Banner Corporation Reports Net Income of $39.8 Million, or $1.15 Per Diluted Share, for Second Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share

Rhea-AI Summary

Banner (NASDAQ: BANR) reported net income of $39.8 million, or $1.15 per diluted share, for Q2 2024, up from $37.6 million, or $1.09 per share, in the previous quarter.

Net interest income fell to $132.5 million from $133.0 million in Q1 2024 and $142.5 million YoY, due to increased funding costs. The net loss on the sale of securities was $562,000, down from $4.9 million in the prior quarter.

Provision for credit losses rose to $2.4 million. Total revenue was $149.7 million, up from $144.6 million in Q1 2024.

Banner declared a quarterly dividend of $0.48 per share, payable on August 16, 2024, to shareholders of record on August 6, 2024.

Positive

• Net income increased to $39.8 million from $37.6 million in the previous quarter.
• Total revenue rose to $149.7 million in Q2 2024 from $144.6 million in Q1 2024.

Negative

• Net interest income decreased to $132.5 million from $142.5 million YoY.
• Provision for credit losses increased to $2.4 million from $520,000 in Q1 2024.

Insights

Financial Analyst

Banner Corporation's Q2 2024 earnings report provides valuable insights into the company's financial performance. Notably, Banner reported a net income of $39.8 million, or $1.15 per diluted share, indicating stability compared to both the previous quarter and the same quarter last year. This is a positive indicator of stable earnings, which can be reassuring for investors.

However, it's essential to note the decrease in net interest income to $132.5 million from $142.5 million a year ago. This decline reflects the impact of higher funding costs, partially offset by increased yields on earning assets. The net interest margin also saw compression, dropping to 3.70% from 4.00% in the previous year. Investors should be mindful of the persistent high-interest-rate environment and its potential impact on Banner's profitability.

On a positive note, Banner's credit quality remains strong, with a provision for credit losses of just $2.4 million, down significantly from $6.8 million in the same quarter last year. This indicates effective risk management practices. Moreover, the dividend declaration of $0.48 per share continues to provide a steady income stream to shareholders.

In conclusion, while the decrease in net interest income is a concern, Banner's stable earnings, strong credit quality and consistent dividend payments offer a balanced perspective for investors. It's vital to monitor interest rate trends and funding costs in the coming quarters to gauge their ongoing impact on Banner's financials.

Market Research Analyst

The earnings report from Banner Corporation also provides significant insights into the company's market positioning and growth strategies. A standout feature is the increase in net loans receivable by 3% quarter-over-quarter, reaching $10.99 billion. This growth in loans, particularly in one- to four-family residential and construction loans, suggests effective market penetration and demand for mortgage products.

Additionally, the increase in mortgage banking operations revenue to $3.0 million from $1.7 million in the same quarter last year indicates a recovering housing market, which could drive further growth. The emphasis on core deposits, which represent 88% of total deposits, underscores Banner's strong customer base and loyalty in a competitive market environment.

However, total deposits saw a slight decrease to $13.08 billion from $13.16 billion in the previous quarter. This reflects seasonal patterns, but it’s worth watching for any long-term trends that may impact liquidity. The reduction in core deposits year-over-year also requires attention as it could signal changes in customer behavior.

Investors should appreciate Banner's strategic focus on retaining a high percentage of core deposits and expanding its loan portfolio. This strategy can help ensure long-term stability and growth, even amid fluctuations in funding costs and interest rates. Also, the geographical diversification across major western Metropolitan Statistical Areas provides a buffer against localized economic downturns.

WALLA WALLA, Wash.--(BUSINESS WIRE)-- Banner Corporation (NASDAQ: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $39.8 million, or $1.15 per diluted share, for the second quarter of 2024, compared to $37.6 million, or $1.09 per diluted share, for the preceding quarter and $39.6 million, or $1.15 per diluted share, for the second quarter of 2023. Net interest income was $132.5 million in the second quarter of 2024, compared to $133.0 million in the preceding quarter and $142.5 million in the second 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 second quarter 2024 results included a $562,000 net loss on the sale of securities, compared to a $4.9 million net loss on the sale of securities in the preceding quarter and a $4.5 million net loss on the sale of securities in the second quarter of 2023. Banner’s second quarter 2024 results also included a $2.4 million provision for credit losses, compared to a $520,000 provision for credit losses in the preceding quarter and a $6.8 million provision for credit losses in the second quarter of 2023. Net income was $77.4 million, or $2.24 per diluted share, for the six months ended June 30, 2024, compared to net income of $95.1 million, or $2.76 per diluted share, for the six months ended June 30, 2023. Banner’s results for the six months ended June 30, 2024 include a $2.9 million provision for credit losses, a $5.5 million net loss on the sale of securities and a $1.2 million net decrease in the fair value adjustments on financial instruments carried at fair value, compared to a $6.2 million provision for credit losses, an $11.8 million net loss on the sale of securities and a $3.7 million net decrease in the fair value adjustments on financial instruments carried at fair value during the same period in 2023.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share. The dividend will be payable August 16, 2024, to common shareholders of record on August 6, 2024.

“Banner’s second quarter operating results reflect the continued successful execution of our super community bank strategy, which emphasizes strong relationship banking and a moderate risk profile,” said Mark Grescovich, President and CEO. “Our earnings for the second quarter of 2024 benefited from solid growth in loans and higher yields on interest-earning assets. The continued high interest rate environment and its effect on funding costs, however, 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 that has been resilient in a highly competitive environment, with core deposits representing 88% 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 June 30, 2024, Banner, on a consolidated basis, had $15.82 billion in assets, $10.99 billion in net loans and $13.08 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.

