.7 million provision for credit losses in the fourth quarter of 2022. Net income was $183.6 million, or $5.33 per diluted share, for the year ended December 31, 2023, compared to net income of $195.4 million, or $5.67 per diluted share, for the year ended December 31, 2022. Banner’s results for the year ended 2023 include 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 fair value adjustments on financial instruments carried at fair value, compared to a $10.4 million provision for credit losses, a $3.2 million net loss on the sale of securities and an $807,000 net increase in the fair value adjustments on financial instruments carried at fair value during the same period in 2022.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share. The dividend will be payable February 16, 2024, to common shareholders of record on February 7, 2024.

“Our super community bank business strategy of emphasizing a moderate risk profile and strong relationship banking, continues to provide stable operating performance and has positioned the Company well to weather recent market headwinds,” said Mark Grescovich, President and CEO. “Banner’s performance for the fourth quarter of 2023 benefited from strong loan growth and higher yields on interest-earning assets. However, the continued higher interest rate environment and its effect on funding costs resulted in moderate compression in our net interest margin during the quarter. We continue to maintain very strong credit quality metrics and a solid reserve for potential loan losses. Additionally, we continue to benefit from a strong core deposit base, with core deposits representing 89% of total deposits at quarter end. Banner’s overarching goals continue to be to do the right thing for our clients, communities, colleagues, company and shareholders; and to provide a consistent and reliable source of commerce and capital through all economic cycles and change events.”

At December 31, 2023, Banner, on a consolidated basis, had $15.67 billion in assets, $10.66 billion in net loans and $13.03 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 2023 Highlights

• Revenues were $152.5 million for the fourth quarter of 2023, compared to $154.4 million in the preceding quarter, and $172.1 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 $157.1 million in the fourth quarter of 2023, compared to $157.7 million in the preceding quarter and $175.7 million in the fourth quarter a year ago.
• Net interest income was $138.4 million in the fourth quarter of 2023, compared to $141.8 million in the preceding quarter and $159.1 million in the fourth quarter a year ago.
• Net interest margin, on a tax equivalent basis, was 3.83%, compared to 3.93% in the preceding quarter and 4.23% in the fourth quarter a year ago.
• Mortgage banking operations revenue was $5.4 million for the fourth quarter of 2023, compared to $2.0 million in the preceding quarter and $2.3 million in the fourth quarter a year ago.
• Return on average assets was 1.09%, compared to 1.17% in the preceding quarter and 1.34% in the fourth quarter a year ago.
• Net loans receivable increased 2% to $10.66 billion at December 31, 2023, compared to $10.46 billion at September 30, 2023, and increased 7% compared to $10.01 billion at December 31, 2022.
• Non-performing assets were $30.1 million, or 0.19% of total assets, at December 31, 2023, compared to $26.8 million, or 0.17% of total assets at September 30, 2023, and $23.4 million, or 0.15% of total assets, at December 31, 2022.
• The allowance for credit losses - loans was $149.6 million, or 1.38% of total loans receivable, as of December 31, 2023, compared to $147.0 million, or 1.38% of total loans receivable as of September 30, 2023 and $141.5 million, or 1.39% of total loans receivable as of December 31, 2022.
• Total deposits decreased to $13.03 billion at December 31, 2023, compared to $13.17 billion at September 30, 2023 and $13.62 billion at December 31, 2022. Core deposits represented 89% of total deposits at December 31, 2023.
• Banner Bank’s estimated uninsured deposits were approximately 31% of total deposits at both December 31, 2023 and September 30, 2023.
• Banner Bank’s estimated uninsured deposits, excluding collateralized public deposits and affiliate deposits, were approximately 28% of total deposits at both December 31, 2023 and September 30, 2023.
• Available borrowing capacity was $4.65 billion at December 31, 2023, compared to $4.62 billion at September 30, 2023.
• On-balance sheet liquidity was $2.93 billion at December 31, 2023, compared to $2.86 billion at September 30, 2023.
• Dividends paid to shareholders were $0.48 per share in the quarter ended December 31, 2023.
• Common shareholders’ equity per share increased 9% to $48.12 at December 31, 2023, compared to $44.27 at the preceding quarter end, and increased 13% from $42.59 at December 31, 2022.
• Tangible common shareholders’ equity per share* increased 12% to $37.09 at December 31, 2023, compared to $33.22 at the preceding quarter end, and increased 18% from $31.41 at December 31, 2022.

*Non-GAAP (Generally Accepted Accounting Principles) 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 $138.4 million in the fourth quarter of 2023, compared to $141.8 million in the preceding quarter and $159.1 million in the fourth quarter a year ago. Net interest margin on a tax equivalent basis was 3.83% for the fourth quarter of 2023, a ten basis-point decrease compared to 3.93% in the preceding quarter and a 40 basis-point decrease compared to 4.23% in the fourth quarter a year ago. Net interest margin for the current quarter was impacted by an increase in funding costs due to an increase in the percentage of deposits being interest bearing and a large mix of higher cost retail CDs, partially offset by a decrease in FHLB advances and increased yields on loans due to the benefit of variable rate interest-earning loans repricing for the first time since the start of the rising rate environment.

Average yields on interest-earning assets increased 12 basis points to 5.06% for the fourth quarter of 2023, compared to 4.94% for the preceding quarter and increased 66 basis points compared to 4.40% in the fourth quarter a year ago. Average loan yields increased 12 basis points to 5.77% compared to 5.65% in the preceding quarter and increased 63 basis points compared to 5.14% in the fourth quarter a year ago. The increase in average yields on interest-earning assets, particularly loans, during the current quarter reflects the benefit of variable rate interest-earning assets repricing higher, as well as new loans being originated at higher interest rates. Total deposit costs were 1.18% in the fourth quarter of 2023, which was a 24 basis-point increase compared to the preceding quarter and a 108 basis-point increase compared to the fourth quarter a year ago. The increase in the costs of deposits was due to an increase in the mix of higher cost retail CDs as well as a larger percentage of core deposits being in interest bearing accounts. The average rate paid on borrowings was 4.77% in the fourth quarter of 2023, a 13 basis-point increase compared to 4.64% in the preceding quarter and a 223 basis-point increase compared to 2.54% in the fourth quarter a year ago. The total cost of funding liabilities was 1.31% during the fourth quarter of 2023, a 23 basis-point increase compared to 1.08% in the preceding quarter and a 113 basis-point increase compared to 0.18% in the fourth quarter a year ago.

