Banner Corporation Reports Net Income of $37.6 Million, or $1.09 Per Diluted Share, for First Quarter 2024; 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 $37.6 million, or $1.09 per diluted share, for the first quarter of 2024, compared to $42.6 million, or $1.24 per diluted share, for the preceding quarter and $55.6 million, or $1.61 per diluted share, for the first quarter of 2023. Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first 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 first quarter 2024 results included a $4.9 million net loss on the sale of securities, compared to a $4.8 million net loss on the sale of securities in the preceding quarter and a $7.3 million net loss on the sale of securities in the first quarter of 2023. Banner’s first quarter 2024 results also included a $520,000 provision for credit losses, compared to a $2.5 million provision for credit losses in the preceding quarter and a $524,000 recapture of provision for credit losses in the first quarter of 2023. In addition, the preceding quarter included a $3.5 million fair value gain recorded on multifamily loans as a result of their transfer from held for sale to held for investment, with no similar transaction recorded in the current quarter.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share. The dividend will be payable May 10, 2024, to common shareholders of record on April 30, 2024.

“Banner’s operating performance for the first quarter of 2024 reflects our super community bank business strategy of emphasizing a moderate risk profile and strong relationship banking, positioning the Company to weather current market conditions,” said Mark Grescovich, President and CEO. “Our results for the first quarter of 2024 benefited from higher yields on interest-earning assets. However, the continued high 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 strong credit quality metrics and a solid reserve for potential credit losses. Additionally, we continue to benefit from a strong core deposit base, with core deposits representing 89% of total deposits at quarter end. Banner has upheld its core values for the past 133 years, which are to do the right thing for our clients, communities, colleagues, company and shareholders; and to provide consistent and reliable strength through all economic cycles and change events.”

At March 31, 2024, Banner, on a consolidated basis, had $15.52 billion in assets, $10.72 billion in net loans and $13.16 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.

First Quarter 2024 Highlights

• Revenues were $144.6 million for the first quarter of 2024, compared to $152.5 million in the preceding quarter and $162.6 million in the first 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 $150.4 million in the first quarter of 2024, compared to $157.1 million in the preceding quarter and $170.4 million in the first quarter a year ago.
• Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago.
• Net interest margin, on a tax equivalent basis, was 3.74%, compared to 3.83% in the preceding quarter and 4.30% in the first quarter a year ago.
• Mortgage banking operations revenue was $2.3 million for the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago.
• Return on average assets was 0.97%, compared to 1.09% in the preceding quarter and 1.44% in the first quarter a year ago.
• Net loans receivable increased 1% to $10.72 billion at March 31, 2024, compared to $10.66 billion at December 31, 2023, and increased 7% compared to $10.02 billion at March 31, 2023.
• Non-performing assets were $29.9 million, or 0.19% of total assets, at March 31, 2024, compared to $30.1 million, or 0.19% of total assets, at December 31, 2023 and $27.1 million, or 0.17% of total assets, at March 31, 2023.
• The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable, as of March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable, as of December 31, 2023 and $141.5 million, or 1.39% of total loans receivable, as of March 31, 2023.
• Total deposits increased to $13.16 billion at March 31, 2024, compared to $13.03 billion at December 31, 2023 and $13.15 billion at March 31, 2023. Core deposits represented 89% of total deposits at March 31, 2024.
• Banner Bank’s estimated uninsured deposits were approximately 31% of total deposits at both March 31, 2024 and December 31, 2023.
• Banner Bank’s estimated uninsured deposits, excluding collateralized public deposits and affiliate deposits, were approximately 28% of total deposits at both March 31, 2024 and December 31, 2023.
• Available borrowing capacity was $5.05 billion at March 31, 2024, compared to $4.65 billion at December 31, 2023.
• On-balance sheet liquidity was $2.77 billion at March 31, 2024, compared to $2.93 billion at December 31, 2023.
• Dividends paid to shareholders were $0.48 per share in the quarter ended March 31, 2024.
• Common shareholders’ equity per share increased 1% to $48.39 at March 31, 2024, compared to $48.12 at the preceding quarter end, and increased 8% from $44.64 at March 31, 2023.
• Tangible common shareholders’ equity per share* increased 1% to $37.40 at March 31, 2024, compared to $37.09 at the preceding quarter end, and increased 12% from $33.52 at March 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 $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago. Net interest margin on a tax equivalent basis decreased nine basis points to 3.74% for the first quarter of 2024, compared to 3.83% in the preceding quarter, and decreased compared to 4.30% in the first quarter a year ago. Net interest margin for the current quarter was impacted by increased funding costs reflecting the persistent high interest rate environment, partially offset by increased yields on loans due to new loans being originated at higher interest rates.

