Financial Performance Highlights - Banner Corporation reported net income of $45.5 million for the second quarter of 2025, slightly up from $45.1 million in the previous quarter[7] - The return on average assets was 1.13%, and the return on average equity was 9.92%, compared to 1.15% and 10.17% respectively in the prior quarter[7] - Net interest margin (tax equivalent) remained steady at 3.92%[7] - The efficiency ratio (GAAP) decreased by 71 basis points to 62.50%, and the adjusted non-GAAP efficiency ratio decreased by 190 basis points to 60.28%[7] Loan Portfolio and Credit Quality - HFI Loan growth reached $547 million year-over-year (5%) and $252 million quarter-over-quarter (9% annualized)[7] - Total loan originations (excluding HFS) amounted to $967 million[7] - The allowance for credit losses was $4.8 million, driven by loan growth and risk rating downgrades; the allowance for credit losses to total loans was 1.37%[7] - Non-performing assets remained low at 0.30% of total assets, a slight increase of 4 basis points from the last quarter[7] Balance Sheet and Capital Management - As of the reporting period, Banner Corporation's assets totaled $16.4 billion, deposits were $13.5 billion, and loans amounted to $11.7 billion[9] - The company announced a dividend of $0.48 per share to be paid in August 2025[7] Strategic Focus and Market Position - Banner Corporation emphasizes its core banking competency, revenue growth, net interest margin protection, careful spending, and moderate risk profile[8, 10] - The company operates in a region with strong population growth, particularly in Idaho (20% projected growth)[11]

Core Insights - Banner (BANR) reported revenue of $162.15 million for the quarter ended June 2025, marking an 8.3% year-over-year increase, with EPS of $1.35 compared to $1.17 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $163.6 million by 0.89%, while the EPS exceeded the consensus estimate of $1.32 by 2.27% [1] Financial Performance Metrics - The efficiency ratio was reported at 62.5%, slightly above the average estimate of 61% [4] - The net interest margin (tax equivalent) was 3.9%, matching the average estimate [4] - Net charge-offs as a percentage of average loans receivable were reported at -0%, better than the average estimate of 0.1% [4] - Total non-interest income was $17.75 million, below the average estimate of $18.8 million [4] - Net interest income was reported at $144.4 million, slightly below the average estimate of $144.8 million [4] Stock Performance - Banner's shares have returned +9% over the past month, outperforming the Zacks S&P 500 composite's +4.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) [Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) Banner Corporation reported strong financial results for the second quarter of 2025, with net income of $45.5 million, or $1.31 per diluted share. This represents a slight increase from the previous quarter and a significant increase from the same quarter last year. The performance was driven by a 9% year-over-year increase in net interest income, fueled by loan growth and higher asset yields. The company also saw a 5% year-over-year growth in net loans and maintained a strong core deposit base, which constituted 89% of total deposits Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $45.5 million | $45.1 million | $39.8 million | | Diluted EPS | $1.31 | $1.30 | $1.15 | | Net Interest Income | $144.4 million | $141.1 million | $132.5 million | | Revenue | $162.2 million | $160.2 million | $149.7 million | | Provision for Credit Losses | $4.8 million | $3.1 million | $2.4 million | - Net loans receivable grew to **$11.53 billion**, a **2% increase** from the prior quarter and a **5% increase** year-over-year[11](index=11&type=chunk) - Core deposits represented **89% of total deposits** at quarter-end, highlighting a strong funding base[4](index=4&type=chunk)[11](index=11&type=chunk) - Non-performing assets (NPAs) increased to **0.30% of total assets**, up from **0.26%** in the prior quarter and **0.21%** in the prior year quarter[11](index=11&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The Board of Directors declared a regular quarterly cash dividend, maintaining its commitment to shareholder returns - A quarterly cash dividend of **$0.48 per share** was declared, payable on August 15, 2025, to shareholders of record on August 5, 2025[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Mark Grescovich attributed the strong quarterly performance to the company's 'super community bank strategy,' which emphasizes client relationships, a solid funding base, and a moderate risk profile. He highlighted that earnings benefited from loan growth and higher asset yields, which offset increased funding costs. The