Banner Corporation (NASDAQ:BANR) ("Banner"), the parent company of Banner Bank, today reported net income of $37.6 million, or $1.09 per diluted share, for the first quarter of 2024, compared to $42.6 million, or $1.24 per diluted share, for the preceding quarter and $55.6 million, or $1.61 per diluted share, for the first quarter of 2023. Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago. The decrease in net interest income compared to the preceding quarter and prior year quarter reflects an increase in funding costs, partially offset by an increase in yields on earning assets. Banner's first quarter 2024 results included a $4.9 million net loss on the sale of securities, compared to a $4.8 million net loss on the sale of securities in the preceding quarter and a $7.3 million net loss on the sale of securities in the first quarter of 2023. Banner's first quarter 2024 results also included a $520,000 provision for credit losses, compared to a $2.5 million provision for credit losses in the preceding quarter and a $524,000 recapture of provision for credit losses in the first quarter of 2023. In addition, the preceding quarter included a $3.5 million fair value gain recorded on multifamily loans as a result of their transfer from held for sale to held for investment, with no similar transaction recorded in the current quarter.

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

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

At March 31, 2024, Banner, on a consolidated basis, had $15.52 billion in assets, $10.72 billion in net loans and $13.16 billion in deposits. Banner operates 135 full-service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

First Quarter 2024 Highlights

Revenues were $144.6 million for the first quarter of 2024, compared to $152.5 million in the preceding quarter and $162.6 million in the first quarter a year ago.
Adjusted revenue* (the total of net interest income and total non-interest income adjusted for the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $150.4 million in the first quarter of 2024, compared to $157.1 million in the preceding quarter and $170.4 million in the first quarter a year ago.
Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago.
Net interest margin, on a tax equivalent basis, was 3.74%, compared to 3.83% in the preceding quarter and 4.30% in the first quarter a year ago.
Mortgage banking operations revenue was $2.3 million for the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago.
Return on average assets was 0.97%, compared to 1.09% in the preceding quarter and 1.44% in the first quarter a year ago.
Net loans receivable increased 1% to $10.72 billion at March 31, 2024, compared to $10.66 billion at December 31, 2023, and increased 7% compared to $10.02 billion at March 31, 2023.
Non-performing assets were $29.9 million, or 0.19% of total assets, at March 31, 2024, compared to $30.1 million, or 0.19% of total assets, at December 31, 2023 and $27.1 million, or 0.17% of total assets, at March 31, 2023.
The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable, as of March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable, as of December 31, 2023 and $141.5 million, or 1.39% of total loans receivable, as of March 31, 2023.
Total deposits increased to $13.16 billion at March 31, 2024, compared to $13.03 billion at December 31, 2023 and $13.15 billion at March 31, 2023. Core deposits represented 89% of total deposits at March 31, 2024.
Banner Bank's estimated uninsured deposits were approximately 31% of total deposits at both March 31, 2024 and December 31, 2023.
Banner Bank's estimated uninsured deposits, excluding collateralized public deposits and affiliate deposits, were approximately 28% of total deposits at both March 31, 2024 and December 31, 2023.
Available borrowing capacity was $5.05 billion at March 31, 2024, compared to $4.65 billion at December 31, 2023.
On-balance sheet liquidity was $2.77 billion at March 31, 2024, compared to $2.93 billion at December 31, 2023.
Dividends paid to shareholders were $0.48 per share in the quarter ended March 31, 2024.
Common shareholders' equity per share increased 1% to $48.39 at March 31, 2024, compared to $48.12 at the preceding quarter end, and increased 8% from $44.64 at March 31, 2023.
Tangible common shareholders' equity per share* increased 1% to $37.40 at March 31, 2024, compared to $37.09 at the preceding quarter end, and increased 12% from $33.52 at March 31, 2023.

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

Income Statement Review

Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago. Net interest margin on a tax equivalent basis decreased nine basis points to 3.74% for the first quarter of 2024, compared to 3.83% in the preceding quarter, and decreased compared to 4.30% in the first quarter a year ago. Net interest margin for the current quarter was impacted by increased funding costs reflecting the persistent high interest rate environment, partially offset by increased yields on loans due to new loans being originated at higher interest rates.

