Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $53.5 million or $1.54 per diluted share for Q3 2025, an increase from $1.31 per share in Q3 2024 [6] - Core earnings for Q3 2025 were $67.8 million, up from $62.5 million in the prior quarter and $57.4 million in Q3 2024 [7] - Revenue from core operations was $169 million, compared to $163 million in the prior quarter and $154 million in Q3 2024 [7] - Return on average assets was 1.3% for 2025 [8] Business Line Data and Key Metrics Changes - Core deposits represented 89% of total deposits, with loans and core deposits both increasing by 4% year-over-year [9] - The commercial construction portfolio declined, while the residential construction portfolio remained diversified across markets [14] - Small business segment loans increased by 8% year-over-year, and agricultural balances increased by 3% compared to the prior quarter [15] Market Data and Key Metrics Changes - Delinquent loans improved to 0.39% of total loans, down from 0.4% a year ago [12] - Adversely classified loans decreased by $16 million quarter-over-quarter, now representing 1.49% of total loans [12] - Total nonperforming assets were $4.5 million, representing 0.27% of total assets [12] Company Strategy and Development Direction - The company continues to execute its super community bank strategy, focusing on client relationships and core funding [9] - Banner has been recognized as one of America's 100 Best Banks and received various accolades for trustworthiness and client satisfaction [10] - The company is investing in technology, including a new loan origination system and fraud-related technology, to enhance scalability and efficiency [56][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current market uncertainties due to a strong balance sheet and reputation [6] - The company anticipates a mid-single-digit growth rate for loans for the full year [15] - Management noted that the competitive landscape remains stable, with some stretching in underwriting standards but overall credit quality holding up well [50][53] Other Important Information - The company announced a 4% increase in its core dividend to $0.50 per common share [9] - Total borrowings decreased by $459 million during the quarter, reflecting strong deposit growth [19] - The company repurchased 250,000 shares during the quarter, indicating confidence in its capital position [19] Q&A Session Summary Question: Margin and FHLB Payoffs - Management indicated that FHLB advances were paid down halfway through the quarter, with expectations of margin expansion despite potential Fed rate cuts [25][27] Question: Capital and Buyback Activity - Management expressed confidence in continuing share repurchases and indicated that M&A opportunities would be considered if they arise [31][34] Question: Deposit Growth and Pricing - Management noted strong seasonal deposit growth without specific promotions, and they reduced CD rates following the Fed's rate cut [40][41] Question: Competitive Landscape and Loan Originations - Management acknowledged a multifaceted decline in loan originations, attributing it to strong prior quarter performance and muted reactions to rate cuts [50][51] Question: Strategic Investments - Management highlighted technology investments, particularly in loan origination systems and fraud prevention, as key areas for future growth [56][58]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Performance - Net income reached $53.5 million, compared to $45.5 million in the prior quarter[5] - HFI Loan growth was $478 million year-over-year, representing a 4% increase[5] - Core deposit growth amounted to $426 million quarter-over-quarter, which translates to a 14% annualized growth rate[5] - Return on average assets stood at 1.30%, while return on average equity was 11.33%, compared to 1.13% and 9.92% respectively in the previous quarter[5] Operational Efficiency - The GAAP efficiency ratio improved by 274 basis points quarter-over-quarter to 59.76%, while the adjusted non-GAAP efficiency ratio improved by 174 basis points to 58.54%[5] - Non-performing assets remained low at 0.27% of total assets, a decrease of 3 basis points from the previous quarter[5] Capital Allocation - The company repurchased 250,000 shares of its common stock at an average price of $63.11 per share[5] - A 4% increase in the dividend was announced, bringing it to $0.50 per share, to be paid in November 2025[5] Balance Sheet - Total assets of Banner Corporation are $16.6 billion[7] - Total deposits are $14.0 billion[7] - Total loans are $11.7 billion[7]

Core Insights - Banner Corporation reported earnings per share (EPS) of $1.54, exceeding the estimated $1.41, while revenue of $168.7 million fell short of the projected $171.5 million [1][6] Financial Performance - The company's net income for Q3 2025 was $53.5 million, an increase from $45.5 million in the previous quarter [2] - Net interest income for Q3 2025 was $150 million, up from $144.4 million in the preceding quarter, indicating improved revenue generation from core banking activities [3] - The company raised its quarterly cash dividend by 4%, increasing it to $0.50 per share [3][6] Financial Metrics - The price-to-earnings (P/E) ratio is approximately 11.90, and the price-to-sales ratio is about 2.53 [4] - The enterprise value to sales ratio is around 2.90, while the enterprise value to operating cash flow ratio is approximately 9.01 [4] - The earnings yield stands at 8.40%, suggesting a good return on investment [4] Debt and Liquidity - The company's debt-to-equity ratio is 0.43, indicating a moderate level of debt compared to equity [5] - The current ratio is 0.04, suggesting limited short-term liquidity, which may raise concerns regarding the company's ability to cover short-term liabilities [5]