A $2.5 million provision for credit losses was recorded in the current quarter (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). This compares to a $2.0 million provision for credit losses in the prior quarter (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) and a $6.7 million provision for credit losses in the fourth quarter a year ago (comprised of a $6.0 million provision for credit losses - loans, a $680,000 provision for credit losses - unfunded loan commitments and a $19,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflects the increasing loan balances and the higher net loan charge-offs, partially offset by an increase in the trading price of bank subordinated debt investments. The provision for credit losses for the preceding quarter primarily reflected increased loan balances and unfunded loan commitments, partially offset by an increase in the trading price on bank subordinated debt investments.

Total non-interest income was $14.1 million in the fourth quarter of 2023, compared to $12.7 million in the preceding quarter and $13.1 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 $3.3 million increase in mortgage banking operations revenue and a $793,000 increase in the fair value adjustments on financial instruments carried at fair value during the current quarter, partially offset by a $1.4 million decrease in deposit fees and other service charges and a $2.1 million increase 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 $3.1 million increase in mortgage banking operations revenue, partially offset by a $1.3 million decrease in deposit fees and other service charges and a $1.1 million increase in the net loss recognized on the sale of securities. Total non-interest income was $44.4 million for the year ended December 31, 2023, compared to $75.3 million for the same period a year earlier.

Mortgage banking operations revenue, including gains on one- to four-family and multifamily loan sales and loan servicing fees, was $5.4 million in the fourth quarter of 2023, compared to $2.0 million in the preceding quarter and $2.3 million in the fourth quarter a year ago. The increase from the preceding quarter and the fourth quarter of 2022 primarily reflects the reversal of the lower of cost or market adjustment on multifamily loans held for sale recognized during the current period due to 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. In addition, the volume of one- to four-family loans sold during the current quarter increased compared to the prior year quarter, although overall volumes remained low due to reduced refinancing and purchase activity amid rising interest rates. The increase in volume of one- to four-family loans sold during the current quarter compared to the prior year quarter was partially offset by a decrease in the gain on sale margin of one- to four-family loans sold. Home purchase activity accounted for 92% of one- to four-family mortgage loan originations in the fourth quarter of 2023, compared to 90% in both the preceding quarter and in the fourth quarter of 2022. For the fourth quarter of 2023, mortgage banking operations revenue included a $3.5 million lower of cost or market upward adjustment on multifamily loans held for sale, attributed to the transfer of $43.5 million of multifamily loans from held for sale to the held for investment portfolio. For the third quarter of 2023, we recorded a $456,000 lower of cost or market downward adjustment on multifamily loans held for sale, driven by increases in market interest rates. During the fourth quarter of 2022, a $723,000 lower of cost or market upward adjustment was recorded due to the transfer of a pool of multifamily loans held for sale to held for investment portfolio loans, partially offset by a negative fair value adjustment on multifamily loans held for sale.

Fourth quarter 2023 non-interest income included a $139,000 net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading and limited partnership investments, and a $4.8 million net loss on the sale of securities. In the preceding quarter, non-interest income included a $654,000 net loss for fair value adjustments and a $2.7 million net loss on the sale of securities. In the fourth quarter a year ago, non-interest income included a $157,000 net gain for fair value adjustments and a $3.7 million net loss on the sale of securities.

Total revenue decreased 1% to $152.5 million for the fourth quarter of 2023, compared to $154.4 million in the preceding quarter, and decreased 11% compared to $172.1 million in the fourth quarter of 2022. 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 $157.1 million in the fourth quarter of 2023, compared to $157.7 million in the preceding quarter and $175.7 million in the fourth quarter a year ago. Total revenue was $620.4 million for the year ended December 31, 2023, compared to $628.4 million for the year ended December 31, 2022. Adjusted revenue* was $643.9 million for the year ended December 31, 2023, compared to $623.1 million for the year ended December 31, 2022.

Total non-interest expense was $96.6 million in the fourth quarter of 2023, compared to $95.9 million in the preceding quarter and $99.0 million in the fourth quarter of 2022. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $627,000 decrease in capitalized loan origination costs, a $478,000 increase in occupancy and equipment expense, a $916,000 increase in payment and card processing services expense, and a $430,000 increase in REO operations, partially offset by a $980,000 decrease in salary and employee benefits expense, primarily due to decreases in severance expenses, and a $775,000 decrease in professional and legal expense. The prior quarter included $996,000 of Banner Forward expenses related to the consolidation of two branch locations, as well as expenses related to the discontinuation of the Multifamily Originated for Sale business line due to the continued lack of an active secondary market for originated for sale multifamily loans. The decrease in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects decreases in occupancy and equipment expense and professional and legal expense, partially offset by a decrease in capitalized loan origination costs and increases in payment and card processing services expense and deposit insurance expense. The prior year quarter included a $3.5 million accrual related to a potential settlement of a pending litigation matter. For the year ended December 31, 2022, total non-interest expense was $382.5 million, compared to $377.3 million for the year ended December 31, 2022. Banner’s efficiency ratio was 63.37% for the fourth quarter of 2023, compared to 62.10% in the preceding quarter and 57.52% in the same quarter a year ago. Banner’s adjusted efficiency ratio* was 60.04% for the fourth quarter of 2023, compared to 59.00% in the preceding quarter and 54.43% in the year ago quarter.

*Non-GAAP financial measures. 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.

Federal and state income tax expense totaled $10.7 million for the fourth quarter of 2023 resulting in an effective tax rate of 20.1%, reflecting the benefits from tax exempt income. Banner’s statutory income tax rate for the quarter ended December 31, 2023, was 23.7%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

Balance Sheet Review

Total assets increased to $15.67 billion at December 31, 2023, compared to $15.51 billion at September 30, 2023, and decreased from $15.83 billion at December 31, 2022. The total of securities and interest-bearing deposits held at other banks totaled $3.48 billion at December 31, 2023, compared to $3.44 billion at September 30, 2023 and $4.28 billion at December 31, 2022. The decrease compared to the prior year quarter was primarily due to reverse repurchase agreements maturing during the first six months of 2023 and the sale of securities. The average effective duration of the securities portfolio was approximately 6.5 years at both December 31, 2023 and 2022.

Total loans receivable increased to $10.81 billion at December 31, 2023, compared to $10.61 billion at September 30, 2023, and $10.15 billion at December 31, 2022. One- to four-family residential loans increased 6% to $1.52 billion at December 31, 2023, compared to $1.44 billion at September 30, 2023, and increased 29% compared to $1.17 billion at December 31, 2022. The increase in one- to four-family residential loans was 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 production. Multifamily real estate loans increased 6% to $811.2 million at December 31, 2023, compared to $766.6 million at September 30, 2023, and increased 26% compared to $645.1 million at December 31, 2022. The increase in multifamily loans was the result of 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; when compared to the prior year quarter the primary driver for the increase was the conversion of affordable housing construction loans to the multifamily portfolio upon the completion of the construction phase. Agricultural business loans decreased 1% to $331.1 million at December 31, 2023, compared to $334.6 million at September 30, 2023, primarily due to operating line paydowns and increased 12% compared to $295.1 million at December 31, 2022, primarily due to new loan production and advances on agricultural lines of credit.