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

A $520,000 provision for credit losses was recorded in the current quarter (comprised of a $1.4 million provision for credit losses - loans, an $887,000 recapture of provision for credit losses - unfunded loan commitments and a $17,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $2.5 million provision for credit losses in the prior quarter (comprised of a $3.8 million provision for credit losses - loans, a $526,000 recapture of provision for credit losses - unfunded loan commitments, a $750,000 recapture of provision for credit losses - available for sale securities and a $23,000 recapture of provision for credit losses - held-to-maturity debt securities) and a $524,000 recapture of provision for credit losses in the first quarter a year ago (comprised of a $774,000 provision for credit losses - loans, a $1.3 million recapture of provision for credit losses - unfunded loan commitments and a $20,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter is primarily related to the loan growth in the construction and one- to four-family loan portfolios and was partially offset by a reduction in unfunded loan commitments in the construction portfolio. The provision for credit losses for the preceding quarter primarily reflected increased loan balances and higher than forecasted net loan charge-offs, partially offset by an increase in the trading price of our investments in other banks' subordinated debt.

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

Mortgage banking operations revenue, including gains on one- to four-family and multifamily loan sales and loan servicing fees, was $2.3 million in the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago. The decrease from the preceding quarter primarily reflects a $3.5 million reversal of the lower of cost or market adjustment on multifamily loans held for sale recognized during the preceding quarter due to the transfer of all remaining multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. In 2023, the Bank discontinued the origination of multifamily loans for sale into the secondary market. The volume of one- to four-family loans sold during the current quarter increased compared to the prior year quarter, although overall volumes remained low due to reduced refinancing and purchase activity in the current rate environment. Home purchase activity accounted for 89% of one- to four-family mortgage loan originations in the first quarter of 2024, compared to 92% in the preceding quarter and 88% in the first quarter of 2023.

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

Total non-interest expense was $97.6 million in the first quarter of 2024, compared to $96.6 million in the preceding quarter and $94.6 million in the first quarter of 2023. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $2.3 million increase in salary and employee benefits, primarily due to typically higher first quarter payroll taxes and 401(k) expense, as well as higher medical insurance expense, partially offset by a $737,000 decrease in professional and legal expense and a $607,000 decrease in advertising and marketing expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, payment and card processing services expense and deposit insurance expense. Banner's efficiency ratio was 67.55% for the first quarter of 2024, compared to 63.37% in the preceding quarter and 58.20% in the same quarter a year ago. Banner's adjusted efficiency ratio* was 63.70% for the first quarter of 2024, compared to 60.04% in the preceding quarter and 54.23% in the year ago quarter.

*Non-GAAP financial measures. See, "Additional Financial Information - Non-GAAP Financial Measures" on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Federal and state income tax expense totaled $8.8 million for the first quarter of 2024 resulting in an effective tax rate of 19.0%, reflecting the benefits from tax exempt income. Banner's statutory income tax rate for the quarter ended March 31, 2024, was 23.7%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

Balance Sheet Review

Total assets decreased to $15.52 billion at March 31, 2024, compared to $15.67 billion at December 31, 2023, and $15.53 billion at March 31, 2023. Securities and interest-bearing deposits held at other banks totaled $3.32 billion at March 31, 2024, compared to $3.48 billion at December 31, 2023 and $3.99 billion at March 31, 2023. The decrease compared to the prior quarter was primarily due to the sale of securities and normal cash flows from the security portfolio. The average effective duration of the securities portfolio was approximately 6.6 years at both March 31, 2024 and March 31, 2023.

