• Banner Corporation Reports Net Income of $49.1 Million, or $1.43 Per Diluted Share, for Third Quarter 2022; Declares Quarterly Cash Dividend of $0.44 Per Share

    المصدر: Nasdaq GlobeNewswire / 19 أكتوبر 2022 16:00:01   America/New_York

    WALLA WALLA, Wash., Oct. 19, 2022 (GLOBE NEWSWIRE) -- Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $49.1 million, or $1.43 per diluted share, for the third quarter of 2022, a 2% increase compared to $48.0 million, or $1.39 per diluted share, for the preceding quarter and a 2% decrease compared to $49.9 million, or $1.44 per diluted share, for the third quarter of 2021. Banner’s third quarter 2022 results include $6.1 million of provision for credit losses, compared to $4.5 million of provision for credit losses in the preceding quarter and $8.6 million in recapture of provision for credit losses in the third quarter of 2021. In addition, Banner recognized a $7.8 million gain related to the branch sale completed during the preceding quarter. For the first nine months of 2022, net income was $141.0 million, or $4.09 per diluted share, compared to net income of $151.1 million, or $4.32 per diluted share for the same period a year earlier. Banner’s first nine months of 2022 results include $3.7 million in provision for credit losses, compared to $28.1 million in recapture of provision for credit losses in the first nine months of 2021.

    Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.44 per share. The dividend will be payable November 10, 2022, to common shareholders of record on October 31, 2022.

    “Banner’s third quarter operating results reflect the continued successful execution of our super community bank strategy, and the ongoing implementation of Banner Forward,” said Mark Grescovich, President and CEO. “Our performance for the third quarter of 2022 benefited from solid loan growth and higher yields on interest-earning assets that led to net interest margin expansion. Our continued focus on fostering new client relationships contributed to our 10% growth in loans, excluding PPP loans, compared to September 30, 2021. We remain well positioned for rising interest rates with an asset sensitive position, which should further expand our net interest margin, and ample on-balance sheet liquidity to support loan demand and mitigate rising deposit costs. Our goal of consistently delivering outstanding service and value to our clients, communities, colleagues and shareholders while meeting our performance objectives continues to guide our success.”

    “During the third quarter of 2021 we began implementing Banner Forward, a bank-wide initiative to enhance revenue growth and reduce operating expense,” said Grescovich. “Banner Forward is focused on accelerating growth in commercial banking, deepening relationships with retail clients, and advancing technology strategies to enhance our digital service channels, while streamlining underwriting and back office processes. The revenue enhancements associated with Banner Forward are already starting to have a positive impact on earnings, and the implementation of the revenue initiatives are expected to continue ramping up over the fourth quarter and into 2023. The remaining efficiency-related initiatives associated with Banner Forward are anticipated to be implemented during the fourth quarter, and we expect full implementation of Banner Forward by the end of next year. During the third quarter of 2022, we incurred expenses of $411,000 related to Banner Forward.”

    At September 30, 2022, Banner Corporation had $16.36 billion in assets, $9.69 billion in net loans and $14.23 billion in deposits. Banner operates 137 full service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

    Third Quarter 2022 Highlights

    • Revenues increased 4% to $162.0 million, compared to $156.2 million in the preceding quarter, and increased 4% compared to $155.5 million in the third quarter a year ago.
    • Net interest income increased 14% to $146.4 million in the third quarter of 2022, compared to $129.0 million in the preceding quarter and increased 13%, compared to $130.1 million in the third quarter a year ago.
    • Net interest margin, on a tax equivalent basis, was 3.85%, compared to 3.44% in the preceding quarter and 3.47% in the third quarter a year ago.
    • Mortgage banking revenues decreased 97% to $105,000, compared to $4.0 million in the preceding quarter, and decreased 99% compared to $9.6 million in the third quarter a year ago.
    • Return on average assets was 1.18%, compared to 1.16% in the preceding quarter and 1.20% in the third quarter a year ago.
    • Net loans receivable increased 4% to $9.69 billion at September 30, 2022, compared to $9.33 billion at June 30, 2022, and increased 7% compared to $9.08 billion at September 30, 2021.
    • Non-performing assets decreased to $15.6 million, or 0.10% of total assets, at September 30, 2022, compared to $19.1 million, or 0.12% of total assets at June 30, 2022, and $29.7 million, or 0.18% of total assets, at September 30, 2021.
    • The allowance for credit losses - loans was $135.9 million, or 1.38% of total loans receivable, as of September 30, 2022, compared to $128.7 million, or 1.36% of total loans receivable as of June 30, 2022 and $139.9 million, or 1.52% of total loans receivable as of September 30, 2021.
    • Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased to $13.51 billion at September 30, 2022, compared to $13.46 billion at June 30, 2022, and $13.31 billion a year ago. Core deposits represented 95% of total deposits at September 30, 2022.
    • Dividends to shareholders were $0.44 per share in the quarter ended September 30, 2022.
    • Common shareholders’ equity per share decreased 5% to $41.20 at September 30, 2022, compared to $43.46 at the preceding quarter end, and decreased 15% from $48.67 a year ago.
    • Tangible common shareholders’ equity per share* decreased 7% to $29.97 at September 30, 2022, compared to $32.20 at the preceding quarter end, and decreased 20% from $37.30 a year ago.

    *Non-GAAP (Generally Accepted Accounting Principles) measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

    Income Statement Review

    Net interest income was $146.4 million in the third quarter of 2022, compared to $129.0 million in the preceding quarter and $130.1 million in the third quarter a year ago. Banner’s net interest margin on a tax equivalent basis was 3.85% for the third quarter of 2022, a 41 basis-point increase compared to 3.44% in the preceding quarter and a 38 basis-point increase compared to 3.47% in the third quarter a year ago. “Rising market interest rates during the quarter produced higher yields on loans and investment securities which improved our net interest margin. Our net interest margin was also enhanced by increases in average loan balances during the quarter,” said Grescovich.

    Average yields on interest-earning assets increased 43 basis points to 3.97% for the third quarter of 2022 compared to 3.54% for the preceding quarter and increased 35 basis points compared to 3.62% in the third quarter a year ago. Since March 2022, in response to inflation, the Federal Open Market Committee (“FOMC”) of the Federal Reserve System has increased the target range for the federal funds rate by 300 basis points, including 150 basis points during the third quarter of 2022, to a range of 3.00% to 3.25%. The increase in average yields on interest-earning assets 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. Average loan yields increased 28 basis points to 4.82% compared to 4.54% in the preceding quarter and decreased six basis points compared to 4.88% in the third quarter a year ago. The increase in average loan yields during the current quarter compared to the preceding quarter was primarily the result of rising interest rates as well as increases in average loan balances. The year-over-year decrease in average loan yields was primarily the result of a decline in the recognition of deferred loan fee income due to loan repayments from SBA PPP loan forgiveness compared to the prior year quarter. Total deposit costs were 0.07% in the third quarter of 2022, which was a one basis-point increase compared to the preceding quarter and a one basis-point decrease compared to the third quarter a year ago. The total cost of funding liabilities was 0.13% during the third quarter of 2022, a two basis-point increase compared to the preceding quarter and a three basis-point decrease compared to 0.16% in the third quarter a year ago.