Second Quarter 2024 Highlights

• Revenue was $149.7 million for the second quarter of 2024, compared to $144.6 million in the preceding quarter and $150.9 million in the second 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 $150.5 million in the second quarter of 2024, compared to $150.4 million in the preceding quarter and $158.6 million in the second quarter a year ago.
• Net interest income was $132.5 million in the second quarter of 2024, compared to $133.0 million in the preceding quarter and $142.5 million in the second quarter a year ago.
• Net interest margin, on a tax equivalent basis, was 3.70%, compared to 3.74% in the preceding quarter and 4.00% in the second quarter a year ago.
• Mortgage banking operations revenue was $3.0 million for the second quarter of 2024, compared to $2.3 million in the preceding quarter and $1.7 million in the second quarter a year ago.
• Return on average assets was 1.02%, compared to 0.97% in the preceding quarter and 1.02% in the second quarter a year ago.
• Net loans receivable increased 3% to $10.99 billion at June 30, 2024, compared to $10.72 billion at March 31, 2024, and increased 6% compared to $10.33 billion at June 30, 2023.
• Non-performing assets were $33.3 million, or 0.21% of total assets, at June 30, 2024, compared to $29.9 million, or 0.19% of total assets, at March 31, 2024 and $28.7 million, or 0.18% of total assets, at June 30, 2023.
• The allowance for credit losses - loans was $152.8 million, or 1.37% of total loans receivable, as of June 30, 2024, compared to $151.1 million, or 1.39% of total loans receivable, as of March 31, 2024 and $144.7 million, or 1.38% of total loans receivable, as of June 30, 2023.
• Total deposits decreased to $13.08 billion at June 30, 2024, compared to $13.16 billion at March 31, 2024 and $13.10 billion at June 30, 2023.
• Core deposits represented 88% of total deposits at June 30, 2024.
• Available borrowing capacity was $4.73 billion at June 30, 2024, compared to $5.05 billion at March 31, 2024.
• On-balance sheet liquidity was $2.83 billion at June 30, 2024, compared to $2.77 billion at March 31, 2024.
• Dividends paid to shareholders were $0.48 per share in the quarter ended June 30, 2024.
• Common shareholders’ equity per share increased 1% to $49.07 at June 30, 2024, compared to $48.39 at the preceding quarter end, and increased 9% from $44.91 at June 30, 2023.
• Tangible common shareholders’ equity per share* increased 2% to $38.12 at June 30, 2024, compared to $37.40 at the preceding quarter end, and increased 13% from $33.83 at June 30, 2023.

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

Income Statement Review

Net interest income was $132.5 million in the second quarter of 2024, compared to $133.0 million in the preceding quarter and $142.5 million in the second quarter a year ago. Net interest margin on a tax equivalent basis decreased four basis points to 3.70% for the second quarter of 2024, compared to 3.74% in the preceding quarter, and decreased compared to 4.00% in the second 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 and adjustable rate loans repricing higher.

Average yields on interest-earning assets increased nine basis points to 5.25% for the second quarter of 2024, compared to 5.16% for the preceding quarter, and increased compared to 4.80% in the second quarter a year ago. Average loan yields increased nine basis points to 5.96%, compared to 5.87% in the preceding quarter, and increased compared to 5.51% in the second quarter a year ago. The increase in average yields, especially loans, during the current quarter reflects the benefit of originating new loans at higher interest rates as well as adjustable rate loans repricing higher. Total deposit costs increased 13 basis points to 1.50% in the second quarter of 2024, compared to 1.37% in the preceding quarter, and compared to 0.64% in the second quarter a year ago. The increase in deposit costs 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 nine basis points to 5.07% in the second quarter of 2024, compared to 4.98% in the preceding quarter, and compared to 4.60% in the second quarter a year ago. The total cost of funding liabilities increased 13 basis points to 1.66% during the second quarter of 2024, compared to 1.53% in the preceding quarter, and compared to 0.86% in the second quarter a year ago.

A $2.4 million provision for credit losses was recorded in the current quarter (comprised of a $2.0 million provision for credit losses - loans, a $430,000 provision for credit losses - unfunded loan commitments and a $14,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $520,000 provision for credit losses in the prior 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) and a $6.8 million provision for credit losses in the second quarter a year ago (comprised of a $3.6 million provision for credit losses - loans, a $1.2 million provision for credit losses - unfunded loan commitments, a $2.0 million provision for credit losses - available for sale securities and a $16,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflected loan growth and an increase in the reserve for collateral dependent loans. The provision for credit losses for the preceding quarter primarily reflected 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.

Total non-interest income was $17.2 million in the second quarter of 2024, compared to $11.6 million in the preceding quarter and $8.4 million in the second quarter a year ago. The increase in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $4.3 million decrease in the net loss recognized on the sale of securities. The increase in non-interest income during the current quarter compared to the prior year quarter was primarily due to a $1.3 million increase in mortgage banking operations revenue, a $4.0 million decrease in the net loss recognized on the sale of securities and a $3.0 million decrease in the net loss recognized for fair value adjustments on financial instruments carried at fair value. Total non-interest income was $28.8 million for the six months ended June 30, 2024, compared to $17.7 million for the same period a year earlier.

Mortgage banking operations revenue was $3.0 million in the second quarter of 2024, compared to $2.3 million in the preceding quarter and $1.7 million in the second quarter a year ago. 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. The increase from the preceding quarter included a $284,000 gain related to the sale of $19.8 million of one- to four-family portfolio loans during the second quarter of 2024. The increase from the preceding quarter also reflects an increase in the percentage of loan sold servicing retained. Home purchase activity accounted for 89% of one- to four-family mortgage loan originations in both the second quarter of 2024 and the preceding quarter and 93% in the second quarter of 2023.

During the second quarter of 2024, non-interest income included a $190,000 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 $562,000 net loss on the sale of securities, related to a security with a premium that was called early. In the preceding quarter, non-interest income included a $992,000 net loss for fair value adjustments and a $4.9 million net loss on the sale of securities. In the second quarter a year ago, non-interest income included a $3.2 million net loss for fair value adjustments and a $4.5 million net loss on the sale of securities.

Total non-interest expense was $98.1 million in the second quarter of 2024, compared to $97.6 million in the preceding quarter and $95.4 million in the second quarter of 2023. The increase in non-interest expense for the current quarter compared to the prior quarter reflects a $1.5 million increase in salary and employee benefits, primarily resulting from normal annual salary and wage increases and an increase in loan production related commission expense, partially offset by a $963,000 increase in capitalized loan origination costs, primarily due to increased loan production. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits and payment and card processing services expense, partially offset by a decrease in professional and legal expenses. For the six months ended June 30, 2024, total non-interest expense was $195.8 million, compared to $190.0 million for the six months ended June 30, 2023. Banner’s efficiency ratio was 65.53% for the second quarter of 2024, compared to 67.55% in the preceding quarter and 63.21% in the same quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP financial measure, was 63.60% for the second quarter of 2024, compared to 63.70% in the preceding quarter and 58.58% in the year ago quarter. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Federal and state income tax expense totaled $9.5 million for the second quarter of 2024 resulting in an effective tax rate of 19.2%, reflecting the benefits from tax exempt income. Banner’s statutory income tax rate for the quarter ended June 30, 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 increased to $15.82 billion at June 30, 2024, compared to $15.52 billion at March 31, 2024, and $15.58 billion at June 30, 2023. Securities and interest-bearing deposits held at other banks totaled $3.27 billion at June 30, 2024, compared to $3.32 billion at March 31, 2024 and $3.64 billion at June 30, 2023. The decrease compared to the prior quarter was primarily due to normal cash flows from the securities portfolio. The average effective duration of the securities portfolio was approximately 6.5 years at June 30, 2024, compared to 6.8 years at June 30, 2023.

