Declares Quarterly Cash Dividend of $0.44 Per Share

Walla Walla, WA - July 20, 2022 - Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent company of Banner Bank, today reported net income of $48.0 million, or $1.39 per diluted share, for the second quarter of 2022, a 9% increase compared to $44.0 million, or $1.27 per diluted share, for the preceding quarter and a 12% decrease compared to $54.4 million, or $1.56 per diluted share, for the second quarter of 2021. Banner's second quarter 2022 results include $4.5 million of provision for credit losses, compared to $7.0 million in recapture of provision for credit losses in the preceding quarter and $10.3 million in recapture of provision for credit losses in the second quarter of 2021. In addition, during the second quarter of 2022 Banner recognized a $7.8 million gain related to the recently completed branch sale. In the first six months of 2022, net income was $91.9 million, or $2.66 per diluted share, compared to net income of $101.2 million, or $2.88 per diluted share for the same period a year earlier. Banner's first six months of 2022 results include $2.4 million in recapture of provision for credit losses, compared to $19.5 million in recapture of provision for credit losses in the first six months of 2021.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.44 per share. The dividend will be payable August 12, 2022, to common shareholders of record on August 2, 2022.

"Banner's second quarter operating results reflect the continued successful execution of our super community bank strategy, and the ongoing implementation of Banner Forward," said Mark Grescovich, President and CEO. "Our performance for the second quarter of 2022 benefited from solid loan growth, higher yields on interest-earning assets that led to net interest margin expansion, and the closing of the branch sale. Our continued focus on cultivating new client relationships contributed to our core deposits increasing 5% and loans, excluding PPP loans, increasing 7%, compared to June 30, 2021. We believe Banner remains well positioned for rising interest rates with an asset sensitive position which should further expand our net interest margin, and ample on-balance sheet liquidity to support loan demand and mitigate rising deposit costs. Our approach of consistently delivering outstanding service and value to our clients, communities, colleagues, company and shareholders while meeting our performance objectives continues to guide our success."

"During the third quarter of 2021 we began implementing Banner Forward, a bank-wide initiative to enhance revenue growth and reduce operating expense," said Grescovich. "Banner Forward is focused on accelerating growth in commercial banking, deepening relationships with retail clients, and advancing technology strategies to enhance our digital service channels, while streamlining underwriting and back office processes. The remaining efficiency-related initiatives associated with Banner Forward are anticipated to be implemented sequentially over the third quarter with implementation of the revenue initiatives ramping up in the second half of the year and into 2023. We expect full implementation by next year. During the second quarter of 2022, we incurred expenses of $1.6 million related to Banner Forward."

At June 30, 2022, Banner Corporation had $16.39 billion in assets, $9.33 billion in net loans and $14.21 billion in deposits. Banner operates 137 full service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.


BANR - Second Quarter 2022 Results
July 20, 2022
Page 2
Second Quarter 2022 Highlights
•
Revenues increased 13% to $156.2 million, compared to $138.1 million in the preceding quarter, and increased 4% when compared to $149.9 million in the second quarter a year ago.
•
Net interest income increased to $129.0 million in the second quarter of 2022, compared to $118.7 million in the preceding quarter and $127.6 million in the second quarter a year ago.
•
Net interest margin on a tax equivalent basis was 3.44%, compared to 3.18% in the preceding quarter and 3.52% in the second quarter a year ago.
•
Mortgage banking revenues decreased 10% to $4.0 million, compared to $4.4 million in the preceding quarter, and decreased 46% compared to $7.3 million in the second quarter a year ago.
•
Return on average assets was 1.16%, compared to 1.06% in the preceding quarter and 1.36% in the second quarter a year ago.
•
Net loans receivable increased 3% to $9.33 billion at June 30, 2022, compared to $9.02 billion at March 31, 2022, and decreased 2% compared to $9.51 billion at June 30, 2021.
•
Non-performing assets were $19.1 million, or 0.12% of total assets, at June 30, 2022, compared to $19.1 million, or 0.11% of total assets in the preceding quarter, and decreased from $31.5 million, or 0.19% of total assets, at June 30, 2021.
•
The allowance for credit losses - loans was $128.7 million, or 1.36% of total loans receivable, as of June 30, 2022, compared to $125.5 million, or 1.37% of total loans receivable as of March 31, 2022 and $148.0 million, or 1.53% of total loans receivable as of June 30, 2021.
•
Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) decreased 2% to $13.46 billion at June 30, 2022, compared to $13.72 billion at March 31, 2022, and increased 5% compared to $12.76 billion a year ago. Core deposits represented 95% of total deposits at June 30, 2022.
•
Dividends to shareholders were $0.44 per share in the quarter ended June 30, 2022.
•
Common shareholders' equity per share decreased 4% to $43.46 at June 30, 2022, compared to $45.49 at the preceding quarter end, and decreased 10% from $48.31 a year ago.
•
Tangible common shareholders' equity per share* decreased 6% to $32.20 at June 30, 2022, compared to $34.25 at the preceding quarter end, and decreased 13% from $36.99 a year ago.
•
Repurchased 200,000 shares of common stock at an average cost of $54.80 per share.

*Tangible common shareholders' equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments, net gain (loss) on the sale of securities and gain on sale of branches from the total of net interest income and total non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of core deposit intangibles, real estate owned operations, loss on extinguishment of debt and state/municipal taxes from non-interest expense divided by adjusted revenue) represent non-GAAP (Generally Accepted Accounting Principles) 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. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.
Significant Recent Initiatives and Events
On June 24, 2022, Banner Bank completed the sale of four branches located in Hayden, Idaho, and in Chewelah, Colville, and Kettle Falls, Washington, generating a gain of $7.8 million.
The branch sale included deposit accounts with an approximate balance of $178.2 million. Banner Bank received a 5.0% premium in relation to the core deposits. The sale also included all related branch premises and equipment.
The sale of these branches further improves the Bank's service footprint, while contributing to our capital, reducing excess liquidity, and improving our operating efficiency, including supporting the Banner Forward initiative by improving management's focus on key operations and markets. Banner's goal is that the combined impact of these branch sales and Banner Forward initiatives will be positive to future annual operating earnings.
Income Statement Review
Net interest income was $129.0 million in the second quarter of 2022, compared to $118.7 million in the preceding quarter and $127.6 million in the second quarter a year ago. "Rising interest rates during the quarter produced higher yields on loans and investment securities which improved our net interest margin. This impact was partially offset by the decline in the recognition of deferred loan fee income due to reduced loan repayments from Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loan forgiveness," said Grescovich.
Banner's net interest margin on a tax equivalent basis was 3.44% for the second quarter of 2022, a 26 basis-point increase compared to 3.18% in the preceding quarter and an eight basis-point decrease compared to 3.52% in the second quarter a year ago. Acquisition accounting adjustments added two basis points to the net interest margin in the current quarter, and three basis points in both the preceding quarter and the second quarter a year ago.