Total loans receivable increased to $10.87 billion at March 31, 2024, compared to $10.81 billion at December 31, 2023, and $10.16 billion at March 31, 2023. One- to four-family residential loans increased 3% to $1.57 billion at March 31, 2024, compared to $1.52 billion at December 31, 2023, and increased 25% compared to $1.25 billion at March 31, 2023. The increase in one- to four-family residential loans was the result of one- to four-family construction loans converting to one- to four-family portfolio loans upon the completion of the construction phase and new loan production. Multifamily real estate loans decreased slightly to $809.1 million at March 31, 2024, compared to $811.2 million at December 31, 2023, and increased 16% compared to $696.9 million at March 31, 2023. The increase in multifamily real estate loans year over year was primarily the result of the conversion of affordable housing multifamily construction loans to the multifamily portfolio upon the completion of the construction phase as well as the transfer of $43.5 million of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. Construction, land and land development loans increased 2% to $1.57 billion at March 31, 2024, compared to $1.54 billion at December 31, 2023, and increased 7% compared to $1.47 billion at March 31, 2023. The increase in construction, land and land development loans was primarily the result of new loan production and advances on multifamily construction loans, primarily related to affordable housing projects. Agricultural business loans decreased 4% to $318.0 million at March 31, 2024, compared to $331.1 million at December 31, 2023, primarily due to operating line paydowns, and increased 17% compared to $272.7 million at March 31, 2023, primarily due to new loan production.

Loans held for sale were $9.4 million at March 31, 2024, compared to $11.2 million at December 31, 2023 and $49.0 million at March 31, 2023. One- to four-family residential mortgage loans sold totaled $65.9 million in the current quarter, compared to $65.6 million in the preceding quarter and $40.5 million in the first quarter a year ago. The decrease in loans held for sale compared to March 31, 2023 was due to the previously mentioned transfer of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. There were no multifamily loans held for sale at March 31, 2024 or December 31, 2023.

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

Banner Bank's estimated uninsured deposits were $4.18 billion or 31% of total deposits at March 31, 2024, compared to $4.08 billion or 31% of total deposits at December 31, 2023. The uninsured deposit calculation includes $316.6 million and $305.3 million of collateralized public deposits at March 31, 2024 and December 31, 2023, respectively. Uninsured deposits also include cash held by the holding company of $113.9 million and $108.2 million at March 31, 2024 and December 31, 2023, respectively. Banner Bank's estimated uninsured deposits, excluding collateralized public deposits and cash held at the holding company, were 28% of total deposits at both March 31, 2024 and December 31, 2023.

Banner had $52.0 million of FHLB advances at March 31, 2024, compared to $323.0 million at December 31, 2023 and $170.0 million a year ago. At March 31, 2024, Banner's off-balance sheet liquidity included additional borrowing capacity of $3.27 billion at the FHLB and $1.66 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

Subordinated notes, net of issuance costs, were $89.5 million at March 31, 2024 compared to $92.9 million at December 31, 2023 and $99.0 million at March 31, 2023. The decrease in subordinated notes from both the preceding and prior year quarters was due to Banner Bank's purchase of $10.0 million of Banner's subordinated debt over the past year.

At March 31, 2024, total common shareholders' equity was $1.66 billion, or 10.73% of total assets, compared to $1.65 billion or 10.55% of total assets at December 31, 2023, and $1.53 billion or 9.86% of total assets at March 31, 2023. The increase in total common shareholders' equity at March 31, 2024 compared to December 31, 2023 was primarily due to a $20.8 million increase in retained earnings as a result of $37.6 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the first quarter of 2024. The increase in retained earnings was partially offset by a $10.3 million increase in accumulated other comprehensive loss, primarily due to a decrease in the fair value of the security portfolio as a result of an increase in market interest rates during the first quarter of 2024. At March 31, 2024, tangible common shareholders' equity*, which excludes goodwill and other intangible assets, net, was $1.29 billion, or 8.50% of tangible assets*, compared to $1.27 billion, or 8.33% of tangible assets, at December 31, 2023, and $1.15 billion, or 7.59% of tangible assets, a year ago.

*Non-GAAP financial measures. See, "Additional Financial Information - Non-GAAP Financial Measures" on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as "well-capitalized." At March 31, 2024, Banner's estimated common equity Tier 1 capital ratio was 12.06%, its estimated Tier 1 leverage capital to average assets ratio was 10.71%, and its estimated total capital to risk-weighted assets ratio was 14.70%. These regulatory capital ratios are estimates, pending completion and filing of Banner's regulatory reports.

