Banner (BANR) came out with quarterly earnings of $1.30 per share, beating the Zacks Consensus Estimate of $1.18 per share. This compares to earnings of $1.43 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10.17%. A quarter ago, it was expected that this regional bank would post earnings of $1.14 per share when it actually produced earnings of $1.17, delivering a surprise of 2.63%.Over the last four quarters, the company has ...

```markdown Executive Summary [Third Quarter 2024 Performance Overview](index=1&type=section&id=Third%20Quarter%202024%20Performance%20Overview) Banner Corporation reported **net income** of **$45.2 million**, or **$1.30** per **diluted share**, for Q3 2024, an increase from the preceding quarter but slightly down from Q3 2023; **net interest income** increased QoQ due to higher **interest-earning assets** and **net interest margin**, despite increased **funding costs** YoY, and the company declared a quarterly cash dividend of **$0.48 per share** Net Income and EPS Trends | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :------------------- | :------ | :------ | :------ | | Net Income (millions) | **$45.2** | **$39.8** | **$45.9** | | Diluted EPS | **$1.30** | **$1.15** | **$1.33** | Net Interest Income Trends | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :-------------------- | :------ | :------ | :------ | | Net Interest Income (millions) | **$135.7** | **$132.5** | **$141.8** | - The increase in **net interest income** compared to the preceding quarter reflects an increase in **interest-earning assets** and **net interest margin**. The decrease compared to the prior year quarter reflects an increase in **funding costs**, partially offset by an increase in **yields on earning assets**[1](index=1&type=chunk) - Banner's Board of Directors declared a regular quarterly cash dividend of **$0.48 per share**[1](index=1&type=chunk) [Strategic Highlights](index=1&type=section&id=Strategic%20Highlights) Banner's CEO highlighted the successful execution of its super community bank strategy, focusing on client relationships, **core funding**, responsive service, and a **moderate risk profile**, benefiting from solid year-over-year **loan growth** and an expanded **net interest margin**, while maintaining strong **credit metrics** and a robust **capital base** - Banner's strategy emphasizes growing new client relationships, maintaining **core funding**, promoting client loyalty, and sustaining a **moderate risk profile**[1](index=1&type=chunk) - Earnings benefited from solid year-over-year **loan growth** and an expanded **net interest margin**[1](index=1&type=chunk) - **Credit metrics** remain strong, reserve for loan losses solid, and **capital base** robust[1](index=1&type=chunk) - **Core deposits** represented **89% of total deposits** at quarter end, demonstrating resilience in a competitive environment[1](index=1&type=chunk) [Key Financial Highlights (Q3 2024 vs. Prior Periods)](index=2&type=section&id=Key%20Financial%20Highlights%20(Q3%202024%20vs.%20Prior%20Periods)) Key financial highlights for Q3 2024 include increased revenue and **net interest income** QoQ, a slight improvement in **net interest margin**, and significant growth in **net loans receivable** and **total deposits** YoY; **non-performing assets** increased QoQ and YoY, while **common** and **tangible common shareholders' equity per share** saw strong increases Q3 2024 Key Financial Highlights | Metric | Q3 2024 | Q2 2024 | Q3 2023 | Change QoQ | Change YoY | | :----------------------------------- | :------ | :------ | :------ | :--------- | :--------- | | Revenue (millions) | **$153.7** | **$149.7** | **$154.4** | **+2.7%** | **-0.5%** | | Net Interest Income (millions) | **$135.7** | **$132.5** | **$141.8** | **+2.4%** | **-4.3%** | | Net Interest Margin (tax equivalent) | **3.72%** | **3.70%** | **3.93%** | **+2 bps** | **-21 bps** | | Mortgage Banking Revenue (millions) | **$3.2** | **$3.0** | **$2.0** | **+6.7%** | **+60.0%** | | Return on Average Assets | **1.13%** | **1.02%** | **1.17%** | **+11 bps** | **-4 bps** | | Net Loans Receivable (billions) | **$11.07** | **$10.99** | **$10.46** | **+0.7%** | **+5.8%** | | Non-Performing Assets (millions) | **$45.2** | **$33.3** | **$26.8** | **+35.7%** | **+68.7%** | | Total Deposits (billions) | **$13.54** | **$13.08** | **$13.17** | **+3.5%** | **+2.8%** | | Core Deposits % of Total Deposits | **89%** | **88%** | **89%** | **+1 pp** | **0 pp** | | Common Shareholders' Equity per Share | **$52.06** | **$49.07** | **$44.27** | **+6.1%** | **+17.6%** | | Tangible Common Shareholders' Equity per Share | **$41.12** | **$38.12** | **$33.22** | **+7.9%** | **+23.8%** | Financial Performance Review [Income Statement Analysis](index=2&type=section&id=Income%20Statement%20Analysis) The income statement review for Q3 2024 shows an increase in **net interest income** and **net interest margin** QoQ, driven by higher **loan yields**, despite rising **funding costs**; **non-interest income** improved significantly YoY, primarily due to reduced losses on **securities sales** and increased **mortgage banking revenue**, while **non-interest expenses** decreased QoQ due to lower **salary and employee benefits**, leading to an improved **efficiency ratio** [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) **Net interest income** increased to **$135.7 million** in Q3 2024, with **net interest margin** rising to **3.72%**, primarily due to increased **yields on loans** from new originations and repricing, partially offset by higher **funding costs**, particularly from higher-costing deposits Net Interest Income and Margin | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :----------------------------------- | :------ | :------ | :------ | | Net Interest Income (millions) | **$135.7** | **$132.5** | **$141.8** | | Net Interest Margin (tax equivalent) | **3.72%** | **3.70%** | **3.93%** | | Average Yields on Interest-Earning Assets | **5.33%** | **5.25%** | **4.94%** | | Average Loan Yields | **6.04%** | **5.96%** | **5.65%** | | Total Deposit Costs | **1.61%** | **1.50%** | **0.94%** | | Total Cost of Funding Liabilities | **1.73%** | **1.66%** | **1.08%** | - **Net interest margin** for the current quarter benefited from increased **yields on loans** due to new loans being originated at **higher interest rates** and adjustable rate loans repricing higher, partially offset by increased **funding costs**[4](index=4&type=chunk) - The increase in **deposit costs** was due to a larger percentage of growth in **higher costing deposits** during the quarter[4](index=4&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) Total **non-interest income** increased to **$18.1 million** in Q3 2024, primarily driven by a decrease in **net loss on securities sales** and a rise in **mortgage banking operations revenue**; **mortgage banking revenue** saw a **60%** increase YoY, despite overall low volumes in the current rate environment Non-Interest Income Trends | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :----------------------------------- | :------ | :------ | :------ | | Total Non-Interest Income (millions) | **$18.1** | **$17.2** | **$12.7** | | Mortgage Banking Operations Revenue (millions) | **$3.2** | **$3.0** | **$2.0** | - The increase in **non-interest income** compared to the preceding quarter was primarily due to a **$562,000 decrease in the net loss recognized on the sale of securities**[5](index=5&type=chunk) - The increase in **non-interest income** compared to the prior year quarter was primarily due to a **$1.1 million increase in mortgage banking operations revenue** and a **$2.7 million decrease in the net loss recognized on the sale of securities**[5](index=5&type=chunk) - **Home purchase activity** accounted for **88% of one- to four-family mortgage loan originations** in Q3 2024[5](index=5&type=chunk) [Non-Interest Expense and Efficiency](index=3&type=section&id=Non-Interest%20Expense%20and%20Efficiency) Total **non-interest expense** decreased to **$96.3 million** in Q3 2024 from the preceding quarter, mainly due to a **$2.0 million reduction in salary and employee benefits**; the **efficiency ratio** improved to **62.63%** QoQ, though it was slightly higher than the prior year quarter Non-Interest Expense and Efficiency Ratios | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :-------------------------- | :------ | :------ | :------ | | Total Non-Interest Expense (millions) | **$96.3** | **$98.1** | **$95.9** | | Efficiency Ratio | **62.63%** | **65.53%** | **62.10%** | | Adjusted Efficiency Ratio (non-GAAP) | **61.27%** | **63.60%** | **59.00%** | - The decrease in **non-interest expense** for the current quarter compared to the prior quarter reflects a **$2.0 million decrease in salary and employee benefits**, primarily from decreased medical premiums and unemployment/workers compensation expense[5](index=5&type=chunk) [Credit Loss Provision](index=2&type=section&id=Credit%20Loss%20Provision) The **provision for credit losses** decreased to **$1.7 million** in Q3 2024, down from **$2.4 million** in the preceding quarter and **$2.0 million** in Q3 2023, primarily reflecting an increase in the reserve for **non-performing collateral dependent loans** Provision for Credit Losses | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :-------------------------- | :------ | :------ | :------ | | Provision for Credit Losses (millions) | **$1.7** | **$2.4** | **$2.0** | - The **provision for credit losses** for the current quarter primarily reflected an increase in the reserve for **non-performing collateral dependent loans**[4](index=4&type=chunk) Balance Sheet Analysis [Assets Overview](index=3&type=section&id=Assets%20Overview) **Total assets** grew to **$16.19 billion** at September 30, 2024, an increase of **2%** QoQ and **4%** YoY, primarily driven by an increase in **interest-bearing deposit balances** and a **1%** QoQ increase in **total loans receivable** [Loan Portfolio Composition and Changes](index=3&type=section&id=Loan%20Portfolio%20Composition%20and%20Changes) **Total loans receivable** increased to **$11.22 billion**, up **1%** QoQ and **6%** YoY; **multifamily real estate loans** showed significant growth, increasing **24%** QoQ, largely due to conversions from construction loans, while **construction, land, and land development loans** decreased due to similar conversions Loan Portfolio Trends (millions) | Loan Type | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | Change QoQ | Change YoY | | :----------------------------------- | :----------- | :----------- | :----------- | :--------- | :--------- | | Total Loans Receivable | **$11,224.6** | **$11,143.8** | **$10,611.4** | **+1%** | **+6%** | | One- to Four-Family Residential | **$1,575.2** | **$1,603.3** | **$1,438.7** | **-2%** | **+9%** | | Multifamily Real Estate | **$889.9** | **$717.1** | **$766.6** | **+24%** | **+16%** | | Construction, Land & Development | **$1,530.0** | **$1,680.0** | **$1,500.0** | **-9%** | **+1%** | | Agricultural Business | **$346.7** | **$334.6** | **$334.6** | **+4%** | **+4%** | - The decrease in **one- to four-family residential loans** from the prior quarter was primarily the result of the transfer of **$47.5 million of one- to four-family residential loans from portfolio to held for sale**[6](index=6&type=chunk) - The increase in **multifamily real estate loans** from June 30, 2024, and September 30, 2023, was primarily the result of the conversion of **multifamily construction loans to the multifamily portfolio** upon the completion of the construction phase[6](index=6&type=chunk) - **Loans held for sale** increased significantly to **$78.8 million** at September 30, 2024, from **$13.4 million** at June 30, 2024, primarily due to the transfer of **$47.5 million of one- to four-family residential loans from portfolio to held for sale**[6](index=6&type=chunk) [Securities and Cash Equivalents](index=3&type=section&id=Securities%20and%20Cash%20Equivalents) **Securities** and **interest-bearing deposits** held at other banks increased to **$3.50 billion** at September 30, 2024, primarily due to an increase in **interest-bearing deposit balances**; the **effective duration of the securities portfolio** shortened to approximately **6.3 years** from **6.8 years** a year ago Securities and Interest-Bearing Deposits (billions) | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Securities and Interest-Bearing Deposits | **$3.50** | **$3.27** | **$3.44** | - The increase compared to the prior quarter was primarily due to an increase in **interest-bearing deposit balances**[6](index=6&type=chunk) - The average **effective duration of the securities portfolio** was approximately **6.3 years** at September 30, 2024, compared to **6.8 years** at September 30, 2023[6](index=6&type=chunk) [Liabilities and Equity](index=3&type=section&id=Liabilities%20and%20Equity) **Total deposits** increased to **$13.54 billion**, with **core deposits** representing **89%** of the total; **FHLB advances** decreased significantly QoQ, and **total common shareholders' equity** grew to **$1.79 billion**, or **11.08% of total assets**, driven by **retained earnings** and a decrease in **accumulated other comprehensive loss** [Deposit Trends and Composition](index=3&type=section&id=Deposit%20Trends%20and%20Composition) **Total deposits** increased to **$13.54 billion**, with **core deposits** growing **4%** QoQ and representing **89% of total deposits**; the increase in **core deposits** was attributed to seasonal **agricultural client activity** and growth in third-party insured sweep accounts, while **certificates of deposit** slightly decreased QoQ due to a reduction in **brokered deposits** Deposit Trends (billions) | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | :----------- | | Total Deposits | **$13.54** | **$13.08** | **$13.17** | | Core Deposits | **$12.02** | **$11.55** | **$11.72** | | Core Deposits % of Total | **89%** | **88%** | **89%** | | Certificates of Deposit | **$1.52** | **$1.53** | **$1.46** | - The increase in **core deposits** compared to the prior quarter primarily reflects normal seasonal increases primarily from **agricultural clients**[6](index=6&type=chunk) - The decrease in **certificates of deposit** during the current quarter compared to the preceding quarter was principally due to a **$55.0 million decrease in brokered deposits**[6](index=6&type=chunk) [Borrowings](index=4&type=section&id=Borrowings) **FHLB advances** significantly decreased to **$230.0 million** at September 30, 2024, down **42%** QoQ; the company maintained substantial **off-balance sheet liquidity**, including additional borrowing capacity at the **FHLB** and **Federal Reserve** FHLB Advances (millions) | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :------------- | :----------- | :----------- | :----------- | | FHLB Advances | **$230.0** | **$398.0** | **$140.0** | - **Off-balance sheet liquidity** included **additional borrowing capacity** of **$3.23 billion at the FHLB** and **$1.53 billion at the Federal Reserve**, as well as **federal funds line of credit agreements** of **$125.0 million**[7](index=7&type=chunk) [Shareholders' Equity and