BANR - Second Quarter 2022 Results
July 20, 2022
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The total purchase discount for acquired loans was $7.7 million at June 30, 2022, compared to $8.5 million at March 31, 2022, and $12.5 million at June 30, 2021.
Average yields on interest-earning assets increased 25 basis points to 3.54% for the second quarter of 2022 compared to 3.29% for the preceding quarter and decreased 14 basis points compared to 3.68% in the second quarter a year ago. In March 2022, in response to inflation, the Federal Open Market Committee ("FOMC") of the Federal Reserve System commenced increasing the target range for the federal funds rate by implementing a 25 basis point increase. During the second quarter of 2022, the FOMC increased the target range for the federal funds rate by an additional 125 basis points to a range of 1.50% to 1.75%. The increase in average yields on interest-earnings assets during the current quarter reflects the lagging benefit of variable rate interest-earnings assets beginning to reprice higher. The year over year decreases in average yield on interest-earning assets primarily reflects decreases in the average yield on total loans due to a decline in the recognition of deferred loan fee income due to loan repayments from SBA PPP loan forgiveness and increases in the average balance of interest-bearing deposits, as excess liquidity was invested in low yielding short term investments. Average loan yields increased four basis points to 4.54% compared to 4.50% in the preceding quarter and decreased 16 basis points compared to 4.70% in the second quarter a year ago. The increase in average loan yields during the current quarter compared to the preceding quarter was primarily the result of rising interest rates, partially offset by a decline in the recognition of deferred loan fee income due to loan repayments from SBA PPP loan forgiveness during the quarter. Loan discount accretion added four basis points to average loan yields in the current quarter and added five basis points in both the preceding quarter and in the second quarter a year ago. Deposit costs were 0.06% in both the second quarter of 2022 and the preceding quarter, which was a three basis-point decrease compared to the second quarter a year ago. The year-over-year decrease in quarterly deposit costs was primarily the result of an increase in the average balance of core deposits. The total cost of funding liabilities was 0.11% during the second quarter of 2022, a one basis-point decrease compared to the preceding quarter and a six basis-point decrease compared to 0.17% in the second quarter a year ago.
Banner recorded a $4.5 million provision for credit losses in the current quarter (comprised of a $3.1 million provision for credit losses - loans, a $1.4 million provision for credit losses - unfunded loan commitments and a $4,000 provision for credit losses - held-to-maturity debt securities). This compares to a $7.0 million recapture of provision for credit losses in the prior quarter (comprised of a $7.4 million recapture of provision for credit losses - loans, a $428,000 provision for credit losses - unfunded loan commitments and a $13,000 recapture of provision for credit losses - held-to-maturity debt securities) and a $10.3 million recapture of provision for credit losses in the second quarter a year ago (comprised of an $8.1 million recapture of provision for credit losses - loans, a $2.2 million recapture of provision for credit losses - unfunded loan commitments and a $12,000 provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflects loan growth and, to a lesser extent, a deterioration in forecasted economic conditions. The recapture of provision for credit losses for the preceding quarters primarily reflects improvement in the level of adversely classified loans, as well as in the forecasted economic indicators utilized to estimate credit losses during those periods.
Total non-interest income was $27.2 million in the second quarter of 2022, compared to $19.4 million in the preceding quarter and $22.3 million in the second quarter a year ago. The increase in non-interest income during the current quarter is primarily due to the previously mentioned $7.8 million gain recognized on the branch sale completed during the quarter. Deposit fees and other service charges were $11.0 million in the second quarter of 2022, compared to $11.2 million in the preceding quarter and $9.8 million in the second quarter a year ago. The increase in deposit fees and other service charges from the second quarter a year ago is primarily a result of increased deposit transaction account activity. Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, decreased to $4.0 million in the second quarter, compared to $4.4 million in the preceding quarter and $7.3 million in the second quarter a year ago. The decrease from the preceding quarter and from the second quarter of 2021 primarily reflects a reduction in the volume of one- to four-family loans sold, as well as a decrease in the gain on sale margin on one- to four-family held-for-sale loans. The reduction in volumes reflects a reduction in refinancing activity as interest rates increased during the current quarter. Home purchase activity accounted for 82% of one- to four-family mortgage loan originations in the second quarter of 2022, compared to 64% in the preceding quarter and was 66% in the second quarter of 2021. Mortgage banking revenue for the current quarter included a $458,000 lower of cost or market downward adjustment recorded on multifamily held for sale loans due to increases in market interest rates, compared to a $603,000 lower of cost or market downward adjustment recorded on multifamily held for sale loans in the first quarter of 2022. The prior quarter market downward adjustment was partially offset by $340,000 of gain recognized on the sale of multifamily loans. There were no sales of multifamily loans during the current quarter. Miscellaneous non-interest income increased to $2.1 million in the second quarter of 2022, compared to $1.7 million in the preceding quarter and decreased compared to $3.9 million in the second quarter a year ago. The decrease in miscellaneous non-interest income from the prior year quarter is primarily a result of higher gains recognized on the disposition of closed branch locations during the second quarter a year ago. Total non-interest income was $46.6 million in the first six months of each of 2022 and 2021.
Banner's second quarter 2022 results included a $69,000 net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading and limited partnership investments, and a $32,000 net gain on the sale of securities. In the preceding quarter, results included a $49,000 net gain for fair value adjustments and a $435,000 net gain on the sale of securities. In the second quarter a year ago, results included a $58,000 net gain for fair value adjustments and a $77,000 net gain on the sale of securities.
Total revenue increased 13% to $156.2 million for the second quarter of 2022, compared to $138.1 million in the preceding quarter, and increased 4% compared to $149.9 million in the second quarter of 2021. Adjusted revenue* (the total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities, the net change in valuation of financial instruments, and the gain on sale of branches) was $148.3 million


BANR - Second Quarter 2022 Results
July 20, 2022
Page 4
in the second quarter of 2022, compared to $137.6 million in the preceding quarter and $149.8 million in the second quarter a year ago. In the first six months of the year, adjusted revenue* was $285.9 million, compared to $291.1 million in the first six months of 2021.
Total non-interest expense was $92.1 million in the second quarter of 2022, compared to $91.2 million in the preceding quarter and $92.6 million in the second quarter of 2021. The increase in non-interest expense for the current quarter compared to the prior quarter reflects a $1.3 million increase in salary and employee benefits expenses, primarily due to normal salary and wage adjustments, a $786,000 increase in payment and card processing services expenses, a $698,000 increase in professional services expenses and a $361,000 increase in advertising and marketing expenses, partially offset by a $1.0 million increase in capitalized loan origination costs, primarily due to increased loan production, a $793,000 decrease in loss on extinguishment of debt and a $654,000 decrease in information / computer data services expense. Banner recorded a $793,000 loss on extinguishment of debt in the prior quarter as a result of the redemption of $50.5 million of junior subordinated debentures. The year-over-year quarterly decrease in non-interest expense primarily reflects decreases in salary and employee benefits expense, primarily due to a reduction in staffing, and in professional and legal expenses, primarily due to a reduction in consultant expense, partially offset by a decrease in capitalized loan origination costs. Year-to-date, total non-interest expense was $183.2 million, compared to $186.2 million in the same period a year earlier. Banner's efficiency ratio was 58.94% for the second quarter, compared to 66.04% in the preceding quarter and 61.79% in same quarter a year ago. Banner's adjusted efficiency ratio* was 59.46% for the second quarter, compared to 62.09% in the preceding quarter and 58.50% in the year ago quarter.
For the second quarter of 2022, Banner had $11.6 million in state and federal income tax expense for an effective tax rate of 19.5%, reflecting the benefits from tax exempt income. Banner's statutory income tax rate is 23.6%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