    Banner recorded a $6.1 million provision for credit losses in the current quarter (comprised of a $6.3 million provision for credit losses - loans, a $205,000 recapture of provision for credit losses - unfunded loan commitments and a $55,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $4.5 million provision for credit losses in the prior quarter (comprised of a $3.1 million provision for credit losses - loans, a $1.4 million provision for credit losses - unfunded loan commitments and a $4,000 provision for credit losses - held-to-maturity debt securities) and a $8.6 million recapture of provision for credit losses in the third quarter a year ago (comprised of an $8.9 million recapture of provision for credit losses - loans, a $218,000 provision for credit losses - unfunded loan commitments and a $6,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current and preceding quarter primarily reflects loan growth and, to a lesser extent, a deterioration in forecasted economic conditions and indicators utilized to estimate credit losses.

    Total non-interest income was $15.6 million in the third quarter of 2022, compared to $27.2 million in the preceding quarter and $25.3 million in the third quarter a year ago. The decrease in non-interest income during the current quarter, compared to the prior quarter was primarily due to a $7.8 million gain recognized on the branch sale completed during the prior quarter, as well as a $3.9 million decrease in mortgage banking revenues. Deposit fees and other service charges were $11.4 million in the third quarter of 2022, compared to $11.0 million in the preceding quarter and $10.5 million in the third quarter a year ago. The increase in deposit fees and other service charges from the third quarter a year ago primarily reflects increased deposit transaction account activity and the benefit from implementing Banner Forward initiatives. Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, decreased to $105,000 in the third quarter, compared to $4.0 million in the preceding quarter and $9.6 million in the third quarter a year ago. The decrease from the preceding quarter and from the third quarter of 2021 primarily reflects a reduction in the volume and a decrease in the gain on sale margin for one- to four-family loans sold along with a negative fair market adjustment on multifamily held for sale loans. The reduction in one-to four family loans sold primarily reflects a reduction in refinancing activity, as well as decreased purchase activity as interest rates increased during the current quarter. Home purchase activity accounted for 88% of one- to four-family mortgage loan originations in the third quarter of 2022, compared to 82% in the preceding quarter and was 68% in the third quarter of 2021. Mortgage banking revenue included a $2.2 million and $458,000 lower of cost or market downward adjustment recorded for the current quarter and preceding quarter, respectively, on multifamily held for sale loans due to increases in market interest rates this year.

    Banner’s third quarter 2022 results included a $532,000 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 $6,000 net gain on the sale of securities. In the preceding quarter, results included a $69,000 net gain for fair value adjustments and a $32,000 net gain on the sale of securities. In the third quarter a year ago, results included a $1.8 million net gain for fair value adjustments and a $56,000 net gain on the sale of securities.

    Total revenue increased 4% to $162.0 million for the third quarter of 2022, compared to $156.2 million in the preceding quarter, and increased 4% compared to $155.5 million in the third quarter of 2021. Adjusted revenue* (the total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities, the net change in valuation of financial instruments, and the gain on sale of branches) was $161.5 million in the third quarter of 2022, compared to $148.3 million in the preceding quarter and $153.6 million in the third quarter a year ago. In the first nine months of the year, adjusted revenue* was $447.4 million, compared to $444.8 million in the first nine months of 2021.

    Total non-interest expense was $95.0 million in the third quarter of 2022, compared to $92.1 million in the preceding quarter and $102.1 million in the third quarter of 2021. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects an $807,000 increase in salary and employee benefits expenses, primarily due to an increase in bonus and commission expense, a $1.2 million decrease in capitalized loan origination costs, primarily due to decreases in production for one- to four-family residential and construction loans, and an $806,000 increase in information / computer data services expense, primarily due to an increase in computer software expenses, partially offset by a $1.3 million decrease in occupancy and equipment expense, primarily due to a reduction in building rent expense during the current quarter as the result of exiting a large lease agreement in the second quarter of 2022. The year-over-year quarterly decrease in non-interest expense primarily reflects a decrease in professional and legal expenses, primarily due to a reduction in consultant expense, and a reduction in occupancy and equipment expense, due to the previously mentioned reduction in building rent expense, partially offset by an increase in salary and employee benefits expense and a decrease in capitalized loan origination costs. Year-to-date, total non-interest expense was $278.3 million, compared to $288.3 million in the same period a year earlier. Banner’s efficiency ratio was 58.65% for the second quarter, compared to 58.94% in the preceding quarter and 65.70% in same quarter a year ago. Banner’s adjusted efficiency ratio* was 57.04% for the second quarter, compared to 59.46% in the preceding quarter and 59.65% in the year ago quarter.

    For the third quarter of 2022, Banner had $11.8 million in state and federal income tax expense for an effective tax rate of 19.4%, reflecting the benefits from tax exempt income. Banner’s statutory income tax rate is 23.6%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

    * Non-GAAP measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

    Balance Sheet Review

    Total assets decreased slightly to $16.36 billion at September 30, 2022, compared to $16.39 billion at June 30, 2022, and decreased 2% when compared to $16.64 billion at September 30, 2021. The total of securities and interest-bearing deposits held at other banks was $5.01 billion at September 30, 2022, compared to $5.45 billion at June 30, 2022 and $6.03 billion at September 30, 2021. The average effective duration of Banner's securities portfolio was approximately 6.4 years at September 30, 2022, compared to 4.4 years at September 30, 2021.

    Total loans receivable increased to $9.83 billion at September 30, 2022, compared to $9.46 billion at June 30, 2022, and $9.22 billion at September 30, 2021. Excluding SBA PPP loans, total loans receivable increased $387.9 million from the preceding quarter and increased $905.5 million from the third quarter a year ago. SBA PPP loans decreased 57% to $13.4 million at September 30, 2022, compared to $31.0 million at June 30, 2022, and decreased 96% when compared to $310.2 million at September 30, 2021. One- to four-family residential loans increased to $1.03 billion at September 30, 2022, compared to $868.2 million at June 30, 2022, and $656.0 million a year ago. The increase in one- to four-family residential loans from the preceding quarter was primarily the result of new production and one- to four-family construction loans converting to one- to four-family portfolio loans as they matured during the third quarter of 2022. Multifamily real estate loans increased 3% to $592.8 million at September 30, 2022, compared to $575.2 million at June 30, 2022, and increased 19% compared to $497.5 million a year ago. Commercial real estate loans decreased slightly to $3.66 billion at September 30, 2022, compared to $3.67 billion at June 30, 2022 and decreased 3% when compared to $3.78 billion at September 30, 2021. Commercial business loans increased 4% to $2.15 billion at September 30, 2022, compared to $2.07 billion at June 30, 2022, and increased 1% compared to $2.12 billion a year ago. Excluding SBA PPP loans, commercial business loans increased 5% to $2.14 billion at September 30, 2022, compared to $2.04 billion at June 30, 2022, and increased 18% compared to $1.81 billion a year ago. Agricultural business loans increased to $299.4 million at September 30, 2022, compared to $283.4 million at June 30, 2022, and increased from $281.1 million a year ago. Total construction, land and land development loans were $1.44 billion at September 30, 2022, a 3% increase from $1.40 billion at June 30, 2022, and a 9% increase from $1.33 billion at September 30, 2021. Consumer loans increased to $662.2 million at September 30, 2022, compared to $595.6 million at June 30, 2022, and increased from $561.2 million a year ago. The increase in consumer loans was partially due to the purchase of a $25.6 million pool of consumer marine loans during the current quarter.