company's credit metrics, reserve levels, and capital base are described as robust - The company's performance is credited to its 'super community bank strategy,' focusing on client relationships, a strong funding base, and exceptional service with a moderate risk profile[4](index=4&type=chunk) - Management noted that credit metrics remain strong, the reserve for loan losses is solid, and the capital base is robust[4](index=4&type=chunk) [Detailed Financial Analysis](index=2&type=section&id=Detailed%20Financial%20Analysis) [Income Statement Review](index=2&type=section&id=Income%20Statement%20Review) The income statement review highlights a 9% year-over-year increase in net interest income to $144.4 million, with a stable net interest margin of 3.92%. The provision for credit losses increased to $4.8 million due to loan growth and risk rating migration. Non-interest income decreased quarter-over-quarter due to one-time building exit costs, while non-interest expenses remained flat, leading to an improved efficiency ratio of 62.50% [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) - Net interest income was **$144.4 million**, up from **$141.1 million** in Q1 2025 and **$132.5 million** in Q2 2024[7](index=7&type=chunk) - Net interest margin (tax equivalent) was stable at **3.92%** for the current and preceding quarters, an increase of **22 basis points** from **3.70%** in Q2 2024[7](index=7&type=chunk) - The increase in net interest income was driven by higher yields on interest-earning assets, with average loan yields rising to **6.12%** from **6.07%** in the prior quarter[8](index=8&type=chunk) - Total cost of funding liabilities increased by **5 basis points** to **1.60%** compared to the preceding quarter, mainly due to higher FHLB advances to fund loan growth[9](index=9&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) - A **$4.8 million** provision for credit losses was recorded in Q2 2025, compared to **$3.1 million** in Q1 2025 and **$2.4 million** in Q2 2024[10](index=10&type=chunk) - The provision primarily reflected loan growth and risk rating migration, which impacted estimated reserve requirements[10](index=10&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) - Total non-interest income was **$17.8 million**, a decrease from **$19.1 million** in the prior quarter, primarily due to a **$1.1 million** decrease in miscellaneous income related to losses on building and lease exits[12](index=12&type=chunk) - Mortgage banking operations revenue was stable at **$3.2 million**, compared to **$3.1 million** in the preceding quarter[13](index=13&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) - Total non-interest expense was flat at **$101.3 million** compared to the preceding quarter. Increases in salary and IT costs were offset by a **$1.6 million** increase in capitalized loan origination costs[14](index=14&type=chunk) - The efficiency ratio improved to **62.50%** from **63.21%** in the preceding quarter. The adjusted efficiency ratio also improved to **60.28%** from **62.18%**[14](index=14&type=chunk) [Balance Sheet Review](index=3&type=section&id=Balance%20Sheet%20Review) As of June 30, 2025, total assets grew to $16.44 billion, driven by a 2% quarterly increase in total loans to $11.69 billion. Deposits saw a slight decrease to $13.53 billion, but core deposits remained strong. The company increased FHLB advances significantly to fund loan growth and paid off its outstanding subordinated debt. Shareholders' equity increased, and all capital ratios remained well above 'well-capitalized' regulatory requirements [Assets, Loans, and Deposits](index=3&type=section&id=Assets%2C%20Loans%2C%20and%20Deposits) Balance Sheet Highlights (as of June 30, 2025) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $16.44 billion | $16.17 billion | $15.82 billion | | Total Loans Receivable | $11.69 billion | $11.44 billion | $11.14 billion | | Total Deposits | $13.53 billion | $13.59 billion | $13.08 billion | - Commercial real estate loans increased by **4%** quarter-over-quarter to **$3.97 billion**, driven by new loan production and construction loan conversions[16](index=16&type=chunk) - Core deposits decreased slightly but remained strong at **$12.05 billion**, representing **89% of total deposits**[18](index=18&type=chunk) [Liquidity and Borrowings](index=3&type=section&id=Liquidity%20and%20Borrowings) - FHLB advances increased significantly to **$565.0 million** from **$168.0 million** in the prior quarter, primarily to fund loan growth[19](index=19&type=chunk) - The company paid off its outstanding subordinated debt during the second quarter of 2025[20](index=20&type=chunk) - At quarter-end, the company had additional off-balance sheet liquidity of **$2.74 billion** at the FHLB and **$1.62 