Total loans receivable increased to $11.14 billion at June 30, 2024, compared to $10.87 billion at March 31, 2024, and $10.47 billion at June 30, 2023. One- to four-family residential loans increased 2% to $1.60 billion at June 30, 2024, compared to $1.57 billion at March 31, 2024, and increased 20% compared to $1.34 billion at June 30, 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, partially offset by the sale of $19.8 million of one- to four-family portfolio loans. Multifamily real estate loans decreased 11% to $717.1 million at June 30, 2024, compared to $809.1 million at March 31, 2024, and increased 2% compared to $699.8 million at June 30, 2023. The decrease in multifamily real estate compared to March 31, 2024 was primarily due to certain affordable housing loans transferring to small balance commercial real estate. The increase in multifamily real estate loans from June 30, 2023 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, partially offset by the transfer of certain affordable housing loans to small balance commercial real estate. Construction, land and land development loans increased 7% to $1.68 billion at June 30, 2024, compared to $1.57 billion at March 31, 2024, and increased 11% compared to $1.51 billion at June 30, 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 increased 5% to $334.6 million at June 30, 2024, compared to $318.0 million at March 31, 2024 and increased 8% compared to $310.1 million at June 30, 2023, primarily due to new loan production and advances on agricultural lines of credit.

Loans held for sale were $13.4 million at June 30, 2024, compared to $9.4 million at March 31, 2024 and $60.6 million at June 30, 2023. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $75.0 million, compared to $65.9 million in the preceding quarter and $62.6 million in the second quarter a year ago. The decrease in loans held for sale compared to June 30, 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 June 30, 2024 or March 31, 2024.

Total deposits decreased to $13.08 billion at June 30, 2024, compared to $13.16 billion at March 31, 2024 and $13.10 billion a year ago. Core deposits decreased 1% to $11.55 billion at June 30, 2024, compared to $11.67 billion at March 31, 2024, and decreased 2% compared to $11.74 billion at June 30, 2023. The decrease in core deposits primarily reflects clients using deposits for seasonal tax payments. Core deposits were 88% of total deposits at June 30, 2024, compared to 89% of total deposits at March 31, 2024 and 90% of total deposits at June 30, 2023. Certificates of deposit increased 3% to $1.53 billion at June 30, 2024, compared to $1.49 billion at March 31, 2024, and increased 12% compared to $1.36 billion a year earlier. The increase in certificates of deposit during the current quarter compared to the preceding quarter and second 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 second quarter a year ago was partially offset by a $98.3 million decrease in brokered deposits.

Banner Bank’s estimated uninsured deposits were $4.09 billion or 31% of total deposits at June 30, 2024, compared to $4.18 billion or 31% of total deposits at March 31, 2024. The uninsured deposit calculation includes $326.5 million and $316.6 million of collateralized public deposits at June 30, 2024 and March 31, 2024, respectively. Uninsured deposits also include cash held by the holding company of $63.9 million and $113.9 million at June 30, 2024 and March 31, 2024, 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 June 30, 2024 and March 31, 2024.

Banner had $398.0 million of FHLB advances at June 30, 2024, compared to $52.0 million at March 31, 2024 and $270.0 million a year ago. At June 30, 2024, Banner’s off-balance sheet liquidity included additional borrowing capacity of $3.02 billion at the FHLB and $1.59 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At June 30, 2024, total common shareholders’ equity was $1.69 billion, or 10.69% of total assets, compared to $1.66 billion or 10.73% of total assets at March 31, 2024, and $1.54 billion or 9.90% of total assets at June 30, 2023. The increase in total common shareholders’ equity at June 30, 2024 compared to March 31, 2024 was primarily due to a $23.1 million increase in retained earnings as a result of $39.8 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the second quarter of 2024. At June 30, 2024, tangible common shareholders’ equity, a non-GAAP financial measure, was $1.31 billion, or 8.51% of tangible assets, compared to $1.29 billion, or 8.50% of tangible assets, at March 31, 2024, and $1.16 billion, or 7.64% of tangible assets, a year ago. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At June 30, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.02%, its estimated Tier 1 leverage capital to average assets ratio was 10.80%, and its estimated total capital to risk-weighted assets ratio was 14.62%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $152.8 million, or 1.37% of total loans receivable and 498% of non-performing loans, at June 30, 2024, compared to $151.1 million, or 1.39% of total loans receivable and 513% of non-performing loans, at March 31, 2024, and $144.7 million, or 1.38% of total loans receivable and 513% of non-performing loans, at June 30, 2023. 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 June 30, 2024, compared to $13.6 million at March 31, 2024, and $14.7 million at June 30, 2023. Net loan charge-offs totaled $245,000 in the second quarter of 2024, compared to net loan recoveries of $73,000 in the preceding quarter and net loan charge-offs of $336,000 in the second quarter a year ago. Non-performing loans were $30.7 million at June 30, 2024, compared to $29.5 million at March 31, 2024, and $28.2 million a year ago.

Substandard loans were $122.0 million at June 30, 2024, compared to $116.1 million at March 31, 2024 and $145.0 million a year ago. The increase from the prior quarter reflects downgrades of loans, partially offset by paydowns and payoffs of substandard loans. The decrease from the prior year quarter primarily reflects paydowns and payoffs of substandard loans as well as risk rating upgrades.

Total non-performing assets were $33.3 million, or 0.21% of total assets, at June 30, 2024, compared to $29.9 million, or 0.19% of total assets, at March 31, 2024, and $28.7 million, or 0.18% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday July 18, 2024, at 8:00 a.m. PDT, to discuss its second quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 005428 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $15.82 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) expectations regarding key growth initiatives and strategic priorities; (7) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (8) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner’s activities; (9) competitive pressures among depository institutions; (10) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (11) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (12) fluctuations in real estate values; (13) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (14) the ability to access cost-effective funding; (15) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (16) changes in financial markets; (17) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (18) the costs, effects and outcomes of litigation; (19) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (20) changes in accounting principles, policies or guidelines; (21) future acquisitions by Banner of other depository institutions or lines of business; (22) future goodwill impairment due to changes in Banner’s business or changes in market conditions; (23) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (24) environmental, social and governance goals and targets; (25) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (26) other risks detailed from time to time in Banner’s other reports filed with and furnished to the Securities and Exchange Commission including Banner’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