Capital Ratios](index=4&type=section&id=Shareholders'%20Equity%20and%20Capital%20Ratios) **Total common shareholders' equity** increased to **$1.79 billion**, representing **11.08% of total assets**, driven by **net income** and a decrease in **accumulated other comprehensive loss**; **tangible common shareholders' equity** also saw an **8%** QoQ increase, and **Banner** and **Banner Bank** continue to exceed 'well-capitalized' regulatory requirements Shareholders' Equity and Ratios | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Common Shareholders' Equity (billions) | **$1.79** | **$1.69** | **$1.52** | | Total Common Shareholders' Equity % of Total Assets | **11.08%** | **10.69%** | **9.81%** | | Tangible Common Shareholders' Equity (billions) | **$1.42** | **$1.31** | **$1.14** | | Tangible Common Shareholders' Equity % of Tangible Assets | **8.96%** | **8.51%** | **7.54%** | - The increase in **total common shareholders' equity** was due to a **$28.4 million increase in retained earnings** from **net income**, partially offset by cash dividends, and a **$72.0 million decrease in accumulated other comprehensive loss** due to an increase in the fair value of the security portfolio[7](index=7&type=chunk) Estimated Regulatory Capital Ratios (Banner Corporation) | Ratio | Sep 30, 2024 | | :----------------------------------- | :----------- | | Common Equity Tier 1 Capital Ratio | **12.30%** | | Tier 1 Leverage Capital to Average Assets Ratio | **10.91%** | | Total Capital to Risk-Weighted Assets Ratio | **14.92%** | - **Banner** and **Banner Bank** continue to maintain capital levels in excess of the requirements to be categorized as **'well-capitalized'**[7](index=7&type=chunk) Credit Quality [Allowance for Credit Losses](index=4&type=section&id=Allowance%20for%20Credit%20Losses) The **allowance for credit losses - loans** increased to **$154.6 million**, representing **1.38% of total loans receivable**; however, its coverage of **non-performing loans** decreased to **359%** from **498%** in the prior quarter, reflecting an increase in **non-performing loans**, and **net loan charge-offs** remained low at **$230,000** Allowance for Credit Losses - Loans | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Allowance for Credit Losses - Loans (millions) | **$154.6** | **$152.8** | **$147.0** | | % of Total Loans Receivable | **1.38%** | **1.37%** | **1.38%** | | % of Non-Performing Loans | **359%** | **498%** | **560%** | | Net Loan Charge-offs (thousands) | **$230** | **$245** | **$663** | - In addition to the **allowance for credit losses - loans**, **Banner** maintains an **allowance for credit losses - unfunded loan commitments**, which was **$13.8 million** at September 30, 2024[8](index=8&type=chunk) [Non-Performing Assets and Delinquencies](index=4&type=section&id=Non-Performing%20Assets%20and%20Delinquencies) **Non-performing loans** increased to **$43.0 million**, and **total non-performing assets** rose to **$45.2 million**, or **0.28% of total assets**; this increase was primarily due to a rise in **adversely classified loans**, leading to **total substandard loans** of **$150.1 million** Non-Performing Assets and Loans | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Non-Performing Loans (millions) | **$43.0** | **$30.7** | **$26.3** | | Total Non-Performing Assets (millions) | **$45.2** | **$33.3** | **$26.8** | | Total Non-Performing Assets % of Total Assets | **0.28%** | **0.21%** | **0.17%** | | Total Substandard Loans (millions) | **$150.1** | **$122.0** | **$124.5** | - An increase in **adversely classified loans**, offset in part by payoffs and paydowns, resulted in **total substandard loans** of **$150.1 million** as of September 30, 2024[8](index=8&type=chunk) Company Information [About Banner Corporation](index=4&type=section&id=About%20Banner%20Corporation) **Banner Corporation** is a **$16.19 billion bank holding company** operating a **commercial bank**, **Banner Bank**, across four Western states, offering a comprehensive range of **deposit services** and various **loan products** through its network of **135 full-service branch offices** - **Banner Corporation** is a **$16.19 billion bank holding company**[10](index=10&type=chunk) - Operates a **commercial bank** in four Western states through **135 full-service branch offices**[10](index=10&type=chunk) - Offers a full range of **deposit services** and business, **commercial real estate**, **construction**, residential, **agricultural**, and **consumer loans**[10](index=10&type=chunk) [Conference Call Details](index=4&type=section&id=Conference%20Call%20Details) **Banner** will host a **conference call** on October 17, 2024, at 8:00 a.m. PDT to discuss its third-quarter results, with investors able to listen live or access a replay online - **Conference call scheduled** for **Thursday, October 17, 2024, at 8:00 a.m. PDT**[9](index=9&type=chunk) - **Live webcast and replay available** at www.bannerbank.com[9](index=9&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The press release includes **forward-looking