billion** at the Federal Reserve[19](index=19&type=chunk) [Shareholders' Equity and Capital Ratios](index=4&type=section&id=Shareholders%27%20Equity%20and%20Capital%20Ratios) - Total common shareholders' equity increased to **$1.87 billion**, or **11.35% of total assets**, up from **$1.83 billion** at the end of the prior quarter[21](index=21&type=chunk) - Tangible common shareholders' equity per share (a non-GAAP measure) increased to **$43.09** from **$42.27** in the prior quarter[11](index=11&type=chunk)[21](index=21&type=chunk) - The company and Banner Bank continue to maintain capital levels in excess of 'well-capitalized' requirements, with an estimated common equity Tier 1 capital ratio of **12.63%**[22](index=22&type=chunk) [Credit Quality](index=4&type=section&id=Credit%20Quality) Credit quality metrics showed some weakening, with non-performing assets rising to 0.30% of total assets. However, the allowance for credit losses on loans remained stable at 1.37% of total loans receivable, providing strong coverage of non-performing loans at 373%. Net loan charge-offs decreased to $1.0 million from $2.7 million in the prior quarter Credit Quality Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Non-performing Assets (NPAs) | $49.8 million | $42.7 million | $33.3 million | | NPAs to Total Assets | 0.30% | 0.26% | 0.21% | | Allowance for Credit Losses (ACL) - Loans | $160.5 million | $157.3 million | $152.8 million | | ACL to Total Loans | 1.37% | 1.38% | 1.37% | | Net Loan Charge-offs | $1.0 million | $2.7 million | $0.2 million | - The allowance for credit losses on loans was **373%** of non-performing loans at June 30, 2025, down from **404%** at March 31, 2025[23](index=23&type=chunk) - Substandard loans decreased to **$189.5 million** from **$197.8 million** in the prior quarter but were up significantly from **$122.0 million** a year ago[23](index=23&type=chunk) [Additional Information](index=4&type=section&id=Additional%20Information) [Conference Call Information](index=4&type=section&id=Conference%20Call%20Information) Banner Corporation will host a conference call to discuss its second quarter 2025 results - The conference call is scheduled for Thursday, July 17, 2025, at **8:00 a.m. PDT**[24](index=24&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding future financial performance and strategic plans. These statements are subject to numerous risks and uncertainties, including economic conditions, interest rate changes, inflation, geopolitical developments, and regulatory changes, which could cause actual results to differ materially - The document includes a standard safe harbor statement, cautioning readers not to place undue reliance on forward-looking statements[26](index=26&type=chunk) - Key risk factors cited include adverse economic conditions, changes in interest rates, inflation, credit risks, competitive pressures, and regulatory changes[27](index=27&type=chunk) [Financial Tables](index=6&type=section&id=Financial%20Tables) [Results of Operations](index=6&type=section&id=Results%20of%20Operations) The detailed income statement shows a year-over-year increase in net income to $45.5 million for Q2 2025, driven by higher net interest income which rose to $144.4 million. For the six months ended June 30, 2025, net income was $90.6 million, up from $77.4 million in the same period of 2024 Income Statement Summary (in thousands) | Description | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $200,259 | $189,138 | $394,127 | $373,826 | | Total Interest Expense | $55,860 | $56,592 | $108,645 | $108,321 | | Net Interest Income | $144,399 | $132,546 | $285,482 | $265,505 | | Provision for Credit Losses | $4,795 | $2,369 | $7,934 | $2,889 | | Total Non-interest Income | $17,751 | $17,199 | $36,859 | $28,790 | | Total Non-interest Expense | $101,348 | $98,128 | $202,607 | $195,769 | | Net Income | $45,496 | $39,795 | $90,631 | $77,354 | [Financial Condition](index=7&type=section&id=Financial%20Condition) The balance sheet expanded, with total assets reaching $16.44 billion at June 30, 2025, a 4% increase from the prior year. This growth was supported by a 5% year-over-year increase in net loans. Total shareholders' equity grew 10% year-over-year to $1.87 billion Balance Sheet Summary (in thousands) | Description | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Total Assets | $16,437,169 | $16,170,812 | $15,816,194 | | Net Loans Receivable | $11,529,872 | $11,281,473 | $10,991,000 | | Total Deposits | $13,527,291 | $13,593,265 | $13,079,263 | | Total Liabilities | $14,571,505 | $14,337,359 | $14,125,428 | | Total Shareholders' Equity | $1,865,664 | $1,833,453 | $1,690,766 | [Loan Portfolio Analysis](index=8&type=section&id=Loan%20Portfolio%20Analysis) The loan portfolio grew to $11.69 