RESULTS OF OPERATIONS		Quarters Ended												Six Months Ended
(in thousands except shares and per share data)		Jun 30, 2024				Mar 31, 2024				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
INTEREST INCOME:
Loans receivable		$	161,191			$	156,475			$	140,848			$	317,666			$	274,105
Mortgage-backed securities			16,708				16,934				18,285				33,642				37,263
Securities and cash equivalents			11,239				11,279				12,676				22,518				27,402
Total interest income			189,138				184,688				171,809				373,826				338,770
INTEREST EXPENSE:
Deposits			48,850				44,613				20,539				93,463				29,783
Federal Home Loan Bank (FHLB) advances			3,621				2,972				5,157				6,593				6,421
Other borrowings			1,160				1,175				771				2,335				1,152
Subordinated debt			2,961				2,969				2,824				5,930				5,584
Total interest expense			56,592				51,729				29,291				108,321				42,940
Net interest income			132,546				132,959				142,518				265,505				295,830
PROVISION FOR CREDIT LOSSES			2,369				520				6,764				2,889				6,240
Net interest income after provision for credit losses			130,177				132,439				135,754				262,616				289,590
NON-INTEREST INCOME:
Deposit fees and other service charges			10,590				11,022				10,600				21,612				21,162
Mortgage banking operations			3,006				2,335				1,686				5,341				4,377
Bank-owned life insurance			2,367				2,237				2,386				4,604				4,574
Miscellaneous			1,988				1,892				1,428				3,880				3,068
			17,951				17,486				16,100				35,437				33,181
Net loss on sale of securities			(562	)			(4,903	)			(4,527	)			(5,465	)			(11,779	)
Net change in valuation of financial instruments carried at fair value			(190	)			(992	)			(3,151	)			(1,182	)			(3,703	)
Total non-interest income			17,199				11,591				8,422				28,790				17,699
NON-INTEREST EXPENSE:
Salary and employee benefits			63,831				62,369				61,972				126,200				123,361
Less capitalized loan origination costs			(4,639	)			(3,676	)			(4,457	)			(8,315	)			(7,888	)
Occupancy and equipment			12,128				12,462				11,994				24,590				23,964
Information and computer data services			7,240				7,320				7,082				14,560				14,229
Payment and card processing services			5,691				5,710				4,669				11,401				9,287
Professional and legal expenses			1,201				1,530				2,400				2,731				4,521
Advertising and marketing			1,198				1,079				940				2,277				1,746
Deposit insurance			2,858				2,809				2,839				5,667				4,729
State and municipal business and use taxes			1,394				1,304				1,229				2,698				2,529
Real estate operations, net			297				(220	)			75				77				(202	)
Amortization of core deposit intangibles			724				723				991				1,447				2,041
Miscellaneous			6,205				6,231				5,671				12,436				11,709
Total non-interest expense			98,128				97,641				95,405				195,769				190,026
Income before provision for income taxes			49,248				46,389				48,771				95,637				117,263
PROVISION FOR INCOME TAXES			9,453				8,830				9,180				18,283				22,117
NET INCOME		$	39,795			$	37,559			$	39,591			$	77,354			$	95,146
Earnings per common share:
Basic		$	1.15			$	1.09			$	1.15			$	2.25			$	2.77
Diluted		$	1.15			$	1.09			$	1.15			$	2.24			$	2.76
Cumulative dividends declared per common share		$	0.48			$	0.48			$	0.48			$	0.96			$	0.96
Weighted average number of common shares outstanding:
Basic			34,488,163				34,391,564				34,373,434				34,439,863				34,306,853
Diluted			34,537,012				34,521,105				34,409,024				34,539,620				34,435,221
Increase in common shares outstanding			60,531				46,852				36,087				107,383				150,609

FINANCIAL CONDITION																		Percentage Change
(in thousands except shares and per share data)		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Jun 30, 2023				Prior Qtr			Prior Yr Qtr
ASSETS
Cash and due from banks		$	195,163			$	168,427			$	209,634			$	229,918			15.9	%		(15.1	)%
Interest-bearing deposits			52,295				40,849				44,830				51,407			28.0	%		1.7	%
Total cash and cash equivalents			247,458				209,276				254,464				281,325			18.2	%		(12.0	)%
Securities - trading			—				—				—				25,659			nm			(100.0	)%
Securities - available for sale, amortized cost $2,572,544, $2,617,986, $2,729,980 and $2,879,179, respectively			2,197,693				2,244,939				2,373,783				2,465,960			(2.1	)%		(10.9	)%
Securities - held to maturity, fair value $852,709, $869,097, $907,514 and $933,116, respectively			1,023,028				1,038,312				1,059,055				1,098,570			(1.5	)%		(6.9	)%
Total securities			3,220,721				3,283,251				3,432,838				3,590,189			(1.9	)%		(10.3	)%
FHLB stock			27,311				11,741				24,028				20,800			132.6	%		31.3	%
Loans held for sale			13,421				9,357				11,170				60,612			43.4	%		(77.9	)%
Loans receivable			11,143,848				10,869,096				10,810,455				10,472,407			2.5	%		6.4	%
Allowance for credit losses – loans			(152,848	)			(151,140	)			(149,643	)			(144,680	)		1.1	%		5.6	%
Net loans receivable			10,991,000				10,717,956				10,660,812				10,327,727			2.5	%		6.4	%
Accrued interest receivable			67,520				66,124				63,100				57,007			2.1	%		18.4	%
Property and equipment, net			126,465				129,889				132,231				135,414			(2.6	)%		(6.6	)%
Goodwill			373,121				373,121				373,121				373,121			—	%		—	%
Other intangibles, net			4,237				4,961				5,684				7,399			(14.6	)%		(42.7	)%
Bank-owned life insurance			307,948				306,600				304,366				301,260			0.4	%		2.2	%
Operating lease right-of-use assets			39,628				40,834				43,731				45,812			(3.0	)%		(13.5	)%
Other assets			397,364				365,169				364,846				384,070			8.8	%		3.5	%
Total assets		$	15,816,194			$	15,518,279			$	15,670,391			$	15,584,736			1.9	%		1.5	%
LIABILITIES
Deposits:
Non-interest-bearing		$	4,537,803			$	4,699,553			$	4,792,369			$	5,369,187			(3.4	)%		(15.5	)%
Interest-bearing transaction and savings accounts			7,016,327				6,973,338				6,759,661				6,373,269			0.6	%		10.1	%
Interest-bearing certificates			1,525,133				1,485,880				1,477,467				1,356,600			2.6	%		12.4	%
Total deposits			13,079,263				13,158,771				13,029,497				13,099,056			(0.6	)%		(0.2	)%
Advances from FHLB			398,000				52,000				323,000				270,000			665.4	%		47.4	%
Other borrowings			165,956				183,341				182,877				193,019			(9.5	)%		(14.0	)%
Subordinated notes, net			89,561				89,456				92,851				92,646			0.1	%		(3.3	)%
Junior subordinated debentures at fair value			66,831				66,586				66,413				67,237			0.4	%		(0.6	)%
Operating lease liabilities			44,056				45,524				48,659				51,234			(3.2	)%		(14.0	)%
Accrued expenses and other liabilities			235,515				211,578				228,428				223,565			11.3	%		5.3	%
Deferred compensation			46,246				46,515				45,975				45,466			(0.6	)%		1.7	%
Total liabilities			14,125,428				13,853,771				14,017,700				14,042,223			2.0	%		0.6	%
SHAREHOLDERS’ EQUITY
Common stock			1,302,236				1,300,969				1,299,651				1,294,934			0.1	%		0.6	%
Retained earnings			686,079				663,021				642,175				587,027			3.5	%		16.9	%
Accumulated other comprehensive loss			(297,549	)			(299,482	)			(289,135	)			(339,448	)		(0.6	)%		(12.3	)%
Total shareholders’ equity			1,690,766				1,664,508				1,652,691				1,542,513			1.6	%		9.6	%
Total liabilities and shareholders’ equity		$	15,816,194			$	15,518,279			$	15,670,391			$	15,584,736			1.9	%		1.5	%
Common Shares Issued:
Shares outstanding at end of period			34,455,752				34,395,221				34,348,369				34,344,627
Common shareholders’ equity per share (1)		$	49.07			$	48.39			$	48.12			$	44.91
Common shareholders’ tangible equity per share (1) (2)		$	38.12			$	37.40			$	37.09			$	33.83
Common shareholders’ equity to total assets			10.69	%			10.73	%			10.55	%			9.90	%
Common shareholders’ tangible equity to tangible assets (2)			8.51	%			8.50	%			8.33	%			7.64	%
Consolidated Tier 1 leverage capital ratio			10.80	%			10.71	%			10.56	%			10.22	%