Loans held for sale were $11.2 million at December 31, 2023, compared to $54.2 million at September 30, 2023, and $56.9 million at December 31, 2022. One- to four- family residential mortgage loans sold totaled $65.6 million in the current quarter, compared to $87.3 million in the preceding quarter and $39.3 million in the fourth quarter a year ago. The decrease in loans held for sale during the current quarter was due to 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 December 31, 2023.

Total deposits decreased to $13.03 billion at December 31, 2023, compared to $13.17 billion at September 30, 2023 and $13.62 billion a year ago. The decline in deposits from a year ago was primarily due to interest rate sensitive clients shifting a portion of their non-operating deposit balances to higher yielding investments. Non-interest-bearing account balances decreased 8% to $4.79 billion at December 31, 2023, compared to $5.20 billion at September 30, 2023, and decreased 22% compared to $6.18 billion at December 31, 2022. Core deposits were 89% of total deposits at both December 31, 2023 and September 30, 2023 and were 95% of total deposits at December 31, 2022. Certificates of deposit increased 1% to $1.48 billion at December 31, 2023, compared to $1.46 billion at September 30, 2023, and increased 104% compared to $723.5 million a year earlier. The increase in certificates of deposit during the current quarter compared to the preceding quarter and 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. The increase in certificates of deposit from the fourth quarter a year ago was also due to a $108.1 million increase in brokered deposits.

Banner Bank’s estimated uninsured deposits were $4.08 billion or 31% of total deposits at December 31, 2023, compared to $4.08 billion or 31% of total deposits at September 30, 2023. The uninsured deposit calculation includes $305.3 million and $300.2 million of collateralized public deposits at December 31, 2023 and September 30, 2023, respectively. Uninsured deposits also include cash held by the holding company of $108.2 million and $97.8 million at December 31, 2023 and September 30, 2023, respectively. Banner Bank’s estimated uninsured deposits, excluding collateralized public deposits and cash held at the holding company, were 28% of total deposits at both December 31, 2023 and September 30, 2023.

Banner had $323.0 million of FHLB borrowings at December 31, 2023, compared to $140.0 million at September 30, 2023 and $50.0 million a year ago. At December 31, 2023, Banner’s off-balance sheet liquidity included additional borrowing capacity of $2.97 billion at the FHLB and $1.56 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

Subordinated notes, net of issuance costs, were $92.9 million at December 31, 2023 compared to $92.7 million at September 30, 2023 and $98.9 million at December 31, 2022. The decrease in subordinated notes from the prior year was due to Banner Bank’s purchase of $6.5 million of Banner’s subordinated debt during the second quarter of 2023.

At December 31, 2023, total common shareholders’ equity was $1.65 billion, or 10.55% of total assets, compared to $1.52 billion or 9.81% of total assets at September 30, 2023, and $1.46 billion or 9.20% of total assets at December 31, 2022. The increase in total common shareholders’ equity at December 31, 2023 compared to September 30, 2023 was primarily due to a $103.8 million decrease in accumulated other comprehensive loss, primarily due to an increase in the fair value of the security portfolio as a result of a decrease in market interest rates during the fourth quarter of 2023 and by a $26.0 million increase in retained earnings as a result of $42.6 million in net income, offset by the accrual of $16.7 million of cash dividends during the fourth quarter of 2023. The increase in total common shareholders’ equity from December 31, 2022 reflects a $116.9 million increase in retained earnings and a $73.6 million decrease in accumulated other comprehensive loss, primarily due to an increase in the fair value of the security portfolio as a result of a decrease in interest rates during the fourth quarter of 2023, and the sale of securities during 2023. At December 31, 2023, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.27 billion, or 8.33% of tangible assets*, compared to $1.14 billion, or 7.54% of tangible assets, at September 30, 2023, and $1.07 billion, or 6.95% of tangible assets, a year ago.

*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.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At December 31, 2023, Banner’s estimated common equity Tier 1 capital ratio was 11.97%, its estimated Tier 1 leverage capital to average assets ratio was 10.56%, and its estimated total capital to risk-weighted assets ratio was 14.58%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $149.6 million, or 1.38% of total loans receivable and 506% of non-performing loans, at December 31, 2023, compared to $147.0 million, or 1.38% of total loans receivable and 560% of non-performing loans, at September 30, 2023, and $141.5 million, or 1.39% of total loans receivable and 615% of non-performing loans, at December 31, 2022. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $14.5 million at December 31, 2023, compared to $15.0 million at September 30, 2023, and $14.7 million at December 31, 2022. Net loan charge-offs totaled $1.1 million in the fourth quarter of 2023, compared to net loan charge-offs of $663,000 in the preceding quarter and net loan charge-offs of $496,000 in the fourth quarter a year ago. Non-performing loans were $29.6 million at December 31, 2023, compared to $26.3 million at September 30, 2023, and $23.0 million a year ago.

Substandard loans were $125.4 million at December 31, 2023, compared to $124.5 million at September 30, 2023, and $137.2 million a year ago. The decrease from the comparable quarter a year ago primarily reflect risk rating upgrades as well as the payoff of substandard loans.

Total non-performing assets were $30.1 million, or 0.19% of total assets, at December 31, 2023, compared to $26.8 million, or 0.17% of total assets, at September 30, 2023, and $23.4 million, or 0.15% of total assets, a year ago.

Conference Call

Banner will host a conference call on Friday January 19, 2024, at 8:00 a.m. PDT, to discuss its fourth quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial [phone] using access code 238589 to participate in the call. A replay will be available for one week at [phone] using access code 197139 or at www.bannerbank.com.