billion, with notable year-over-year increases in owner-occupied commercial real estate (+18%), multifamily real estate (+20%), and land development (+19%). Loan originations in Q2 2025 totaled $966.6 million. Geographically, Washington and California remain the largest markets, accounting for 47% and 26% of the loan portfolio, respectively [Loan Composition and Growth](index=8&type=section&id=Loan%20Composition%20and%20Growth) Loan Composition (in thousands) as of June 30, 2025 | Loan Type | Amount | % Change YoY | | :--- | :--- | :--- | | Commercial Real Estate (CRE) | $3,973,727 | +7% | | Multifamily Real Estate | $860,700 | +20% | | Construction and Land | $1,696,560 | +5% | | Commercial Business | $2,471,014 | +4% | | One- to four-family residential | $1,610,133 | 0% | | **Total Loans Receivable** | **$11,690,373** | **+5%** | [Loan Originations](index=9&type=section&id=Loan%20Originations) - Total loan originations (excluding loans held for sale) were **$966.6 million** in Q2 2025, a significant increase from **$535.8 million** in Q1 2025 and slightly below **$996.1 million** in Q2 2024[33](index=33&type=chunk) - Construction and land loans represented the largest category of originations in Q2 2025 at **$411.2 million**[33](index=33&type=chunk) [Geographic Distribution](index=8&type=section&id=Geographic%20Distribution) Loans by Geographic Location as of June 30, 2025 | State | Amount (in thousands) | Percentage | | :--- | :--- | :--- | | Washington | $5,438,285 | 47% | | California | $3,010,678 | 26% | | Oregon | $2,141,185 | 17% | | Idaho | $671,217 | 6% | | Other | $429,008 | 4% | [Credit Quality Metrics](index=10&type=section&id=Credit%20Quality%20Metrics) The allowance for credit losses (ACL) on loans increased to $160.5 million, maintaining a stable ratio of 1.37% to total loans. Net charge-offs for the quarter were $1.0 million. Non-performing assets (NPAs) rose to $49.8 million, driven by increases in non-accrual one-to-four family and agricultural loans, and an increase in REO [Allowance for Credit Losses (ACL) Analysis](index=10&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)%20Analysis) - The ACL for loans increased to **$160.5 million** at the end of Q2 2025 from a beginning balance of **$157.3 million**, with a provision of **$4.2 million** and net charge-offs of **$1.0 million** during the quarter[34](index=34&type=chunk) - The ACL for unfunded loan commitments increased to **$12.8 million** from **$12.2 million** in the prior quarter[34](index=34&type=chunk) [Non-Performing Assets (NPA) Analysis](index=11&type=section&id=Non-Performing%20Assets%20(NPA)%20Analysis) Non-Performing Assets (in thousands) | Category | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Total non-performing loans | $42,974 | $38,959 | $30,722 | | REO and other repossessed assets | $6,801 | $3,768 | $2,564 | | **Total non-performing assets** | **$49,775** | **$42,727** | **$33,286** | [Deposit Analysis](index=12&type=section&id=Deposit%20Analysis) Total deposits stood at $13.53 billion, a slight decrease from the prior quarter but up 3% year-over-year. Core deposits, comprising non-interest-bearing and interest-bearing transaction and savings accounts, made up 89% of the total. Geographically, Washington accounts for 55% of all deposits Deposit Composition (in thousands) as of June 30, 2025 | Deposit Type | Amount | % of Total | | :--- | :--- | :--- | | Non-interest-bearing | $4,504,491 | 33% | | Interest-bearing transaction and savings | $7,545,028 | 56% | | **Total Core Deposits** | **$12,049,519** | **89%** | | Interest-bearing certificates | $1,477,772 | 11% | | **Total Deposits** | **$13,527,291** | **100%** | - Total deposits are geographically concentrated in Washington (**55%**), Oregon (**22%**), and California (**18%**)[37](index=37&type=chunk) [Capital Adequacy](index=13&type=section&id=Capital%20Adequacy) As of June 30, 2025, both Banner Corporation and Banner Bank maintained capital ratios significantly exceeding the minimums required to be categorized as 'well-capitalized' by regulators Estimated Regulatory Capital Ratios (Banner Corporation) | Ratio | Actual | 'Well Capitalized' Minimum | | :--- | :--- | :--- | | Common equity tier 1 capital to risk-weighted assets | 12.63% | n/a | | Tier 1 capital to risk-weighted assets | 13.26% | 6.00% | | Total capital to risk-weighted assets | 14.51% | 10.00% | | Tier 1 leverage capital to average assets | 11.29% | n/a | [Non-GAAP Financial Measures](index=16&type=section&id=Non-GAAP%20Financial%20Measures) The company provides several non-GAAP financial measures, such as tangible common equity and adjusted efficiency ratio, to offer what it believes are useful and comparative insights into its core operations. These measures exclude items like