Average yields on interest-earning assets increased 10 basis points to 5.16% for the first quarter of 2024, compared to 5.06% for the preceding quarter, and increased compared to 4.68% in the first quarter a year ago. Average loan yields increased 10 basis points to 5.87%, compared to 5.77% in the preceding quarter, and increased compared to 5.38% in the first quarter a year ago. The increase in average yields on interest-earning assets, particularly loans, during the current quarter reflects the benefit of new loans being originated at higher interest rates. Total deposit costs increased 19 basis points to 1.37% in the first quarter of 2024, compared to 1.18% in the preceding quarter, and compared to 0.28% in the first quarter a year ago. The increase in the cost of deposits was due to a larger percentage of core deposits being in interest bearing accounts as well as an increase in the mix of higher cost retail CDs. The average rate paid on borrowings increased 21 basis points to 4.98% in the first quarter of 2024, compared to 4.77% in the preceding quarter, and compared to 3.41% in the first quarter a year ago. The total cost of funding liabilities increased 22 basis points to 1.53% during the first quarter of 2024, compared to 1.31% in the preceding quarter, and compared to 0.40% in the first quarter a year ago.

A $520,000 provision for credit losses was recorded in the current quarter (comprised of a $1.4 million provision for credit losses - loans, an $887,000 recapture of provision for credit losses - unfunded loan commitments and a $17,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $2.5 million provision for credit losses in the prior 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) and a $524,000 recapture of provision for credit losses in the first quarter a year ago (comprised of a $774,000 provision for credit losses - loans, a $1.3 million recapture of provision for credit losses - unfunded loan commitments and a $20,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter is primarily related to the loan growth in the construction and one- to four-family loan portfolios and was partially offset by a reduction in unfunded loan commitments in the construction portfolio. The provision for credit losses for the preceding quarter primarily reflected increased loan balances and higher than forecasted net loan charge-offs, partially offset by an increase in the trading price of our investments in other banks’ subordinated debt.

Total non-interest income was $11.6 million in the first quarter of 2024, compared to $14.1 million in the preceding quarter and $9.3 million in the first quarter a year ago. The decrease in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $3.1 million decrease in mortgage banking operations revenue and a $1.1 million decrease in the fair value adjustments on financial instruments carried at fair value during the current quarter, partially offset by a $1.5 million increase in deposit fees and other service charges. The increase in non-interest income during the current quarter compared to the prior year quarter was primarily due to a $2.3 million decrease in the net loss recognized on the sale of securities.

Mortgage banking operations revenue, including gains on one- to four-family and multifamily loan sales and loan servicing fees, was $2.3 million in the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago. The decrease from the preceding 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 preceding quarter due to the transfer of all remaining multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. In 2023, the Bank discontinued the origination of multifamily loans for sale into the secondary market. 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 in the current rate environment. Home purchase activity accounted for 89% of one- to four-family mortgage loan originations in the first quarter of 2024, compared to 92% in the preceding quarter and 88% in the first quarter of 2023.

First quarter 2024, non-interest income included a $992,000 net loss for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of limited partnership investments, and a $4.9 million net loss on the sale of securities. In the preceding quarter, non-interest income included a $139,000 net gain for fair value adjustments and a $4.8 million net loss on the sale of securities. In the first quarter a year ago, non-interest income included a $552,000 net loss for fair value adjustments and a $7.3 million net loss on the sale of securities.

Total non-interest expense was $97.6 million in the first quarter of 2024, compared to $96.6 million in the preceding quarter and $94.6 million in the first quarter of 2023. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $2.3 million increase in salary and employee benefits, primarily due to typically higher first quarter payroll taxes and 401(k) expense, as well as higher medical insurance expense, partially offset by a $737,000 decrease in professional and legal expense and a $607,000 decrease in advertising and marketing expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, payment and card processing services expense and deposit insurance expense. Banner’s efficiency ratio was 67.55% for the first quarter of 2024, compared to 63.37% in the preceding quarter and 58.20% in the same quarter a year ago. Banner’s adjusted efficiency ratio* was 63.70% for the first quarter of 2024, compared to 60.04% in the preceding quarter and 54.23% 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 $8.8 million for the first quarter of 2024 resulting in an effective tax rate of 19.0%, reflecting the benefits from tax exempt income. Banner’s statutory income tax rate for the quarter ended March 31, 2024, 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 decreased to $15.52 billion at March 31, 2024, compared to $15.67 billion at December 31, 2023, and $15.53 billion at March 31, 2023. Securities and interest-bearing deposits held at other banks totaled $3.32 billion at March 31, 2024, compared to $3.48 billion at December 31, 2023 and $3.99 billion at March 31, 2023. The decrease compared to the prior quarter was primarily due to the sale of securities and normal cash flows from the security portfolio. The average effective duration of the securities portfolio was approximately 6.6 years at both March 31, 2024 and March 31, 2023.

Total loans receivable increased to $10.87 billion at March 31, 2024, compared to $10.81 billion at December 31, 2023, and $10.16 billion at March 31, 2023. One- to four-family residential loans increased 3% to $1.57 billion at March 31, 2024, compared to $1.52 billion at December 31, 2023, and increased 25% compared to $1.25 billion at March 31, 2023. 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 loan production. Multifamily real estate loans decreased slightly to $809.1 million at March 31, 2024, compared to $811.2 million at December 31, 2023, and increased 16% compared to $696.9 million at March 31, 2023. The increase in multifamily real estate loans year over year was primarily the result of the conversion of affordable housing multifamily construction loans to the multifamily portfolio upon the completion of the construction phase as well as 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. Construction, land and land development loans increased 2% to $1.57 billion at March 31, 2024, compared to $1.54 billion at December 31, 2023, and increased 7% compared to $1.47 billion at March 31, 2023. The increase in construction, land and land development loans was primarily the result of new loan production and advances on multifamily construction loans, primarily related to affordable housing projects. Agricultural business loans decreased 4% to $318.0 million at March 31, 2024, compared to $331.1 million at December 31, 2023, primarily due to operating line paydowns, and increased 17% compared to $272.7 million at March 31, 2023, primarily due to new loan production.