Core Insights - Banner (BANR) reported revenue of $170.72 million for Q3 2025, marking an 11% year-over-year increase and a surprise of +0.84% over the Zacks Consensus Estimate of $169.3 million [1] - The earnings per share (EPS) for the same quarter was $1.52, compared to $1.30 a year ago, resulting in a surprise of +7.8% over the consensus estimate of $1.41 [1] Financial Performance Metrics - The net interest margin was reported at 4%, matching the average estimate from two analysts [4] - The efficiency ratio stood at 59.8%, consistent with the average estimate from two analysts [4] - Total non-interest income was $20.73 million, exceeding the average estimate of $19.4 million [4] - Net interest income was reported at $149.99 million, slightly above the average estimate of $149.9 million [4] Stock Performance - Over the past month, shares of Banner have returned -1.2%, while the Zacks S&P 500 composite has seen a +1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides a high-level overview of Banner Corporation's strong Q3 2025 financial results, dividend increase, strategic focus, and company profile [Q3 2025 Financial Performance](index=1&type=section&id=Q3%202025%20Financial%20Performance) Banner Corporation reported strong financial results for the third quarter of 2025, with significant increases in net income and net interest income compared to both the preceding quarter and the prior year. The provision for credit losses decreased quarter-over-quarter | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Net Income | $53.5 million | $45.5 million | $45.2 million | | Diluted EPS | $1.54 | $1.31 | $1.30 | | Net Interest Income | $150.0 million | $144.4 million | $135.7 million | | Provision for Credit Losses | $2.7 million | $4.8 million | $1.7 million | - Net interest income increased compared to the preceding quarter and prior year quarter due to higher yields and average balance of interest-earning assets, and a decrease in overall funding costs compared to the prior year quarter[2](index=2&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) Banner's Board of Directors approved a 4% increase in the regular quarterly cash dividend | Dividend Type | Amount Per Share | Payable Date | Record Date | | :------------ | :--------------- | :----------- | :---------- | | Quarterly Cash Dividend | $0.50 (4% increase) | November 14, 2025 | November 4, 2025 | [CEO Commentary & Strategic Focus](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Focus) The CEO highlighted the continued strength of Banner's super community bank strategy, emphasizing client relationships, a strong funding base, exceptional service, and a moderate risk profile. The quarter's earnings benefited from solid loan growth and higher asset yields, supported by strong credit quality and a robust capital position - Banner's strategy focuses on building client relationships, preserving a strong funding base, and delivering exceptional service while sustaining a moderate risk profile[4](index=4&type=chunk) - Earnings benefited from solid year-over-year loan growth and higher yields on interest-earning assets[4](index=4&type=chunk) - The company maintains strong credit quality, supported by stable credit metrics, a well-funded reserve for loan losses, and a robust capital position[4](index=4&type=chunk) - Core deposits represented **89% of total deposits** at quarter-end, indicating a strong core deposit base[4](index=4&type=chunk) [Company Overview](index=1&type=section&id=Company%20Overview) Banner Corporation is a bank holding company operating Banner Bank across four Western states, providing a full range of banking services | Metric | Value (as of Sep 30, 2025) | | :----- | :------------------------- | | Total Assets | $16.56 billion | | Net Loans | $11.54 billion | | Total Deposits | $14.02 billion | | Branch Offices | 135 | | Operating States | Four Western states | [Financial Performance Review](index=2&type=section&id=Financial%20Performance%20Review) This section details Banner's Q3 2025 financial performance, including key highlights, income statement analysis, and drivers of net interest income, non-interest income, and expenses [Third Quarter 2025 Highlights](index=2&type=section&id=Third%20Quarter%202025%20Highlights) Key financial and operational metrics for Q3 2025 demonstrated improvements across profitability, asset quality, and capital strength, with notable increases in revenue, net interest margin, and shareholder equity | Metric | Q3 2025 | Q2 2025 | Q3 2024 | QoQ Change | YoY Change | | :---------------------------------- | :------ | :------ | :------ | :--------- | :--------- | | Net Interest Margin (tax equivalent) | 3.98% | 3.92% | 3.72% | +6 bps | +26 bps | | Revenue | $170.7 million | $162.2 million | $153.7 million | +5% | +11% | | Adjusted Revenue* | $168.7 million | $163.0 million | $153.7 million | +3.5% | +9.8% | | Return on Average Assets | 1.30% | 1.13% | 1.13% | +0.17% | +0.17% | | Net Loans Receivable | $11.54 billion | $11.53 billion | $11.07 billion | +0.09% | +4% | | Total Deposits | $14.02 billion | $13.53 billion | $13.54 billion | +4% | +4% | | Core Deposits % of Total Deposits | 89% | 89% | 89% | 0% | 0% | | Non-Performing Assets % of Total Assets | 0.27% | 0.30% | 0.28% | -0.03% | -0.01% | | Allowance for Credit Losses - Loans % of Total Loans | 1.36% | 1.37% | 1.38% | -0.01% | -0.02% | | Common Shareholders' Equity Per Share | $55.71 | $53.95 | $52.06 | +3% | +7% | | Tangible Common Shareholders' Equity Per Share* | $44.79 | $43.09 | $41.12 | +4% | +9% | | Shares Repurchased (Q3 2025) | 250,000 shares | - | - | - | - | | Average Repurchase Price (Q3 2025) | $63.11 per share | - | - | - | - | [Income Statement Analysis](index=2&type=section&id=Income%20Statement%20Analysis) Banner's income statement showed robust growth in net interest income driven by higher asset yields and lower funding costs, while non-interest income also increased. Operating expenses saw controlled growth, contributing to an improved efficiency ratio [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income and margin saw increases, driven by favorable asset yields and reduced funding costs | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Net Interest Income | $150.0 million | $144.4 million | $135.7 million | | Net Interest Margin (tax equivalent) | 3.98% | 3.92% | 3.72% | - Net interest margin increased by **6 basis points QoQ** and **26 basis points YoY**, benefiting from higher yields on interest-earning assets and lower funding costs[7](index=7&type=chunk) [Interest Income](index=2&type=section&id=Interest%20Income) Total interest income grew, primarily reflecting higher average yields on interest-earning assets and loans | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Total Interest Income | $205.8 million | $200.3 million | $195.8 million | | Average Yields on Interest-Earning Assets | 5.43% | 5.40% | 5.33% | | Average Loan Yields | 6.17% | 6.12% | 6.04% | - The increase in average loan yields primarily reflects new loans originated at higher interest rates and adjustable-rate loans repricing higher[8](index=8&type=chunk) [Interest Expense](index=2&type=section&id=Interest%20Expense) Total interest expense decreased year-over-year, driven by lower deposit costs and reduced borrowing rates and balances | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Total Interest Expense | $55.9 million | $55.9 million | $60.2 million | | Total Deposit Costs | 1.50% | 1.47% | 1.61% | | Average Rate Paid on Borrowings | 4.18% | 4.47% | 5.08% | | Total Cost of Funding Liabilities | 1.57% | 1.60% | 1.73% | - The decrease in deposit costs compared to the prior year quarter was primarily due to interest rate declines in the second half of 2024[9](index=9&type=chunk) - The decrease in the average rate paid on borrowings was primarily due to declines in both market interest rates and the average balance of borrowings[9](index=9&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses decreased quarter-over-quarter, influenced by changes in portfolio mix and individually evaluated loans | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Total Provision for Credit Losses | $2.7 million | $4.8 million | $1.7 million | | Provision for Credit Losses - Loans | $1.4 million | $4.2 million | $2.0 million | | Provision for Credit Losses - Unfunded Loan Commitments | $1.3 million | $588,000 | ($262,000) recapture | - The provision for credit losses in the current quarter was driven by changes in both portfolio mix and individually evaluated loans[10](index=10&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) Non-interest income increased, primarily due to higher miscellaneous income from asset sales, while mortgage banking revenue remained stable | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Total Non-Interest Income | $20.7 million | $17.8 million | $18.1 million | | Miscellaneous Income | $3.175 million | $1.221 million | $1.658 million | | Mortgage Banking Operations Revenue | $3.3 million | $3.2 million | $3.2 million | - The increase in non-interest income from the preceding quarter was primarily due to a **$2.0 million increase in miscellaneous income**, reflecting gains on asset sales compared to prior quarter losses on building and lease exits[12](index=12&type=chunk) - Home purchase activity accounted for **88% of one- to four-family mortgage loan originations** in Q3 2025[13](index=13&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) Non-interest expense saw a slight quarter-over-quarter increase due to talent acquisition and marketing, with a larger year-over-year rise from salary and IT costs | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Total Non-Interest Expense | $102.0 million | $101.3 million | $96.3 million | | Miscellaneous Expense (QoQ change) | +$450,000 | - | - | | Advertising and Marketing Expenses (QoQ change) | +$308,000 | - | - | | Salary and Employee Benefits (QoQ change) | -$551,000 | - | - | | Building and Lease Exit Costs | $1.0 million | $834,000 | - | | Total Non-Interest Expense (Nine Months Ended Sep 30) | $304.6 million (2025) | - | $292.1 million (2024) | - The quarter-over-quarter increase in non-interest expense was primarily due to higher talent acquisition, other employee-related expenses, and advertising/marketing, partially offset by decreased medical premiums and payroll taxes[14](index=14&type=chunk) - The year-over-year increase was mainly due to higher salary and employee benefits, information and computer data services, and professional and legal expenses[14](index=14&type=chunk) [Efficiency Ratio](index=3&type=section&id=Efficiency%20Ratio) The efficiency ratio improved, reflecting stronger net interest margins and controlled operating expense growth | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :----- | :------ | :------ | :------ | | Efficiency Ratio (GAAP) | 59.76% | 62.50% | 62.63% | | Adjusted Efficiency Ratio (non-GAAP) | 58.54% | 60.28% | 61.27% | - The improvement in the efficiency ratio compared to both the preceding and prior year quarters primarily reflected stronger net interest margins, combined with controlled growth in operating expenses[15](index=15&type=chunk) [Financial Condition Review](index=3&type=section&id=Financial%20Condition%20Review) This section reviews Banner's financial condition, including balance sheet changes, loan portfolio composition, deposit and funding trends, and capital adequacy [Balance Sheet Overview](index=3&type=section&id=Balance%20Sheet%20Overview) Banner's total assets grew, primarily driven by an increase in interest-bearing deposits held at other banks, despite a decrease in securities | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----- | :----------- | :----------- | :----------- | | Total Assets | $16.56 billion | $16.44 billion | $16.19 billion | | Securities and Interest-Bearing Deposits at Other Banks | $3.47 billion | $3.29 billion | $3.50 billion | - The increase in total assets compared to the prior quarter was primarily due to an increase in interest-bearing deposits held at other banks, partially offset by decreases in securities[16](index=16&type=chunk) [Loan Portfolio](index=3&type=section&id=Loan%20Portfolio) The loan portfolio showed overall growth, particularly in commercial real estate and construction loans, while loans held for sale decreased due to strong sales activity | Loan Category | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :------------ | :----------- | :----------- | :----------- | :--------- | :--------- | | Total Loans Receivable | $11.70 billion | $11.69 billion | $11.22 billion | +0.09% | +4% | | Commercial Real Estate Loans | $4.00 billion | $3.97 billion | $3.79 billion | +0.76% | +5% | | Construction, Land and Land Development Loans | $1.74 billion | $1.70 billion | $1.53 billion | +2% | +14% | | Commercial Business Loans | $2.43 billion | $2.47 billion | $2.37 billion | -2% | +3% | | Loans Held for Sale | $20.3 million | $37.7 million | $78.8 million | -46% | -74% | - The increase in commercial real estate loans was a combination of new loan production and conversion of commercial construction loans[17](index=17&type=chunk) - The decrease in loans held for sale was primarily the result of increased sales of one- to four-family residential mortgage loans, with sales outpacing originations[18](index=18&type=chunk) [Deposits and Funding](index=3&type=section&id=Deposits%20and%20Funding) Total deposits and core deposits experienced healthy growth, leading to a significant reduction in FHLB advances as deposits became the primary funding source | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | QoQ Change | YoY Change | | :----- | :----------- | :----------- | :----------- | :--------- | :--------- | | Total Deposits | $14.02 billion | $13.53 billion | $13.54 billion | +4% | +4% | | Core Deposits | $12.48 billion | $12.05 