    Loans held for sale were $84.4 million at September 30, 2022, compared to $69.2 million at June 30, 2022, and $63.7 million at September 30, 2021. The volume of one- to four- family residential mortgage loans sold was $49.7 million in the current quarter, compared to $88.6 million in the preceding quarter and $232.2 million in the third quarter a year ago. Banner sold $10.5 million of multifamily loans during the third quarter of 2022, compared to none in the preceding quarter and $96.1 million in the third quarter a year ago.

    Total deposits increased slightly to $14.23 billion at September 30, 2022, compared to $14.21 billion at June 30, 2022, and $14.16 billion a year ago. Non-interest-bearing account balances increased 2% to $6.51 billion at September 30, 2022, compared to $6.39 billion at June 30, 2022, and increased 2% compared to $6.40 billion a year ago. Core deposits were 95% of total deposits at both September 30, 2022 and June 30, 2022 and were 94% of total deposits at September 30, 2021. Certificates of deposit decreased to $721.9 million at September 30, 2022, compared to $756.3 million at June 30, 2022, and decreased 15% compared to $851.1 million a year earlier. Banner had no FHLB borrowings at both September 30, 2022 and June 30, 2022, compared to $50.0 million a year ago.

    At September 30, 2022, total common shareholders’ equity was $1.41 billion, or 8.61% of assets, compared to $1.49 billion or 9.07% of assets at June 30, 2022, and $1.67 billion or 10.02% of assets a year ago. The decrease in total common shareholders’ equity during the current quarter was primarily due to a $113.3 million decrease in accumulated other comprehensive income related to an increase in the unrealized loss on available for sale securities reflecting the increase in market interest rates during the current quarter. The decrease from the prior year, reflects a $384.1 million decrease in accumulated other comprehensive income and also includes the repurchase of 200,000 shares of common stock in the second quarter of 2022 at an average cost of $54.80 per share. At September 30, 2022, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.02 billion, or 6.41% of tangible assets*, compared to $1.10 billion, or 6.88% of tangible assets, at June 30, 2022, and $1.28 billion, or 7.86% of tangible assets, a year ago. Banner’s tangible book value per share* decreased to $29.97 at September 30, 2022, compared to $32.20 at June 30, 2022, and $37.30 per share a year ago.

    Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At September 30, 2022, Banner's common equity Tier 1 capital ratio was 11.27%, its Tier 1 leverage capital to average assets ratio was 9.06%, and its total capital to risk-weighted assets ratio was 13.85%.

    * Non-GAAP measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

    Credit Quality

    The allowance for credit losses - loans was $135.9 million at September 30, 2022, or 1.38% of total loans receivable and 895% of non-performing loans, compared to $128.7 million at June 30, 2022, or 1.36% of total loans receivable and 688% of non-performing loans, and $139.9 million at September 30, 2021, or 1.52% of total loans receivable and 485% of non-performing loans. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $14.0 million at September 30, 2022, compared to $14.2 million at June 30, 2022 and $10.1 million at September 30, 2021. Net loan recoveries totaled $869,000 in the third quarter of 2022, compared to $87,000 in the preceding quarter and $756,000 in the third quarter a year ago. Non-performing loans were $15.2 million at September 30, 2022, compared to $18.7 million at June 30, 2022, and $28.9 million a year ago.

    Banner’s total substandard loans were $136.4 million at September 30, 2022, compared to $154.5 million at June 30, 2022, and $225.8 million a year ago. The quarter over quarter decrease primarily reflects risk rating upgrades.

    Banner’s total non-performing assets were $15.6 million, or 0.10% of total assets, at September 30, 2022, compared to $19.1 million, or 0.12% of total assets, at June 30, 2022, and $29.7 million, or 0.18% of total assets, a year ago.

    Conference Call

    Banner will host a conference call on Thursday October 20, 2022, at 8:00 a.m. PDT, to discuss its third quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (844) 200-6205 using access code 664717 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 067235 or at www.bannerbank.com.

    About the Company

    Banner Corporation is a $16.36 billion bank holding company operating one 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 caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses to the COVID-19 pandemic, including the possibility of new COVID-19 variants; (2) 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; (3) 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; (4) competitive pressures among depository institutions; (5) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (6) uncertainty regarding the future of the London Interbank Offered Rate (LIBOR), and the transition away from LIBOR toward new interest rate benchmarks; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (10) the ability to access cost-effective funding; (11) 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; (12) changes in financial markets; (13) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular, including the risk of inflation; (14) the costs, effects and outcomes of litigation; (15) 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; (16) changes in accounting principles, policies or guidelines; (17) future acquisitions by Banner of other depository institutions or lines of business; (18) future goodwill impairment due to changes in Banner’s business, changes in market conditions;(19) the costs associated with Banner Forward and (20) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (21) other risks detailed from time to time in Banner’s filings with 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 Nine Months Ended
    (in thousands except shares and per share data) Sep 30, 2022 Jun 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
               