Loans held for sale were $9.4 million at March 31, 2024, compared to $11.2 million at December 31, 2023 and $49.0 million at March 31, 2023. One- to four-family residential mortgage loans sold totaled $65.9 million in the current quarter, compared to $65.6 million in the preceding quarter and $40.5 million in the first quarter a year ago. The decrease in loans held for sale compared to March 31, 2023 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 March 31, 2024 or December 31, 2023.

Total deposits increased to $13.16 billion at March 31, 2024, compared to $13.03 billion at December 31, 2023 and $13.15 billion a year ago. Core deposits increased 1% to $11.67 billion at March 31, 2024, compared to $11.55 billion at December 31, 2023, and decreased 4% compared to $12.20 billion at March 31, 2023. The increase in core deposits compared to the prior quarter was primarily due to increases in savings accounts while the decrease compared to the prior year quarter reflected clients moving funds out of non-interest bearing accounts into higher yielding certificates of deposits. Core deposits were 89% of total deposits at March 31, 2024, compared to 89% of total deposits at December 31, 2023 and 93% of total deposits at March 31, 2023. Certificates of deposit increased 1% to $1.49 billion at March 31, 2024, compared to $1.48 billion at December 31, 2023, and increased 56% compared to $949.9 million a year earlier. The increase in certificates of deposit during the current quarter compared to the preceding quarter and first 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 first quarter a year ago was also due to a $107.5 million increase in brokered deposits.

Banner Bank’s estimated uninsured deposits were $4.18 billion or 31% of total deposits at March 31, 2024, compared to $4.08 billion or 31% of total deposits at December 31, 2023. The uninsured deposit calculation includes $316.6 million and $305.3 million of collateralized public deposits at March 31, 2024 and December 31, 2023, respectively. Uninsured deposits also include cash held by the holding company of $113.9 million and $108.2 million at March 31, 2024 and December 31, 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 March 31, 2024 and December 31, 2023.

Banner had $52.0 million of FHLB advances at March 31, 2024, compared to $323.0 million at December 31, 2023 and $170.0 million a year ago. At March 31, 2024, Banner’s off-balance sheet liquidity included additional borrowing capacity of $3.27 billion at the FHLB and $1.66 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 $89.5 million at March 31, 2024 compared to $92.9 million at December 31, 2023 and $99.0 million at March 31, 2023. The decrease in subordinated notes from both the preceding and prior year quarters was due to Banner Bank’s purchase of $10.0 million of Banner’s subordinated debt over the past year.

At March 31, 2024, total common shareholders’ equity was $1.66 billion, or 10.73% of total assets, compared to $1.65 billion or 10.55% of total assets at December 31, 2023, and $1.53 billion or 9.86% of total assets at March 31, 2023. The increase in total common shareholders’ equity at March 31, 2024 compared to December 31, 2023 was primarily due to a $20.8 million increase in retained earnings as a result of $37.6 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the first quarter of 2024. The increase in retained earnings was partially offset by a $10.3 million increase in accumulated other comprehensive loss, primarily due to a decrease in the fair value of the security portfolio as a result of an increase in market interest rates during the first quarter of 2024. At March 31, 2024, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.29 billion, or 8.50% of tangible assets*, compared to $1.27 billion, or 8.33% of tangible assets, at December 31, 2023, and $1.15 billion, or 7.59% 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 March 31, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.06%, its estimated Tier 1 leverage capital to average assets ratio was 10.71%, and its estimated total capital to risk-weighted assets ratio was 14.70%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable and 513% of non-performing loans, at March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable and 506% of non-performing loans, at December 31, 2023, and $141.5 million, or 1.39% of total loans receivable and 528% of non-performing loans, at March 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 March 31, 2024, compared to $14.5 million at December 31, 2023, and $13.4 million at March 31, 2023. Net loan recoveries totaled $73,000 in the first quarter of 2024, compared to net loan charge-offs of $1.1 million in the preceding quarter and net loan charge-offs of $782,000 in the first quarter a year ago. Non-performing loans were $29.5 million at March 31, 2024, compared to $29.6 million at December 31, 2023, and $26.8 million a year ago.

Substandard loans were $116.1 million at March 31, 2024, compared to $125.4 million at December 31, 2023 and $148.0 million a year ago. The decrease primarily reflects paydowns and payoffs of substandard loans as well as risk rating upgrades.