Balance Sheet Review
Total assets decreased to $16.39 billion at June 30, 2022, compared to $16.78 billion at March 31, 2022, and increased 1% when compared to $16.18 billion at June 30, 2021. The total of securities and interest-bearing deposits held at other banks was $5.45 billion at June 30, 2022, compared to $6.06 billion at March 31, 2022 and $5.19 billion at June 30, 2021. The average effective duration of Banner's securities portfolio was approximately 6.5 years at June 30, 2022, compared to 4.6 years at June 30, 2021.
Total loans receivable increased to $9.46 billion at June 30, 2022, compared to $9.15 billion at March 31, 2022, and decreased when compared to $9.65 billion at June 30, 2021. Excluding SBA PPP loans, total loans receivable increased $337.8 million from the preceding quarter and increased $596.8 million from the second quarter a year ago. SBA PPP loans decreased 47% to $31.0 million at June 30, 2022, compared to $58.6 million at March 31, 2022, and decreased 96% when compared to $825.1 million at June 30, 2021. One- to four-family loans increased to $868.2 million at June 30, 2022, compared to $718.4 million at March 31, 2022, and increased from $611.2 million a year ago. The increase in one- to four-family loans from the preceding quarter was primarily the result of a jumbo mortgage special offered during the second quarter of 2022. Multifamily real estate loans decreased 4% to $575.2 million at June 30, 2022, compared to $598.6 million at March 31, 2022, and increased 23% compared to $469.0 million a year ago. Commercial real estate loans decreased 1% to $3.67 billion at June 30, 2022, compared to $3.71 billion at both March 31, 2022 and June 30, 2021. Commercial business loans increased 6% to $2.07 billion at June 30, 2022, compared to $1.96 billion at March 31, 2022, and decreased 22% compared to $2.67 billion a year ago, primarily due to SBA PPP loans forgiven. Excluding SBA PPP loans, commercial business loans increased 8% to $2.04 billion at June 30, 2022, compared to $1.90 billion at March 31, 2022, and increased 9% compared to $1.87 billion a year ago. Agricultural business loans increased to $283.4 million at June 30, 2022, compared to $245.3 million at March 31, 2022, and increased from $258.9 million a year ago. Total construction, land and land development loans were $1.40 billion at June 30, 2022, a 3% increase from $1.35 billion at March 31, 2022, and a 2% increase from $1.37 billion at June 30, 2021. Consumer loans increased to $595.6 million at June 30, 2022, compared to $567.6 million at March 31, 2022, and increased from $560.7 million a year ago.
Loans held for sale were $69.2 million at June 30, 2022, compared to $64.2 million at March 31, 2022, and $71.7 million at June 30, 2021. The volume of one- to four- family residential mortgage loans sold was $88.6 million in the current quarter, compared to $210.4 million in the preceding quarter and $266.7 million in the second quarter a year ago. Banner sold no multifamily loans during the second quarter of 2022, compared to $15.8 million in the preceding quarter and $83.9 million in the second quarter a year ago.
Total deposits decreased 2% to $14.21 billion at June 30, 2022, compared to $14.52 billion at March 31, 2022, and increased 4% when compared to $13.64 billion a year ago. The year-over-year increase in total deposits was due primarily to an increase in general client liquidity. Non-interest-bearing account balances decreased to $6.39 billion at June 30, 2022, compared to $6.49 billion at March 31, 2022, and increased 5% compared to $6.09 billion a year ago. Core deposits were 95% of total deposits at June 30, 2022, and 94% of total deposits at both March 31, 2022 and June 30, 2021. Certificates of deposit decreased to $756.3 million at June 30, 2022, compared to $800.4 million at March 31, 2022, and decreased 13% compared to $873.0 million a year earlier. Banner had no FHLB borrowings at both June 30, 2022 and March 31, 2022, compared to $100.0 million a year ago.
At June 30, 2022, total common shareholders' equity was $1.49 billion, or 9.07% of assets, compared to $1.56 billion or 9.32% of assets at March 31, 2022, and $1.67 billion or 10.32% of assets a year ago. The decrease in total common shareholders' equity during the current quarter was primarily due to a $101.8 million decrease in accumulated other comprehensive income related to an increase in the unrealized loss on available for sale securities reflecting the increase in market interest rates during the current quarter. In addition, Banner repurchased 200,000 shares of its common stock in the second quarter of 2022 at an average cost of $54.80 per share. At June 30, 2022, tangible common shareholders' equity*, which excludes goodwill and

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July 20, 2022
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other intangible assets, net, was $1.10 billion, or 6.88% of tangible assets*, compared to $1.18 billion, or 7.18% of tangible assets, at March 31, 2022, and $1.28 billion, or 8.09% of tangible assets, a year ago. Banner's tangible book value per share* decreased to $32.20 at June 30, 2022, compared to $36.99 per share a year ago.
Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as "well-capitalized." At June 30, 2022, Banner's common equity Tier 1 capital ratio was 11.21%, its Tier 1 leverage capital to average assets ratio was 8.74%, and its total capital to risk-weighted assets ratio was 13.80%.

Credit Quality
The allowance for credit losses - loans was $128.7 million at June 30, 2022, or 1.36% of total loans receivable and 688% of non-performing loans, compared to $125.5 million at March 31, 2022, or 1.37% of total loans receivable and 674% of non-performing loans, and $148.0 million at June 30, 2021, or 1.53% of total loans receivable and 481% of non-performing loans. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $14.2 million at June 30, 2022, compared to $12.9 million at March 31, 2022 and $9.9 million at June 30, 2021. Net loan recoveries totaled $87,000 in the second quarter of 2022, compared to $748,000 in the preceding quarter and $55,000 in the second quarter a year ago. Non-performing loans were $18.7 million at June 30, 2022, compared to $18.6 million at March 31, 2022, and $30.8 million a year ago. Real estate owned and other repossessed assets were $357,000 at June 30, 2022, compared to $446,000 at March 31, 2022, and $780,000 a year ago.
Banner's total substandard loans were $154.5 million at June 30, 2022, compared to $178.4 million at March 31, 2022, and $272.8 million a year ago. The quarter over quarter decrease primarily reflects the payoff of substandard loans as well as balance paydowns and risk rating upgrades.
Banner's total non-performing assets were $19.1 million, or 0.12% of total assets, at June 30, 2022, compared to $19.1 million, or 0.11% of total assets, at March 31, 2022, and $31.5 million, or 0.19% of total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday July 21, 2022, at 8:00 a.m. PDT, to discuss its second quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (844) 200-6205 using access code 218798 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 996409, or at www.bannerbank.com.
About the Company
Banner Corporation is a $16.39 billion bank holding company operating one commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "may," "believe," "will," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," "potential," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banner's operating and stock price performance.
Factors that could cause Banner's actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: (1) potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of the ongoing COVID-19 pandemic and any governmental or societal responses thereto; (2) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (3) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner's activities; (4) competitive pressures among depository institutions; (5) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (6) uncertainty regarding the future of the London Interbank Offered Rate (LIBOR), and the transition away from LIBOR toward new interest rate benchmarks; (7) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the