About the Company

Banner Corporation is a $15.67 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) potential 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 potential recession or slowed economic growth, or increased political instability due to acts of war; (2) changes in the interest rate environment, including the recent increases in the Board of Governors of the Federal Reserve System (the “Federal Reserve”) benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; (3) the impact of continuing high 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) 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; (7) 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; (8) competitive pressures among depository institutions; (9) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (10) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (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) changes in accounting principles, policies or guidelines; (20) future acquisitions by Banner of other depository institutions or lines of business; (21) future goodwill impairment due to changes in Banner’s business or changes in 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) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (24) 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, 2023				Sep 30, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
INTEREST INCOME:
Loans receivable		$	154,532			$	149,254			$	129,450			$	577,891			$	450,916
Mortgage-backed securities			17,398				17,691				19,099				72,352				67,585
Securities and cash equivalents			11,808				12,119				17,009				51,329				54,068
Total interest income			183,738				179,064				165,558				701,572				572,569
INTEREST EXPENSE:
Deposits			39,342				31,001				3,623				100,126				10,124
Federal Home Loan Bank (FHLB) advances			1,870				2,233				198				10,524				489
Other borrowings			1,125				1,099				132				3,376				377
Subordinated debt			2,992				2,965				2,534				11,541				8,400
Total interest expense			45,329				37,298				6,487				125,567				19,390
Net interest income			138,409				141,766				159,071				576,005				553,179
PROVISION FOR CREDIT LOSSES			2,522				2,027				6,704				10,789				10,364
Net interest income after provision for credit losses			135,887				139,739				152,367				565,216				542,815
NON-INTEREST INCOME:
Deposit fees and other service charges			9,560				10,916				10,821				41,638				44,459
Mortgage banking operations			5,391				2,049				2,311				11,817				10,834
Bank-owned life insurance			2,609				2,062				2,120				9,245				7,794
Miscellaneous			1,159				942				1,382				5,169				6,805
			18,719				15,969				16,634				67,869				69,892
Net loss on sale of securities			(4,806	)			(2,657	)			(3,721	)			(19,242	)			(3,248	)
Net change in valuation of financial instruments carried at fair value			139				(654	)			157				(4,218	)			807
Gain on sale of branches, including related deposits			—				—				—				—				7,804
Total non-interest income			14,052				12,658				13,070				44,409				75,255
NON-INTEREST EXPENSE:
Salary and employee benefits			60,111				61,091				60,309				244,563				242,266
Less capitalized loan origination costs			(3,871	)			(4,498	)			(4,877	)			(16,257	)			(24,313	)
Occupancy and equipment			12,200				11,722				13,506				47,886				52,018
Information and computer data services			7,098				7,118				6,535				28,445				25,986
Payment and card processing services			6,088				5,172				5,109				20,547				21,195
Professional and legal expenses			2,267				3,042				6,328				9,830				14,005
Advertising and marketing			1,686				1,362				1,350				4,794				3,959
Deposit insurance			2,926				2,874				1,739				10,529				6,649
State and municipal business and use taxes			1,372				1,359				1,304				5,260				4,693
Real estate operations, net			47				(383	)			28				(538	)			(104	)
Amortization of core deposit intangibles			858				857				1,215				3,756				5,279
Loss on extinguishment of debt			—				—				—				—				793
Miscellaneous			5,839				6,175				6,467				23,723				24,869
Total non-interest expense			96,621				95,891				99,013				382,538				377,295
Income before provision for income taxes			53,318				56,506				66,424				227,087				240,775
PROVISION FOR INCOME TAXES			10,694				10,652				12,044				43,463				45,397
NET INCOME		$	42,624			$	45,854			$	54,380			$	183,624			$	195,378
Earnings per common share:
Basic		$	1.24			$	1.33			$	1.59			$	5.35			$	5.70
Diluted		$	1.24			$	1.33			$	1.58			$	5.33			$	5.67
Cumulative dividends declared per common share		$	0.48			$	0.48			$	0.44			$	1.92			$	1.76
Weighted average number of common shares outstanding:
Basic			34,381,780				34,379,865				34,226,162				34,344,142				34,264,322
Diluted			34,472,155				34,429,726				34,437,151				34,450,412				34,459,922
Increase (decrease) in common shares outstanding			2,420				1,322				2,259				154,351				(58,614	)

FINANCIAL CONDITION														Percentage Change
(in thousands except shares and per share data)		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022				Prior Qtr			Prior Yr Qtr
ASSETS
Cash and due from banks		$	209,634			$	207,171			$	198,154			1.2	%		5.8	%
Interest-bearing deposits			44,830				44,535				44,908			0.7	%		(0.2	)%
Total cash and cash equivalents			254,464				251,706				243,062			1.1	%		4.7	%
Securities - trading			—				25,268				28,694			(100.0	)%		(100.0	)%
Securities - available for sale, amortized cost $2,729,980, $2,774,972 and $3,218,777, respectively			2,373,783				2,287,993				2,789,031			3.7	%		(14.9	)%
Securities - held to maturity, fair value $907,514, $853,653 and $942,180, respectively			1,059,055				1,082,156				1,117,588			(2.1	)%		(5.2	)%
Total securities			3,432,838				3,395,417				3,935,313			1.1	%		(12.8	)%
FHLB stock			24,028				15,600				12,000			54.0	%		100.2	%
Securities purchased under agreements to resell			—				—				300,000			nm			(100.0	)%
Loans held for sale			11,170				54,158				56,857			(79.4	)%		(80.4	)%
Loans receivable			10,810,455				10,611,417				10,146,724			1.9	%		6.5	%
Allowance for credit losses – loans			(149,643	)			(146,960	)			(141,465	)		1.8	%		5.8	%
Net loans receivable			10,660,812				10,464,457				10,005,259			1.9	%		6.6	%
Accrued interest receivable			63,100				61,040				57,284			3.4	%		10.2	%
Property and equipment, net			132,231				136,504				138,754			(3.1	)%		(4.7	)%
Goodwill			373,121				373,121				373,121			—	%		—	%
Other intangibles, net			5,684				6,542				9,440			(13.1	)%		(39.8	)%
Bank-owned life insurance			304,366				303,347				297,565			0.3	%		2.3	%
Operating lease right-of-use assets			43,731				43,447				49,283			0.7	%		(11.3	)%
Other assets			364,846				402,541				355,493			(9.4	)%		2.6	%
Total assets		$	15,670,391			$	15,507,880			$	15,833,431			1.0	%		(1.0	)%
LIABILITIES
Deposits:
Non-interest-bearing		$	4,792,369			$	5,197,854			$	6,176,998			(7.8	)%		(22.4	)%
Interest-bearing transaction and savings accounts			6,759,661				6,518,385				6,719,531			3.7	%		0.6	%
Interest-bearing certificates			1,477,467				1,458,313				723,530			1.3	%		104.2	%
Total deposits			13,029,497				13,174,552				13,620,059			(1.1	)%		(4.3	)%
Advances from FHLB			323,000				140,000				50,000			130.7	%		546.0	%
Other borrowings			182,877				188,440				232,799			(3.0	)%		(21.4	)%
Subordinated notes, net			92,851				92,748				98,947			0.1	%		(6.2	)%
Junior subordinated debentures at fair value			66,413				66,284				74,857			0.2	%		(11.3	)%
Operating lease liabilities			48,659				48,642				55,205			—	%		(11.9	)%
Accrued expenses and other liabilities			228,428				231,478				200,839			(1.3	)%		13.7	%
Deferred compensation			45,975				45,129				44,293			1.9	%		3.8	%
Total liabilities			14,017,700				13,987,273				14,376,999			0.2	%		(2.5	)%
SHAREHOLDERS’ EQUITY
Common stock			1,299,651				1,297,307				1,293,959			0.2	%		0.4	%
Retained earnings			642,175				616,215				525,242			4.2	%		22.3	%
Accumulated other comprehensive loss			(289,135	)			(392,915	)			(362,769	)		(26.4	)%		(20.3	)%
Total shareholders’ equity			1,652,691				1,520,607				1,456,432			8.7	%		13.5	%
Total liabilities and shareholders’ equity		$	15,670,391			$	15,507,880			$	15,833,431			1.0	%		(1.0	)%
Common Shares Issued:
Shares outstanding at end of period			34,348,369				34,345,949				34,194,018
Common shareholders’ equity per share (1)		$	48.12			$	44.27			$	42.59
Common shareholders’ tangible equity per share (1) (2)		$	37.09			$	33.22			$	31.41
Common shareholders’ tangible equity to tangible assets (2)			8.33	%			7.54	%			6.95	%
Consolidated Tier 1 leverage capital ratio			10.56	%			10.40	%			9.45	%