Total non-performing assets were $29.9 million, or 0.19% of total assets, at March 31, 2024, compared to $30.1 million, or 0.19% of total assets, at December 31, 2023, and $27.1 million, or 0.17% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, April 18, 2024, at 8:00 a.m. PDT, to discuss its first quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial [phone] using access code 062587 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $15.52 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 past 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 elevated 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
(in thousands except shares and per share data)		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
INTEREST INCOME:
Loans receivable		$	156,475			$	154,532			$	133,257
Mortgage-backed securities			16,934				17,398				18,978
Securities and cash equivalents			11,279				11,808				14,726
Total interest income			184,688				183,738				166,961
INTEREST EXPENSE:
Deposits			44,613				39,342				9,244
Federal Home Loan Bank (FHLB) advances			2,972				1,870				1,264
Other borrowings			1,175				1,125				381
Subordinated debt			2,969				2,992				2,760
Total interest expense			51,729				45,329				13,649
Net interest income			132,959				138,409				153,312
PROVISION (RECAPTURE) FOR CREDIT LOSSES			520				2,522				(524	)
Net interest income after provision (recapture) for credit losses			132,439				135,887				153,836
NON-INTEREST INCOME:
Deposit fees and other service charges			11,022				9,560				10,562
Mortgage banking operations			2,335				5,391				2,691
Bank-owned life insurance			2,237				2,609				2,188
Miscellaneous			1,892				1,159				1,640
			17,486				18,719				17,081
Net loss on sale of securities			(4,903	)			(4,806	)			(7,252	)
Net change in valuation of financial instruments carried at fair value			(992	)			139				(552	)
Total non-interest income			11,591				14,052				9,277
NON-INTEREST EXPENSE:
Salary and employee benefits			62,369				60,111				61,389
Less capitalized loan origination costs			(3,676	)			(3,871	)			(3,431	)
Occupancy and equipment			12,462				12,200				11,970
Information and computer data services			7,320				7,098				7,147
Payment and card processing services			5,710				6,088				4,618
Professional and legal expenses			1,530				2,267				2,121
Advertising and marketing			1,079				1,686				806
Deposit insurance			2,809				2,926				1,890
State and municipal business and use taxes			1,304				1,372				1,300
Real estate operations, net			(220	)			47				(277	)
Amortization of core deposit intangibles			723				858				1,050
Miscellaneous			6,231				5,839				6,038
Total non-interest expense			97,641				96,621				94,621
Income before provision for income taxes			46,389				53,318				68,492
PROVISION FOR INCOME TAXES			8,830				10,694				12,937
NET INCOME		$	37,559			$	42,624			$	55,555
Earnings per common share:
Basic		$	1.09			$	1.24			$	1.62
Diluted		$	1.09			$	1.24			$	1.61
Cumulative dividends declared per common share		$	0.48			$	0.48			$	0.48
Weighted average number of common shares outstanding:
Basic			34,391,564				34,381,780				34,239,533
Diluted			34,521,105				34,472,155				34,457,869
Increase in common shares outstanding			46,852				2,420				114,522

FINANCIAL CONDITION														Percentage Change
(in thousands except shares and per share data)		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023				Prior Qtr			Prior Yr Qtr
ASSETS
Cash and due from banks		$	168,427			$	209,634			$	194,629			(19.7	)%		(13.5	)%
Interest-bearing deposits			40,849				44,830				48,363			(8.9	)%		(15.5	)%
Total cash and cash equivalents			209,276				254,464				242,992			(17.8	)%		(13.9	)%
Securities - trading			—				—				28,591			nm			(100.0	)%
Securities - available for sale, amortized cost $2,617,986, $2,729,980 and $3,040,211, respectively			2,244,939				2,373,783				2,653,860			(5.4	)%		(15.4	)%
Securities - held to maturity, fair value $869,097, $907,514 and $957,062, respectively			1,038,312				1,059,055				1,109,595			(2.0	)%		(6.4	)%
Total securities			3,283,251				3,432,838				3,792,046			(4.4	)%		(13.4	)%
FHLB stock			11,741				24,028				16,800			(51.1	)%		(30.1	)%
Securities purchased under agreements to resell			—				—				150,000			nm			(100.0	)%
Loans held for sale			9,357				11,170				49,016			(16.2	)%		(80.9	)%
Loans receivable			10,869,096				10,810,455				10,160,684			0.5	%		7.0	%
Allowance for credit losses – loans			(151,140	)			(149,643	)			(141,457	)		1.0	%		6.8	%
Net loans receivable			10,717,956				10,660,812				10,019,227			0.5	%		7.0	%
Accrued interest receivable			66,124				63,100				52,094			4.8	%		26.9	%
Property and equipment, net			129,889				132,231				136,362			(1.8	)%		(4.7	)%
Goodwill			373,121				373,121				373,121			—	%		—	%
Other intangibles, net			4,961				5,684				8,390			(12.7	)%		(40.9	)%
Bank-owned life insurance			306,600				304,366				299,754			0.7	%		2.3	%
Operating lease right-of-use assets			40,834				43,731				47,106			(6.6	)%		(13.3	)%
Other assets			365,169				364,846				346,695			0.1	%		5.3	%
Total assets		$	15,518,279			$	15,670,391			$	15,533,603			(1.0	)%		(0.1	)%
LIABILITIES
Deposits:
Non-interest-bearing		$	4,699,553			$	4,792,369			$	5,764,009			(1.9	)%		(18.5	)%
Interest-bearing transaction and savings accounts			6,973,338				6,759,661				6,440,261			3.2	%		8.3	%
Interest-bearing certificates			1,485,880				1,477,467				949,932			0.6	%		56.4	%
Total deposits			13,158,771				13,029,497				13,154,202			1.0	%		—	%
Advances from FHLB			52,000				323,000				170,000			(83.9	)%		(69.4	)%
Other borrowings			183,341				182,877				214,564			0.3	%		(14.6	)%
Subordinated notes, net			89,456				92,851				99,046			(3.7	)%		(9.7	)%
Junior subordinated debentures at fair value			66,586				66,413				74,703			0.3	%		(10.9	)%
Operating lease liabilities			45,524				48,659				52,772			(6.4	)%		(13.7	)%
Accrued expenses and other liabilities			211,578				228,428				191,326			(7.4	)%		10.6	%
Deferred compensation			46,515				45,975				45,295			1.2	%		2.7	%
Total liabilities			13,853,771				14,017,700				14,001,908			(1.2	)%		(1.1	)%
SHAREHOLDERS’ EQUITY
Common stock			1,300,969				1,299,651				1,293,225			0.1	%		0.6	%
Retained earnings			663,021				642,175				564,106			3.2	%		17.5	%
Accumulated other comprehensive loss			(299,482	)			(289,135	)			(325,636	)		3.6	%		(8.0	)%
Total shareholders’ equity			1,664,508				1,652,691				1,531,695			0.7	%		8.7	%
Total liabilities and shareholders’ equity		$	15,518,279			$	15,670,391			$	15,533,603			(1.0	)%		(0.1	)%
Common Shares Issued:
Shares outstanding at end of period			34,395,221				34,348,369				34,308,540
Common shareholders’ equity per share (1)		$	48.39			$	48.12			$	44.64
Common shareholders’ tangible equity per share (1) (2)		$	37.40			$	37.09			$	33.52
Common shareholders’ tangible equity to tangible assets (2)			8.50	%			8.33	%			7.59	%
Consolidated Tier 1 leverage capital ratio			10.71	%			10.56	%			9.96	%