billion | $12.02 billion | +4% | +4% | | Core Deposits % of Total Deposits | 89% | 89% | 89% | 0% | 0% | | Certificates of Deposit | $1.54 billion | $1.48 billion | $1.52 billion | +4% | +1% | | FHLB Advances | $100.0 million | $565.0 million | $230.0 million | -82% | -57% | - The increase in core deposits primarily reflects increases in interest-bearing transaction and savings accounts[19](index=19&type=chunk) - FHLB advances decreased significantly as deposits were used as the primary source of funds during the current quarter[20](index=20&type=chunk) - Off-balance sheet liquidity included additional borrowing capacity of **$3.25 billion** at the FHLB and **$1.63 billion** at the Federal Reserve[20](index=20&type=chunk) [Capital Adequacy](index=4&type=section&id=Capital%20Adequacy) Shareholders' equity and capital ratios remained strong, exceeding 'well-capitalized' requirements, supported by retained earnings and share repurchases | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----- | :----------- | :----------- | :----------- | | Total Common Shareholders' Equity | $1.91 billion | $1.87 billion | $1.79 billion | | Common Shareholders' Equity % of Total Assets | 11.55% | 11.35% | 11.08% | | Tangible Common Shareholders' Equity (non-GAAP) | $1.54 billion | $1.49 billion | $1.42 billion | | Tangible Common Shareholders' Equity % of Tangible Assets (non-GAAP) | 9.50% | 9.28% | 8.96% | | Estimated Common Equity Tier 1 Capital Ratio | 12.78% | - | - | | Estimated Tier 1 Leverage Capital to Average Assets Ratio | 11.33% | - | - | | Estimated Total Capital to Risk-Weighted Assets Ratio | 14.66% | - | - | - The increase in common shareholders' equity was due to a **$36.7 million increase in retained earnings**, partially offset by cash dividends and share repurchases[21](index=21&type=chunk) - Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as 'well-capitalized'[22](index=22&type=chunk) [Credit Quality](index=4&type=section&id=Credit%20Quality) This section assesses Banner's credit quality, focusing on allowance for credit losses, non-performing assets, and loan risk ratings [Allowance for Credit Losses](index=4&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses on loans remained robust, providing strong coverage for non-performing loans, despite an increase in net loan charge-offs | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----- | :----------- | :----------- | :----------- | | Allowance for Credit Losses - Loans | $159.7 million | $160.5 million | $154.6 million | | ACL - Loans % of Total Loans Receivable | 1.36% | 1.37% | 1.38% | | ACL - Loans % of Non-Performing Loans | 399% | 373% | 359% | | Allowance for Credit Losses - Unfunded Loan Commitments | $14.0 million | $12.8 million | $13.8 million | | Net Loan Charge-offs (Q3) | $2.2 million | $1.0 million | $230,000 | [Non-Performing Assets and Loans](index=4&type=section&id=Non-Performing%20Assets%20and%20Loans) Non-performing loans and total non-performing assets decreased quarter-over-quarter, indicating an improvement in asset quality | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----- | :----------- | :----------- | :----------- | | Non-Performing Loans | $40.0 million | $43.0 million | $43.0 million | | Total Non-Performing Assets | $45.3 million | $49.8 million | $45.2 million | | Total Non-Performing Assets % of Total Assets | 0.27% | 0.30% | 0.28% | [Loan Credit Risk Ratings](index=4&type=section&id=Loan%20Credit%20Risk%20Ratings) Substandard loans decreased quarter-over-quarter but increased year-over-year, while special mention loans also saw a decrease | Metric | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----- | :----------- | :----------- | :----------- | | Substandard Loans | $174.0 million | $189.5 million | $150.1 million | | Special Mention Loans | $37.0 million | $68.4 million | $52.5 million | [Supplemental Financial Data](index=6&type=section&id=Supplemental%20Financial%20Data) This section provides detailed financial tables and reconciliations, offering in-depth insights into operations, balance sheet, loan and deposit specifics, capital, and non-GAAP metrics [Consolidated Results of Operations](index=6&type=section&id=Consolidated%20Results%20of%20Operations) Detailed breakdown of interest income, interest expense, non-interest income, and non-interest expense, leading to net income and earnings per share for the quarter and nine months ended September 30, 2025 and 2024 | RESULTS OF OPERATIONS (in thousands) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :----------------------------------- | :----------------- | :----------------- | :----------------- | :---------------- | :---------------- | | INTEREST INCOME: | | | | | | | Loans receivable | $179,065 | $175,373 | $168,338 | $523,115 | $486,004 | | Total interest income | $205,848 | $200,259 | $195,841 | $599,975 | $569,667 | | INTEREST EXPENSE: | | | | | | | Deposits | $52,251 | $49,316 | $53,785 | $150,304 | $147,248 | | Total interest expense | $55,859 | $55,860 | $60,166 | $164,504 | $168,487 | | Net interest income | $149,989 | $144,399 | $135,675 | $435,471 | $401,180 | | PROVISION FOR CREDIT LOSSES | $2,670 | $4,795 | $1,692 | $10,604 | $4,581 | | NON-INTEREST INCOME: | | | | | | | Total non-interest income | $20,730 | $17,751 | $18,063 | $57,589 | $46,853 | | NON-INTEREST EXPENSE: | | | | | | | Total non-interest expense | $102,022 | $101,348 | $96,291 | $304,629 | $292,060 | | NET INCOME | $53,502 | $45,496 | $45,153 | $144,133 | $122,507 | | Earnings per common share: Diluted | $1.54 | $1.31 | $1.30 | $4.15 | $3.54 | | Cumulative dividends declared per common share | $0.48 | $0.48 | $0.48 | $1.44 | $1.44 | [Consolidated Financial Condition](index=7&type=section&id=Consolidated%20Financial%20Condition) Detailed balance sheet information showing assets, liabilities, and shareholders' equity at various quarter-ends, highlighting changes in key components | FINANCIAL CONDITION (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | Prior Qtr Change (%) | Prior Yr Qtr Change (%) | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | :------------------- | :-------------------- | | ASSETS: | | | | | | | | Total cash and cash equivalents | $672,863 | $483,348 | $501,858 | $478,795 | 39% | 41% | | Total securities | $2,990,128 | $3,045,893 | $3,106,075 | $3,251,842 | (2)% | (8)% | | Net loans receivable | $11,542,831 | $11,529,872 | $11,199,135 | $11,070,021 | — % | 4 % | | Total assets | $16,563,081 | $16,437,169 | $16,200,037 | $16,188,676 | 1 % | 2 % | | LIABILITIES: | | | | | | | | Total deposits | $14,015,935 | $13,527,291 | $13,514,398 | $13,538,148 | 4 % | 4 % | | Advances from FHLB | $100,000 | $565,000 | $290,000 | $230,000 | (82)% | (57)% | | Total liabilities | $14,650,189 | $14,571,505 | $14,425,711 | $14,394,955 | 1 % | 2 % | | SHAREHOLDERS' EQUITY: | | | | | | | | Total shareholders' equity | $1,912,892 | $1,865,664 | $1,774,326 | $1,793,721 | 3 % | 7 % | | Common shareholders' equity per share | $55.71 | $53.95 | $51.49 | $52.06 | | | | Common shareholders' tangible equity per share (non-GAAP) | $44.79 | $43.09 | $40.57 | $41.12 | | | | Common shareholders' equity to total assets | 11.55 % | 11.35 % | 10.95 % | 11.08 % | | | [Loan Portfolio Breakdown](index=8&type=section&id=Loan%20Portfolio%20Breakdown) Detailed breakdown of the loan portfolio by type and geographic location, showing growth in commercial real estate and construction loans, with Washington and California being the largest concentrations | LOANS (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | Prior Qtr Change (%) | Prior Yr Qtr Change (%) | | :------------------- | :----------- | :----------- | :----------- | :----------- | :------------------- | :-------------------- | | Commercial real estate | $4,857,607 | $4,809,427 | $4,759,315 | $4,682,001 | 1% | 4% | | Construction, land and land development | $1,735,705 | $1,698,560 | $1,519,951 | $1,502,199 | 2% | 15% | | Commercial business | $2,431,349 | $2,471,014 | $2,422,450 | $2,369,329 | (2)% | 3% | | Agricultural business | $354,884 | $345,742 | $340,280 | $346,686 | 3% | 2% | | One- to four-family residential | $1,582,605 | $1,610,133 | $1,591,260 | $1,575,164 | (2)% | — % | | Consumer | $740,288 | $732,497 | $721,400 | $724,161 | 1% | 2% | | Total loans receivable | $11,702,538 | $11,690,373 | $11,354,656 | $11,224,606 | — % | 4 % | | LOANS BY GEOGRAPHIC LOCATION (in thousands) | Sep 30, 2025 Amount | Sep 30, 2025 Percentage | Jun 30, 2025 Amount | Sep 30, 2024 Amount | Prior Qtr Change (%) | Prior Yr Qtr Change (%) | | :---------------------------------------- | :------------------ | :---------------------- | :------------------ | :------------------ | :------------------- | :-------------------- | | Washington | $5,407,327 | 46 % | $5,438,285 | $5,203,637 | (1)% | 4 % | | California | $3,064,993 | 26 % | $3,010,678 | $2,796,965 | 2 % | 10 % | | Oregon | $2,137,422 | 18 % | $2,141,185 | $2,108,229 | — % | 1 % | | Idaho | $668,949 | 6 % | $671,217 | $652,148 | — % | 3 % | | Utah | $79,697 | 1 % | $70,474 | $85,316 | 13 % | (7)% | | Other | $344,150 | 3 % | $358,534 | $378,311 | (4)% | (9)% | | Total loans receivable | $11,702,538 | 100 % | $11,690,373 | $11,224,606 | — % | 4 % | [Loan Originations](index=9&type=section&id=Loan%20Originations) Total loan originations (excluding loans held for sale) decreased quarter-over-quarter but remained substantial, with construction and land being the largest category | LOAN ORIGINATIONS (in thousands) | Q3 2025 | Q2 2025 | Q3 2024 | | :------------------------------- | :------ | :------ | :------ | | Commercial real estate | $118,354 | $216,189 | $114,372 | | Construction and land | $369,363 | $411,210 | $472,506 | | Commercial business | $167,627 | $203,656 | $179,871 | | Agricultural business | $7,681 | $14,414 | $5,877 | | One- to four-family residential | $6,817 | $5,491 | $24,488 | | Consumer | $122,193 | $102,600 | $96,137 | | Total loan originations (excluding loans held for sale) | $794,535 | $966,625 | $893,565 | [Allowance for Credit Losses Movement](index=10&type=section&id=Allowance%20for%20Credit%20Losses%20Movement) Detailed changes in the allowance for credit losses for loans and unfunded loan commitments, including provisions, recoveries, and charge-offs | CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES – LOANS (in thousands) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | | :------------------------------------------------- | :----------------- | :----------------- | :----------------- | | Balance, beginning of period | $160,501 | $157,323 | $152,848 | | Provision for credit losses – loans | $1,384 | $4,201 | $1,967 | | Recoveries of loans previously charged off | $1,050 | $641 | $734 | | Loans charged off | ($3,228) | ($1,664) | ($964) | | Net charge-offs | ($2,178) | ($1,023) | ($230) | | Balance, end of period | $159,707 | $160,501 | $154,585 | | Net charge-offs / average loans receivable | (0.019)% | (0.009)% | (0.002)% | | ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES – LOANS (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :------------------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Commercial real estate | $41,191 | $41,036 | $40,830 | $40,040 | | Construction and land | $35,144 | $34,124 | $29,038 | $28,322 | | Commercial business | $37,646 | $38,591 | $38,611 | $39,779 | | Total allowance for credit losses – loans | $159,707 | $160,501 | $155,521 | $154,585 | | Allowance for credit losses - loans / Total loans receivable | 1.36 % | 1.37 % | 1.37 % | 1.38 % | | Allowance for credit losses - loans / Non-performing loans | 399 % | 373 % | 421 % | 359 % | | CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Sep 30, 2024 | | :----------------------------------------------------------------- | :----------- | :----------- | :----------- | | Balance, beginning of period | $12,750 | $12,162 | $14,027 | | Provision (recapture) for credit losses - unfunded loan commitments | $1,290 | $588 | ($262) | | Balance, end of period | $14,040 | $12,750 | $13,765 | [Non-Performing Assets and Credit Risk Ratings](index=11&type=section&id=Non-Performing%20Assets%20and%20Credit%20Risk%20Ratings) Detailed breakdown of non-performing assets, including loans on non-accrual status and real estate owned (REO), along with the distribution of loans by credit risk rating | NON-PERFORMING ASSETS (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Loans on non-accrual status | $38,742 | $39,998 | $36,552 | $39,049 | | Loans more than 90 days delinquent, still on accrual | $1,274 | $2,976 | $404 | $3,958 | | Total non-performing loans | $40,016 | $42,974 | $36,956 | $43,007 | | REO | $5,272 | $6,801 | $2,367 | $2,221 | | Total non-performing assets | $45,288 | $49,775 | $39,623 | $45,228 | | Total non-performing assets to total assets | 0.27 % | 0.30 % | 0.24 % | 0.28 % | | LOANS BY CREDIT RISK RATING (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | | Pass | $11,491,485 | $11,432,456 | $11,118,744 | $11,022,014 | | Special Mention | $37,013 | $68,372 | $43,451 | $52,497 | | Substandard | $174,040 | $189,545 | $192,461 | $150,095 | | Total | $11,702,538 | $11,690,373 | $11,354,656 | $11,224,606 | [Deposit Composition and Geographic Concentration](index=12&type=section&id=Deposit%20Composition%20and%20Geographic%20Concentration) Detailed breakdown of deposit types and their geographic distribution, showing growth in interest-bearing transaction and savings accounts, with Washington being the largest deposit market | DEPOSIT COMPOSITION (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | Prior Qtr Change (%) | Prior Yr Qtr Change (%) | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | :------------------- | :-------------------- | | Non-interest-bearing | $4,572,338 | $4,504,491 | $4,591,543 | $4,688,244 | 2 % | (2)% | | Interest-bearing checking | $2,734,822 | $2,534,900 | $2,393,864 | $2,344,561 | 8 % | 17 % | | Regular savings accounts | $3,705,823 | $3,538,372 | $3,478,423 | $3,339,859 | 5 % | 11 % | | Money market accounts | $1,462,570 | $1,471,756 | $1,550,896 | $1,643,631 | (1)% | (11)% | | Total core deposits | $12,475,553 | $12,049,519 | $12,014,726 | $12,016,295 | 4 % | 4 % | | Interest-bearing certificates | $1,540,382 | $1,477,772 | $1,499,672 | $1,521,853 | 4 % | 1 % | | Total deposits | $14,015,935 | $13,527,291 | $13,514,398 | $13,538,148 | 4 % | 4 % | | GEOGRAPHIC CONCENTRATION OF DEPOSITS (in thousands) | Sep 30, 2025 Amount | Sep 30, 2025 Percentage | Jun 30, 2025 Amount | Sep 30, 2024 Amount | Prior Qtr Change (%) | Prior Yr Qtr Change (%) | | :------------------------------------------------ | :------------------ | :---------------------- | :------------------ | :------------------ | :------------------- | :-------------------- | | Washington | $7,648,527 | 55 % | $7,334,391 | $7,413,414 | 4 % | 3 % | | Oregon | $3,081,329 | 22 % | $3,029,712 | $2,997,843 | 2 % | 3 % | | California | $2,542,903 | 18 % | $2,486,514 | $2,423,295 | 2 % | 5 % | | Idaho | $743,176 | 5 % | $676,674 | $703,596 | 10 % | 6 % | | Total deposits | $14,015,935 | 100 % | $13,527,291 | $13,538,148 | 4 % | 4 % | | Total public deposits | $405,851 | - | $423,106 | $416,017 | - | - | | Total brokered deposits | $49,989 | - | $49,977 | $50,333 | - | - | | Average account balance per account | $31 | - | $30 | $30 | - | - | [Estimated Regulatory Capital Ratios](index=13&type=section&id=Estimated%20Regulatory%20Capital%20Ratios) Estimated regulatory capital ratios for Banner Corporation and Banner Bank, demonstrating compliance with 'well-capitalized' requirements | ESTIMATED REGULATORY CAPITAL RATIOS AS OF SEPTEMBER 30, 2025 | Actual Ratio | Minimum for 'Adequately Capitalized' | Minimum for 'Well Capitalized' | | :------------------------------------------------- | :----------- | :----------------------------------- | :----------------------------- | | Banner Corporation-consolidated: | | | | | Total capital to risk-weighted assets | 14.66 % | 8.00 % | 10.00 % | | Tier 1 capital to risk-weighted assets | 13.41 % | 6.00 % | 6.00 % | | Tier 1 leverage capital to average assets | 11.33 % | 4.00 % | n/a | | Common equity tier 1 capital to risk-weighted assets | 12.78 % | 4.50 % | n/a | | Banner Bank: | | | | | Total capital to risk-weighted assets | 14.16 % | 8.00 % | 10.00 % | | Tier 1 capital to risk-weighted assets | 12.91 % | 6.00 % | 8.00 % | | Tier 1 leverage capital to average assets | 10.91 % | 4.00 % | 5.00 % | | Common equity tier 1 capital to risk-weighted assets | 12.91 % | 4.50 % | 6.50 % | - These regulatory capital ratios are estimates, pending completion and filing of Banner's regulatory reports[38](index=38&type=chunk) [Net Interest Spread Analysis](index=14&type=section&id=Net%20Interest%20Spread%20Analysis) Detailed analysis of average balances, interest income/expense, and yields/costs for interest-earning assets and funding liabilities, showing the calculation of net interest spread and margin for both quarterly and nine-month periods | ANALYSIS OF NET INTEREST SPREAD (in thousands, rates annualized) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | | :------------------------------------------------- | :----------------- | :----------------- | :----------------- | | Total interest-earning assets (Avg Balance) | $15,280,477 | $15,129,177 | $14,877,162 | | Total interest-earning assets (Yield) | 5.43 % | 5.40 % | 5.33 % | | Total funding liabilities (Avg Balance) | $14,133,850 | $14,009,090 | $13,818,232 | | Total funding liabilities (Cost) | 1.57 % | 1.60 % | 1.73 % | | Net interest income/rate spread (tax equivalent) | 3.86 % | 3.80 % | 3.60 % | | Net interest margin (tax equivalent) | 3.98 % | 3.92 % | 3.72 % | | Return on average assets | 1.30 % | 1.13 % | 1.13 % | | Efficiency ratio | 59.76 % | 62.50 % | 62.63 % | | ANALYSIS OF NET INTEREST SPREAD (in thousands, rates annualized) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :------------------------------------------------- | :---------------- | :---------------- | | Total interest-earning assets (Avg Balance) | $15,118,343 | $14,752,638 | | Total interest-earning assets (Yield) | 5.40 % | 5.24 % | | Total funding liabilities (Avg Balance) | $13,990,458 | $13,722,463 | | Total funding liabilities (Cost) | 1.57 % | 1.64 % | | Net interest income/rate spread (tax equivalent) | 3.83 % | 3.60 % | | Net interest margin (tax equivalent) | 3.94 % | 3.72 % | | Return on average assets | 1.19 % | 1.04 % | | Efficiency ratio | 61.78 % | 65.19 % | [Non-GAAP Financial Measures Reconciliation](index=16&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) Reconciliation of GAAP to non-GAAP financial measures, including adjusted revenue, adjusted earnings, adjusted efficiency ratio, and tangible common shareholders' equity, providing additional insights into core operational performance - Non-GAAP financial measures are presented to provide useful and comparative information to assess trends in Banner's core operations and facilitate comparison with peers[41](index=41&type=chunk) | ADJUSTED REVENUE (in thousands) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :------------------------------ | :----------------- | :----------------- | :----------------- | :---------------- | :---------------- | | Total revenue (GAAP) | $170,719 | $162,150 | $153,738 | $493,060 | $448,033 | | Adjusted revenue (non-GAAP) | $168,746 | $162,984 | $153,699 | $491,606 | $454,641 | | ADJUSTED EARNINGS (in thousands) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :------------------------------- | :----------------- | :----------------- | :----------------- | :---------------- | :---------------- | | Net income (GAAP) | $53,502 | $45,496 | $45,153 | $144,133 | $122,507 | | Total adjusted earnings (non-GAAP) | $52,795 | $46,763 | $45,123 | $144,454 | $127,529 | | Diluted earnings per share (GAAP) | $1.54 | $1.31 | $1.30 | $4.15 | $3.54 | | Diluted adjusted earnings per share (non-GAAP) | $1.52 | $1.35 | $1.30 | $4.16 | $3.69 | | Return on average assets | 1.30 % | 1.13 % | 1.13 % | 1.19 % | 1.04 % | | Adjusted return on average assets (non-GAAP) | 1.28 % | 1.16 % | 1.13 % | 1.20 % | 1.08 % | | Return on average equity | 11.33 % | 9.92 % | 10.39 % | 10.49 % | 9.76 % | | Adjusted return on average equity (non-GAAP) | 11.18 % | 10.20 % | 10.39 % | 10.51 % | 10.16 % | | ADJUSTED EFFICIENCY RATIO (in thousands) | Sep 30, 2025 (Qtr) | Jun 30, 2025 (Qtr) | Sep 30, 2024 (Qtr) | Sep 30, 2025 (9M) | Sep 30, 2024 (9M) | | :--------------------------------------- | :----------------- | :----------------- | :----------------- | :---------------- | :---------------- | | Non-interest expense (GAAP) | $102,022 | $101,348 | $96,291 | $304,629 | $292,060 | | Adjusted non-interest expense (non-GAAP) | $98,781 | $98,251 | $94,166 | $296,442 | $285,713 | | Efficiency ratio (GAAP) | 59.76 % | 62.50 % | 62.63 % | 61.78 % | 65.19 % | | Adjusted efficiency ratio (non-GAAP) | 58.54 % | 60.28 % | 61.27 % | 60.30 % | 62.84 % | | TANGIBLE COMMON SHAREHOLDERS' EQUITY (in thousands) | Sep 30, 2025 | Jun 30, 2025 | Dec 31, 2024 | Sep 30, 2024 | | :------------------------------------------------ | :----------- | :----------- | :----------- | :----------- | | Shareholders' equity (GAAP) | $1,912,892 | $1,865,664 | $1,774,326 | $1,793,721 | | Tangible common shareholders' equity (non-GAAP) | $1,537,965 | $1,490,396 | $1,398,147 | $1,416,953 | | Total assets (GAAP) | $16,563,081 | $16,437,169 | $16,200,037 | $16,188,676 | | Total tangible assets (non-GAAP) | $16,188,154 | $16,061,901 | $15,823,858 | $15,811,908 | | Tangible common shareholders' equity to tangible assets (non-GAAP) | 9.50 % | 9.28 % | 8.84 % | 8.96 % | | Tangible common shareholders' equity per share (non-GAAP) | $44.79 | $43.09 | $40.57 | $41.12 | [Corporate Information](index=4&type=section&id=Corporate%20Information) This section provides details on the upcoming conference call, a brief company overview, and important disclosures regarding forward-looking statements and associated risks [Conference Call](index=4&type=section&id=Conference%20Call) Banner Corporation will host a conference call to discuss its third-quarter results, with options for live listening and professional participation - A conference call will be held on Thursday, October 16, 2025, at 8:00 a.m. PDT[24](index=24&type=chunk) - Interested investors can listen live at www.bannerbank.com, and investment professionals can dial (833) 470-1428 using access code 613608[24](index=24&type=chunk) - A replay of the call will be available at www.bannerbank.com[24](index=24&type=chunk) [About the Company](index=4&type=section&id=About%20the%20Company) Banner Corporation is a bank holding company operating Banner Bank, providing a comprehensive range of financial services across four Western states - Banner Corporation is a **$16.56 billion** bank holding company[25](index=25&type=chunk) - It operates Banner Bank through a network of branches in four Western states[25](index=25&type=chunk) - Services include a full range of deposit services and various types of loans (business, commercial real estate, construction, residential, agricultural, and consumer)[25](index=25&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section provides a standard disclaimer regarding forward-looking statements, outlining the inherent risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are identified by words like 'may,' 'believe,' 'will,' 'expect,' 'anticipate,' 'estimate,' 'project,' 'plans,' or 'potential'[26](index=26&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which are based on information known at the time they are made[26](index=26&type=chunk) - Banner does not undertake any obligation to revise forward-looking statements to reflect future events or circumstances[26](index=26&type=chunk) - Key risk factors include adverse economic conditions, changes in interest rates, inflation, geopolitical developments, bank failures, credit risks, regulatory changes, technological advancements, and market volatility[27](index=27&type=chunk)

Core Insights - Wall Street analysts expect Banner (BANR) to report quarterly earnings of $1.41 per share, reflecting an 8.5% year-over-year increase, with revenues projected at $169.3 million, up 10.1% from the previous year [1] Earnings Estimates - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [2] - Analysts' consensus on key metrics provides valuable insights into the company's performance [3] Key Metrics Forecast - The consensus for 'Net interest margin (tax equivalent)' is projected to reach 4.0%, up from 3.7% a year ago [4] - The 'Efficiency Ratio' is expected to improve to 59.8%, compared to 62.6% in the previous year [4] - 'Total non-interest income' is estimated at $19.40 million, an increase from $18.06 million year-over-year [4] - 'Net interest income' is projected to be $149.90 million, up from $135.68 million a year ago [5] Stock Performance - Banner's shares have decreased by 6.6% over the past month, contrasting with a 3.5% increase in the Zacks S&P 500 composite [5] - With a Zacks Rank of 4 (Sell), Banner is expected to underperform the overall market in the near future [5]

Group 1 - Crude Value Insights provides an investment service and community focused on the oil and natural gas sector [1] - The service emphasizes cash flow and identifies companies that generate it, highlighting their value and growth prospects [1] - Subscribers have access to a model account with over 50 stocks, detailed cash flow analyses of exploration and production firms, and live discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas market [2]