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		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Jun 30, 2023				Prior Qtr			Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied		$	950,922			$	905,063			$	915,897			$	894,876			5.1	%		6.3	%
Investment properties			1,536,142				1,544,885				1,541,344				1,558,176			(0.6	)%		(1.4	)%
Small balance CRE			1,234,302				1,159,355				1,178,500				1,172,825			6.5	%		5.2	%
Multifamily real estate			717,089				809,101				811,232				699,830			(11.4	)%		2.5	%
Construction, land and land development:
Commercial construction			173,296				158,011				170,011				183,765			9.7	%		(5.7	)%
Multifamily construction			663,989				573,014				503,993				433,868			15.9	%		53.0	%
One- to four-family construction			490,237				495,931				526,432				547,200			(1.1	)%		(10.4	)%
Land and land development			352,184				344,563				336,639				345,053			2.2	%		2.1	%
Commercial business:
Commercial business			1,298,134				1,262,716				1,255,734				1,313,226			2.8	%		(1.1	)%
Small business scored			1,074,465				1,028,067				1,022,154				982,283			4.5	%		9.4	%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland			334,583				317,958				331,089				310,120			5.2	%		7.9	%
One- to four-family residential			1,603,266				1,566,834				1,518,046				1,340,126			2.3	%		19.6	%
Consumer:
Consumer—home equity revolving lines of credit			611,739				597,060				588,703				577,725			2.5	%		5.9	%
Consumer—other			103,500				106,538				110,681				113,334			(2.9	)%		(8.7	)%
Total loans receivable		$	11,143,848			$	10,869,096			$	10,810,455			$	10,472,407			2.5	%		6.4	%
Loans 30 - 89 days past due and on accrual		$	11,850			$	19,649			$	19,744			$	6,259
Total delinquent loans (including loans on non-accrual), net		$	32,081			$	39,429			$	43,164			$	29,135
Total delinquent loans / Total loans receivable			0.29	%			0.36	%			0.40	%			0.28	%

LOANS BY GEOGRAPHIC LOCATION																	Percentage Change
		Jun 30, 2024						Mar 31, 2024			Dec 31, 2023			Jun 30, 2023			Prior Qtr			Prior Yr Qtr
		Amount			Percentage			Amount			Amount			Amount
Washington		$	5,182,378		46.5	%		$	5,091,912		$	5,095,602		$	4,945,074		1.8	%		4.8	%
California			2,787,190		25.0	%			2,687,114			2,670,923			2,537,121		3.7	%		9.9	%
Oregon			2,072,153		18.6	%			2,013,453			1,974,001			1,913,929		2.9	%		8.3	%
Idaho			641,209		5.8	%			613,155			610,064			595,065		4.6	%		7.8	%
Utah			80,295		0.7	%			72,652			68,931			62,720		10.5	%		28.0	%
Other			380,623		3.4	%			390,810			390,934			418,498		(2.6	)%		(9.1	)%
Total loans receivable		$	11,143,848		100.0	%		$	10,869,096		$	10,810,455		$	10,472,407		2.5	%		6.4	%

ADDITIONAL FINANCIAL INFORMATION (dollars in thousands)
LOAN ORIGINATIONS		Quarters Ended
		Jun 30, 2024			Mar 31, 2024			Jun 30, 2023
Commercial real estate		$	102,258		$	67,362		$	94,640
Multifamily real estate			2,774			385			3,441
Construction and land			546,675			437,273			488,980
Commercial business			167,168			154,715			128,404
Agricultural business			22,255			34,406			28,367
One-to four-family residential			34,498			17,568			52,618
Consumer			120,470			66,145			112,555
Total loan originations (excluding loans held for sale)		$	996,098		$	777,854		$	909,005

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
		Quarters Ended
CHANGE IN THE		Jun 30, 2024				Mar 31, 2024				Jun 30, 2023
ALLOWANCE FOR CREDIT LOSSES – LOANS
Balance, beginning of period		$	151,140			$	149,643			$	141,457
Provision for credit losses – loans			1,953				1,424				3,559
Recoveries of loans previously charged off:
Commercial real estate			98				1,389				74
One- to four-family real estate			17				16				36
Commercial business			324				781				524
Agricultural business, including secured by farmland			195				106				2
Consumer			112				159				117
			746				2,451				753
Loans charged off:
Commercial real estate			(347	)			—				—
Construction and land			—				—				(156	)
One- to four-family real estate			—				—				(4	)
Commercial business			(137	)			(1,809	)			(566	)
Consumer			(507	)			(569	)			(363	)
			(991	)			(2,378	)			(1,089	)
Net (charge-offs) recoveries			(245	)			73				(336	)
Balance, end of period		$	152,848			$	151,140			$	144,680
Net (charge-offs) recoveries / Average loans receivable			(0.002	)%			0.001	%			(0.003	)%

ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES – LOANS		Jun 30, 2024				Mar 31, 2024				Jun 30, 2023
Commercial real estate		$	39,064			$	43,555			$	43,636
Multifamily real estate			8,253				9,293				8,039
Construction and land			31,597				28,908				29,844
One- to four-family real estate			20,906				20,432				16,737
Commercial business			38,835				35,544				33,880
Agricultural business, including secured by farmland			4,045				3,890				3,573
Consumer			10,148				9,518				8,971
Total allowance for credit losses – loans		$	152,848			$	151,140			$	144,680
Allowance for credit losses - loans / Total loans receivable			1.37	%			1.39	%			1.38	%
Allowance for credit losses - loans / Non-performing loans			498	%			513	%			513	%