statements**, which are subject to **numerous uncertainties and risks** that could cause **actual results to differ materially**; these factors include **economic conditions**, **interest rate changes**, **inflation**, **regulatory actions**, **competitive pressures**, and **technological changes** - **Forward-looking statements** are identified by words like 'may,' 'believe,' 'will,' 'expect,' 'anticipate,' 'estimate,' 'project,' or similar expressions[11](index=11&type=chunk) - Statements are subject to **numerous uncertainties** that could cause **actual results to differ materially** from those anticipated[11](index=11&type=chunk) - **Key risk factors** include **adverse economic conditions**, changes in **interest rates**, **inflation**, **bank failures**, **regulatory examinations**, **competitive pressures**, and **technological changes**[11](index=11&type=chunk) Detailed Financial Statements [Results of Operations (Income Statement)](index=6&type=section&id=Results%20of%20Operations%20(Income%20Statement)) The detailed income statement shows **interest income** from loans, mortgage-backed securities, and cash equivalents, alongside **interest expenses** from deposits and various borrowings; **net interest income**, **provision for credit losses**, **non-interest income**, and **non-interest expenses** are presented, culminating in **net income** and **earnings per share** for the quarter and nine-month periods Results of Operations (in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :---------------- | :---------------- | :---------------- | :----------------------- | :----------------------- | | Total Interest Income | **$195,841** | **$189,138** | **$179,064** | **$569,667** | **$517,834** | | Total Interest Expense | **$60,166** | **$56,592** | **$37,298** | **$168,487** | **$80,238** | | Net Interest Income | **$135,675** | **$132,546** | **$141,766** | **$401,180** | **$437,596** | | Provision for Credit Losses | **$1,692** | **$2,369** | **$2,027** | **$4,581** | **$8,267** | | Total Non-Interest Income | **$18,063** | **$17,199** | **$12,658** | **$46,853** | **$30,357** | | Total Non-Interest Expense | **$96,291** | **$98,128** | **$95,891** | **$292,060** | **$285,917** | | Net Income | **$45,153** | **$39,795** | **$45,854** | **$122,507** | **$141,000** | | Diluted Earnings per Common Share | **$1.30** | **$1.15** | **$1.33** | **$3.54** | **$4.09** | [Financial Condition (Balance Sheet)](index=7&type=section&id=Financial%20Condition%20(Balance%20Sheet)) The balance sheet details **assets** including cash, securities, and loans, and **liabilities** such as deposits and borrowings, along with **shareholders' equity**; **total assets** increased to **$16.19 billion**, driven by growth in **interest-bearing deposits** and **net loans receivable**, and **shareholders' equity** also saw a notable increase Financial Condition (in thousands) | Metric | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Assets | **$16,188,676** | **$15,816,194** | **$15,670,391** | **$15,507,880** | | Total Cash and Cash Equivalents | **$478,795** | **$247,458** | **$254,464** | **$251,706** | | Total Securities | **$3,251,842** | **$3,220,721** | **$3,432,838** | **$3,395,417** | | Net Loans Receivable | **$11,070,021** | **$10,991,000** | **$10,660,812** | **$10,464,457** | | Total Deposits | **$13,538,148** | **$13,079,263** | **$13,029,497** | **$13,174,552** | | Advances from FHLB | **$230,000** | **$398,000** | **$323,000** | **$140,000** | | Total Liabilities | **$14,394,955** | **$14,125,428** | **$14,017,700** | **$13,987,273** | | Total Shareholders' Equity | **$1,793,721** | **$1,690,766** | **$1,652,691** | **$1,520,607** | | Common Shareholders' Equity per Share | **$52.06** | **$49.07** | **$48.12** | **$44.27** | [Loan Portfolio Details](index=8&type=section&id=Loan%20Portfolio%20Details) Detailed loan information reveals the composition of the portfolio by type and geographic concentration; **loan originations** saw a QoQ decrease but a YoY increase, and the **allowance for credit losses on loans** increased, while **non-performing loans** and **assets** also rose, leading to a decrease in coverage ratios [Loan Originations](index=9&type=section&id=Loan%20Originations) Total **loan originations** (excluding **loans held for sale**) were **$893.6 million** in Q3 2024, a decrease from the preceding quarter but an increase compared to the prior year quarter; **construction and land loans** represented the largest category of originations Loan Originations (in thousands) | Loan Type | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | | :----------------------------------- | :---------------- | :---------------- | :---------------- | | Commercial Real Estate | **$114,372** | **$102,258** | **$62,337** | | Multifamily Real Estate | **$314** | **$2,774** | **$12,725** | | Construction and Land | **$472,506** | **$546,675** | **$421,656** | | Commercial Business | **$179,871** | **$167,168** | **$157,833** | | Agricultural Business | **$5,877** | **$22,255** | **$17,466** | | One-to Four-Family