BANR - Second Quarter 2022 Results
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ability to adapt successfully to technological changes to meet clients' needs and developments in the market place; (10) the ability to access cost-effective funding; (11) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (12) changes in financial markets; (13) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular, including the risk of inflation; (14) the costs, effects and outcomes of litigation; (15) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (16) changes in accounting principles, policies or guidelines; (17) future acquisitions by Banner of other depository institutions or lines of business; (18) future goodwill impairment due to changes in Banner's business, changes in market conditions;(19) the costs associated with Banner Forward and (20) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (21) other risks detailed from time to time in Banner's filings with the Securities and Exchange Commission including Banner's Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

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RESULTS OF OPERATIONS
Quarters Ended
Six Months Ended
(in thousands except shares and per share data)
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Jun 30, 2022
Jun 30, 2021
INTEREST INCOME:
Loans receivable
$
104,506
$
100,350
$
115,391
$
204,856
$
224,315
Mortgage-backed securities
16,819
14,109
11,437
30,928
20,808
Securities and cash equivalents
11,676
8,432
6,737
20,108
12,963
133,001
122,891
133,565
255,892
258,086
INTEREST EXPENSE:
Deposits
2,008
2,086
3,028
4,094
6,637
Federal Home Loan Bank advances
-
291
655
291
1,589
Other borrowings
80
84
124
164
233
Subordinated debt
1,902
1,776
2,204
3,678
4,412
3,990
4,237
6,011
8,227
12,871
Net interest income
129,011
118,654
127,554
247,665
245,215
PROVISION (RECAPTURE) FOR CREDIT LOSSES
4,534
(6,961
)
(10,256
)
(2,427
)
(19,507
)
Net interest income after provision (recapture) for credit losses
124,477
125,615
137,810
250,092
264,722
NON-INTEREST INCOME:
Deposit fees and other service charges
11,000
11,189
9,758
22,189
18,697
Mortgage banking operations
3,978
4,440
7,345
8,418
18,692
Bank-owned life insurance
2,239
1,631
1,245
3,870
2,552
Miscellaneous
2,051
1,683
3,853
3,734
5,988
19,268
18,943
22,201
38,211
45,929
Net gain on sale of securities
32
435
77
467
562
Net change in valuation of financial instruments carried at fair value
69
49
58
118
117
Gain on sale of branches, including related deposits
7,804
-
-
7,804
-
Total non-interest income
27,173
19,427
22,336
46,600
46,608
NON-INTEREST EXPENSE:
Salary and employee benefits
60,832
59,486
61,935
120,318
126,754
Less capitalized loan origination costs
(7,222
)
(6,230
)
(8,768
)
(13,452
)
(18,464
)
Occupancy and equipment
13,284
13,220
12,823
26,504
25,812
Information / computer data services
5,997
6,651
5,602
12,648
11,805
Payment and card processing services
5,682
4,896
4,975
10,578
9,301
Professional and legal expenses
2,878
2,180
4,371
5,058
7,699
Advertising and marketing
822
461
1,181
1,283
2,444
Deposit insurance
1,440
1,524
1,241
2,964
2,774
State/municipal business and use taxes
1,004
1,162
1,083
2,166
2,148
Real estate operations
(121
)
(79
)
118
(200
)
(124
)
Amortization of core deposit intangibles
1,425
1,424
1,711
2,849
3,422
Loss on extinguishment of debt
-
793
-
793
-
Miscellaneous
6,032
5,707
6,156
11,739
11,665
92,053
91,195
92,428
183,248
185,236
COVID-19 expenses
-
-
117
-
265
Merger and acquisition-related expenses
-
-
79
-
650
Total non-interest expense
92,053
91,195
92,624
183,248
186,151
Income before provision for income taxes
59,597
53,847
67,522
113,444
125,179
PROVISION FOR INCOME TAXES
11,632
9,884
13,140
21,516
23,942
NET INCOME
$
47,965
$
43,963
$
54,382
$
91,928
$
101,237
Earnings per common share:
Basic
$
1.40
$
1.28
$
1.57
$
2.68
$
2.90
Diluted
$
1.39
$
1.27
$
1.56
$
2.66
$
2.88
Cumulative dividends declared per common share
$
0.44
$
0.44
$
0.41
$
0.88
$
0.82
Weighted average number of common shares outstanding:
Basic
34,307,001
34,300,742
34,736,639
34,303,889
34,854,357
Diluted
34,451,740
34,598,436
34,933,714
34,532,935
35,149,986
(Decrease) increase in common shares outstanding
(181,454
)
120,152
(184,455
)
(61,302
)
(608,312
)

BANR - Second Quarter 2022 Results
July 20, 2022
Page 8

FINANCIAL CONDITION
Percentage Change
(in thousands except shares and per share data)
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Prior
Qtr
Prior
Yr Qtr
Cash and due from banks
$
294,717
$
414,780
$
358,461
$
329,359
(28.9
)%
(10.5
)%
Interest-bearing deposits
876,130
1,573,608
1,775,839
1,138,572
(44.3
)%
(23.1
)%
Total cash and cash equivalents
1,170,847
1,988,388
2,134,300
1,467,931
(41.1
)%
(20.2
)%
Securities - trading
27,886
27,354
26,981
25,097
1.9
%
11.1
%
Securities - available for sale
3,094,422
3,147,547
3,638,993
3,275,979
(1.7
)%
(5.5
)%
Securities - held to maturity
1,151,765
1,015,522
520,922
455,256
13.4
%
153.0
%
Total securities
4,274,073
4,190,423
4,186,896
3,756,332
2.0
%
13.8
%
Federal Home Loan Bank stock
10,000
10,000
12,000
14,001
-
%
(28.6
)%
Securities purchased under agreements to resell
300,000
300,000
300,000
300,000
-
%
-
%
Loans held for sale
69,161
64,218
96,487
71,741
7.7
%
(3.6
)%
Loans receivable
9,456,829
9,146,629
9,084,763
9,654,181
3.4
%
(2.0
)%
Allowance for credit losses - loans
(128,702
)
(125,471
)
(132,099
)
(148,009
)
2.6
%
(13.0
)%
Net loans receivable
9,328,127
9,021,158
8,952,664
9,506,172
3.4
%
(1.9
)%
Accrued interest receivable
45,408
41,827
42,916
46,979
8.6
%
(3.3
)%
Real estate owned (REO) held for sale, net
340
429
852
763
(20.7
)%
(55.4
)%
Property and equipment, net
141,114
142,594
148,759
156,063
(1.0
)%
(9.6
)%
Goodwill
373,121
373,121
373,121
373,121
-
%
-
%
Other intangibles, net
11,870
13,431
14,855
18,004
(11.6
)%
(34.1
)%
Bank-owned life insurance
293,631
294,556
244,156
192,677
(0.3
)%
52.4
%
Operating lease right-of-use assets
49,792
52,792
55,257
55,287
(5.7
)%
(9.9
)%
Other assets
317,713
283,234
242,609
222,786
12.2
%
42.6
%
Total assets
$
16,385,197
$
16,776,171
$
16,804,872
$
16,181,857
(2.3
)%
1.3
%
LIABILITIES
Deposits:
Non-interest-bearing
$
6,388,815
$
6,494,852
$
6,385,177
$
6,090,063
(1.6
)%
4.9
%
Interest-bearing transaction and savings accounts
7,067,437
7,228,558
7,103,125
6,673,598
(2.2
)%
5.9
%
Interest-bearing certificates
756,312
800,364
838,631
873,047
(5.5
)%
(13.4
)%
Total deposits
14,212,564
14,523,774
14,326,933
13,636,708
(2.1
)%
4.2
%
Advances from Federal Home Loan Bank (FHLB)
-
-
50,000
100,000
-
%
(100.0
)%
Other borrowings
234,737
266,778
264,490
237,736
(12.0
)%
(1.3
)%
Subordinated notes, net
98,752
98,658
98,564
98,380
0.1
%
0.4
%
Junior subordinated debentures at fair value
72,229
70,510
119,815
117,520
2.4
%
(38.5
)%
Operating lease liabilities
55,746
57,343
59,756
59,117
(2.8
)%
(5.7
)%
Accrued expenses and other liabilities
180,999
148,689
148,303
216,399
21.7
%
(16.4
)%
Deferred compensation
44,340
46,639
46,684
46,786
(4.9
)%
(5.2
)%
Total liabilities
14,899,367
15,212,391
15,114,545
14,512,646
(2.1
)%
2.7
%
SHAREHOLDERS' EQUITY
Common stock
1,289,499
1,298,212
1,299,381
1,311,455
(0.7
)%
(1.7
)%
Retained earnings
452,246
419,659
390,762
319,505
7.8
%
41.5
%
Accumulated other comprehensive (loss) income
(255,915
)
(154,091
)
184
38,251
66.1
%
(769.0
)%
Total shareholders' equity
1,485,830
1,563,780
1,690,327
1,669,211
(5.0
)%
(11.0
)%
Total liabilities and shareholders' equity
$
16,385,197
$
16,776,171
$
16,804,872
$
16,181,857
(2.3
)%
1.3
%
Common Shares Issued:
Shares outstanding at end of period
34,191,330
34,372,784
34,252,632
34,550,888
Common shareholders' equity per share (1)
$
43.46
$
45.49
$
49.35
$
48.31
Common shareholders' tangible equity per share (1) (2)
$
32.20
$
34.25
$
38.02
$
36.99
Common shareholders' tangible equity to tangible assets (2)
6.88
%
7.18
%
7.93
%
8.09
%
Consolidated Tier 1 leverage capital ratio
8.74
%
8.58
%
8.76
%
8.86
%