    INTEREST INCOME:          
    Loans receivable $116,610  $104,506  $116,487  $321,466  $340,802 
    Mortgage-backed securities  17,558   16,819   11,695   48,486   32,503 
    Securities and cash equivalents  16,951   11,676   7,686   37,059   20,649 
       151,119   133,001   135,868   407,011   393,954 
    INTEREST EXPENSE:          
    Deposits  2,407   2,008   2,749   6,501   9,386 
    Federal Home Loan Bank advances        655   291   2,244 
    Other borrowings  81   80   125   245   358 
    Subordinated debt  2,188   1,902   2,193   5,866   6,605 
       4,676   3,990   5,722   12,903   18,593 
    Net interest income  146,443   129,011   130,146   394,108   375,361 
    PROVISION (RECAPTURE) FOR CREDIT LOSSES  6,087   4,534   (8,638)  3,660   (28,145)
    Net interest income after provision (recapture) for credit losses  140,356   124,477   138,784   390,448   403,506 
    NON-INTEREST INCOME:          
    Deposit fees and other service charges  11,449   11,000   10,457   33,638   29,154 
    Mortgage banking operations  105   3,978   9,613   8,523   28,305 
    Bank-owned life insurance  1,804   2,239   1,245   5,674   3,797 
    Miscellaneous  1,689   2,051   2,185   5,423   8,173 
       15,047   19,268   23,500   53,258   69,429 
    Net gain on sale of securities  6   32   56   473   618 
    Net change in valuation of financial instruments carried at fair value  532   69   1,778   650   1,895 
    Gain on sale of branches, including related deposits     7,804      7,804    
    Total non-interest income  15,585   27,173   25,334   62,185   71,942 
    NON-INTEREST EXPENSE:          
    Salary and employee benefits  61,639   60,832   59,799   181,957   186,553 
    Less capitalized loan origination costs  (5,984)  (7,222)  (8,290)  (19,436)  (26,754)
    Occupancy and equipment  12,008   13,284   13,153   38,512   38,965 
    Information / computer data services  6,803   5,997   6,110   19,451   17,915 
    Payment and card processing services  5,508   5,682   6,181   16,086   15,482 
    Professional and legal expenses  2,619   2,878   12,324   7,677   20,023 
    Advertising and marketing  1,326   822   1,521   2,609   3,965 
    Deposit insurance  1,946   1,440   1,469   4,910   4,243 
    State/municipal business and use taxes  1,223   1,004   1,219   3,389   3,367 
    Real estate operations  68   (121)  53   (132)  (71)
    Amortization of core deposit intangibles  1,215   1,425   1,575   4,064   4,997 
    Loss on extinguishment of debt           793    
    Miscellaneous  6,663   6,032   6,977   18,402   18,642 
       95,034   92,053   102,091   278,282   287,327 
    COVID-19 expenses        44      309 
    Merger and acquisition-related expenses        10      660 
    Total non-interest expense  95,034   92,053   102,145   278,282   288,296 
    Income before provision for income taxes  60,907   59,597   61,973   174,351   187,152 
    PROVISION FOR INCOME TAXES  11,837   11,632   12,089   33,353   36,031 
    NET INCOME $49,070  $47,965  $49,884  $140,998  $151,121 
    Earnings per common share:          
    Basic $1.43  $1.40  $1.45  $4.11  $4.35 
    Diluted $1.43  $1.39  $1.44  $4.09  $4.32 
    Cumulative dividends declared per common share $0.44  $0.44  $0.41  $1.32  $1.23 
    Weighted average number of common shares outstanding:          
    Basic  34,224,640   34,307,001   34,446,510   34,277,182   34,716,914 
    Diluted  34,416,017   34,451,740   34,669,492   34,499,246   35,012,228 
    Increase (decrease) in common shares outstanding  429   (181,454)  (298,897)  (60,873)  (907,209)


    FINANCIAL CONDITION         Percentage Change
    (in thousands except shares and per share data) Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021 Prior Qtr Prior Yr Qtr
                 
    ASSETS            
    Cash and due from banks $273,052  $294,717  $358,461  $392,035  (7.4)% (30.4)%
    Interest-bearing deposits  548,869   876,130   1,775,839   1,808,547  (37.4)% (69.7)%
    Total cash and cash equivalents  821,921   1,170,847   2,134,300   2,200,582  (29.8)% (62.6)%
    Securities - trading  28,383   27,886   26,981   26,875  1.8% 5.6%
    Securities - available for sale  2,996,173   3,094,422   3,638,993   3,446,575  (3.2)% (13.1)%
    Securities - held to maturity  1,132,852   1,151,765   520,922   447,708  (1.6)% 153.0%
    Total securities  4,157,408   4,274,073   4,186,896   3,921,158  (2.7)% 6.0%
    Federal Home Loan Bank stock  10,000   10,000   12,000   12,000  % (16.7)%
    Securities purchased under agreements to resell  300,000   300,000   300,000   300,000  % %
    Loans held for sale  84,358   69,161   96,487   63,678  22.0% 32.5%
    Loans receivable  9,827,096   9,456,829   9,084,763   9,218,384  3.9% 6.6%
    Allowance for credit losses - loans  (135,918)  (128,702)  (132,099)  (139,915) 5.6% (2.9)%
    Net loans receivable  9,691,178   9,328,127   8,952,664   9,078,469  3.9% 6.7%
    Accrued interest receivable  50,689   45,408   42,916   43,644  11.6% 16.1%
    Real estate owned (REO) held for sale, net  340   340   852   852  % (60.1)%
    Property and equipment, net  141,280   141,114   148,759   151,503  0.1% (6.7)%
    Goodwill  373,121   373,121   373,121   373,121  % %
    Other intangibles, net  10,655   11,870   14,855   16,429  (10.2)% (35.1)%
    Bank-owned life insurance  295,443   293,631   244,156   192,950  0.6% 53.1%
    Operating lease right-of-use assets  51,908   49,792   55,257   58,523  4.2% (11.3)%
    Other assets  372,508   317,713   242,609   224,970  17.2% 65.6%
    Total assets $16,360,809  $16,385,197  $16,804,872  $16,637,879  (0.1)% (1.7)%
    LIABILITIES            
    Deposits:            
    Non-interest-bearing $6,507,523  $6,388,815  $6,385,177  $6,400,864  1.9% 1.7%
    Interest-bearing transaction and savings accounts  7,004,799   7,067,437   7,103,125   6,912,759  (0.9)% 1.3%
    Interest-bearing certificates  721,944   756,312   838,631   851,054  (4.5)% (15.2)%
    Total deposits  14,234,266   14,212,564   14,326,933   14,164,677  0.2% 0.5%
    Advances from Federal Home Loan Bank (FHLB)        50,000   50,000  % (100.0)%
    Other borrowings  234,006   234,737   264,490   247,358  (0.3)% (5.4)%
    Subordinated notes, net  98,849   98,752   98,564   98,472  0.1% 0.4%
    Junior subordinated debentures at fair value  73,841   72,229   119,815   124,853  2.2% (40.9)%
    Operating lease liabilities  58,031   55,746   59,756   62,946  4.1% (7.8)%
    Accrued expenses and other liabilities  209,226   180,999   148,303   175,960  15.6% 18.9%
    Deferred compensation  43,931   44,340   46,684   46,494  (0.9)% (5.5)%
    Total liabilities  14,952,150   14,899,367   15,114,545   14,970,760  0.4% (0.1)%
    SHAREHOLDERS’ EQUITY            
    Common stock  1,291,741   1,289,499   1,299,381   1,297,145  0.2% (0.4)%
    Retained earnings  486,108   452,246   390,762   355,035  7.5% 36.9%
    Accumulated other comprehensive (loss) income  (369,190)  (255,915)  184   14,939  44.3% (2,571.3)%
    Total shareholders’ equity  1,408,659   1,485,830   1,690,327   1,667,119  (5.2)% (15.5)%
    Total liabilities and shareholders’ equity $16,360,809  $16,385,197  $16,804,872  $16,637,879  (0.1)% (1.7)%
    Common Shares Issued:            
    Shares outstanding at end of period  34,191,759   34,191,330   34,252,632   34,251,991     
    Common shareholders’ equity per share(1) $41.20  $43.46  $49.35  $48.67     
    Common shareholders’ tangible equity per share(1) (2) $29.97  $32.20  $38.02  $37.30     
    Common shareholders’ tangible equity to tangible assets(2)  6.41%  6.88%  7.93%  7.86%    
    Consolidated Tier 1 leverage capital ratio  9.06%  8.74%  8.76%  8.79%    


    (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 excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final two pages of the press release tables.