Residential | **$24,488** | **$34,498** | **$43,622** | | Consumer | **$96,137** | **$120,470** | **$70,043** | | Total Loan Originations | **$893,565** | **$996,098** | **$785,682** | [Allowance for Credit Losses - Loans](index=10&type=section&id=Allowance%20for%20Credit%20Losses%20-%20Loans) The **allowance for credit losses - loans** increased to **$154.6 million** at period end; the **provision for credit losses - loans** was **$2.0 million**, while **net charge-offs** were **$230,000**, and the allowance as a percentage of **total loans receivable** remained stable at **1.38%**, but its coverage of **non-performing loans** decreased to **359%** Change in Allowance for Credit Losses – Loans (in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | | :----------------------------------- | :---------------- | :---------------- | :---------------- | | Balance, Beginning of Period | **$152,848** | **$151,140** | **$144,680** | | Provision for Credit Losses – Loans | **$1,967** | **$1,953** | **$2,943** | | Total Recoveries | **$734** | **$746** | **$806** | | Total Loans Charged Off | (**$964**) | (**$991**) | (**$1,469**) | | Net Charge-offs | (**$230**) | (**$245**) | (**$663**) | | Balance, End of Period | **$154,585** | **$152,848** | **$146,960** | | Net Charge-offs / Average Loans Receivable | (**0.002%**) | (**0.002%**) | (**0.006%**) | Allocation of Allowance for Credit Losses – Loans (in thousands) | Loan Type | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Commercial Real Estate | **$40,040** | **$39,064** | **$44,016** | | Multifamily Real Estate | **$10,233** | **$8,253** | **$8,804** | | Construction and Land | **$28,322** | **$31,597** | **$29,389** | | One- to Four-Family Real Estate | **$20,463** | **$20,906** | **$17,925** | | Commercial Business | **$39,779** | **$38,835** | **$34,065** | | Agricultural Business | **$5,340** | **$4,045** | **$3,718** | | Consumer | **$10,408** | **$10,148** | **$9,043** | | Total Allowance for Credit Losses – Loans | **$154,585** | **$152,848** | **$146,960** | | Allowance for Credit Losses - Loans / Total Loans Receivable | **1.38%** | **1.37%** | **1.38%** | | Allowance for Credit Losses - Loans / Non-Performing Loans | **359%** | **498%** | **560%** | [Allowance for Credit Losses - Unfunded Loan Commitments](index=10&type=section&id=Allowance%20for%20Credit%20Losses%20-%20Unfunded%20Loan%20Commitments) The **allowance for credit losses - unfunded loan commitments** decreased slightly to **$13.8 million** at September 30, 2024, following a recapture of **provision for credit losses** Change in Allowance for Credit Losses - Unfunded Loan Commitments (in thousands) | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Balance, Beginning of Period | **$14,027** | **$13,597** | **$14,664** | | (Recapture) Provision for Credit Losses | (**$262**) | **$430** | **$346** | | Balance, End of Period | **$13,765** | **$14,027** | **$15,010** | [Non-Accrual and Delinquent Loans](index=11&type=section&id=Non-Accrual%20and%20Delinquent%20Loans) Total **non-performing loans** increased to **$43.0 million**, with significant increases in **agricultural business** and **commercial loans** on **non-accrual status**; loans more than **90 days delinquent** also rose, contributing to an increase in **total non-performing assets** to **$45.2 million** Loans on Non-Accrual Status (in thousands) | Loan Type | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Commercial | **$2,127** | **$2,326** | **$2,677** | **$1,365** | | Construction and Land | **$4,286** | **$3,999** | **$3,105** | **$5,538** | | One- to Four-Family | **$9,592** | **$8,184** | **$5,702** | **$5,480** | | Commercial Business | **$10,705** | **$8,694** | **$9,002** | **$5,289** | | Agricultural Business | **$7,703** | **$1,586** | **$3,167** | **$3,170** | | Consumer | **$4,636** | **$3,380** | **$3,204** | **$3,378** | | Total Loans on Non-Accrual Status | **$39,049** | **$28,169** | **$26,857** | **$24,220** | Total Non-Performing Loans and Assets (in thousands) | Metric | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Non-Performing Loans | **$43,007** | **$30,722** | **$29,602** | **$26,264** | | REO | **$2,221** | **$2,564** | **$526** | **$546** | | Total Non-Performing Assets | **$45,228** | **$33,286** | **$30,128** | **$26,810** | | Total Non-Performing Assets to Total Assets | **0.28%** | **0.21%** | **0.19%** | **0.17%** | [Loans by Credit Risk Rating](index=11&type=section&id=Loans%20by%20Credit%20Risk%20Rating) The total amount of **substandard loans** increased to **$150.1 million** at September 30, 2024, up from **$122.0 million** in the prior quarter, indicating a shift in **credit risk profile** Loans by Credit Risk Rating (in thousands) | Rating | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Pass | **$11,022,014** | **$10,971,850** | **$10,671,281** | **$10,467,498** | | Special Mention | **$52,497** | **$50,027** | **$13,732** | **$19,394** | | Substandard | **$150,095** | **$121,971** | **$125,442** | **$124,525** | | Total | **$11,224,606** | **$11,143,848** | **$10,810,455** | **$10,611,417** | [Deposit