(1)
Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
(2)
Common shareholders' tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final two pages of the press release tables.

BANR - Second Quarter 2022 Results
July 20, 2022
Page 9

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Percentage Change
LOANS (1)
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Prior
Qtr
Prior Yr
Qtr
Commercial real estate (CRE):
Owner-occupied
$
845,184
$
872,801
$
831,623
$
780,558
(3.2
)%
8.3
%
Investment properties
1,628,105
1,670,896
1,674,027
1,633,481
(2.6
)%
(0.3
)%
Small balance CRE
1,191,903
1,162,164
1,281,863
1,294,879
2.6
%
(8.0
)%
Multifamily real estate
575,183
598,588
530,885
468,970
(3.9
)%
22.6
%
Construction, land and land development:
Commercial construction
193,984
179,796
167,998
181,316
7.9
%
7.0
%
Multifamily construction
256,952
274,015
259,116
295,661
(6.2
)%
(13.1
)%
One- to four-family construction
625,488
582,800
568,753
603,895
7.3
%
3.6
%
Land and land development
320,041
317,560
313,454
290,404
0.8
%
10.2
%
Commercial business:
Commercial business
1,176,287
1,081,847
1,038,206
1,123,026
8.7
%
4.7
%
SBA PPP
30,651
57,854
132,574
807,172
(47.0
)%
(96.2
)%
Small business scored
865,828
817,065
792,310
743,975
6.0
%
16.4
%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland
283,059
244,580
279,224
240,933
15.7
%
17.5
%
SBA PPP
356
708
1,354
17,962
(49.7
)%
(98.0
)%
One- to four-family residential
868,175
718,403
657,474
611,227
20.8
%
42.0
%
Consumer:
Consumer-home equity revolving lines of credit
506,524
470,485
458,533
458,915
7.7
%
10.4
%
Consumer-other
89,109
97,067
97,369
101,807
(8.2
)%
(12.5
)%
Total loans receivable
$
9,456,829
$
9,146,629
$
9,084,763
$
9,654,181
3.4
%
(2.0
)%
Restructured loans performing under their
restructured terms
$
4,370
$
5,279
$
5,309
$
5,472
Loans 30 - 89 days past due and on accrual
$
8,336
$
9,611
$
11,558
$
5,656
Total delinquent loans (including loans on non-
accrual), net
$
18,123
$
19,231
$
18,688
$
23,582
Total delinquent loans / Total loans receivable
0.19
%
0.21
%
0.21
%
0.24
%
(1)
December 31, 2021 and June 30, 2021 loan balances were reclassified to match current period presentation.

LOANS BY GEOGRAPHIC LOCATION
Percentage Change
Jun 30, 2022
Mar 31,
2022
Dec 31,
2021
Jun 30,
2021
Prior
Qtr
Prior
Yr Qtr
Amount
Percentage
Amount
Amount
Amount
Washington
$
4,436,092
46.9
%
$
4,254,748
$
4,264,590
$
4,541,792
4.3
%
(2.3
)%
California
2,227,532
23.6
%
2,195,904
2,138,340
2,246,580
1.4
%
(0.8
)%
Oregon
1,699,238
18.0
%
1,629,281
1,652,364
1,753,285
4.3
%
(3.1
)%
Idaho
562,464
5.9
%
541,706
525,141
525,610
3.8
%
7.0
%
Utah
94,508
1.0
%
84,720
74,913
92,103
11.6
%
2.6
%
Other
436,995
4.6
%
440,270
429,415
494,811
(0.7
)%
(11.7
)%
Total loans receivable
$
9,456,829
100.0
%
$
9,146,629
$
9,084,763
$
9,654,181
3.4
%
(2.0
)%

BANR - Second Quarter 2022 Results
July 20, 2022
Page 10

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

LOAN ORIGINATIONS
Quarters Ended
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Commercial real estate
$
121,365
$
87,421
$
103,415
Multifamily real estate
2,959
21,169
45,674
Construction and land
643,832
545,475
509,828
Commercial business:
Commercial business
245,997
272,513
181,996
SBA PPP
-
-
55,990
Agricultural business
26,786
28,676
12,546
One-to four-family residential
126,963
55,821
47,086
Consumer
193,853
121,959
131,424
Total loan originations (excluding loans held for sale)
$
1,361,755
$
1,133,034
$
1,087,959

BANR - Second Quarter 2022 Results
July 20, 2022
Page 11
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Quarters Ended
CHANGE IN THE
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
ALLOWANCE FOR CREDIT LOSSES - LOANS
Balance, beginning of period
$125,471
$132,099
$156,054
Provision (recapture) for credit losses - loans
3,144
(7,376
)
(8,100
)
Recoveries of loans previously charged off:
Commercial real estate
129
87
147
Construction and land
-
384
-
One- to four-family real estate
98
40
20
Commercial business
234
149
321
Agricultural business, including secured by farmland
14
118
8
Consumer
112
216
97
587
994
593
Loans charged off:
Commercial real estate
-
(2
)
(3
)
Construction and land
-
(5
)
-
Commercial business
(248)
(82
)
(123
)
Agricultural business, including secured by farmland
-
-
(2
)
Consumer
(252)
(157
)
(410
)
(500)
(246
)
(538
)
Net recoveries
87
748
55
Balance, end of period
$128,702
$125,471
$148,009
Net recoveries / Average loans receivable
0.001
%
0.008
%
0.001
%

ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES - LOANS
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Specific or allocated credit loss allowance:
Commercial real estate
$
46,373
$
47,264
$
60,349
Multifamily real estate
6,906
7,183
5,807
Construction and land
26,939
26,679
30,899
One- to four-family real estate
9,573
8,109
9,800
Commercial business
28,673
26,655
30,830
Agricultural business, including secured by farmland
3,002
2,586
3,256
Consumer
7,236
6,995
7,068
Total allowance for credit losses - loans
$
128,702
$
125,471
$
148,009
Allowance for credit losses - loans / Total loans receivable
1.36
%
1.37
%
1.53
%
Allowance for credit losses - loans / Non-performing loans
688
%
674
%
481
%

Quarters Ended
CHANGE IN THE
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period
$12,860
$12,432
$12,077
Provision/(recapture) for credit losses - unfunded loan commitments
1,386
428
(2,168)
Balance, end of period
$14,246
$12,860
$9,909

BANR - Second Quarter 2022 Results
July 20, 2022
Page 12

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
NON-PERFORMING ASSETS
Loans on non-accrual status:
Secured by real estate:
Commercial
$
10,041
$
10,618
$
14,159
$
17,427
Construction and land
200
119
479
541
One- to four-family
2,002
2,199
2,711
4,007
Commercial business
1,521
1,845
2,156
3,673
Agricultural business, including secured by farmland
1,022
1,021
1,022
1,200
Consumer
1,874
2,123
1,754
1,799
16,660
17,925
22,281
28,647
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Commercial
899
-
-
911
One- to four-family
1,053
210
436
579
Commercial business
20
351
2
495
Consumer
83
121
117
131
2,055
682
555
2,116
Total non-performing loans
18,715
18,607
22,836
30,763
REO
340
429
852
763
Other repossessed assets
17
17
17
17
Total non-performing assets
$
19,072
$
19,053
$
23,705
$
31,543
Total non-performing assets to total assets
0.12
%
0.11
%
0.14
%
0.19
%

Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
LOANS BY CREDIT RISK RATING
Pass
$
9,274,655
$
8,961,358
$
8,874,468
$
9,315,264
Special Mention
27,711
6,908
11,932
66,103
Substandard
154,463
178,363
198,363
272,814
Total
$
9,456,829
$
9,146,629
$
9,084,763
$
9,654,181

Quarters Ended
Six Months Ended
REAL ESTATE OWNED
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Jun 30, 2022
Jun 30, 2021
Balance, beginning of period
$
429
$
852
$
340
$
852
$
816
Additions from loan foreclosures
-
-
423
-
423
Proceeds from dispositions of REO
(257
)
(607
)
-
(864
)
(783
)
Gain on sale of REO
168
184
-
352
307
Balance, end of period
$
340
$
429
$
763
$
340
$
763

BANR - Second Quarter 2022 Results
July 20, 2022
Page 13

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION
Percentage Change
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Prior Qtr
Prior Yr
Qtr
Non-interest-bearing
$
6,388,815
$
6,494,852
$
6,385,177
$
6,090,063
(1.6
)%
4.9
%
Interest-bearing checking
1,859,582
1,971,936
1,947,414
1,736,696
(5.7
)%
7.1
%
Regular savings accounts
2,801,177
2,853,891
2,784,716
2,646,302
(1.8
)%
5.9
%
Money market accounts
2,406,678
2,402,731
2,370,995
2,290,600
0.2
%
5.1
%
Total interest-bearing transaction and
savings accounts
7,067,437
7,228,558
7,103,125
6,673,598
(2.2
)%
5.9
%
Total core deposits
13,456,252
13,723,410
13,488,302
12,763,661
(1.9
)%
5.4
%
Interest-bearing certificates
756,312
800,364
838,631
873,047
(5.5
)%
(13.4
)%
Total deposits
$
14,212,564
$
14,523,774
$
14,326,933
$
13,636,708
(2.1
)%
4.2
%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Percentage Change
Amount
Percentage
Amount
Amount
Amount
Prior Qtr
Prior Yr
Qtr
Washington
$
7,820,321
55.0
%
$
8,067,253
$
7,952,376
$
7,547,591
(3.1
)%
3.6
%
Oregon
3,123,110
22.0
%
3,140,393
3,067,054
2,939,667
(0.6
)%
6.2
%
California
2,520,493
17.7
%
2,520,655
2,524,296
2,417,387
-
%
4.3
%
Idaho
748,640
5.3
%
795,473
783,207
732,063
(5.9
)%
2.3
%
Total deposits
$
14,212,564
100.0
%
$
14,523,774
$
14,326,933
$
13,636,708
(2.1
)%
4.2
%

INCLUDED IN TOTAL DEPOSITS
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Public non-interest-bearing accounts
$
220,694
$
189,907
$
193,917
$
187,702
Public interest-bearing transaction & savings accounts
179,930
165,692
159,957
156,987
Public interest-bearing certificates
37,415
37,689
39,961
41,444
Total public deposits
$
438,039
$
393,288
$
393,835
$
386,133


BANR - Second Quarter 2022 Results
July 20, 2022
Page 14


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Actual
Minimum to be
categorized as
"Adequately Capitalized"
Minimum to be
categorized as
"Well Capitalized"
REGULATORY CAPITAL RATIOS AS OF JUNE 30, 2022
Amount
Ratio
Amount
Ratio
Amount
Ratio
Banner Corporation-consolidated:
Total capital to risk-weighted assets
$
1,667,107
13.80
%
$
966,205
8.00
%
$
1,207,756
10.00
%
Tier 1 capital to risk-weighted assets
1,439,822
11.92
%
724,654
6.00
%
724,654
6.00
%
Tier 1 leverage capital to average assets
1,439,822
8.74
%
659,250
4.00
%
n/a
n/a
Common equity tier 1 capital to risk-weighted assets
1,353,322
11.21
%
543,490
4.50
%
n/a
n/a
Banner Bank:
Total capital to risk-weighted assets
1,601,881
13.27
%
965,374
8.00
%
1,206,718
10.00
%
Tier 1 capital to risk-weighted assets
1,474,596
12.22
%
724,031
6.00
%
965,374
8.00
%
Tier 1 leverage capital to average assets
1,474,596
8.95
%
658,890
4.00
%
823,612
5.00
%
Common equity tier 1 capital to risk-weighted assets
1,474,596
12.22
%
543,023
4.50
%
784,367
6.50
%