		Quarters Ended
CHANGE IN THE		Jun 30, 2024			Mar 31, 2024				Jun 30, 2023
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period		$	13,597		$	14,484			$	13,443
Provision/(recapture) for credit losses - unfunded loan commitments			430			(887	)			1,221
Balance, end of period		$	14,027		$	13,597			$	14,664

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
NON-PERFORMING ASSETS
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Jun 30, 2023
Loans on non-accrual status:
Secured by real estate:
Commercial		$	2,326			$	2,753			$	2,677			$	2,478
Construction and land			3,999				5,029				3,105				2,280
One- to four-family			8,184				7,750				5,702				7,605
Commercial business			8,694				7,355				9,002				8,439
Agricultural business, including secured by farmland			1,586				2,496				3,167				3,997
Consumer			3,380				3,411				3,204				3,272
			28,169				28,794				26,857				28,071
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Construction and land			—				286				1,138				—
One- to four-family			1,861				409				1,205				60
Commercial business			—				—				1				—
Consumer			692				—				401				49
			2,553				695				2,745				109
Total non-performing loans			30,722				29,489				29,602				28,180
REO			2,564				448				526				546
Total non-performing assets		$	33,286			$	29,937			$	30,128			$	28,726
Total non-performing assets to total assets			0.21	%			0.19	%			0.19	%			0.18	%

LOANS BY CREDIT RISK RATING
		Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Jun 30, 2023
Pass		$	10,971,850		$	10,731,015		$	10,671,281		$	10,315,687
Special Mention			50,027			22,029			13,732			11,745
Substandard			121,971			116,052			125,442			144,975
Total		$	11,143,848		$	10,869,096		$	10,810,455		$	10,472,407

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION														Percentage Change
		Jun 30, 2024			Mar 31, 2024			Dec 31, 2023			Jun 30, 2023			Prior Qtr			Prior Yr Qtr
Non-interest-bearing		$	4,537,803		$	4,699,553		$	4,792,369		$	5,369,187		(3.4	)%		(15.5	)%
Interest-bearing checking			2,208,742			2,112,799			2,098,526			1,908,402		4.5	%		15.7	%
Regular savings accounts			3,192,036			3,171,933			2,980,530			2,588,298		0.6	%		23.3	%
Money market accounts			1,615,549			1,688,606			1,680,605			1,876,569		(4.3	)%		(13.9	)%
Total interest-bearing transaction and savings accounts			7,016,327			6,973,338			6,759,661			6,373,269		0.6	%		10.1	%
Total core deposits			11,554,130			11,672,891			11,552,030			11,742,456		(1.0	)%		(1.6	)%
Interest-bearing certificates			1,525,133			1,485,880			1,477,467			1,356,600		2.6	%		12.4	%
Total deposits		$	13,079,263		$	13,158,771		$	13,029,497		$	13,099,056		(0.6	)%		(0.2	)%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
		Jun 30, 2024						Mar 31, 2024			Dec 31, 2023			Jun 30, 2023			Percentage Change
		Amount			Percentage			Amount			Amount			Amount			Prior Qtr			Prior Yr Qtr
Washington		$	7,171,699		54.8	%		$	7,258,785		$	7,247,392		$	7,255,731		(1.2	)%		(1.2	)%
Oregon			2,909,838		22.3	%			2,914,605			2,852,677			2,914,267		(0.2	)%		(0.2	)%
California			2,331,793		17.8	%			2,316,515			2,269,557			2,257,247		0.7	%		3.3	%
Idaho			665,933		5.1	%			668,866			659,871			671,811		(0.4	)%		(0.9	)%
Total deposits		$	13,079,263		100.0	%		$	13,158,771		$	13,029,497		$	13,099,056		(0.6	)%		(0.2	)%

INCLUDED IN TOTAL DEPOSITS
		Jun 30, 2024			Mar 31, 2024			Jun 30, 2023
Public non-interest-bearing accounts		$	149,012		$	140,477		$	191,591
Public interest-bearing transaction & savings accounts			250,136			251,161			189,140
Public interest-bearing certificates			29,101			28,821			45,840
Total public deposits		$	428,249		$	420,459		$	426,571
Collateralized public deposits		$	326,524		$	316,554		$	309,665
Total brokered deposits		$	105,309		$	107,527		$	203,649
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
		Jun 30, 2024			Mar 31, 2024			Jun 30, 2023
Number of deposit accounts			460,107			461,399			467,490
Average account balance per account		$	29		$	29		$	28