(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)
														Percentage Change
LOANS		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022				Prior Qtr			Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied		$	915,897			$	911,540			$	845,320			0.5	%		8.3	%
Investment properties			1,541,344				1,530,087				1,589,975			0.7	%		(3.1	)%
Small balance CRE			1,178,500				1,169,828				1,200,251			0.7	%		(1.8	)%
Multifamily real estate			811,232				766,571				645,071			5.8	%		25.8	%
Construction, land and land development:
Commercial construction			170,011				168,061				184,876			1.2	%		(8.0	)%
Multifamily construction			503,993				453,129				325,816			11.2	%		54.7	%
One- to four-family construction			526,432				536,349				647,329			(1.8	)%		(18.7	)%
Land and land development			336,639				346,362				328,475			(2.8	)%		2.5	%
Commercial business:
Commercial business			1,255,734				1,263,747				1,283,407			(0.6	)%		(2.2	)%
Small business scored			1,022,154				1,000,714				947,092			2.1	%		7.9	%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland			331,089				334,626				295,077			(1.1	)%		12.2	%
One- to four-family residential			1,518,046				1,438,694				1,173,112			5.5	%		29.4	%
Consumer:
Consumer—home equity revolving lines of credit			588,703				579,836				566,291			1.5	%		4.0	%
Consumer—other			110,681				111,873				114,632			(1.1	)%		(3.4	)%
Total loans receivable		$	10,810,455			$	10,611,417			$	10,146,724			1.9	%		6.5	%
Loans 30 - 89 days past due and on accrual		$	19,744			$	6,108			$	17,186
Total delinquent loans (including loans on non-accrual), net		$	43,164			$	28,312			$	32,371
Total delinquent loans / Total loans receivable			0.40	%			0.27	%			0.32	%

LOANS BY GEOGRAPHIC LOCATION														Percentage Change
		Dec 31, 2023						Sep 30, 2023			Dec 31, 2022			Prior Qtr			Prior Yr Qtr
		Amount			Percentage			Amount			Amount
Washington		$	5,095,602		47.2	%		$	5,046,028		$	4,777,546		1.0	%		6.7	%
California			2,670,923		24.7	%			2,570,175			2,484,980		3.9	%		7.5	%
Oregon			1,974,001		18.3	%			1,929,531			1,826,743		2.3	%		8.1	%
Idaho			610,064		5.6	%			600,648			565,586		1.6	%		7.9	%
Utah			68,931		0.6	%			57,711			75,967		19.4	%		(9.3	)%
Other			390,934		3.6	%			407,324			415,902		(4.0	)%		(6.0	)%
Total loans receivable		$	10,810,455		100.0	%		$	10,611,417		$	10,146,724		1.9	%		6.5	%

ADDITIONAL FINANCIAL INFORMATION (dollars in thousands)
LOAN ORIGINATIONS	Quarters Ended									Year Ended
	Dec 31, 2023			Sep 30, 2023			Dec 31, 2022			Dec 31, 2023			Dec 31, 2022
Commercial real estate	$	76,277		$	62,337		$	117,787		$	309,022		$	418,635
Multifamily real estate		5,360			12,725			8,881			57,046			37,612
Construction and land		382,905			421,656			301,804			1,541,383			1,935,476
Commercial business		166,984			157,833			298,396			585,047			1,034,950
Agricultural business		15,058			17,466			24,314			84,072			89,655
One-to four-family residential		37,446			43,622			83,491			167,951			358,976
Consumer		57,427			70,043			102,502			300,913			545,254
Total loan originations (excluding loans held for sale)	$	741,457		$	785,682		$	937,175		$	3,045,434		$	4,420,558

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
		Quarters Ended												Year Ended
CHANGE IN THE		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
ALLOWANCE FOR CREDIT LOSSES – LOANS
Balance, beginning of period		$	146,960			$	144,680			$	135,918			$	141,465			$	132,099
Provision for credit losses – loans			3,821				2,943				6,043				11,097				8,158
Recoveries of loans previously charged off:
Commercial real estate			129				170				88				557				392
Construction and land			—				29				—				29				384
One- to four-family real estate			18				59				18				230				181
Commercial business			237				403				616				1,283				1,923
Agricultural business, including secured by farmland			16				19				91				146				475
Consumer			131				126				153				543				566
			531				806				966				2,788				3,921
Loans charged off:
Commercial real estate			—				—				—				—				(2	)
Construction and land			(933	)			—				—				(1,089	)			(30	)
One- to four-family real estate			(8	)			—				—				(42	)			—
Commercial business			(310	)			(616	)			(1,231	)			(2,650	)			(1,699	)
Agricultural business, including secured by farmland			—				(564	)			—				(564	)			(42	)
Consumer			(418	)			(289	)			(231	)			(1,362	)			(940	)
			(1,669	)			(1,469	)			(1,462	)			(5,707	)			(2,713	)
Net (charge-offs) recoveries			(1,138	)			(663	)			(496	)			(2,919	)			1,208
Balance, end of period		$	149,643			$	146,960			$	141,465			$	149,643			$	141,465
Net (charge-offs) recoveries / Average loans receivable			(0.011	)%			(0.006	)%			(0.005	)%			(0.028	)%			0.013	%

ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES – LOANS		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022
Commercial real estate		$	44,384			$	44,016			$	44,086
Multifamily real estate			9,326				8,804				7,734
Construction and land			28,095				29,389				29,171
One- to four-family real estate			19,271				17,925				14,729
Commercial business			35,464				34,065				33,299
Agricultural business, including secured by farmland			3,865				3,718				3,475
Consumer			9,238				9,043				8,971
Total allowance for credit losses – loans		$	149,643			$	146,960			$	141,465
Allowance for credit losses - loans / Total loans receivable			1.38	%			1.38	%			1.39	%
Allowance for credit losses - loans / Non-performing loans			506	%			560	%			615	%

		Quarters Ended										Year Ended
CHANGE IN THE		Dec 31, 2023				Sep 30, 2023			Dec 31, 2022			Dec 31, 2023				Dec 31, 2022
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period		$	15,010			$	14,664		$	14,041		$	14,721			$	12,432
(Recapture) provision for credit losses - unfunded loan commitments			(526	)			346			680			(237	)			2,289
Balance, end of period		$	14,484			$	15,010		$	14,721		$	14,484			$	14,721

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
NON-PERFORMING ASSETS
	Dec 31, 2023				Sep 30, 2023				Dec 31, 2022
Loans on non-accrual status:
Secured by real estate:
Commercial	$	2,677			$	1,365			$	3,683
Construction and land		3,105				5,538				181
One- to four-family		5,702				5,480				5,236
Commercial business		9,002				5,289				9,886
Agricultural business, including secured by farmland		3,167				3,170				594
Consumer		3,204				3,378				2,126
		26,857				24,220				21,706
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Construction and land		1,138				—				—
One- to four-family		1,205				1,799				1,023
Commercial business		1				—				—
Consumer		401				245				264
		2,745				2,044				1,287
Total non-performing loans		29,602				26,264				22,993
REO		526				546				340
Other repossessed assets		—				—				17
Total non-performing assets	$	30,128			$	26,810			$	23,350
Total non-performing assets to total assets		0.19	%			0.17	%			0.15	%

LOANS BY CREDIT RISK RATING
	Dec 31, 2023			Sep 30, 2023			Dec 31, 2022
Pass	$	10,671,281		$	10,467,498		$	10,000,493
Special Mention		13,732			19,394			9,081
Substandard		125,442			124,525			137,150
Total	$	10,810,455		$	10,611,417		$	10,146,724

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION											Percentage Change
		Dec 31, 2023			Sep 30, 2023			Dec 31, 2022			Prior Qtr			Prior Yr Qtr
Non-interest-bearing		$	4,792,369		$	5,197,854		$	6,176,998		(7.8	)%		(22.4	)%
Interest-bearing checking			2,098,526			2,006,866			1,811,153		4.6	%		15.9	%
Regular savings accounts			2,980,530			2,751,453			2,710,090		8.3	%		10.0	%
Money market accounts			1,680,605			1,760,066			2,198,288		(4.5	)%		(23.5	)%
Total interest-bearing transaction and savings accounts			6,759,661			6,518,385			6,719,531		3.7	%		0.6	%
Total core deposits			11,552,030			11,716,239			12,896,529		(1.4	)%		(10.4	)%
Interest-bearing certificates			1,477,467			1,458,313			723,530		1.3	%		104.2	%
Total deposits		$	13,029,497		$	13,174,552		$	13,620,059		(1.1	)%		(4.3	)%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
		Dec 31, 2023						Sep 30, 2023			Dec 31, 2022			Percentage Change
		Amount			Percentage			Amount			Amount			Prior Qtr			Prior Yr Qtr
Washington		$	7,247,392		55.6	%		$	7,241,341		$	7,563,056		0.1	%		(4.2	)%
Oregon			2,852,677		21.9	%			2,918,446			2,998,572		(2.3	)%		(4.9	)%
California			2,269,557		17.4	%			2,342,345			2,331,524		(3.1	)%		(2.7	)%
Idaho			659,871		5.1	%			672,420			726,907		(1.9	)%		(9.2	)%
Total deposits		$	13,029,497		100.0	%		$	13,174,552		$	13,620,059		(1.1	)%		(4.3	)%

INCLUDED IN TOTAL DEPOSITS
		Dec 31, 2023			Sep 30, 2023			Dec 31, 2022
Public non-interest-bearing accounts		$	146,916		$	169,058		$	212,533
Public interest-bearing transaction & savings accounts			209,699			188,831			180,326
Public interest-bearing certificates			52,048			46,349			26,810
Total public deposits		$	408,663		$	404,238		$	419,669
Collateralized public deposits		$	305,306		$	300,189		$	304,244
Total brokered deposits		$	108,058		$	162,856		$	—
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
		Dec 31, 2023			Sep 30, 2023			Dec 31, 2022
Number of deposit accounts			463,750			466,159			471,140
Average account balance per account		$	29		$	28		$	29