BANR - Second Quarter 2022 Results
July 20, 2022
Page 15


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD
Quarters Ended
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Average
Balance
Interest
and
Dividends
Yield /
Cost(3)
Average
Balance
Interest
and
Dividends
Yield /
Cost(3)
Average
Balance
Interest
and
Dividends
Yield /
Cost(3)
Interest-earning assets:
Held for sale loans
$69,338
$655
3.79%
$130,221
$1,115
3.47%
$69,908
$544
3.12%
Mortgage loans
7,565,894
85,408
4.53%
7,347,662
81,032
4.47%
7,147,733
80,673
4.53%
Commercial/agricultural loans
1,572,957
17,153
4.37%
1,479,216
15,011
4.12%
1,480,954
15,818
4.28%
SBA PPP loans
45,739
1,056
9.26%
88,720
2,784
12.73%
1,144,195
17,796
6.24%
Consumer and other loans
117,162
1,683
5.76%
115,881
1,700
5.95%
122,951
1,828
5.96%
Total loans(1)
9,371,090
105,955
4.54%
9,161,700
101,642
4.50%
9,965,741
116,659
4.70%
Mortgage-backed securities
3,170,915
16,965
2.15%
2,975,263
14,235
1.94%
2,440,913
11,563
1.90%
Other securities
1,626,204
10,326
2.55%
1,573,834
8,429
2.17%
1,250,417
7,088
2.27%
Interest-bearing deposits with banks
1,176,591
2,281
0.78%
1,697,545
820
0.20%
1,139,749
376
0.13%
FHLB stock
10,000
100
4.01%
11,756
106
3.66%
14,001
161
4.61%
Total investment securities
5,983,710
29,672
1.99%
6,258,398
23,590
1.53%
4,845,080
19,188
1.59%
Total interest-earning assets
15,354,800
135,627
3.54%
15,420,098
125,232
3.29%
14,810,821
135,847
3.68%
Non-interest-earning assets
1,282,649
1,372,182
1,227,167
Total assets
$16,637,449
$16,792,280
$16,037,988
Deposits:
Interest-bearing checking accounts
$1,924,896
289
0.06%
$1,958,824
273
0.06%
$1,754,363
302
0.07%
Savings accounts
2,841,286
352
0.05%
2,816,774
354
0.05%
2,622,716
454
0.07%
Money market accounts
2,431,456
531
0.09%
2,390,621
506
0.09%
2,288,638
668
0.12%
Certificates of deposit
783,536
836
0.43%
825,028
953
0.47%
889,020
1,604
0.72%
Total interest-bearing deposits
7,981,174
2,008
0.10%
7,991,247
2,086
0.11%
7,554,737
3,028
0.16%
Non-interest-bearing deposits
6,456,432
-
-%
6,421,143
-
-%
6,057,884
-
-%
Total deposits
14,437,606
2,008
0.06%
14,412,390
2,086
0.06%
13,612,621
3,028
0.09%
Other interest-bearing liabilities:
FHLB advances
-
-
-%
42,222
291
2.80%
100,000
655
2.63%
Other borrowings
252,085
80
0.13%
266,148
84
0.13%
240,229
124
0.21%
Junior subordinated debentures and subordinated notes
189,178
1,902
4.03%
191,985
1,776
3.75%
247,944
2,204
3.57%
Total borrowings
441,263
1,982
1.80%
500,355
2,151
1.74%
588,173
2,983
2.03%
Total funding liabilities
14,878,869
3,990
0.11%
14,912,745
4,237
0.12%
14,200,794
6,011
0.17%
Other non-interest-bearing liabilities(2)
239,676
225,953
199,619
Total liabilities
15,118,545
15,138,698
14,400,413
Shareholders' equity
1,518,904
1,653,582
1,637,575
Total liabilities and shareholders' equity
$16,637,449
$16,792,280
$16,037,988
Net interest income/rate spread (tax equivalent)
$131,637
3.43%
$120,995
3.17%
$129,836
3.51%
Net interest margin (tax equivalent)
3.44%
3.18%
3.52%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis
(2,626)
(2,341)
(2,282)
Net interest income and margin, as reported
$129,011
3.37%
$118,654
3.12%
$127,554
3.45%
Additional Key Financial Ratios:
Return on average assets
1.16%
1.06%
1.36%
Return on average equity
12.67%
10.78%
13.32%
Average equity/average assets
9.13%
9.85%
10.21%
Average interest-earning assets/average interest-bearing liabilities
182.31%
181.59%
181.89%
Average interest-earning assets/average funding liabilities
103.20%
103.40%
104.30%
Non-interest income/average assets
0.66%
0.47%
0.56%
Non-interest expense/average assets
2.22%
2.20%
2.32%
Efficiency ratio(4)
58.94%
66.04%
61.79%
Adjusted efficiency ratio(5)
59.46%
62.09%
58.50%
(1)
Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
(2)
Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
(3)
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.4 million for the three months ended June 30, 2022, and $1.3 million for both the three months ended March 31, 2022 and June 30, 2021. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.2 million for the three months ended June 30, 2022, and $1.0 million for both the three months ended March 31, 2022 and June 30, 2021.
(4)
Non-interest expense divided by the total of net interest income and non-interest income.
(5)
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP Financial Measures on the final two pages of the press release tables.
BANR - Second Quarter 2022 Results
July 20, 2022
Page 16


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD
Six Months Ended
Jun 30, 2022
Jun 30, 2021
Average
Balance
Interest and
Dividends
Yield/Cost(3)
Average
Balance
Interest and
Dividends
Yield/Cost(3)
Interest-earning assets:
Held for sale loans
$103,508
$1,770
3.45%
$94,488
$1,469
3.14%
Mortgage loans
7,453,483
166,440
4.50%
7,146,260
161,253
4.55%
Commercial/agricultural loans
1,526,345
32,164
4.25%
1,499,902
31,737
4.27%
SBA PPP loans
67,111
3,840
11.54%
1,158,266
28,588
4.98%
Consumer and other loans
116,525
3,383
5.85%
125,197
3,775
6.08%
Total loans(1)
9,266,972
207,597
4.52%
10,024,113
226,822
4.56%
Mortgage-backed securities
3,073,630
31,200
2.05%
2,198,712
21,035
1.93%
Other securities
1,600,164
18,755
2.36%
1,150,193
13,775
2.42%
Equity securities
-
-
-%
866
-
-%
Interest-bearing deposits with banks
1,435,629
3,101
0.44%
1,086,241
638
0.12%
FHLB stock
10,873
206
3.82%
14,971
322
4.34%
Total investment securities
6,120,296
53,262
1.75%
4,450,983
35,770
1.62%
Total interest-earning assets
15,387,268
260,859
3.42%
14,475,096
262,592
3.66%
Non-interest-earning assets
1,327,169
1,232,196
Total assets
$16,714,437
$15,707,292
Deposits:
Interest-bearing checking accounts
$1,941,766
562
0.06%
$1,685,973
617
0.07%
Savings accounts
2,829,098
706
0.05%
2,555,144
975
0.08%
Money market accounts
2,411,152
1,037
0.09%
2,265,819
1,443
0.13%
Certificates of deposit
804,167
1,789
0.45%
900,970
3,602
0.81%
Total interest-bearing deposits
7,986,183
4,094
0.10%
7,407,906
6,637
0.18%
Non-interest-bearing deposits
6,438,885
-
-%
5,861,941
-
-%
Total deposits
14,425,068
4,094
0.06%
13,269,847
6,637
0.10%
Other interest-bearing liabilities:
FHLB advances
20,994
291
2.80%
122,100
1,589
2.62%
Other borrowings
259,078
164
0.13%
221,682
233
0.21%
Junior subordinated debentures and subordinated notes
190,573
3,678
3.89%
247,944
4,412
3.59%
Total borrowings
470,645
4,133
1.77%
591,726
6,234
2.12%
Total funding liabilities
14,895,713
8,227
0.11%
13,861,573
12,871
0.19%
Other non-interest-bearing liabilities(2)
232,853
203,567
Total liabilities
15,128,566
14,065,140
Shareholders' equity
1,585,871
1,642,152
Total liabilities and shareholders' equity
$16,714,437
$15,707,292
Net interest income/rate spread (tax equivalent)
$252,632
3.31%
$249,721
3.47%
Net interest margin (tax equivalent)
3.31%
3.48%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis
(4,967)
(4,506)
Net interest income and margin, as reported
$247,665
3.25%
$245,215
3.42%
Additional Key Financial Ratios:
Return on average assets
1.11%
1.30%
Return on average equity
11.69%
12.43%
Average equity/average assets
9.49%
10.45%
Average interest-earning assets/average interest-bearing liabilities
181.95%
180.95%
Average interest-earning assets/average funding liabilities
103.30%
104.43%
Non-interest income/average assets
0.56%
0.60%
Non-interest expense/average assets
2.21%
2.39%
Efficiency ratio(4)
62.27%
63.79%
Adjusted efficiency ratio(5)
60.72%
60.77%
(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 $2.7 million and $2.5 million for the six months ended June 30, 2022 and June 30, 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.2 million and $2.0 million for the six months ended June 30, 2022 and June 30, 2021, respectively.
(4)
Non-interest expense divided by the total of net interest income and non-interest income.
(5)
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP Financial Measures on the final two pages of the press release tables.