    ADDITIONAL FINANCIAL INFORMATION            
    (dollars in thousands)            
              Percentage Change
    LOANS(1) Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021 Prior Qtr Prior Yr Qtr
                 
    Commercial real estate (CRE):            
    Owner-occupied $862,792  $845,184  $831,623  $823,477  2.1% 4.8%
    Investment properties  1,604,881   1,628,105   1,674,027   1,667,098  (1.4)% (3.7)%
    Small balance CRE  1,188,351   1,191,903   1,281,863   1,284,596  (0.3)% (7.5)%
    Multifamily real estate  592,834   575,183   530,885   497,517  3.1% 19.2%
    Construction, land and land development:            
    Commercial construction  171,029   193,984   167,998   168,663  (11.8)% 1.4%
    Multifamily construction  275,488   256,952   259,116   278,184  7.2% (1.0)%
    One- to four-family construction  666,350   625,488   568,753   571,431  6.5% 16.6%
    Land and land development  329,459   320,041   313,454   308,164  2.9% 6.9%
    Commercial business:            
    Commercial business  1,229,490   1,176,287   1,038,206   1,038,417  4.5% 18.4%
    SBA PPP  13,060   30,651   132,574   306,976  (57.4)% (95.7) %
    Small business scored  906,647   865,828   792,310   775,554  4.7% 16.9%
    Agricultural business, including secured by farmland:            
    Agricultural business, including secured by farmland  299,056   283,059   279,224   277,850  5.7% 7.6%
    SBA PPP  344   356   1,354   3,214  (3.4)% (89.3)%
    One- to four-family residential  1,025,143   868,175   657,474   656,011  18.1% 56.3%
    Consumer:            
    Consumer—home equity revolving lines of credit  545,807   506,524   458,533   462,819  7.8% 17.9%
    Consumer—other  116,365   89,109   97,369   98,413  30.6% 18.2%
    Total loans receivable $9,827,096  $9,456,829  $9,084,763  $9,218,384  3.9% 6.6%
    Restructured loans performing under their restructured terms $4,352  $4,370  $5,309  $5,273     
    Loans 30 - 89 days past due and on accrual $15,208  $8,336  $11,558  $6,911     
    Total delinquent loans (including loans on non-accrual), net $21,728  $18,123  $18,688  $18,619     
    Total delinquent loans / Total loans receivable  0.22%  0.19%  0.21%  0.20%    


    (1)December 31, 2021 and September 30, 2021 loan balances were reclassified to match current period presentation.


    LOANS BY GEOGRAPHIC LOCATION           Percentage Change
      Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021 Prior Qtr Prior Yr Qtr
      Amount Percentage Amount Amount Amount    
                   
    Washington $4,648,124 47.3% $4,436,092 $4,264,590 $4,319,008 4.8% 7.6%
    California  2,323,740 23.6%  2,227,532  2,138,340  2,160,280 4.3% 7.6%
    Oregon  1,765,254 18.0%  1,699,238  1,652,364  1,679,452 3.9% 5.1%
    Idaho  588,498 6.0%  562,464  525,141  536,128 4.6% 9.8%
    Utah  95,250 1.0%  94,508  74,913  89,620 0.8% 6.3%
    Other  406,230 4.1%  436,995  429,415  433,896 (7.0)% (6.4)%
    Total loans receivable $9,827,096 100.0% $9,456,829 $9,084,763 $9,218,384 3.9% 6.6%

    ADDITIONAL FINANCIAL INFORMATION
    (dollars in thousands)

    LOAN ORIGINATIONSQuarters Ended
     Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
    Commercial real estate$92,062 $121,365 $174,827
    Multifamily real estate 4,603  2,959  26,155
    Construction and land 444,365  643,832  496,386
    Commercial business:     
    Commercial business 218,044  245,997  229,859
    SBA PPP     907
    Agricultural business 9,879  26,786  9,223
    One-to four-family residential 92,701  126,963  49,594
    Consumer 126,940  193,853  145,102
    Total loan originations (excluding loans held for sale)$988,594 $1,361,755 $1,132,053


    ADDITIONAL FINANCIAL INFORMATION      
    (dollars in thousands)      
      Quarters Ended
    CHANGE IN THE Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
    ALLOWANCE FOR CREDIT LOSSES – LOANS      
    Balance, beginning of period $128,702  $125,471  $148,009 
    Provision (recapture) for credit losses – loans  6,347   3,144   (8,850)
    Recoveries of loans previously charged off:      
    Commercial real estate  88   129   923 
    One- to four-family real estate  25   98   19 
    Commercial business  924   234   230 
    Agricultural business, including secured by farmland  252   14   17 
    Consumer  85   112   227 
       1,374   587   1,416 
    Loans charged off:      
    Construction and land  (25)      
    Commercial business  (138)  (248)  (362)
    Agricultural business, including secured by farmland  (42)     (179)
    Consumer  (300)  (252)  (119)
       (505)  (500)  (660)
    Net recoveries  869   87   756 
    Balance, end of period $135,918  $128,702  $139,915 
    Net recoveries / Average loans receivable  0.009%  0.001%  0.008%


           
    ALLOCATION OF      
    ALLOWANCE FOR CREDIT LOSSES – LOANS Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
    Specific or allocated credit loss allowance:      
    Commercial real estate $44,365  $46,373  $57,215 
    Multifamily real estate  7,114   6,906   6,657 
    Construction and land  27,985   26,939   29,342 
    One- to four-family real estate  12,394   9,573   9,460 
    Commercial business  31,854   28,673   26,873 
    Agricultural business, including secured by farmland  3,455   3,002   3,177 
    Consumer  8,751   7,236   7,191 
    Total allowance for credit losses – loans $135,918  $128,702  $139,915 
    Allowance for credit losses - loans / Total loans receivable  1.38%  1.36%  1.52%
    Allowance for credit losses - loans / Non-performing loans  895%  688%  485%


      Quarters Ended
    CHANGE IN THE Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
    ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS      
    Balance, beginning of period $14,246  $12,860 $9,909
    (Recapture) provision for credit losses - unfunded loan commitments  (205)  1,386  218
    Balance, end of period $14,041  $14,246 $10,127