Credit Quality

The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable and 513% of non-performing loans, at March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable and 506% of non-performing loans, at December 31, 2023, and $141.5 million, or 1.39% of total loans receivable and 528% of non-performing loans, at March 31, 2023. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $13.6 million at March 31, 2024, compared to $14.5 million at December 31, 2023, and $13.4 million at March 31, 2023. Net loan recoveries totaled $73,000 in the first quarter of 2024, compared to net loan charge-offs of $1.1 million in the preceding quarter and net loan charge-offs of $782,000 in the first quarter a year ago. Non-performing loans were $29.5 million at March 31, 2024, compared to $29.6 million at December 31, 2023, and $26.8 million a year ago.

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

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

Conference Call

Banner will host a conference call on Thursday, April 18, 2024, at 8:00 a.m. PDT, to discuss its first quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 062587 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $15.52 billion bank holding company operating a commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "may," "believe," "will," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," "potential," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banner's operating and stock price performance.

Factors that could cause Banner's actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: (1) potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth, or increased political instability due to acts of war; (2) changes in the interest rate environment, including past increases in the Board of Governors of the Federal Reserve System (the "Federal Reserve") benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; (3) the impact of continuing elevated inflation and the current and future monetary policies of the Federal Reserve in response thereto; (4) the effects of any federal government shutdown; (5) the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; (6) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (7) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner's activities; (8) competitive pressures among depository institutions; (9) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (10) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (11) fluctuations in real estate values; (12) the ability to adapt successfully to technological changes to meet clients' needs and developments in the market place; (13) the ability to access cost-effective funding; (14) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (15) changes in financial markets; (16) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (17) the costs, effects and outcomes of litigation; (18) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (19) changes in accounting principles, policies or guidelines; (20) future acquisitions by Banner of other depository institutions or lines of business; (21) future goodwill impairment due to changes in Banner's business or changes in market conditions; (22) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (23) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (24) other risks detailed from time to time in Banner's other reports filed with and furnished to the Securities and Exchange Commission including Banner's Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

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

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
										Percentage Change
LOANS	Mar 31, 2024			Dec 31, 2023			Mar 31, 2023			Prior Qtr		Prior Yr Qtr

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

LOANS BY GEOGRAPHIC LOCATION									Percentage Change
	Mar 31, 2024				Dec 31, 2023		Mar 31, 2023		Prior Qtr		Prior Yr Qtr
	Amount		Percentage		Amount		Amount

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

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

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

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

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

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

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

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

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

INCLUDED IN TOTAL DEPOSITS
	Mar 31, 2024		Dec 31, 2023		Mar 31, 2023
Public non-interest-bearing accounts	$	140,477	$	146,916	$	177,913
Public interest-bearing transaction & savings accounts		251,161		209,699		183,924
Public interest-bearing certificates		28,821		52,048		26,857
Total public deposits	$	420,459	$	408,663	$	388,694
Collateralized public deposits	$	316,554	$	305,306	$	277,725
Total brokered deposits	$	107,527	$	108,058	$	—

AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
	Mar 31, 2024		Dec 31, 2023		Mar 31, 2023
Number of deposit accounts		461,399		463,750		462,880
Average account balance per account	$	29	$	29	$	28

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

ESTIMATED REGULATORY CAPITAL RATIOS AS OF MARCH 31, 2024	Actual				Minimum to be categorized as "Adequately Capitalized"				Minimum to be categorized as "Well Capitalized"
	Amount		Ratio		Amount		Ratio		Amount		Ratio

Banner Corporation-consolidated:
Total capital to risk-weighted assets	$	1,927,380	14.70	%	$	1,049,048	8.00	%	$	1,311,311	10.00	%
Tier 1 capital to risk-weighted assets		1,667,720	12.72	%		786,786	6.00	%		786,786	6.00	%
Tier 1 leverage capital to average assets		1,667,720	10.71	%		622,892	4.00	%		n/a	n/a
Common equity tier 1 capital to risk-weighted assets		1,581,220	12.06	%		590,090	4.50	%		n/a

Not meaningful

Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.

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.

Banner Corporation Reports Net Income of $37.6 Million, or $1.09 Per Diluted Share, for First Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share