nm		Not meaningful
(1)		Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
(2)		Common shareholders’ tangible equity and tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
														Percentage Change
LOANS		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023				Prior Qtr			Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied		$	905,063			$	915,897			$	865,705			(1.2	)%		4.5	%
Investment properties			1,544,885				1,541,344				1,520,261			0.2	%		1.6	%
Small balance CRE			1,159,355				1,178,500				1,179,749			(1.6	)%		(1.7	)%
Multifamily real estate			809,101				811,232				696,864			(0.3	)%		16.1	%
Construction, land and land development:
Commercial construction			158,011				170,011				191,051			(7.1	)%		(17.3	)%
Multifamily construction			573,014				503,993				362,425			13.7	%		58.1	%
One- to four-family construction			495,931				526,432				584,655			(5.8	)%		(15.2	)%
Land and land development			344,563				336,639				329,438			2.4	%		4.6	%
Commercial business:
Commercial business			1,262,716				1,255,734				1,266,047			0.6	%		(0.3	)%
Small business scored			1,028,067				1,022,154				960,650			0.6	%		7.0	%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland			317,958				331,089				272,707			(4.0	)%		16.6	%
One- to four-family residential			1,566,834				1,518,046				1,252,104			3.2	%		25.1	%
Consumer:
Consumer—home equity revolving lines of credit			597,060				588,703				564,334			1.4	%		5.8	%
Consumer—other			106,538				110,681				114,694			(3.7	)%		(7.1	)%
Total loans receivable		$	10,869,096			$	10,810,455			$	10,160,684			0.5	%		7.0	%
Loans 30 - 89 days past due and on accrual		$	19,649			$	19,744			$	14,037
Total delinquent loans (including loans on non-accrual), net		$	39,429			$	43,164			$	37,251
Total delinquent loans / Total loans receivable			0.36	%			0.40	%			0.37	%

LOANS BY GEOGRAPHIC LOCATION																	Percentage Change
		Mar 31, 2024							Dec 31, 2023				Mar 31, 2023				Prior Qtr			Prior Yr Qtr
		Amount				Percentage			Amount				Amount
Washington		$	5,091,912			46.9	%		$	5,095,602			$	4,808,821			(0.1	)%		5.9	%
California			2,687,114			24.7	%			2,670,923				2,490,666			0.6	%		7.9	%
Oregon			2,013,453			18.5	%			1,974,001				1,823,057			2.0	%		10.4	%
Idaho			613,155			5.6	%			610,064				565,335			0.5	%		8.5	%
Utah			72,652			0.7	%			68,931				67,085			5.4	%		8.3	%
Other			390,810			3.6	%			390,934				405,720			—	%		(3.7	)%
Total loans receivable		$	10,869,096			100.0	%		$	10,810,455			$	10,160,684			0.5	%		7.0	%

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
LOAN ORIGINATIONS		Quarters Ended
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Commercial real estate		$	67,362			$	76,277			$	75,768
Multifamily real estate			385				5,360				35,520
Construction and land			437,273				382,905				247,842
Commercial business			154,715				166,984				131,826
Agricultural business			34,406				15,058				23,181
One-to four-family residential			17,568				37,446				34,265
Consumer			66,145				57,427				60,888
Total loan originations (excluding loans held for sale)		$	777,854			$	741,457			$	609,290