    ADDITIONAL FINANCIAL INFORMATION       
    (dollars in thousands)       
     Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021
    NON-PERFORMING ASSETS       
    Loans on non-accrual status:       
    Secured by real estate:       
    Commercial$6,997  $10,041  $14,159  $14,931 
    Construction and land 299   200   479   354 
    One- to four-family 2,381   2,002   2,711   3,182 
    Commercial business 1,462   1,521   2,156   2,700 
    Agricultural business, including secured by farmland 594   1,022   1,022   1,022 
    Consumer 1,779   1,874   1,754   1,850 
      13,512   16,660   22,281   24,039 
    Loans more than 90 days delinquent, still on accrual:       
    Secured by real estate:       
    Commercial    899      3,955 
    One- to four-family 1,556   1,053   436   772 
    Commercial business 64   20   2   61 
    Consumer 61   83   117   34 
      1,681   2,055   555   4,822 
    Total non-performing loans 15,193   18,715   22,836   28,861 
    REO 340   340   852   852 
    Other repossessed assets 17   17   17   17 
    Total non-performing assets$15,550  $19,072  $23,705  $29,730 
    Total non-performing assets to total assets 0.10%  0.12%  0.14%  0.18%


     Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021
    LOANS BY CREDIT RISK RATING       
            
    Pass$9,672,473 $9,274,655 $8,874,468 $8,956,604
    Special Mention 18,251  27,711  11,932  36,001
    Substandard 136,372  154,463  198,363  225,779
    Total$9,827,096 $9,456,829 $9,084,763 $9,218,384


     Quarters Ended Nine Months Ended
    REAL ESTATE OWNEDSep 30, 2022 Jun 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
    Balance, beginning of period$340 $429  $763 $852  $816 
    Additions from loan foreclosures      89     512 
    Proceeds from dispositions of REO   (257)    (864)  (783)
    Gain on sale of REO   168     352   307 
    Balance, end of period$340 $340  $852 $340  $852 


    ADDITIONAL FINANCIAL INFORMATION            
    (dollars in thousands)             
                 
    DEPOSIT COMPOSITION         Percentage Change
      Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021 Prior Qtr Prior Yr Qtr
                 
    Non-interest-bearing $6,507,523 $6,388,815 $6,385,177 $6,400,864 1.9% 1.7%
    Interest-bearing checking  1,856,244  1,859,582  1,947,414  1,799,657 (0.2)% 3.1%
    Regular savings accounts  2,824,711  2,801,177  2,784,716  2,773,995 0.8% 1.8%
    Money market accounts  2,323,844  2,406,678  2,370,995  2,339,107 (3.4)% (0.7)%
    Total interest-bearing transaction and savings accounts  7,004,799  7,067,437  7,103,125  6,912,759 (0.9)% 1.3%
    Total core deposits  13,512,322  13,456,252  13,488,302  13,313,623 0.4% 1.5%
    Interest-bearing certificates  721,944  756,312  838,631  851,054 (4.5)% (15.2)%
    Total deposits $14,234,266 $14,212,564 $14,326,933 $14,164,677 0.2% 0.5%


    GEOGRAPHIC CONCENTRATION OF DEPOSITS            
      Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021 Percentage Change
      Amount Percentage Amount Amount Amount Prior Qtr Prior Yr Qtr
    Washington $7,845,755 55.2% $7,820,321 $7,952,376 $7,877,919 0.3% (0.4)%
    Oregon  3,148,520 22.1%  3,123,110  3,067,054  3,030,109 0.8% 3.9%
    California  2,493,977 17.5%  2,520,493  2,524,296  2,501,521 (1.1)% (0.3)%
    Idaho  746,014 5.2%  748,640  783,207  755,128 (0.4)% (1.2)%
    Total deposits $14,234,266 100.0% $14,212,564 $14,326,933 $14,164,677 0.2% 0.5%


    INCLUDED IN TOTAL DEPOSITS Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021
    Public non-interest-bearing accounts $192,742 $220,694 $193,917 $193,414
    Public interest-bearing transaction & savings accounts  172,567  179,930  159,957  161,407
    Public interest-bearing certificates  33,787  37,415  39,961  40,851
    Total public deposits $399,096 $438,039 $393,835 $395,672


    ADDITIONAL FINANCIAL INFORMATION            
    (dollars in thousands)            
      Actual Minimum to be categorized as "Adequately Capitalized" Minimum to be
    categorized as
    "Well Capitalized"
    REGULATORY CAPITAL RATIOS AS OF SEPTEMBER 30, 2022 Amount Ratio Amount Ratio Amount Ratio
                 
    Banner Corporation-consolidated:            
    Total capital to risk-weighted assets $1,716,295 13.85% $991,112 8.00% $1,238,890 10.00%
    Tier 1 capital to risk-weighted assets  1,482,138 11.96%  743,334 6.00%  743,334 6.00%
    Tier 1 leverage capital to average assets  1,482,138 9.06%  654,646 4.00% n/a n/a 
    Common equity tier 1 capital to risk-weighted assets  1,395,638 11.27%  557,500 4.50% n/a n/a 
                      
    Banner Bank:            
    Total capital to risk-weighted assets  1,641,723 13.26%  990,256 8.00%  1,237,820 10.00%
    Tier 1 capital to risk-weighted assets  1,507,566 12.18%  742,692 6.00%  990,256 8.00%
    Tier 1 leverage capital to average assets  1,507,566 9.22%  654,248 4.00%  817,809 5.00%
    Common equity tier 1 capital to risk-weighted assets  1,507,566 12.18%  557,019 4.50%  804,583 6.50%