Details](index=12&type=section&id=Deposit%20Details) **Deposit composition** shows continued strength in **core deposits**, which increased **4%** QoQ and represent **89% of total deposits**; geographic concentration highlights **Washington** as the largest deposit market, and all major operating states showed QoQ and YoY growth in deposits, while **brokered deposits** decreased significantly QoQ [Deposit Composition](index=12&type=section&id=Deposit%20Composition) **Core deposits**, comprising **non-interest-bearing**, **interest-bearing checking**, **regular savings accounts**, and **money market accounts**, increased to **$12.02 billion**, representing **89% of total deposits**; **interest-bearing certificates** remained relatively stable Deposit Composition (in thousands) | Deposit Type | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Non-Interest-Bearing | **$4,688,244** | **$4,537,803** | **$4,792,369** | **$5,197,854** | | Interest-Bearing Checking | **$2,344,561** | **$2,208,742** | **$2,098,526** | **$2,006,866** | | Regular Savings Accounts | **$3,339,859** | **$3,192,036** | **$2,980,530** | **$2,751,453** | | Money Market Accounts | **$1,643,631** | **$1,615,549** | **$1,680,605** | **$1,760,066** | | Total Core Deposits | **$12,016,295** | **$11,554,130** | **$11,552,030** | **$11,716,239** | | Interest-Bearing Certificates | **$1,521,853** | **$1,525,133** | **$1,477,467** | **$1,458,313** | | Total Deposits | **$13,538,148** | **$13,079,263** | **$13,029,497** | **$13,174,552** | [Geographic Concentration of Deposits](index=12&type=section&id=Geographic%20Concentration%20of%20Deposits) **Washington** continues to hold the largest share of deposits at **$7.41 billion**, followed by **Oregon** and **California**; all major operating states showed QoQ and YoY growth in deposits Geographic Concentration of Deposits (in thousands) | State | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Washington | **$7,413,414** | **$7,171,699** | **$7,247,392** | **$7,241,341** | | Oregon | **$2,997,843** | **$2,909,838** | **$2,852,677** | **$2,918,446** | | California | **$2,423,295** | **$2,331,793** | **$2,269,557** | **$2,342,345** | | Idaho | **$703,596** | **$665,933** | **$659,871** | **$672,420** | | Total Deposits | **$13,538,148** | **$13,079,263** | **$13,029,497** | **$13,174,552** | [Public and Brokered Deposits](index=12&type=section&id=Public%20and%20Brokered%20Deposits) Total **public deposits** were **$416.0 million**, with **collateralized public deposits** at **$318.0 million**; **brokered deposits** significantly decreased to **$50.3 million** from **$105.3 million** in the preceding quarter Public and Brokered Deposits (in thousands) | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Public Deposits | **$416,017** | **$428,249** | **$404,238** | | Collateralized Public Deposits | **$317,960** | **$326,524** | **$300,189** | | Total Brokered Deposits | **$50,333** | **$105,309** | **$162,856** | [Estimated Regulatory Capital Ratios](index=13&type=section&id=Estimated%20Regulatory%20Capital%20Ratios) **Banner Corporation** and **Banner Bank** maintained strong estimated regulatory capital ratios, well above the 'well-capitalized' thresholds; for **Banner Corporation**, the **Common Equity Tier 1 Capital Ratio** was **12.30%**, and the **Total Capital to Risk-Weighted Assets Ratio** was **14.92%** Estimated Regulatory Capital Ratios (Banner Corporation) | Ratio | Actual Amount (thousands) | Actual Ratio | Minimum 'Adequately Capitalized' Ratio | Minimum 'Well Capitalized' Ratio | | :----------------------------------- | :------------------------ | :----------- | :----------------------------------- | :------------------------------- | | Total Capital to Risk-Weighted Assets | **$1,988,948** | **14.92%** | **8.00%** | **10.00%** | | Tier 1 Capital to Risk-Weighted Assets | **$1,725,690** | **12.94%** | **6.00%** | **6.00%** | | Tier 1 Leverage Capital to Average Assets | **$1,725,690** | **10.91%** | **4.00%** | n/a | | Common Equity Tier 1 Capital to Risk-Weighted Assets | **$1,639,190** | **12.30%** | **4.50%** | n/a | Estimated Regulatory Capital Ratios (Banner Bank) | Ratio | Actual Amount (thousands) | Actual Ratio | Minimum 'Adequately Capitalized' Ratio | Minimum 'Well Capitalized' Ratio | | :----------------------------------- | :------------------------ | :----------- | :----------------------------------- | :------------------------------- | | Total Capital to Risk-Weighted Assets | **$1,862,242** | **13.95%** | **8.00%** | **10.00%** | | Tier 1 Capital to Risk-Weighted Assets | **$1,698,984** | **12.73%** | **6.00%** | **8.00%** | | Tier 1 Leverage Capital to Average Assets | **$1,698,984** | **10.74%** | **4.00%** | **5.00%** | | Common Equity Tier 1 Capital to Risk-Weighted Assets | **$1,698,984** | **12.73%** | **4.50%** | **6.50%** | [Analysis of Net Interest Spread and Key Financial Ratios](index=14&type=section&id=Analysis%20of%20Net%20Interest%20Spread%20and%20Key%20Financial%20Ratios) The analysis of **net interest spread** shows