Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $39 million or $1.10 per diluted share for Q4 2020, compared to $1.03 per share in Q3 2020 and $0.95 per share in Q4 2019 [10] - For the full year 2020, net income available to common shareholders was $115.9 million, down from $146.3 million in 2019, impacted by credit loss allowances due to COVID-19 [10] - Pre-tax pre-provision earnings for 2020 were $211.9 million, a 5% increase from $201.6 million in 2019, indicating core earnings power [11] Business Line Data and Key Metrics Changes - Core revenue from operations increased by 5% to $579.6 million in 2020, compared to $551 million in 2019, driven by a larger earning asset mix and strong mortgage banking revenue [11] - Core deposits increased by 31% year-over-year, representing 93% of total deposits, reflecting strong organic growth in client relationships [12] Market Data and Key Metrics Changes - The loan portfolio saw a quarter-over-quarter decline of 2.9% excluding PPP loans, and a year-over-year decline of 5.1%, primarily due to strong residential purchase and refinance activity [19] - Credit line utilization decreased nearly 5% compared to year-end 2019, indicating borrowers are maintaining liquidity [21] Company Strategy and Development Direction - The company continues to execute its super community bank strategy, focusing on growing client relationships and core funding through deposits [12] - Banner Corporation is committed to assisting clients during the pandemic, providing various assistance programs including $1.15 billion in SBA Payroll Protection Funds [13] Management's Comments on Operating Environment and Future Outlook - Management anticipates normalized loan growth rates to return in the second half of 2021 as the economy stabilizes with vaccine distribution [21] - The company expects a flat year in terms of loan growth overall for 2021, with potential modest growth in the latter half [43] Other Important Information - The company has maintained a strong balance sheet with a robust reserve for credit losses, well above regulatory requirements [26] - Banner Corporation has consolidated 21 branch locations, representing a 12% reduction in branches since the second quarter [35] Q&A Session Summary Question: What are the expectations for core expenses in 2021? - Management expects a continued decline in core expenses due to branch consolidations and efficiency initiatives, with a soft landing anticipated by the fourth quarter [39][41] Question: What is the outlook for loan growth in 2021? - Management indicated that normalized growth rates are expected to return in the second half of 2021, with a flat year overall due to the pandemic's impact [43][44] Question: How is the company managing asset sensitivity? - The company has become more asset sensitive, keeping excess deposit liquidity invested in short-term instruments, which will benefit from rising rates [55] Question: What is the status of the mortgage business? - The mortgage business remains strong, with a robust pipeline expected to continue into the first quarter of 2021, despite seasonal declines [59] Question: What is the status of PPP loan forgiveness? - The company is processing a steady pace of loan forgiveness, with expectations for higher forgiveness in Q2 2021 compared to Q1 [63] Question: How does the company view capital allocation? - The company is agnostic on the use of excess capital, considering share repurchases, acquisitions, and special dividends based on the best opportunities [87]

[PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1 – Financial Statements](index=4&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements) This section presents Banner Corporation's unaudited condensed consolidated financial statements as of September 30, 2020, and for the three and nine months then ended, detailing financial condition, operations, and cash flows, alongside notes on accounting policies and financial instruments [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of September 30, 2020, total assets increased to **$14.64 billion** from **$12.60 billion** at year-end 2019, driven by growth in loans and deposits, with shareholders' equity rising to **$1.65 billion** Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | **$14,642,075** | **$12,604,031** | | Total Loans, Net | $9,995,952 | $9,204,798 | | Total Deposits | $12,215,341 | $10,048,641 | | **Total Liabilities** | **$12,995,546** | **$11,009,997** | | **Total Shareholders' Equity** | **$1,646,529** | **$1,594,034** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for Q3 2020 decreased to **$36.5 million** from **$39.6 million** in Q3 2019, primarily due to a significantly higher provision for credit losses, while nine-month net income also declined to **$77.0 million** Key Operating Results (in thousands, except per share data) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $121,026 | $116,621 | $359,864 | $349,420 | | Provision for Credit Losses | $13,641 | $2,000 | $64,917 | $6,000 | | Non-interest Income | $28,222 | $20,866 | $75,107 | $61,667 | | Non-interest Expense | $91,567 | $87,308 | $276,389 | $264,038 | | **Net Income** | **$36,548** | **$39,577** | **$76,971** | **$112,623** | | **Diluted EPS** | **$1.03** | **$1.15** | **$2.17** | **$3.23** | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2020, operating activities generated **$138.2 million** in cash, while investing activities used **$1.65 billion**, largely offset by **$1.91 billion** from financing activities, resulting in a **$397.8 million** net increase in cash Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $138,162 | $68,492 | | Net Cash used in Investing Activities | ($1,650,717) | ($27,292) | | Net Cash from Financing Activities | $1,910,358 | $11,060 | | **Net Change in Cash** | **$397,803** | **$52,260** | [Selected Notes to the Consolidated Financial Statements](index=14&type=section&id=Selected%20Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including the adoption of the CECL standard which reduced shareholders' equity by **$11.2 million** after-tax, and provide extensive information on the AltaPacific acquisition, financial instrument portfolios, and regulatory capital - The company adopted the new credit loss standard, ASU 2016-13 (Topic 326 or CECL), on January 1, 2020, replacing the incurred loss methodology with an expected loss model[56](index=56&type=chunk) Pre-Tax Impact of Adopting CECL (in thousands) | Account | Impact of Topic 326 Adoption | | :--- | :--- | | Allowance for credit losses on loans | $7,812 | | Allowance for credit losses on unfunded loan commitments | $7,022 | | Allowance for credit losses on held-to-maturity debt securities | $63 | | **Total Pre-Tax Impact** | **$14,897** | - On November 1, 2019, the Company completed the acquisition of AltaPacific Bancorp, which added **$425.7 million** in assets, **$332.4 million** in loans, and **$313.4 million** in deposits, resulting in **$34.0 million** of goodwill[58](index=58&type=chunk)[59](index=59&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the COVID-19 pandemic's impact on operations, including loan deferrals and PPP, noting strengthened financial condition with **$14.64 billion** in assets, a decline in Q3 2020 net income to **$36.5 million** due to higher credit loss provisions, and maintained strong asset quality, liquidity, and capital [Executive Overview](index=60&type=section&id=Executive%20Overview) Banner Corporation reported Q3 2020 net income of **$36.5 million**, a decrease from Q3 2019 primarily due to a **$13.6 million** provision for credit losses, while actively managing COVID-19 impacts through loan deferrals and **$1.15 billion** in PPP loans - The company is actively responding to the COVID-19 pandemic by offering payment relief programs, deferring payments on **3,370 loans** totaling **$1.09 billion** year-to-date, with **$239.6 million** remaining on deferral as of September 30, 2020[224](index=224&type=chunk) - Banner participated in the Paycheck Protection Program (PPP), funding **9,103 applications** totaling **$1.15 billion** in loans as of September 30, 2020[225](index=225&type=chunk) Adjusted Earnings (Non-GAAP, in thousands) | Metric | Q3 2020 | Q3 2019 | 9 Months 2020 | 9 Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Net income (GAAP) | $36,548 | $39,577 | $76,971 | $112,623 | | **Adjusted earnings (non-GAAP)** | **$36,626** | **$40,275** | **$81,692** | **$115,281** | [Comparison of Financial Condition](index=68&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew by **$2.04 billion** to **$14.64 billion** at September 30, 2020, driven by an **$858.6 million** increase in loans, including **$1.15 billion** in PPP loans, and a **$2.17 billion** increase in deposits, with shareholders' equity rising to **$1.65 billion** Loan Portfolio Composition (in thousands) | Loan Type | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Commercial real estate | $3,639,106 | $3,618,493 | | Construction & land | $1,270,278 | $1,234,116 | | Commercial business (incl. PPP) | $3,107,443 | $2,137,307 | | One- to four-family residential | $771,431 | $925,531 | | Consumer | $622,831 | $664,251 | | **Total loans receivable** | **$10,163,917** | **$9,305,357** | Deposit Composition (in thousands) | Deposit Type | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Non-interest-bearing | $5,412,570 | $3,945,000 | | Interest-bearing transaction & savings | $5,887,419 | $4,983,238 | | Interest-bearing certificates | $915,352 | $1,120,403 | | **Total deposits** | **$12,215,341** | **$10,048,641** | [Comparison of Results of Operations](index=71&type=section&id=Comparison%20of%20Results%20of%20Operations) Q3 2020 net interest income rose **4%** to **$121.0 million** despite margin compression to **3.72%**, while the provision for credit losses significantly increased to **$13.6 million**, non-interest income grew **35%** to **$28.2 million**, and non-interest expense rose **5%** to **$91.6 million** - Net interest margin on a tax equivalent basis decreased to **3.72%** for Q3 2020 from **4.29%** in Q3 2019, primarily due to lower yields on interest-earning assets, including low-yield PPP loans and excess liquidity[283](index=283&type=chunk) - Mortgage banking operations revenue increased by **150%** to **$16.6 million** in Q3 2020 from **$6.6 million** in Q3 2019, driven by higher loan sale volumes and wider gain-on-sale margins amid lower interest rates[303](index=303&type=chunk)[305](index=305&type=chunk) - Non-interest expense increased to **$91.6 million** in Q3 2020 from **$87.3 million** in Q3 2019, partly due to a **$3.2 million** year-over-year swing in deposit insurance expense, as Q3 2019 included a large FDIC credit[281](index=281&type=chunk)[306](index=306&type=chunk) [Asset Quality](index=79&type=section&id=Asset%20Quality) Asset quality remained manageable with non-performing assets decreasing to **$36.7 million** (**0.25%** of total assets), while the allowance for credit losses on loans significantly increased to **$168.0 million**, representing **482%** of non-performing loans, reflecting CECL adoption and COVID-19 provisions Non-Performing Assets (in thousands) | Category | Sep 30, 2020 | Dec 31, 2019 | Sep 30, 2019 | | :--- | :--- | :--- | :--- | | Nonaccrual Loans | $31,568 | $37,501 | $15,769 | | Loans 90+ Days Past Due & Accruing | $3,255 | $2,097 | $2,487 | | **Total Non-Performing Loans** | **$34,823** | **$39,598** | **$18,256** | | REO, net & Other Repossessed Assets | $1,832 | $936 | $343 | | **Total Non-Performing Assets** | **$36,655** | **$40,534** | **$18,599** | - The allowance for credit losses on loans to non-performing loans ratio increased significantly to **482%** at Q3 2020, compared to **254%** at year-end 2019, indicating a strengthened reserve position[311](index=311&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity and capital, with deposits growing by **$2.17 billion**, FHLB advances reduced, and **$100.0 million** in subordinated notes issued, ensuring all regulatory capital ratios remain significantly above 'Well-Capitalized' thresholds - At September 30, 2020, Banner Bank had **$2.36 billion** of available credit capacity with the FHLB and **$990 million** with the Federal Reserve Bank, providing substantial liquidity[325](index=325&type=chunk) Banner Corporation Regulatory Capital Ratios | Ratio | Sep 30, 2020 Actual | 'Well-Capitalized' Minimum | | :--- | :--- | :--- | | Total capital to risk-weighted assets | 14.65% | 10.00% | | Tier 1 capital to risk-weighted assets | 12.47% | N/A | | Tier 1 leverage capital to average assets | 9.56% | N/A | | Common equity tier 1 capital | 11.13% | N/A | [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed via simulation modeling, with the balance sheet positioned to benefit from rising rates, as a **100 basis point** increase is estimated to increase net interest income by **4.3%** over 12 months Interest Rate Sensitivity Analysis (as of Sep 30, 2020) | Change in Interest Rates (Basis Points) | Estimated % Change in Net Interest Income (Next 12 Months) | Estimated % Change in Economic Value of Equity | | :--- | :--- | :--- | | +200 | +7.5% | +8.0% | | +100 | +4.3% | +6.9% | | -25 | (0.8)% | (2.3)% | [Item 4 – Controls and Procedures](index=89&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2020, with CECL implementation being the only significant internal control change - The CEO and CFO concluded that as of September 30, 2020, the company's disclosure controls and procedures were effective[349](index=349&type=chunk) [PART II – OTHER INFORMATION](index=90&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1 – Legal Proceedings](index=90&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in various legal proceedings, none of which are expected to have a material adverse effect on its financial condition or operations - Management does not believe any pending legal proceedings would have a material adverse effect on the company's financial condition or operations[352](index=352&type=chunk) [Item 1A – Risk Factors](index=90&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) This section supplements previous disclosures by focusing on COVID-19 related risks, including adverse effects on operations, loan demand, borrower repayment, PPP loan administration, goodwill impairment, and subsidiary dividend capacity - The COVID-19 pandemic has adversely affected business operations, loan demand (excluding PPP), and borrowers' ability to make payments, which could lead to increased delinquencies and charge-offs[353](index=353&type=chunk)[356](index=356&type=chunk) - The company faces risks related to its **$1.15 billion** PPP loan portfolio, including administrative complexities and the loan forgiveness process[357](index=357&type=chunk) - Adverse economic conditions and a decrease in the company's stock price due to the pandemic could trigger goodwill impairment charges[358](index=358&type=chunk) [Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds](index=91&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q3 2020, as its authorization expired in March 2020 and will not be renewed due to the pandemic, though **479 shares** were surrendered for tax obligations - The company's share repurchase authorization expired in March 2020 and has not been renewed due to the pandemic and market conditions[362](index=362&type=chunk) [Item 6 – Exhibits](index=92&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and required CEO and CFO certifications

Banner Corporation (NASDAQ:BANR) Q3 2020 Earnings Conference Call October 22, 2020 11:00 AM ET Company Participants Mark Grescovich - President and CEO Rich Arnold - Investor Relations Rick Barton - Chief Credit Officer Jill Rice - EVP and Senior Credit Officer Peter Conner - EVP and Chief Financial Officer Conference Call Participants Jeff Rulis - D.A. Davidson Andrew Liesch - Piper Sandler David Feaster - Raymond James Jacquelynne Bohlen - KBW Tim Coffey - Janney Montgomery Scott Operator Good morning, a ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ to ______________ Commission File Number 000-26584 BANNER CORPORATION (Exact name of registrant as specified in its charter) Washington 91-16916 ...

Banner Corporation (NASDAQ:BANR) Q2 2020 Earnings Conference Call July 23, 2020 11:00 AM ET Company Participants Mark Grescovich - President and CEO Rick Barton - Chief Credit Officer Jill Rice - Chief Commercial Credit Officer Peter Conner - CFO Rich Arnold - Head of IR Conference Call Participants Jeff Rulis - D.A. Davidson Gordon McGuire - Stephens, Inc. Andrew Liesch - Piper Sandler Jackie Bohlen - KBW David Feaster - Raymond James Tim Coffey - Janney Montgomery Scott Operator Good morning, and welcome ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ to ______________ Commission File Number 000-26584 BANNER CORPORATION (Exact name of registrant as specified in its charter) Washington 91-1691 ...