    ADDITIONAL FINANCIAL INFORMATION                 
    (dollars in thousands)                 
    (rates / ratios annualized)                 
    ANALYSIS OF NET INTEREST SPREADQuarters Ended
     Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
     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$68,608 $676  3.91% $69,338 $655  3.79% $114,938 $996  3.44%
    Mortgage loans 7,841,018  94,581  4.79%  7,565,894  85,408  4.53%  7,245,962  83,803  4.59%
    Commercial/agricultural loans 1,670,595  20,418  4.85%  1,572,957  17,153  4.37%  1,534,978  15,776  4.08%
    SBA PPP loans 21,943  613  11.08%  45,739  1,056  9.26%  566,515  15,421  10.80%
    Consumer and other loans 120,583  1,824  6.00%  117,162  1,683  5.76%  120,112  1,774  5.86%
    Total loans(1) 9,722,747  118,112  4.82%  9,371,090  105,955  4.54%  9,582,505  117,770  4.88%
    Mortgage-backed securities 3,183,837  17,704  2.21%  3,170,915  16,965  2.15%  2,560,027  11,820  1.83%
    Other securities 1,671,305  13,578  3.22%  1,626,204  10,326  2.55%  1,491,035  7,873  2.09%
    Interest-bearing deposits with banks 778,196  4,406  2.25%  1,176,591  2,281  0.78%  1,486,839  586  0.16%
    FHLB stock 10,000  75  2.98%  10,000  100  4.01%  13,957  135  3.84%
    Total investment securities 5,643,338  35,763  2.51%  5,983,710  29,672  1.99%  5,551,858  20,414  1.46%
    Total interest-earning assets 15,366,085  153,875  3.97%  15,354,800  135,627  3.54%  15,134,363  138,184  3.62%
    Non-interest-earning assets 1,100,313      1,282,649      1,301,383    
    Total assets$16,466,398     $16,637,449     $16,435,746    
    Deposits:                 
    Interest-bearing checking accounts$1,862,887  429  0.09% $1,924,896  289  0.06% $1,771,869  282  0.06%
    Savings accounts 2,822,153  481  0.07%  2,841,286  352  0.05%  2,721,028  458  0.07%
    Money market accounts 2,378,851  769  0.13%  2,431,456  531  0.09%  2,322,453  668  0.11%
    Certificates of deposit 740,014  728  0.39%  783,536  836  0.43%  863,971  1,341  0.62%
    Total interest-bearing deposits 7,803,905  2,407  0.12%  7,981,174  2,008  0.10%  7,679,321  2,749  0.14%
    Non-interest-bearing deposits 6,458,749    %  6,456,432    %  6,275,634    %
    Total deposits 14,262,654  2,407  0.07%  14,437,606  2,008  0.06%  13,954,955  2,749  0.08%
    Other interest-bearing liabilities:                 
    FHLB advances     %      %  98,370  655  2.64%
    Other borrowings 242,658  81  0.13%  252,085  80  0.13%  252,720  125  0.20%
    Junior subordinated debentures and subordinated notes 189,178  2,188  4.59%  189,178  1,902  4.03%  247,944  2,193  3.51%
    Total borrowings 431,836  2,269  2.08%  441,263  1,982  1.80%  599,034  2,973  1.97%
    Total funding liabilities 14,694,490  4,676  0.13%  14,878,869  3,990  0.11%  14,553,989  5,722  0.16%
    Other non-interest-bearing liabilities(2) 257,058      239,676      202,918    
    Total liabilities 14,951,548      15,118,545      14,756,907    
    Shareholders’ equity 1,514,850      1,518,904      1,678,839    
    Total liabilities and shareholders’ equity$16,466,398     $16,637,449     $16,435,746    
    Net interest income/rate spread (tax equivalent)  $149,199  3.84%   $131,637  3.43%   $132,462  3.46%
    Net interest margin (tax equivalent)    3.85%     3.44%     3.47%
    Reconciliation to reported net interest income:                 
    Adjustments for taxable equivalent basis   (2,756)      (2,626)      (2,316)  
    Net interest income and margin, as reported  $146,443  3.78%   $129,011  3.37%   $130,146  3.41%
    Additional Key Financial Ratios:                 
    Return on average assets    1.18%     1.16%     1.20%
    Return on average equity    12.85%     12.67%     11.79%
    Average equity/average assets    9.20%     9.13%     10.21%
    Average interest-earning assets/average interest-bearing liabilities    186.58%     182.31%     182.82%
    Average interest-earning assets/average funding liabilities    104.57%     103.20%     103.99%
    Non-interest income/average assets    0.38%     0.66%     0.61%
    Non-interest expense/average assets    2.29%     2.22%     2.47%
    Efficiency ratio(4)    58.65%     58.94%     65.70%
    Adjusted efficiency ratio(5)    57.04%     59.46%     59.65%


    (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 $1.5 million, $1.4 million and $1.3 million for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.3 million, $1.2 million, and $1.0 million for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, 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 the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.


    ADDITIONAL FINANCIAL INFORMATION           
    (dollars in thousands)           
    (rates / ratios annualized)           
    ANALYSIS OF NET INTEREST SPREADNine Months Ended
     Sep 30, 2022 Sep 30, 2021
     Average Balance Interest and Dividends Yield/Cost(3) Average Balance Interest and Dividends Yield/Cost(3)
    Interest-earning assets:           
    Held for sale loans$94,289 $2,446  3.47% $101,380 $2,465  3.25%
    Mortgage loans 7,581,540  261,021  4.60%  7,179,859  245,056  4.56%
    Commercial/agricultural loans 1,574,957  52,582  4.46%  1,511,723  47,513  4.20%
    SBA PPP loans 51,890  4,453  11.47%  958,848  44,009  6.14%
    Consumer and other loans 117,892  5,207  5.91%  123,483  5,549  6.01%
    Total loans(1) 9,420,568  325,709  4.62%  9,875,293  344,592  4.67%
    Mortgage-backed securities 3,110,769  48,904  2.10%  2,320,474  32,855  1.89%
    Other securities 1,624,138  32,333  2.66%  1,265,056  21,648  2.29%
    Equity securities     %  574    %
    Interest-bearing deposits with banks 1,214,076  7,507  0.83%  1,221,241  1,224  0.13%
    FHLB stock 10,579  281  3.55%  14,629  457  4.18%
    Total investment securities 5,959,562  89,025  2.00%  4,821,974  56,184  1.56%
    Total interest-earning assets 15,380,130  414,734  3.61%  14,697,267  400,776  3.65%
    Non-interest-earning assets 1,250,719      1,255,512    
    Total assets$16,630,849     $15,952,779    
    Deposits:           
    Interest-bearing checking accounts$1,915,184  991  0.07% $1,714,920  899  0.07%
    Savings accounts 2,826,757  1,187  0.06%  2,611,046  1,433  0.07%
    Money market accounts 2,400,267  1,806  0.10%  2,284,904  2,111  0.12%
    Certificates of deposit 782,548  2,517  0.43%  888,502  4,943  0.74%
    Total interest-bearing deposits 7,924,756  6,501  0.11%  7,499,372  9,386  0.17%
    Non-interest-bearing deposits 6,445,579    %  6,001,354    %
    Total deposits 14,370,335  6,501  0.06%  13,500,726  9,386  0.09%
    Other interest-bearing liabilities:           
    FHLB advances 13,919  291  2.80%  114,103  2,244  2.63%
    Other borrowings 253,545  245  0.13%  232,142  358  0.21%
    Junior subordinated debentures and subordinated notes 190,103  5,866  4.13%  247,944  6,605  3.56%
    Total borrowings 457,567  6,402  1.87%  594,189  9,207  2.07%
    Total funding liabilities 14,827,902  12,903  0.12%  14,094,915  18,593  0.18%
    Other non-interest-bearing liabilities(2) 241,010      203,349    
    Total liabilities 15,068,912      14,298,264    
    Shareholders’ equity 1,561,937      1,654,515    
    Total liabilities and shareholders’ equity$16,630,849     $15,952,779    
    Net interest income/rate spread (tax equivalent)  $401,831  3.49%   $382,183  3.47%
    Net interest margin (tax equivalent)    3.49%     3.48%
    Reconciliation to reported net interest income:           
    Adjustments for taxable equivalent basis   (7,723)      (6,822)  
    Net interest income and margin, as reported  $394,108  3.43%   $375,361  3.41%
    Additional Key Financial Ratios:           
    Return on average assets    1.13%     1.27%
    Return on average equity    12.07%     12.21%
    Average equity/average assets    9.39%     10.37%
    Average interest-earning assets/average interest-bearing liabilities    183.48%     181.59%
    Average interest-earning assets/average funding liabilities    103.72%     104.27%
    Non-interest income/average assets    0.50%     0.60%
    Non-interest expense/average assets    2.24%     2.42%
    Efficiency ratio(4)    60.99%     64.45%
    Adjusted efficiency ratio(5)    59.39%     60.39%