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF JUNE 30, 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		$	1,955,333		14.62	%		$	1,069,904		8.00	%		$	1,337,380		10.00	%
Tier 1 capital to risk-weighted assets			1,693,543		12.66	%			802,428		6.00	%			802,428		6.00	%
Tier 1 leverage capital to average assets			1,693,543		10.80	%			627,282		4.00	%			n/a		n/a
Common equity tier 1 capital to risk-weighted assets			1,607,043		12.02	%			601,821		4.50	%			n/a		n/a
Banner Bank:
Total capital to risk-weighted assets			1,833,271		13.70	%			1,070,354		8.00	%			1,337,943		10.00	%
Tier 1 capital to risk-weighted assets			1,671,481		12.49	%			802,766		6.00	%			1,070,354		8.00	%
Tier 1 leverage capital to average assets			1,671,481		10.66	%			627,468		4.00	%			784,335		5.00	%
Common equity tier 1 capital to risk-weighted assets			1,671,481		12.49	%			602,074		4.50	%			869,663		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
		Jun 30, 2024										Mar 31, 2024										Jun 30, 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		$	11,665		$	206			7.10	%		$	9,939		$	167			6.76	%		$	56,073		$	738			5.28	%
Mortgage loans			9,006,857			129,230			5.77	%			8,892,561			125,284			5.67	%			8,413,392			112,097			5.34	%
Commercial/agricultural loans			1,874,039			31,761			6.82	%			1,830,095			30,847			6.78	%			1,768,511			27,683			6.28	%
Consumer and other loans			132,661			2,156			6.54	%			133,854			2,196			6.60	%			138,902			2,137			6.17	%
Total loans (1)			11,025,222			163,353			5.96	%			10,866,449			158,494			5.87	%			10,376,878			142,655			5.51	%
Mortgage-backed securities			2,672,187			16,850			2.54	%			2,728,640			17,076			2.52	%			2,958,700			18,429			2.50	%
Other securities			958,809			11,181			4.69	%			984,639			11,501			4.70	%			1,184,503			12,932			4.38	%
Interest-bearing deposits with banks			58,022			578			4.01	%			45,264			459			4.08	%			44,922			557			4.97	%
FHLB stock			21,080			365			6.96	%			19,073			209			4.41	%			25,611			157			2.46	%
Total investment securities			3,710,098			28,974			3.14	%			3,777,616			29,245			3.11	%			4,213,736			32,075			3.05	%
Total interest-earning assets			14,735,320			192,327			5.25	%			14,644,065			187,739			5.16	%			14,590,614			174,730			4.80	%
Non-interest-earning assets			926,411										943,725										939,100
Total assets		$	15,661,731									$	15,587,790									$	15,529,714
Deposits:
Interest-bearing checking accounts		$	2,156,214			7,621			1.42	%		$	2,104,242			6,716			1.28	%		$	1,870,605			2,331			0.50	%
Savings accounts			3,147,522			17,200			2.20	%			3,066,448			15,279			2.00	%			2,536,713			4,895			0.77	%
Money market accounts			1,659,327			9,124			2.21	%			1,674,159			8,388			2.02	%			1,957,553			6,007			1.23	%
Certificates of deposit			1,503,597			14,905			3.99	%			1,500,429			14,230			3.81	%			1,126,647			7,306			2.60	%
Total interest-bearing deposits			8,466,660			48,850			2.32	%			8,345,278			44,613			2.15	%			7,491,518			20,539			1.10	%
Non-interest-bearing deposits			4,634,738			—			—	%			4,711,922			—			—	%			5,445,960			—			—	%
Total deposits			13,101,398			48,850			1.50	%			13,057,200			44,613			1.37	%			12,937,478			20,539			0.64	%
Other interest-bearing liabilities:
FHLB advances			259,549			3,621			5.61	%			212,989			2,972			5.61	%			390,705			5,157			5.29	%
Other borrowings			175,518			1,160			2.66	%			180,692			1,175			2.62	%			188,060			771			1.64	%
Junior subordinated debentures and subordinated notes			179,178			2,961			6.65	%			181,579			2,969			6.58	%			185,096			2,824			6.12	%
Total borrowings			614,245			7,742			5.07	%			575,260			7,116			4.98	%			763,861			8,752			4.60	%
Total funding liabilities			13,715,643			56,592			1.66	%			13,632,460			51,729			1.53	%			13,701,339			29,291			0.86	%
Other non-interest-bearing liabilities (2)			294,794										303,412										279,232
Total liabilities			14,010,437										13,935,872										13,980,571
Shareholders’ equity			1,651,294										1,651,918										1,549,143
Total liabilities and shareholders’ equity		$	15,661,731									$	15,587,790									$	15,529,714
Net interest income/rate spread (tax equivalent)					$	135,735			3.59	%					$	136,010			3.63	%					$	145,439			3.94	%
Net interest margin (tax equivalent)									3.70	%									3.74	%									4.00	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis						(3,189	)									(3,051	)									(2,921	)
Net interest income and margin, as reported					$	132,546			3.62	%					$	132,959			3.65	%					$	142,518			3.92	%
Additional Key Financial Ratios:
Return on average assets									1.02	%									0.97	%									1.02	%
Adjusted return on average assets (4)									1.04	%									1.08	%									1.18	%
Return on average equity									9.69	%									9.14	%									10.25	%
Adjusted return on average equity (4)									9.83	%									10.24	%									11.80	%
Average equity/average assets									10.54	%									10.60	%									9.98	%
Average interest-earning assets/average interest-bearing liabilities									162.27	%									164.16	%									176.74	%
Average interest-earning assets/average funding liabilities									107.43	%									107.42	%									106.49	%
Non-interest income/average assets									0.44	%									0.30	%									0.22	%
Non-interest expense/average assets									2.52	%									2.52	%									2.46	%
Efficiency ratio									65.53	%									67.55	%									63.21	%
Adjusted efficiency ratio (4)									63.60	%									63.70	%									58.58	%

(1)		Average balances include loans accounted for on a nonaccrual basis and accruing loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
(2)		Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
(3)		Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $2.2 million, $2.0 million and $1.8 million for the quarters ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million for both the quarters ended June 30, 2024 and March 31, 2024 and $1.1 million for the quarter ended June 30, 2023.
(4)		Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD		Six Months Ended
		Jun 30, 2024										Jun 30, 2023
		Average Balance			Interest and Dividends				Yield/Cost (3)			Average Balance			Interest and Dividends				Yield/Cost (3)
Interest-earning assets:
Held for sale loans		$	10,802		$	373			6.94	%		$	54,375		$	1,409			5.23	%
Mortgage loans			8,949,709			254,514			5.72	%			8,340,792			218,997			5.29	%
Commercial/agricultural loans			1,852,067			62,608			6.80	%			1,739,091			52,909			6.14	%
Consumer and other loans			133,258			4,352			6.57	%			138,004			4,252			6.21	%
Total loans (1)			10,945,836			321,847			5.91	%			10,272,262			277,567			5.45	%
Mortgage-backed securities			2,700,413			33,926			2.53	%			3,025,907			37,552			2.50	%
Other securities			971,724			22,682			4.69	%			1,294,743			28,027			4.37	%
Interest-bearing deposits with banks			51,643			1,037			4.04	%			49,229			1,165			4.77	%
FHLB stock			20,077			574			5.75	%			19,955			247			2.50	%
Total investment securities			3,743,857			58,219			3.13	%			4,389,834			66,991			3.08	%
Total interest-earning assets			14,689,693			380,066			5.20	%			14,662,096			344,558			4.74	%
Non-interest-earning assets			935,068										930,208
Total assets		$	15,624,761									$	15,592,304
Deposits:
Interest-bearing checking accounts		$	2,130,228			14,337			1.35	%		$	1,825,386			3,237			0.36	%
Savings accounts			3,106,985			32,479			2.10	%			2,575,726			6,779			0.53	%
Money market accounts			1,666,743			17,512			2.11	%			2,061,767			9,806			0.96	%
Certificates of deposit			1,502,013			29,135			3.90	%			969,607			9,961			2.07	%
Total interest-bearing deposits			8,405,969			93,463			2.24	%			7,432,486			29,783			0.81	%
Non-interest-bearing deposits			4,673,330			—			—	%			5,701,953			—			—	%
Total deposits			13,079,299			93,463			1.44	%			13,134,439			29,783			0.46	%
Other interest-bearing liabilities:
FHLB advances			236,269			6,593			5.61	%			249,131			6,421			5.20	%
Other borrowings			178,105			2,335			2.64	%			208,645			1,152			1.11	%
Junior subordinated debentures and subordinated notes			180,379			5,930			6.61	%			188,142			5,584			5.99	%
Total borrowings			594,753			14,858			5.02	%			645,918			13,157			4.11	%
Total funding liabilities			13,674,052			108,321			1.59	%			13,780,357			42,940			0.63	%
Other non-interest-bearing liabilities (2)			299,103										286,084
Total liabilities			13,973,155										14,066,441
Shareholders’ equity			1,651,606										1,525,863
Total liabilities and shareholders’ equity		$	15,624,761									$	15,592,304
Net interest income/rate spread (tax equivalent)					$	271,745			3.61	%					$	301,618			4.11	%
Net interest margin (tax equivalent)									3.72	%									4.15	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis						(6,240	)									(5,788	)
Net interest income and margin, as reported					$	265,505			3.63	%					$	295,830			4.07	%
Additional Key Financial Ratios:
Return on average assets									1.00	%									1.23	%
Adjusted return on average assets (4)									1.06	%									1.39	%
Return on average equity									9.42	%									12.57	%
Adjusted return on average equity (4)									10.03	%									14.16	%
Average equity/average assets									10.57	%									9.79	%
Average interest-earning assets/average interest-bearing liabilities									163.21	%									181.50	%
Average interest-earning assets/average funding liabilities									107.43	%									106.40	%
Non-interest income/average assets									0.37	%									0.23	%
Non-interest expense/average assets									2.52	%									2.46	%
Efficiency ratio									66.52	%									60.61	%
Adjusted efficiency ratio (4)									63.65	%									56.33	%