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.5 million or $1.31 per diluted share for Q2 2025, compared to $1.15 per share for Q2 2024 and $1.30 per share for Q1 2025 [5][6] - Core earnings for Q2 2025 were $62 million, up from $52 million in Q2 2024, with revenue from core operations increasing to $163 million from $150 million year-over-year [7][8] - Return on average assets was 1.13% for Q2 2025, reflecting strong core deposit base and net interest margin [7] Business Line Data and Key Metrics Changes - Loan originations increased by 80% compared to the linked quarter, with commercial real estate up 484%, C&I originations up 96%, and construction and land development increasing by 43% [11] - Total loans grew by $265 million during the quarter, with portfolio loans increasing by $252 million or nearly 9% on an annualized basis [17] - Core deposits represented 89% of total deposits, with a 4% increase year-over-year [8][18] Market Data and Key Metrics Changes - The agricultural loans sector saw a 3% increase in the quarter, driven by higher operating costs and seasonal activity [13] - Delinquent loans declined to 0.41% of total loans, down from 0.63% in the previous quarter [14] - Nonperforming assets remained modest at 0.3% of total assets, primarily related to consumer loans [14] Company Strategy and Development Direction - The company continues to focus on maintaining a moderate risk profile while investing in operating performance [6] - Banner's strategy emphasizes growing new client relationships and maintaining core funding positions through a super community bank model [8] - The company remains open to opportunistic M&A but is primarily focused on organic growth [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through current market uncertainties, citing a strong balance sheet and reputation [6] - There is an expectation of a slight pullback in loan growth in Q3, but management anticipates maintaining a mid-single-digit growth rate for the year [29] - The company is monitoring potential impacts from policy changes and tariffs on small businesses and consumers [15] Other Important Information - Banner was recognized as one of America's 100 Best Banks and received various accolades for trustworthiness and customer satisfaction [9][10] - The company has a strong capital and liquidity profile, allowing it to repay $100 million of subordinated notes [18] Q&A Session Summary Question: Improvement in loan originations - Management noted that the increase in originations pulled some of the pipeline out, with expectations of mid-single-digit growth for the year despite a potential pullback in Q3 [28][29] Question: Competition on the deposit side - Management indicated that they are not currently seeing increased competition for deposits, maintaining a focus on relationship banking to drive core deposits [32][33] Question: Funding loan growth - The company plans to use FHLB advances to bridge any gaps in funding due to seasonal deposit outflows, with expectations for deposit growth in Q3 [36][37] Question: M&A environment - Management acknowledged a more amicable M&A environment but emphasized a focus on organic growth rather than feeling compelled to pursue acquisitions [46][48] Question: Credit quality and risk ratings - Management reported a mix of upgrades and downgrades in credit quality, with particular attention to the agricultural sector experiencing more downgrades due to commodity price pressures [56][57]

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.5 million or $1.31 per diluted share for Q2 2025, compared to $1.15 per share for Q2 2024 and $1.30 per share for Q1 2025 [5][6] - Core earnings for Q2 2025 were $62 million, up from $52 million in Q2 2024, with revenue from core operations increasing to $163 million from $150 million year-over-year [7][8] - Return on average assets was 1.13% for Q2 2025, reflecting strong core performance [8] Business Line Data and Key Metrics Changes - Loan originations increased by 80% compared to the linked quarter, with commercial real estate up 484%, C&I originations up 96%, and construction and land development increasing by 43% [12] - Total loans grew by $265 million during the quarter, with portfolio loans increasing by $252 million or nearly 9% on an annualized basis [19] - Core deposits represented 89% of total deposits, with a 4% year-over-year increase in core deposits [9][20] Market Data and Key Metrics Changes - The agricultural loans sector saw a 3% increase in the quarter, driven by higher operating costs and seasonal activity [14] - Delinquent loans decreased to 0.41% of total loans, down from 0.63% in the previous quarter [14][15] - Nonperforming assets remained modest at 0.3% of total assets, with nonperforming loans totaling $43 million, primarily related to consumer loans [15] Company Strategy and Development Direction - The company continues to focus on its super community bank strategy, emphasizing client relationships, core funding, and safety through economic cycles [8][9] - Banner Corporation aims to maintain a moderate risk profile while investing in operational improvements to enhance performance [6][9] - The company received multiple accolades, including being named one of America's 100 Best Banks and recognized for retail client satisfaction [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that economic uncertainty has not significantly impacted loan growth, with strong originations and growth observed in Q2 [17] - The company expects a slight pullback in loan growth in Q3 but maintains a mid-single-digit growth rate projection for the year [30] - Management remains focused on organic growth while being open to opportunistic M&A, emphasizing the success of their current business model [49] Other Important Information - The company reported a core dividend of $0.48 per common share, reflecting strong financial performance [9] - Total securities decreased by $55 million primarily due to normal portfolio cash flows [19] - The company called and repaid $100 million of subordinated notes, reflecting strong capital and liquidity positions [20] Q&A Session Summary Question: Follow-up on loan originations and customer confidence - Management indicated that the increase in originations pulled some of the pipeline out, with expectations of mid-single-digit growth for the year despite potential pullbacks in Q3 [29][30] Question: Competition on the deposit side - Management noted that they are not currently seeing increased competition for deposits, maintaining a focus on relationship banking to drive core deposits [33][34] Question: Funding loan growth amid deposit growth - Management confirmed that FHLB advances were used to temporarily fund loan growth, with expectations for deposit growth to outpace loan growth in Q3 [37][38] Question: M&A environment and strategy - Management acknowledged an increase in M&A activity but emphasized a focus on organic growth, viewing opportunistic M&A as a secondary strategy [49] Question: Credit quality and loan performance - Management clarified that the increase in nonperforming loans was primarily due to residential properties, with agricultural loans experiencing more downgrades due to commodity pressures [61][62]