goodwill, intangible assets, and certain one-time gains or losses - Management uses non-GAAP measures like adjusted revenue, adjusted earnings, and tangible book value per share to assess core operational trends and facilitate peer comparison[41](index=41&type=chunk) Tangible Common Shareholders' Equity Reconciliation | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Common shareholders' equity (book value) per share (GAAP) | $53.95 | $53.16 | $49.07 | | Tangible common shareholders' equity (tangible book value) per share (non-GAAP) | $43.09 | $42.27 | $38.12 | Adjusted Efficiency Ratio Reconciliation | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Efficiency ratio (GAAP) | 62.50% | 63.21% | 65.53% | | Adjusted efficiency ratio (non-GAAP) | 60.28% | 62.18% | 63.60% |

Core Insights - Banner (BANR) is positioned to potentially continue its earnings-beat streak in upcoming reports, having surpassed earnings estimates by an average of 6.95% in the last two quarters [1][5] Earnings Performance - For the most recent quarter, Banner reported earnings of $1.23 per share against an expectation of $1.29 per share, resulting in a surprise of 4.88%. In the previous quarter, the company exceeded the consensus estimate of $1.22 per share by reporting $1.33 per share, achieving a surprise of 9.02% [2] Earnings Estimates and Predictions - There has been a favorable change in earnings estimates for Banner, with a positive Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat, especially when combined with a solid Zacks Rank [5][8] - The current Earnings ESP for Banner is +1.52%, suggesting that analysts have recently become more optimistic about the company's earnings prospects [8] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [7]

Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Banner (BANR) due to higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Banner is expected to report quarterly earnings of $1.32 per share, reflecting a year-over-year increase of +12.8% [3][18] - Revenues are projected to be $163.6 million, representing a 9.3% increase from the previous year [3][18] Estimate Revisions - The consensus EPS estimate has been revised 1.5% higher in the last 30 days, indicating a positive reassessment by analysts [4][19] - The Most Accurate Estimate for Banner is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.52% [12][19] Earnings Surprise Prediction - A positive Earnings ESP suggests a likelihood of beating the consensus EPS estimate, especially when combined with a Zacks Rank of 3 (Hold) [10][12] - Banner has a history of beating consensus EPS estimates, having done so in the last four quarters [14][19] Market Reaction - The upcoming earnings report on July 16 could lead to stock price movement depending on whether the results exceed or fall short of expectations [2][19] - Management's discussion of business conditions during the earnings call will be crucial for future earnings expectations [2]

Group 1 - Banner Corporation (NASDAQ: BANR) operates a network of bank branch offices and loan production [1] - The company was highlighted as a bullish investment opportunity in September 2023 [1] Group 2 - Crude Value Insights provides an investing service focused on oil and natural gas, emphasizing cash flow and growth prospects [1] - Subscribers have access to a stock model account, cash flow analyses of exploration and production firms, and live sector discussions [2]

Core Insights - Banner Capital Management has successfully closed a portfolio recapitalization into Banner Capital Fund I and launched Banner Capital Fund II [1][4] Fund I - Fund I is a multi-asset continuation fund with over $400 million in capital commitments, aimed at acquiring interests in eight pre-fund portfolio companies [2] - Hamilton Lane acted as the lead investor, with many pre-fund investors retaining significant interests in the portfolio companies through this new vehicle [2] - The transaction provides additional time and capital for portfolio companies while offering partial liquidity to pre-fund investors [2][3] Fund II - Fund II is a lower middle market buyout fund with a target size of $200 million, following the close of Fund I [4] - A preliminary closing for Fund II was held to facilitate the Western Pavement Services transaction, with participation from the Larry H. & Gail Miller Family Foundation and other legacy LPs [4][5] - A traditional first closing for Fund II is anticipated in Q4 2025 [4] Company Overview - Banner Capital Management focuses on providing partnership capital to family-owned and founder-led businesses across the Western United States, investing in sectors such as industrial, services, consumer, and healthcare [6] - As of the closing of Fund I, Banner has $653 million in assets under management [6][7]