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2023		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		$	1,904,533		14.58	%		$	1,045,181		8.00	%		$	1,306,476		10.00	%
Tier 1 capital to risk-weighted assets			1,650,872		12.64	%			783,886		6.00	%			783,886		6.00	%
Tier 1 leverage capital to average assets			1,650,872		10.56	%			625,387		4.00	%			n/a		n/a
Common equity tier 1 capital to risk-weighted assets			1,564,372		11.97	%			587,914		4.50	%			n/a		n/a
Banner Bank:
Total capital to risk-weighted assets			1,789,371		13.69	%			1,045,273		8.00	%			1,306,592		10.00	%
Tier 1 capital to risk-weighted assets			1,635,710		12.52	%			783,955		6.00	%			1,045,273		8.00	%
Tier 1 leverage capital to average assets			1,635,710		10.46	%			625,298		4.00	%			781,622		5.00	%
Common equity tier 1 capital to risk-weighted assets			1,635,710		12.52	%			587,966		4.50	%			849,285		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, 2023										Sep 30, 2023										Dec 31, 2022
	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	$	31,148		$	447			5.69	%		$	56,697		$	765			5.35	%		$	45,654		$	527			4.58	%
Mortgage loans		8,770,029			123,382			5.58	%			8,596,705			118,285			5.46	%			8,175,281			103,478			5.02	%
Commercial/agricultural loans		1,818,198			30,420			6.64	%			1,822,609			29,866			6.50	%			1,742,517			24,727			5.63	%
SBA PPP loans		3,871			27			2.77	%			4,298			28			2.58	%			9,347			224			9.51	%
Consumer and other loans		138,049			2,237			6.43	%			138,723			2,226			6.37	%			140,801			2,125			5.99	%
Total loans(1)		10,761,295			156,513			5.77	%			10,619,032			151,170			5.65	%			10,113,600			131,081			5.14	%
Mortgage-backed securities		2,798,647			17,541			2.49	%			2,863,345			17,834			2.47	%			3,187,557			19,244			2.40	%
Other securities		1,035,842			11,993			4.59	%			1,071,389			12,128			4.49	%			1,628,553			15,945			3.88	%
Interest-bearing deposits with banks		45,286			506			4.43	%			43,594			529			4.81	%			245,538			2,126			3.44	%
FHLB stock		15,326			215			5.57	%			16,443			385			9.29	%			10,773			76			2.80	%
Total investment securities		3,895,101			30,255			3.08	%			3,994,771			30,876			3.07	%			5,072,421			37,391			2.92	%
Total interest-earning assets		14,656,396			186,768			5.06	%			14,613,803			182,046			4.94	%			15,186,021			168,472			4.40	%
Non-interest-earning assets		875,719										932,364										927,585
Total assets	$	15,532,115									$	15,546,167									$	16,113,606
Deposits:
Interest-bearing checking accounts	$	2,060,226			5,907			1.14	%		$	1,971,179			4,190			0.84	%		$	1,818,907			566			0.12	%
Savings accounts		2,885,167			12,560			1.73	%			2,659,890			8,400			1.25	%			2,761,323			866			0.12	%
Money market accounts		1,723,426			7,644			1.76	%			1,793,953			6,639			1.47	%			2,256,867			1,337			0.24	%
Certificates of deposit		1,477,474			13,231			3.55	%			1,412,542			11,772			3.31	%			709,974			854			0.48	%
Total interest-bearing deposits		8,146,293			39,342			1.92	%			7,837,564			31,001			1.57	%			7,547,071			3,623			0.19	%
Non-interest-bearing deposits		5,036,523			—			—	%			5,316,023			—			—	%			6,402,297			—			—	%
Total deposits		13,182,816			39,342			1.18	%			13,153,587			31,001			0.94	%			13,949,368			3,623			0.10	%
Other interest-bearing liabilities:
FHLB advances		129,630			1,870			5.72	%			161,087			2,233			5.50	%			19,337			198			4.06	%
Other borrowings		185,518			1,125			2.41	%			194,659			1,099			2.24	%			238,217			132			0.22	%
Junior subordinated debentures and subordinated notes		182,678			2,992			6.50	%			182,678			2,965			6.44	%			189,178			2,534			5.31	%
Total borrowings		497,826			5,987			4.77	%			538,424			6,297			4.64	%			446,732			2,864			2.54	%
Total funding liabilities		13,680,642			45,329			1.31	%			13,692,011			37,298			1.08	%			14,396,100			6,487			0.18	%
Other non-interest-bearing liabilities(2)		311,539										296,578										292,480
Total liabilities		13,992,181										13,988,589										14,688,580
Shareholders’ equity		1,539,934										1,557,578										1,425,026
Total liabilities and shareholders’ equity	$	15,532,115									$	15,546,167									$	16,113,606
Net interest income/rate spread (tax equivalent)				$	141,439			3.75	%					$	144,748			3.86	%					$	161,985			4.22	%
Net interest margin (tax equivalent)								3.83	%									3.93	%									4.23	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(3,030	)									(2,982	)									(2,914	)
Net interest income and margin, as reported				$	138,409			3.75	%					$	141,766			3.85	%					$	159,071			4.16	%
Additional Key Financial Ratios:
Return on average assets								1.09	%									1.17	%									1.34	%
Return on average equity								10.98	%									11.68	%									15.14	%
Average equity/average assets								9.91	%									10.02	%									8.84	%
Average interest-earning assets/average interest-bearing liabilities								169.55	%									174.47	%									189.97	%
Average interest-earning assets/average funding liabilities								107.13	%									106.73	%									105.49	%
Non-interest income/average assets								0.36	%									0.32	%									0.32	%
Non-interest expense/average assets								2.47	%									2.45	%									2.44	%
Efficiency ratio(4)								63.37	%									62.10	%									57.52	%
Adjusted efficiency ratio(5)								60.04	%									59.00	%									54.43	%

(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 $2.0 million, $1.9 million and $1.6 million for the quarters ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million, $1.1 million and $1.3 million for the quarters ended December 31, 2023, September 30, 2023 and December 31, 2022, respectively.
(4)	Non-interest expense divided by the total of net interest income and non-interest income.
(5)	Adjusted non-interest expense divided by adjusted revenue. 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, 2023										Dec 31, 2022
	Average Balance			Interest and Dividends				Yield/Cost(3)			Average Balance			Interest and Dividends				Yield/Cost(3)
Interest-earning assets:
Held for sale loans	$	49,106		$	2,621			5.34	%		$	82,030		$	2,973			3.62	%
Mortgage loans		8,513,487			460,664			5.41	%			7,731,195			364,499			4.71	%
Commercial/agricultural loans		1,777,099			113,078			6.36	%			1,617,191			77,309			4.78	%
SBA PPP loans		5,042			172			3.41	%			41,167			4,677			11.36	%
Consumer and other loans		138,196			8,715			6.31	%			123,667			7,332			5.93	%
Total loans(1)		10,482,930			585,250			5.58	%			9,595,250			456,790			4.76	%
Mortgage-backed securities		2,927,650			72,927			2.49	%			3,130,124			68,148			2.18	%
Other securities		1,173,637			52,148			4.44	%			1,625,250			48,278			2.97	%
Interest-bearing deposits with banks		46,815			2,200			4.70	%			969,952			9,633			0.99	%
FHLB stock		17,903			847			4.73	%			10,628			357			3.36	%
Total investment securities		4,166,005			128,122			3.08	%			5,735,954			126,416			2.20	%
Total interest-earning assets		14,648,935			713,372			4.87	%			15,331,204			583,206			3.80	%
Non-interest-earning assets		917,018										1,169,271
Total assets	$	15,565,953									$	16,500,475
Deposits:
Interest-bearing checking accounts	$	1,921,326			13,334			0.69	%		$	1,890,917			1,557			0.08	%
Savings accounts		2,674,936			27,739			1.04	%			2,810,264			2,053			0.07	%
Money market accounts		1,908,983			24,089			1.26	%			2,364,122			3,143			0.13	%
Certificates of deposit		1,209,261			34,964			2.89	%			764,255			3,371			0.44	%
Total interest-bearing deposits		7,714,506			100,126			1.30	%			7,829,558			10,124			0.13	%
Non-interest-bearing deposits		5,436,953			—			—	%			6,434,670			—			—	%
Total deposits		13,151,459			100,126			0.76	%			14,264,228			10,124			0.07	%
Other interest-bearing liabilities:
FHLB advances		196,819			10,524			5.35	%			15,285			489			3.20	%
Other borrowings		199,291			3,376			1.69	%			249,681			377			0.15	%
Junior subordinated debentures and subordinated notes		185,883			11,541			6.21	%			189,870			8,400			4.42	%
Total borrowings		581,993			25,441			4.37	%			454,836			9,266			2.04	%
Total funding liabilities		13,733,452			125,567			0.91	%			14,719,064			19,390			0.13	%
Other non-interest-bearing liabilities(2)		295,098										253,983
Total liabilities		14,028,550										14,973,047
Shareholders’ equity		1,537,403										1,527,428
Total liabilities and shareholders’ equity	$	15,565,953									$	16,500,475
Net interest income/rate spread (tax equivalent)				$	587,805			3.96	%					$	563,816			3.67	%
Net interest margin (tax equivalent)								4.01	%									3.68	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis					(11,800	)									(10,637	)
Net interest income and margin, as reported				$	576,005			3.93	%					$	553,179			3.61	%
Additional Key Financial Ratios:
Return on average assets								1.18	%									1.18	%
Return on average equity								11.94	%									12.79	%
Average equity/average assets								9.88	%									9.26	%
Average interest-earning assets/average interest-bearing liabilities								176.57	%									185.06	%
Average interest-earning assets/average funding liabilities								106.67	%									104.16	%
Non-interest income/average assets								0.29	%									0.46	%
Non-interest expense/average assets								2.46	%									2.29	%
Efficiency ratio(4)								61.66	%									60.04	%
Adjusted efficiency ratio(5)								57.89	%									57.99	%