      

    (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 $4.2 million and $3.8 million for the nine months ended September 30, 2022 and September 30, 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.5 million and $3.0 million for the nine months ended September 30, 2022 and September 30, 2021, 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 the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.


    ADDITIONAL FINANCIAL INFORMATION         
    (dollars in thousands)         
              
    * Non-GAAP Financial Measures         
    In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Tangible common shareholders’ equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments, net gain (loss) on the sale of securities and gain on sale of branches from the total of net interest income and total non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of core deposit intangibles, real estate owned operations, loss on extinguishment of debt and state/municipal taxes from non-interest expense divided by adjusted revenue) represent non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
              
    ADJUSTED REVENUEQuarters Ended Nine Months Ended
     Sep 30, 2022 Jun 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
    Net interest income (GAAP)$146,443  $129,011  $130,146  $394,108  $375,361 
    Non-interest income (GAAP) 15,585   27,173   25,334   62,185   71,942 
    Total revenue (GAAP) 162,028   156,184   155,480   456,293   447,303 
    Exclude net gain on sale of securities (6)  (32)  (56)  (473)  (618)
    Exclude net change in valuation of financial instruments carried at fair value (532)  (69)  (1,778)  (650)  (1,895)
    Exclude gain on sale of branches    (7,804)     (7,804)   
    Adjusted revenue (non-GAAP)$161,490  $148,279  $153,646  $447,366  $444,790 


    ADJUSTED EARNINGSQuarters Ended Nine Months Ended
     Sep 30, 2022 Jun 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
    Net income (GAAP)$49,070  $47,965  $49,884  $140,998  $151,121 
    Exclude net gain on sale of securities (6)  (32)  (56)  (473)  (618)
    Exclude net change in valuation of financial instruments carried at fair value (532)  (69)  (1,778)  (650)  (1,895)
    Exclude merger and acquisition-related expenses       10      660 
    Exclude COVID-19 expenses       44      309 
    Exclude gain on sale of branches    (7,804)     (7,804)   
    Exclude Banner Forward expenses 411   1,579   7,592   4,455   10,447 
    Exclude loss on extinguishment of debt          793    
    Exclude related net tax expense (benefit) 31   1,518   (1,395)  883   (2,137)
    Total adjusted earnings (non-GAAP)$48,974  $43,157  $54,301  $138,202  $157,887 
              
    Diluted earnings per share (GAAP)$1.43  $1.39  $1.44  $4.09  $4.32 
    Diluted adjusted earnings per share (non-GAAP)$1.42  $1.25  $1.57  $4.01  $4.51 


    ADDITIONAL FINANCIAL INFORMATION          
    (dollars in thousands)          
    ADJUSTED EFFICIENCY RATIO Quarters Ended Nine Months Ended
      Sep 30, 2022 Jun 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
    Non-interest expense (GAAP) $95,034  $92,053  $102,145  $278,282  $288,296 
    Exclude merger and acquisition-related expenses        (10)     (660)
    Exclude COVID-19 expenses        (44)     (309)
    Exclude Banner Forward expenses  (411)  (1,579)  (7,592)  (4,455)  (10,447)
    Exclude CDI amortization  (1,215)  (1,425)  (1,575)  (4,064)  (4,997)
    Exclude state/municipal tax expense  (1,223)  (1,004)  (1,219)  (3,389)  (3,367)
    Exclude REO operations  (68)  121   (53)  132   71 
    Exclude loss on extinguishment of debt           (793)   
    Adjusted non-interest expense (non-GAAP) $92,117  $88,166  $91,652  $265,713  $268,587 
               
    Net interest income (GAAP) $146,443  $129,011  $130,146  $394,108  $375,361 
    Non-interest income (GAAP)  15,585   27,173   25,334   62,185   71,942 
    Total revenue (GAAP)  162,028   156,184   155,480   456,293   447,303 
    Exclude net gain on sale of securities  (6)  (32)  (56)  (473)  (618)
    Exclude net change in valuation of financial instruments carried at fair value  (532)  (69)  (1,778)  (650)  (1,895)
    Exclude gain on sale of branches     (7,804)     (7,804)   
    Adjusted revenue (non-GAAP) $161,490  $148,279  $153,646  $447,366  $444,790 
               
    Efficiency ratio (GAAP)  58.65%  58.94%  65.70%  60.99%  64.45%
    Adjusted efficiency ratio (non-GAAP)  57.04%  59.46%  59.65%  59.39%  60.39%


    TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS Sep 30, 2022 Jun 30, 2022 Dec 31, 2021 Sep 30, 2021
    Shareholders’ equity (GAAP) $1,408,659  $1,485,830  $1,690,327  $1,667,119 
    Exclude goodwill and other intangible assets, net  383,776   384,991   387,976   389,550 
    Tangible common shareholders’ equity (non-GAAP) $1,024,883  $1,100,839  $1,302,351  $1,277,569 
             
    Total assets (GAAP) $16,360,809  $16,385,197  $16,804,872  $16,637,879 
    Exclude goodwill and other intangible assets, net  383,776   384,991   387,976   389,550 
    Total tangible assets (non-GAAP) $15,977,033  $16,000,206  $16,416,896  $16,248,329 
    Common shareholders’ equity to total assets (GAAP)  8.61%  9.07%  10.06%  10.02%
    Tangible common shareholders’ equity to tangible assets (non-GAAP)  6.41%  6.88%  7.93%  7.86%
             
    TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE        
    Tangible common shareholders’ equity (non-GAAP) $1,024,883  $1,100,839  $1,302,351  $1,277,569 
    Common shares outstanding at end of period  34,191,759   34,191,330   34,252,632   34,251,991 
    Common shareholders’ equity (book value) per share (GAAP) $41.20  $43.46  $49.35  $48.67 
    Tangible common shareholders’ equity (tangible book value) per share (non-GAAP) $29.97  $32.20  $38.02  $37.30 


    CONTACT:MARK J. GRESCOVICH,
     PRESIDENT & CEO
     PETER J. CONNER, CFO
     (509) 527-3636


     


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