Financial Performance - Net income for the three months ended March 31, 2025, was $45.14 million, an increase of 20.2% compared to $37.56 million for the same period in 2024[14]. - Earnings per common share for Q1 2025 were $1.31, compared to $1.09 for the same period in 2024, representing an increase of 20.2%[14]. - Net income for the three months ended March 31, 2025, was $45,135,000, an increase of 20% compared to $37,559,000 for the same period in 2024[16]. - Other comprehensive income for the same period was $29,348,000, compared to a loss of $10,347,000 in 2024[16]. - Total comprehensive income for Q1 2025 reached $74,483,000, significantly higher than $27,212,000 in Q1 2024[16]. Asset and Deposit Changes - Total assets decreased slightly to $16.17 billion as of March 31, 2025, from $16.20 billion at the end of 2024, representing a decline of 0.18%[12]. - Total deposits increased to $13.59 billion as of March 31, 2025, up from $13.51 billion at the end of 2024, marking a growth of 0.6%[12]. - The company reported an increase in deposits, netting $78,867,000, compared to $129,274,000 in the prior year[23]. - Total deposits increased to $13.593 billion as of March 31, 2025, compared to $13.514 billion at December 31, 2024, reflecting a growth of 0.58%[75]. Interest Income and Expenses - Total interest income rose to $193.87 million for Q1 2025, up 4.3% from $184.69 million in Q1 2024[14]. - Net interest income after provision for credit losses increased to $137.94 million, compared to $132.44 million in the prior year, reflecting a growth of 4.2%[14]. - Net interest income increased to $141.08 million for the three months ended March 31, 2025, up from $132.96 million in the same period of 2024, reflecting a growth of 6.4%[14]. - Total non-interest expense increased to $101.26 million in Q1 2025, compared to $97.64 million in Q1 2024, reflecting a rise of 3.4%[14]. Credit Loss Provisions - The provision for credit losses was $3.14 million for Q1 2025, significantly higher than $0.52 million in Q1 2024, indicating increased caution in lending practices[14]. - The allowance for credit losses on loans was $157.32 million as of March 31, 2025, compared to $155.52 million at the end of 2024[12]. - The provision for credit losses increased to $3,139,000 in Q1 2025, a significant increase from $520,000 in Q1 2024[21]. - The allowance for credit losses increased to $157,323 as of March 31, 2025, from $155,521 at the beginning of the period[70]. Loan Portfolio and Performance - Total loans receivable reached $11.439 billion as of March 31, 2025, an increase from $11.355 billion as of December 31, 2024[38]. - The net loans, after accounting for unearned loan fees and discounts, totaled $11.281 billion as of March 31, 2025[38]. - The company modified loans totaling $5.090 million for borrowers experiencing financial difficulty during the three months ended March 31, 2025[41]. - The commercial business loans that were 90 days or more past due totaled $1.183 million as of March 31, 2025[43]. Securities and Fair Value - As of March 31, 2025, the total amortized cost of available-for-sale securities was $2,426,395 thousand, with a fair value of $2,108,945 thousand, reflecting a gross unrealized loss of $319,418 thousand[32]. - The gross unrealized losses for available-for-sale securities were $319,418 thousand, with 199 securities in an unrealized loss position as of March 31, 2025, compared to 201 at December 31, 2024[33]. - The fair value of loans receivable, net, was estimated at $11.04 billion as of March 31, 2025, down from $11.20 billion at December 31, 2024[76]. - The fair value of mortgage servicing rights at March 31, 2025, was $36.03 million, compared to $37.93 million at December 31, 2024[76]. Tax and Regulatory Matters - The Company had a net deferred tax asset of $139.4 million as of March 31, 2025, and recognized $2.0 million of unrecognized tax benefits related to uncertain tax positions[96]. - Tax credits and other tax benefits recognized amounted to $4.245 million for Q1 2025, up from $2.994 million in Q1 2024, representing a growth of approximately 42%[99]. - The Company recorded an income tax expense of $10.7 million for Q1 2025, with an effective tax rate of 19.1%, slightly higher than the 19.0% rate in Q1 2024[97]. Miscellaneous - The company reported a net loss on the sale of securities of $0 for Q1 2025, a significant improvement compared to a loss of $4.90 million in Q1 2024[14]. - The company does not currently provide profits interest awards, making the new FASB guidance on stock compensation not applicable to its consolidated financial statements[30]. - The total shareholders' equity as of March 31, 2025, was $1,833,453,000, an increase from $1,664,508,000 as of March 31, 2024[19].