(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 $3.5 million for the six months ended June 30, 2024 and June 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.1 million and $2.3 million for the six months ended June 30, 2024 and June 30, 2023, respectively.
(4)		Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

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									Six Months Ended
		Jun 30, 2024			Mar 31, 2024			Jun 30, 2023			Jun 30, 2024			Jun 30, 2023
Net interest income (GAAP)		$	132,546		$	132,959		$	142,518		$	265,505		$	295,830
Non-interest income (GAAP)			17,199			11,591			8,422			28,790			17,699
Total revenue (GAAP)			149,745			144,550			150,940			294,295			313,529
Exclude: Net loss on sale of securities			562			4,903			4,527			5,465			11,779
Net change in valuation of financial instruments carried at fair value			190			992			3,151			1,182			3,703
Adjusted revenue (non-GAAP)		$	150,497		$	150,445		$	158,618		$	300,942		$	329,011

ADJUSTED EARNINGS		Quarters Ended												Six Months Ended
		Jun 30, 2024				Mar 31, 2024				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
Net income (GAAP)		$	39,795			$	37,559			$	39,591			$	77,354			$	95,146
Exclude: Net loss on sale of securities			562				4,903				4,527				5,465				11,779
Net change in valuation of financial instruments carried at fair value			190				992				3,151				1,182				3,703
Banner Forward expenses (1)			—				—				195				—				338
Related net tax benefit			(180	)			(1,415	)			(1,890	)			(1,595	)			(3,797	)
Total adjusted earnings (non-GAAP)		$	40,367			$	42,039			$	45,574			$	82,406			$	107,169
Diluted earnings per share (GAAP)		$	1.15			$	1.09			$	1.15			$	2.24			$	2.76
Diluted adjusted earnings per share (non-GAAP)		$	1.17			$	1.22			$	1.32			$	2.39			$	3.11
Return on average assets			1.02	%			0.97	%			1.02	%			1.00	%			1.23	%
Adjusted return on average assets (2)			1.04	%			1.08	%			1.18	%			1.06	%			1.39	%
Return on average equity			9.69	%			9.14	%			10.25	%			9.42	%			12.57	%
Adjusted return on average equity (3)			9.83	%			10.24	%			11.80	%			10.03	%			14.16	%

(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												Six Months Ended
		Jun 30, 2024				Mar 31, 2024				Jun 30, 2023				Jun 30, 2024				Jun 30, 2023
Non-interest expense (GAAP)		$	98,128			$	97,641			$	95,405			$	195,769			$	190,026
Exclude: Banner Forward expenses (1)			—				—				(195	)			—				(338	)
CDI amortization			(724	)			(723	)			(991	)			(1,447	)			(2,041	)
State/municipal tax expense			(1,394	)			(1,304	)			(1,229	)			(2,698	)			(2,529	)
REO operations			(297	)			220				(75	)			(77	)			202
Adjusted non-interest expense (non-GAAP)		$	95,713			$	95,834			$	92,915			$	191,547			$	185,320
Net interest income (GAAP)		$	132,546			$	132,959			$	142,518			$	265,505			$	295,830
Non-interest income (GAAP)			17,199				11,591				8,422				28,790				17,699
Total revenue (GAAP)			149,745				144,550				150,940				294,295				313,529
Exclude: Net loss on sale of securities			562				4,903				4,527				5,465				11,779
Net change in valuation of financial instruments carried at fair value			190				992				3,151				1,182				3,703
Adjusted revenue (non-GAAP)		$	150,497			$	150,445			$	158,618			$	300,942			$	329,011
Efficiency ratio (GAAP)			65.53	%			67.55	%			63.21	%			66.52	%			60.61	%
Adjusted efficiency ratio (non-GAAP) (2)			63.60	%			63.70	%			58.58	%			63.65	%			56.33	%

(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
		Jun 30, 2024				Mar 31, 2024				Dec 31, 2023				Jun 30, 2023
Shareholders’ equity (GAAP)		$	1,690,766			$	1,664,508			$	1,652,691			$	1,542,513
Exclude goodwill and other intangible assets, net			377,358				378,082				378,805				380,520
Tangible common shareholders’ equity (non-GAAP)		$	1,313,408			$	1,286,426			$	1,273,886			$	1,161,993
Total assets (GAAP)		$	15,816,194			$	15,518,279			$	15,670,391			$	15,584,736
Exclude goodwill and other intangible assets, net			377,358				378,082				378,805				380,520
Total tangible assets (non-GAAP)		$	15,438,836			$	15,140,197			$	15,291,586			$	15,204,216
Common shareholders’ equity to total assets (GAAP)			10.69	%			10.73	%			10.55	%			9.90	%
Tangible common shareholders’ equity to tangible assets (non-GAAP)			8.51	%			8.50	%			8.33	%			7.64	%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Shareholders’ equity (GAAP)		$	1,690,766			$	1,664,508			$	1,652,691			$	1,542,513
Tangible common shareholders’ equity (non-GAAP)		$	1,313,408			$	1,286,426			$	1,273,886			$	1,161,993
Common shares outstanding at end of period			34,455,752				34,395,221				34,348,369				34,344,627
Common shareholders’ equity (book value) per share (GAAP)		$	49.07			$	48.39			$	48.12			$	44.91
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)		$	38.12			$	37.40			$	37.09			$	33.83

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240717812042/en/

MARK J. GRESCOVICH, PRESIDENT & CEO

ROBERT G. BUTTERFIELD, CFO

(509) 527-3636

Source: Banner Corporation

FAQ

What was Banner 's net income for Q2 2024?

Banner reported a net income of $39.8 million for Q2 2024.

How did Banner 's net interest income change in Q2 2024?

Net interest income decreased to $132.5 million from $133.0 million in Q1 2024 and from $142.5 million YoY.

What is the declared dividend for Banner in Q2 2024?

Banner declared a quarterly cash dividend of $0.48 per share, payable on August 16, 2024.

How much was the provision for credit losses for Banner in Q2 2024?

The provision for credit losses was $2.4 million in Q2 2024.