(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 $7.4 million and $5.9 million for the years ended December 31, 2023 and December 31, 2022, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $4.4 million and $4.8 million for the years ended December 31, 2023 and December 31, 2022, respectively.
(4)	Non-interest expense divided by the total of net interest income and non-interest income.
(5)	Adjusted non-interest expense divided by adjusted revenue. These 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 press 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 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, 2023				Sep 30, 2023			Dec 31, 2022				Dec 31, 2023			Dec 31, 2022
Net interest income (GAAP)	$	138,409			$	141,766		$	159,071			$	576,005		$	553,179
Non-interest income (GAAP)		14,052				12,658			13,070				44,409			75,255
Total revenue (GAAP)		152,461				154,424			172,141				620,414			628,434
Exclude: Net loss on sale of securities		4,806				2,657			3,721				19,242			3,248
Net change in valuation of financial instruments carried at fair value		(139	)			654			(157	)			4,218			(807	)
Gain on sale of branches		—				—			—				—			(7,804	)
Adjusted revenue (non-GAAP)	$	157,128			$	157,735		$	175,705			$	643,874		$	623,071

ADJUSTED EARNINGS	Quarters Ended												Year Ended
	Dec 31, 2023				Sep 30, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
Net income (GAAP)	$	42,624			$	45,854			$	54,380			$	183,624			$	195,378
Exclude: Net loss on sale of securities		4,806				2,657				3,721				19,242				3,248
Net change in valuation of financial instruments carried at fair value		(139	)			654				(157	)			4,218				(807	)
Gain on sale of branches		—				—				—				—				(7,804	)
Banner Forward expenses (1)		—				996				838				1,334				5,293
Loss on extinguishment of debt		—				—				—				—				793
Related net tax benefit		(1,121	)			(1,033	)			(1,057	)			(5,951	)			(174	)
Total adjusted earnings (non-GAAP)	$	46,170			$	49,128			$	57,725			$	202,467			$	195,927
Diluted earnings per share (GAAP)	$	1.24			$	1.33			$	1.58			$	5.33			$	5.67
Diluted adjusted earnings per share (non-GAAP)	$	1.34			$	1.43			$	1.68			$	5.88			$	5.69

(1)	Included in miscellaneous expenses in results of operations.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIO		Quarters Ended												Year Ended
		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022				Dec 31, 2023				Dec 31, 2022
Non-interest expense (GAAP)		$	96,621			$	95,891			$	99,013			$	382,538			$	377,295
Exclude: Banner Forward expenses (1)			—				(996	)			(838	)			(1,334	)			(5,293	)
CDI amortization			(858	)			(857	)			(1,215	)			(3,756	)			(5,279	)
State/municipal tax expense			(1,372	)			(1,359	)			(1,304	)			(5,260	)			(4,693	)
REO operations			(47	)			383				(28	)			538				104
Loss on extinguishment of debt			—				—				—				—				(793	)
Adjusted non-interest expense (non-GAAP)		$	94,344			$	93,062			$	95,628			$	372,726			$	361,341
Net interest income (GAAP)		$	138,409			$	141,766			$	159,071			$	576,005			$	553,179
Non-interest income (GAAP)			14,052				12,658				13,070				44,409				75,255
Total revenue (GAAP)			152,461				154,424				172,141				620,414				628,434
Exclude: Net loss on sale of securities			4,806				2,657				3,721				19,242				3,248
Net change in valuation of financial instruments carried at fair value			(139	)			654				(157	)			4,218				(807	)
Gain on sale of branches			—				—				—				—				(7,804	)
Adjusted revenue (non-GAAP)		$	157,128			$	157,735			$	175,705			$	643,874			$	623,071
Efficiency ratio (GAAP)			63.37	%			62.10	%			57.52	%			61.66	%			60.04	%
Adjusted efficiency ratio (non-GAAP)			60.04	%			59.00	%			54.43	%			57.89	%			57.99	%

(1)	Included in miscellaneous expenses in results of operations.

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
		Dec 31, 2023				Sep 30, 2023				Dec 31, 2022
Shareholders’ equity (GAAP)		$	1,652,691			$	1,520,607			$	1,456,432
Exclude goodwill and other intangible assets, net			378,805				379,663				382,561
Tangible common shareholders’ equity (non-GAAP)		$	1,273,886			$	1,140,944			$	1,073,871
Total assets (GAAP)		$	15,670,391			$	15,507,880			$	15,833,431
Exclude goodwill and other intangible assets, net			378,805				379,663				382,561
Total tangible assets (non-GAAP)		$	15,291,586			$	15,128,217			$	15,450,870
Common shareholders’ equity to total assets (GAAP)			10.55	%			9.81	%			9.20	%
Tangible common shareholders’ equity to tangible assets (non-GAAP)			8.33	%			7.54	%			6.95	%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Tangible common shareholders’ equity (non-GAAP)		$	1,273,886			$	1,140,944			$	1,073,871
Common shares outstanding at end of period			34,348,369				34,345,949				34,194,018
Common shareholders’ equity (book value) per share (GAAP)		$	48.12			$	44.27			$	42.59
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)		$	37.09			$	33.22			$	31.41

 

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The Banner Stock at the time of publication of the news with a raise of +0,53 % to 49,27USD on Nasdaq stock exchange (18. Januar 2024, 21:49 Uhr).