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
		Quarters Ended
CHANGE IN THE		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
ALLOWANCE FOR CREDIT LOSSES – LOANS
Balance, beginning of period		$	149,643			$	146,960			$	141,465
Provision for credit losses – loans			1,424				3,821				774
Recoveries of loans previously charged off:
Commercial real estate			1,389				129				184
One- to four-family real estate			16				18				117
Commercial business			781				237				119
Agricultural business, including secured by farmland			106				16				109
Consumer			159				131				169
			2,451				531				698
Loans charged off:
Construction and land			—				(933	)			—
One- to four-family real estate			—				(8	)			(30	)
Commercial business			(1,809	)			(310	)			(1,158	)
Consumer			(569	)			(418	)			(292	)
			(2,378	)			(1,669	)			(1,480	)
Net recoveries (charge-offs)			73				(1,138	)			(782	)
Balance, end of period		$	151,140			$	149,643			$	141,457
Net recoveries (charge-offs) / Average loans receivable			0.001	%			(0.011	)%			(0.008	)%

ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES – LOANS		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Commercial real estate		$	43,555			$	44,384			$	42,975
Multifamily real estate			9,293				9,326				8,475
Construction and land			28,908				28,095				28,433
One- to four-family real estate			20,432				19,271				15,736
Commercial business			35,544				35,464				33,735
Agricultural business, including secured by farmland			3,890				3,865				3,094
Consumer			9,518				9,238				9,009
Total allowance for credit losses – loans		$	151,140			$	149,643			$	141,457
Allowance for credit losses - loans / Total loans receivable			1.39	%			1.38	%			1.39	%
Allowance for credit losses - loans / Non-performing loans			513	%			506	%			528	%

		Quarters Ended
CHANGE IN THE		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period		$	14,484			$	15,010			$	14,721
Recapture of provision for credit losses - unfunded loan commitments			(887	)			(526	)			(1,278	)
Balance, end of period		$	13,597			$	14,484			$	13,443

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
NON-PERFORMING ASSETS
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Loans on non-accrual status:
Secured by real estate:
Commercial		$	2,753			$	2,677			$	2,815
Construction and land			5,029				3,105				172
One- to four-family			7,750				5,702				6,789
Commercial business			7,355				9,002				9,365
Agricultural business, including secured by farmland			2,496				3,167				4,074
Consumer			3,411				3,204				2,247
			28,794				26,857				25,462
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Construction and land			286				1,138				—
One- to four-family			409				1,205				445
Commercial business			—				1				—
Consumer			—				401				865
			695				2,745				1,310
Total non-performing loans			29,489				29,602				26,772
REO			448				526				340
Other repossessed assets			—				—				17
Total non-performing assets		$	29,937			$	30,128			$	27,129
Total non-performing assets to total assets			0.19	%			0.19	%			0.17	%

LOANS BY CREDIT RISK RATING
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Pass		$	10,731,015			$	10,671,281			$	10,008,385
Special Mention			22,029				13,732				4,251
Substandard			116,052				125,442				148,048
Total		$	10,869,096			$	10,810,455			$	10,160,684

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION														Percentage Change
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023				Prior Qtr			Prior Yr Qtr
Non-interest-bearing		$	4,699,553			$	4,792,369			$	5,764,009			(1.9	)%		(18.5	)%
Interest-bearing checking			2,112,799				2,098,526				1,794,477			0.7	%		17.7	%
Regular savings accounts			3,171,933				2,980,530				2,502,084			6.4	%		26.8	%
Money market accounts			1,688,606				1,680,605				2,143,700			0.5	%		(21.2	)%
Total interest-bearing transaction and savings accounts			6,973,338				6,759,661				6,440,261			3.2	%		8.3	%
Total core deposits			11,672,891				11,552,030				12,204,270			1.0	%		(4.4	)%
Interest-bearing certificates			1,485,880				1,477,467				949,932			0.6	%		56.4	%
Total deposits		$	13,158,771			$	13,029,497			$	13,154,202			1.0	%		—	%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
		Mar 31, 2024							Dec 31, 2023				Mar 31, 2023				Percentage Change
		Amount				Percentage			Amount				Amount				Prior Qtr			Prior Yr Qtr
Washington		$	7,258,785			55.2	%		$	7,247,392			$	7,237,499			0.2	%		0.3	%
Oregon			2,914,605			22.1	%			2,852,677				2,911,788			2.2	%		0.1	%
California			2,316,515			17.6	%			2,269,557				2,309,174			2.1	%		0.3	%
Idaho			668,866			5.1	%			659,871				695,741			1.4	%		(3.9	)%
Total deposits		$	13,158,771			100.0	%		$	13,029,497			$	13,154,202			1.0	%		—	%

INCLUDED IN TOTAL DEPOSITS
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Public non-interest-bearing accounts		$	140,477			$	146,916			$	177,913
Public interest-bearing transaction & savings accounts			251,161				209,699				183,924
Public interest-bearing certificates			28,821				52,048				26,857
Total public deposits		$	420,459			$	408,663			$	388,694
Collateralized public deposits		$	316,554			$	305,306			$	277,725
Total brokered deposits		$	107,527			$	108,058			$	—
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Number of deposit accounts			461,399				463,750				462,880
Average account balance per account		$	29			$	29			$	28