Financial Data and Key Metrics Changes - Banner Corporation reported a net profit available to common shareholders of $45.1 million or $1.30 per diluted share for Q1 2025, compared to $1.09 per share for Q1 2024 and $1.34 per share for Q4 2024 [9] - Core earnings for Q1 2025 were $59 million, up from $53 million in Q1 2024, with revenue from core operations increasing to $160 million from $150 million year-over-year [11] - Return on average assets was 1.15% for Q1 2025, reflecting continued execution on the super community bank strategy [12] Business Line Data and Key Metrics Changes - Total loans increased by $84 million in Q1 2025, with a 5% year-over-year growth, while core deposits increased by 3% [13][21] - Delinquent loans rose to 0.63% of total loans, up from 0.49% at year-end and 0.36% in March 2024, indicating a manageable increase despite the higher interest rate environment [16] - Nonperforming assets increased to 0.26% of total assets, consisting of $39 million in nonperforming loans [19] Market Data and Key Metrics Changes - The agricultural sector remains a concern due to tariff implications, with the ag portfolio representing 3% of total loans [51][26] - The construction portfolio, including residential, commercial, and multifamily construction, remains acceptable at 15% of total loans [24] Company Strategy and Development Direction - The company aims to maintain a moderate risk profile while focusing on core deposit growth and client relationships [12][13] - Banner has been recognized as one of America's 100 best banks and continues to receive accolades for its business model and value proposition [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, anticipating a slowdown due to tariffs and market volatility, but remains optimistic about capturing market share [118][119] - The company plans to continue robust portfolio reviews and maintain close contact with borrowers to understand long-term implications of economic changes [27] Other Important Information - The company announced a core dividend of 48 cents per common share, reflecting strong capital ratios and tangible common equity growth of 13% year-over-year [13] - The company has a strong balance sheet and capital base, exceeding regulatory requirements [32] Q&A Session Summary Question: Margin expectations and components - Management noted that funding costs were flat throughout the quarter, with expectations for NIM expansion in Q2 if the Fed cuts rates [44] Question: Agricultural sector concerns - Management indicated ongoing caution regarding the agricultural sector due to tariff implications, expecting continued strain in the coming months [49] Question: Competitive dynamics and client demand - Management reported that pipelines continue to grow despite uncertainty, with clients eager to proceed once clarity is achieved [61] Question: Capital plans and stock buyback - Management emphasized maintaining the core dividend as a priority, with potential for stock buybacks under consideration [85] Question: Economic outlook and defense spending - Management expressed a pessimistic view on economic growth but noted opportunities for market share due to disruptions in the banking sector [118] Question: Changes in oversight on retail CRE book - Management confirmed no changes in oversight but maintains a thorough quarterly review process [136]

Financial Performance - Net income was $45.1 million, compared to $46.4 million for the prior quarter[6] - HFI Loan growth of $570 million year-over-year, representing a 5% increase[6] - Net interest margin (tax equivalent) increased by 10 basis points to 3.92%[6] - Return on average assets was 1.15%, and return on average equity was 10.17%, compared to 1.15% and 10.35% respectively, for the prior quarter[6] Balance Sheet and Loan Portfolio - Total assets of Banner Corporation are $16.2 billion, with deposits of $13.6 billion and loans of $11.5 billion[8] - Total loan originations (excluding HFS) were $536 million[6] - Allowance for credit losses – loans was 1.38% of total loans, with a $3.1 million provision for credit losses[6] - Non-performing assets remained low at 0.26% of total assets, up 2 basis points from last quarter[6] Revenue and Efficiency - Core revenue was $160 million for the quarter and $624 million for the last 12 months[23] - Noninterest income was $18.8 million for the quarter and $74.4 million for the last 12 months[23] - Efficiency ratio (GAAP) increased 126 basis points to 63.21%; adjusted, non-GAAP efficiency ratio increased 144 basis points to 62.18%[6] Strategic Focus - The company aims to build value for stakeholders by focusing on core banking competency, sustainable growth, and scalable acquisitions[7] - The company emphasizes growing revenue by taking advantage of its geography and value proposition[9]