BANR - Second Quarter 2022 Results
July 20, 2022
Page 17

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
* Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. 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, 2022
Mar 31, 2022
Jun 30, 2021
Jun 30, 2022
Jun 30, 2021
Net interest income (GAAP)
$
129,011
$
118,654
$
127,554
$
247,665
$
245,215
Non-interest income (GAAP)
27,173
19,427
22,336
46,600
46,608
Total revenue (GAAP)
156,184
138,081
149,890
294,265
291,823
Exclude net gain on sale of securities
(32
)
(435
)
(77
)
(467
)
(562
)
Exclude net change in valuation of financial instruments carried at fair value
(69
)
(49
)
(58
)
(118
)
(117
)
Exclude gain on sale of branches
(7,804
)
-
-
(7,804
)
-
Adjusted revenue (non-GAAP)
$
148,279
$
137,597
$
149,755
$
285,876
$
291,144

ADJUSTED EARNINGS
Quarters Ended
Six Months Ended
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Jun 30, 2022
Jun 30, 2021
Net income (GAAP)
$
47,965
$
43,963
$
54,382
$
91,928
$
101,237
Exclude net gain on sale of securities
(32
)
(435
)
(77
)
(467
)
(562
)
Exclude net change in valuation of financial instruments carried at fair value
(69
)
(49
)
(58
)
(118
)
(117
)
Exclude merger and acquisition-related expenses
-
-
79
-
650
Exclude COVID-19 expenses
-
-
117
-
265
Exclude gain on sale of branches
(7,804
)
-
-
(7,804
)
-
Exclude Banner Forward expenses
1,579
2,465
1,905
4,044
2,855
Exclude loss on extinguishment of debt
-
793
-
793
-
Exclude related net tax expense (benefit)
1,518
(666
)
(472
)
852
(742
)
Total adjusted earnings (non-GAAP)
$
43,157
$
46,071
$
55,876
$
89,228
$
103,586
Diluted earnings per share (GAAP)
$
1.39
$
1.27
$
1.56
$
2.66
$
2.88
Diluted adjusted earnings per share (non-GAAP)
$
1.25
$
1.33
$
1.60
$
2.58
$
2.95

BANR - Second Quarter 2022 Results
July 20, 2022
Page 18

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIO
Quarters Ended
Six Months Ended
Jun 30, 2022
Mar 31, 2022
Jun 30, 2021
Jun 30, 2022
Jun 30, 2021
Non-interest expense (GAAP)
$
92,053
$
91,195
$
92,624
$
183,248
$
186,151
Exclude merger and acquisition-related expenses
-
-
(79
)
-
(650
)
Exclude COVID-19 expenses
-
-
(117
)
-
(265
)
Exclude Banner Forward expenses
(1,579
)
(2,465
)
(1,905
)
(4,044
)
(2,855
)
Exclude CDI amortization
(1,425
)
(1,424
)
(1,711
)
(2,849
)
(3,422
)
Exclude state/municipal tax expense
(1,004
)
(1,162
)
(1,083
)
(2,166
)
(2,148
)
Exclude REO operations
121
79
(118
)
200
124
Exclude loss on extinguishment of debt
-
(793
)
-
(793
)
-
Adjusted non-interest expense (non-GAAP)
$
88,166
$
85,430
$
87,611
$
173,596
$
176,935
Net interest income (GAAP)
$
129,011
$
118,654
$
127,554
$
247,665
$
245,215
Non-interest income (GAAP)
27,173
19,427
22,336
46,600
46,608
Total revenue (GAAP)
156,184
138,081
149,890
294,265
291,823
Exclude net gain on sale of securities
(32
)
(435
)
(77
)
(467
)
(562
)
Exclude net change in valuation of financial instruments carried at fair value
(69
)
(49
)
(58
)
(118
)
(117
)
Exclude gain on sale of branches
(7,804
)
-
-
(7,804
)
-
Adjusted revenue (non-GAAP)
$
148,279
$
137,597
$
149,755
$
285,876
$
291,144
Efficiency ratio (GAAP)
58.94
%
66.04
%
61.79
%
62.27
%
63.79
%
Adjusted efficiency ratio (non-GAAP)
59.46
%
62.09
%
58.50
%
60.72
%
60.77
%

TANGIBLE COMMON SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS
Jun 30, 2022
Mar 31, 2022
Dec 31, 2021
Jun 30, 2021
Shareholders' equity (GAAP)
$
1,485,830
$
1,563,780
$
1,690,327
$
1,669,211
Exclude goodwill and other intangible assets, net
384,991
386,552
387,976
391,125
Tangible common shareholders' equity (non-GAAP)
$
1,100,839
$
1,177,228
$
1,302,351
$
1,278,086
Total assets (GAAP)
$
16,385,197
$
16,776,171
$
16,804,872
$
16,181,857
Exclude goodwill and other intangible assets, net
384,991
386,552
387,976
391,125
Total tangible assets (non-GAAP)
$
16,000,206
$
16,389,619
$
16,416,896
$
15,790,732
Common shareholders' equity to total assets (GAAP)
9.07
%
9.32
%
10.06
%
10.32
%
Tangible common shareholders' equity to tangible assets (non-GAAP)
6.88
%
7.18
%
7.93
%
8.09
%
TANGIBLE COMMON SHAREHOLDERS' EQUITY PER SHARE
Tangible common shareholders' equity (non-GAAP)
$
1,100,839
$
1,177,228
$
1,302,351
$
1,278,086
Common shares outstanding at end of period
34,191,330
34,372,784
34,252,632
34,550,888
Common shareholders' equity (book value) per share (GAAP)
$
43.46
$
45.49
$
49.35
$
48.31
Tangible common shareholders' equity (tangible book value) per share (non-GAAP)
$
32.20
$
34.25
$
38.02
$
36.99


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Banner Corporation published this content on 21 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 July 2022 10:13:04 UTC.