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF MARCH 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		$	1,927,380			14.70	%		$	1,049,048			8.00	%		$	1,311,311			10.00	%
Tier 1 capital to risk-weighted assets			1,667,720			12.72	%			786,786			6.00	%			786,786			6.00	%
Tier 1 leverage capital to average assets			1,667,720			10.71	%			622,892			4.00	%			n/a			n/a
Common equity tier 1 capital to risk-weighted assets			1,581,220			12.06	%			590,090			4.50	%			n/a			n/a
Banner Bank:
Total capital to risk-weighted assets			1,807,301			13.77	%			1,049,707			8.00	%			1,312,134			10.00	%
Tier 1 capital to risk-weighted assets			1,647,641			12.56	%			787,281			6.00	%			1,049,707			8.00	%
Tier 1 leverage capital to average assets			1,647,641			10.58	%			622,882			4.00	%			778,603			5.00	%
Common equity tier 1 capital to risk-weighted assets			1,647,641			12.56	%			590,460			4.50	%			852,887			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
	Mar 31, 2024											Dec 31, 2023											Mar 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	$	9,939			$	167			6.76	%		$	31,148			$	447			5.69	%		$	52,657			$	671			5.17	%
Mortgage loans		8,892,561				125,284			5.67	%			8,770,029				123,382			5.58	%			8,267,386				106,900			5.24	%
Commercial/agricultural loans		1,830,095				30,847			6.78	%			1,822,069				30,447			6.63	%			1,709,345				25,226			5.99	%
Consumer and other loans		133,854				2,196			6.60	%			138,049				2,237			6.43	%			137,096				2,115			6.26	%
Total loans(1)		10,866,449				158,494			5.87	%			10,761,295				156,513			5.77	%			10,166,484				134,912			5.38	%
Mortgage-backed securities		2,728,640				17,076			2.52	%			2,798,647				17,541			2.49	%			3,093,860				19,123			2.51	%
Other securities		984,639				11,501			4.70	%			1,035,842				11,993			4.59	%			1,404,355				15,095			4.36	%
Interest-bearing deposits with banks		45,264				459			4.08	%			45,286				506			4.43	%			53,584				608			4.60	%
FHLB stock		19,073				209			4.41	%			15,326				215			5.57	%			14,236				90			2.56	%
Total investment securities		3,777,616				29,245			3.11	%			3,895,101				30,255			3.08	%			4,566,035				34,916			3.10	%
Total interest-earning assets		14,644,065				187,739			5.16	%			14,656,396				186,768			5.06	%			14,732,519				169,828			4.68	%
Non-interest-earning assets		943,725											875,719											921,217
Total assets	$	15,587,790										$	15,532,115										$	15,653,736
Deposits:
Interest-bearing checking accounts	$	2,104,242				6,716			1.28	%		$	2,060,226				5,907			1.14	%		$	1,779,664				906			0.21	%
Savings accounts		3,066,448				15,279			2.00	%			2,885,167				12,560			1.73	%			2,615,173				1,884			0.29	%
Money market accounts		1,674,159				8,388			2.02	%			1,723,426				7,644			1.76	%			2,167,138				3,799			0.71	%
Certificates of deposit		1,500,429				14,230			3.81	%			1,477,474				13,231			3.55	%			810,821				2,655			1.33	%
Total interest-bearing deposits		8,345,278				44,613			2.15	%			8,146,293				39,342			1.92	%			7,372,796				9,244			0.51	%
Non-interest-bearing deposits		4,711,922				—			—	%			5,036,523				—			—	%			5,960,791				—			—	%
Total deposits		13,057,200				44,613			1.37	%			13,182,816				39,342			1.18	%			13,333,587				9,244			0.28	%
Other interest-bearing liabilities:
FHLB advances		212,989				2,972			5.61	%			129,630				1,870			5.72	%			105,984				1,264			4.84	%
Other borrowings		180,692				1,175			2.62	%			185,518				1,125			2.41	%			229,459				381			0.67	%
Junior subordinated debentures and subordinated notes		181,579				2,969			6.58	%			182,678				2,992			6.50	%			189,178				2,760			5.92	%
Total borrowings		575,260				7,116			4.98	%			497,826				5,987			4.77	%			524,621				4,405			3.41	%
Total funding liabilities		13,632,460				51,729			1.53	%			13,680,642				45,329			1.31	%			13,858,208				13,649			0.40	%
Other non-interest-bearing liabilities(2)		303,412											311,539											293,205
Total liabilities		13,935,872											13,992,181											14,151,413
Shareholders’ equity		1,651,918											1,539,934											1,502,323
Total liabilities and shareholders’ equity	$	15,587,790										$	15,532,115										$	15,653,736
Net interest income/rate spread (tax equivalent)					$	136,010			3.63	%						$	141,439			3.75	%						$	156,179			4.28	%
Net interest margin (tax equivalent)									3.74	%										3.83	%										4.30	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis						(3,051	)										(3,030	)										(2,867	)
Net interest income and margin, as reported					$	132,959			3.65	%						$	138,409			3.75	%						$	153,312			4.22	%
Additional Key Financial Ratios:
Return on average assets									0.97	%										1.09	%										1.44	%
Adjusted return on average assets(4)									1.08	%										1.18	%										1.60	%
Return on average equity									9.14	%										10.98	%										15.00	%
Adjusted return on average equity(4)									10.24	%										11.89	%										16.63	%
Average equity/average assets									10.60	%										9.91	%										9.60	%
Average interest-earning assets/average interest-bearing liabilities									164.16	%										169.55	%										186.55	%
Average interest-earning assets/average funding liabilities									107.42	%										107.13	%										106.31	%
Non-interest income/average assets									0.30	%										0.36	%										0.24	%
Non-interest expense/average assets									2.52	%										2.47	%										2.45	%
Efficiency ratio									67.55	%										63.37	%										58.20	%
Adjusted efficiency ratio(4)									63.70	%										60.04	%										54.23	%

(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 for both the quarters ended March 31, 2024 and December 31, 2023 and was $1.7 million for the quarter ended March 31, 2023. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million, for both the quarters ended March 31, 2024 and December 31, 2023 and was $1.2 million for the quarter ended March 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)

* 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
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Net interest income (GAAP)		$	132,959			$	138,409			$	153,312
Non-interest income (GAAP)			11,591				14,052				9,277
Total revenue (GAAP)			144,550				152,461				162,589
Exclude: Net loss on sale of securities			4,903				4,806				7,252
Net change in valuation of financial instruments carried at fair value			992				(139	)			552
Adjusted revenue (non-GAAP)		$	150,445			$	157,128			$	170,393

ADJUSTED EARNINGS		Quarters Ended
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Net income (GAAP)		$	37,559			$	42,624			$	55,555
Exclude: Net loss on sale of securities			4,903				4,806				7,252
Net change in valuation of financial instruments carried at fair value			992				(139	)			552
Banner Forward expenses (1)			—				—				143
Related net tax benefit			(1,415	)			(1,121	)			(1,907	)
Total adjusted earnings (non-GAAP)		$	42,039			$	46,170			$	61,595
Diluted earnings per share (GAAP)		$	1.09			$	1.24			$	1.61
Diluted adjusted earnings per share (non-GAAP)		$	1.22			$	1.34			$	1.79
Return on average assets			0.97	%			1.09	%			1.44	%
Adjusted return on average assets (2)			1.08	%			1.18	%			1.60	%
Return on average equity			9.14	%			10.98	%			15.00	%
Adjusted return on average equity (3)			10.24	%			11.89	%			16.63	%

(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
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Non-interest expense (GAAP)		$	97,641			$	96,621			$	94,621
Exclude: Banner Forward expenses (1)			—				—				(143	)
CDI amortization			(723	)			(858	)			(1,050	)
State/municipal tax expense			(1,304	)			(1,372	)			(1,300	)
REO operations			220				(47	)			277
Adjusted non-interest expense (non-GAAP)		$	95,834			$	94,344			$	92,405
Net interest income (GAAP)		$	132,959			$	138,409			$	153,312
Non-interest income (GAAP)			11,591				14,052				9,277
Total revenue (GAAP)			144,550				152,461				162,589
Exclude: Net loss on sale of securities			4,903				4,806				7,252
Net change in valuation of financial instruments carried at fair value			992				(139	)			552
Adjusted revenue (non-GAAP)		$	150,445			$	157,128			$	170,393
Efficiency ratio (GAAP)			67.55	%			63.37	%			58.20	%
Adjusted efficiency ratio (non-GAAP) (2)			63.70	%			60.04	%			54.23	%

(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
		Mar 31, 2024				Dec 31, 2023				Mar 31, 2023
Shareholders’ equity (GAAP)		$	1,664,508			$	1,652,691			$	1,531,695
Exclude goodwill and other intangible assets, net			378,082				378,805				381,511
Tangible common shareholders’ equity (non-GAAP)		$	1,286,426			$	1,273,886			$	1,150,184
Total assets (GAAP)		$	15,518,279			$	15,670,391			$	15,533,603
Exclude goodwill and other intangible assets, net			378,082				378,805				381,511
Total tangible assets (non-GAAP)		$	15,140,197			$	15,291,586			$	15,152,092
Common shareholders’ equity to total assets (GAAP)			10.73	%			10.55	%			9.86	%
Tangible common shareholders’ equity to tangible assets (non-GAAP)			8.50	%			8.33	%			7.59	%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Shareholders’ equity (GAAP)		$	1,664,508			$	1,652,691			$	1,531,695
Tangible common shareholders’ equity (non-GAAP)		$	1,286,426			$	1,273,886			$	1,150,184
Common shares outstanding at end of period			34,395,221				34,348,369				34,308,540
Common shareholders’ equity (book value) per share (GAAP)		$	48.39			$	48.12			$	44.64
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)		$	37.40			$	37.09			$	33.52

 

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The Banner Stock at the time of publication of the news with a raise of +0,42 % to 43,15USD on Nasdaq stock exchange (17. April 2024, 21:49 Uhr).