an increase in **average yields on interest-earning assets** and **average loan yields** QoQ, while **total deposit costs** and **total funding liabilities** also increased; **key financial ratios** like **Return on Average Assets** and **Efficiency Ratio** improved QoQ Analysis of Net Interest Spread (Quarterly, in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | | :----------------------------------- | :---------------- | :---------------- | :---------------- | | Average Total Interest-Earning Assets | **$14,877,162** | **$14,735,320** | **$14,613,803** | | Total Interest and Dividends | **$199,174** | **$192,327** | **$182,046** | | Yield on Interest-Earning Assets | **5.33%** | **5.25%** | **4.94%** | | Average Total Funding Liabilities | **$13,818,232** | **$13,715,643** | **$13,692,011** | | Total Interest Expense | **$60,166** | **$56,592** | **$37,298** | | Cost of Funding Liabilities | **1.73%** | **1.66%** | **1.08%** | | Net Interest Margin (tax equivalent) | **3.72%** | **3.70%** | **3.93%** | Additional Key Financial Ratios (Quarterly) | Ratio | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | | :----------------------------------- | :---------------- | :---------------- | :---------------- | | Return on Average Assets | **1.13%** | **1.02%** | **1.17%** | | Return on Average Equity | **10.39%** | **9.69%** | **11.68%** | | Efficiency Ratio | **62.63%** | **65.53%** | **62.10%** | Analysis of Net Interest Spread (Nine Months, in thousands) | Metric | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :----------------------- | :----------------------- | | Average Total Interest-Earning Assets | **$14,752,638** | **$14,646,422** | | Total Interest and Dividends | **$579,240** | **$526,604** | | Yield on Interest-Earning Assets | **5.24%** | **4.81%** | | Average Total Funding Liabilities | **$13,722,463** | **$13,751,248** | | Total Interest Expense | **$168,487** | **$80,238** | | Cost of Funding Liabilities | **1.64%** | **0.78%** | | Net Interest Margin (tax equivalent) | **3.72%** | **4.07%** | Additional Key Financial Ratios (Nine Months) | Ratio | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :----------------------- | :----------------------- | | Return on Average Assets | **1.04%** | **1.21%** | | Return on Average Equity | **9.76%** | **12.27%** | | Efficiency Ratio | **65.19%** | **61.10%** | Non-GAAP Financial Measures Reconciliation [Adjusted Revenue Reconciliation](index=16&type=section&id=Adjusted%20Revenue%20Reconciliation) **Adjusted revenue**, a **non-GAAP financial measure**, is reconciled from GAAP **total revenue** by excluding **net loss on sale of securities** and **net change in valuation of financial instruments**; for Q3 2024, **adjusted revenue** was **$153.7 million**, nearly identical to GAAP **revenue** due to no **securities sales** - **Adjusted revenue** is a **non-GAAP financial measure** used to assess trends in **core operations**[31](index=31&type=chunk) Adjusted Revenue Reconciliation (in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :---------------- | :---------------- | :---------------- | :----------------------- | :----------------------- | | Total Revenue (GAAP) | **$153,738** | **$149,745** | **$154,424** | **$448,033** | **$467,953** | | Exclude: Net Loss on Sale of Securities | — | **$562** | **$2,657** | **$5,465** | **$14,436** | | Net Change in Valuation of Financial Instruments | (**$39**) | **$190** | **$654** | **$1,143** | **$4,357** | | Adjusted Revenue (non-GAAP) | **$153,699** | **$150,497** | **$157,735** | **$454,641** | **$486,746** | [Adjusted Earnings and Return Ratios Reconciliation](index=16&type=section&id=Adjusted%20Earnings%20and%20Return%20Ratios%20Reconciliation) **Adjusted earnings** and related **return ratios** (on **average assets** and **equity**) are presented as **non-GAAP measures**, excluding specific items like **net loss on securities sales** and **fair value adjustments**; for Q3 2024, **adjusted diluted EPS** was **$1.30**, and **adjusted return on average assets** was **1.13%** Adjusted Earnings and Return Ratios Reconciliation (in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :---------------- | :---------------- | :---------------- | :----------------------- | :----------------------- | | Net Income (GAAP) | **$45,153** | **$39,795** | **$45,854** | **$122,507** | **$141,000** | | Exclude: Net Loss on Sale of Securities | — | **$562** | **$2,657** | **$5,465** | **$14,436** | | Net Change in Valuation of Financial Instruments | (**$39**) | **$190** | **$654** | **$1,143** | **$4,357** | | Related Net Tax Expense (Benefit) | **$9** | (**$180**) | (**$1,033**) | (**$1,586**) | (**$4,830**) | | Total Adjusted Earnings (non-GAAP) | **$45,123** | **$40,367** | **$49,128** | **$127,529** | **$156,297** | | Diluted Earnings per Share (GAAP) | **$1.30** | **$1.15** | **$1.33** | **$3.54** | **$4.09** | | Diluted Adjusted Earnings per Share (non-GAAP) | **$1.30** | **$1.17** | **$1.43** | **$3.69** | **$4.54** | | Return on Average Assets (GAAP) | **1.13%** | **1.02%** | **1.17%** | **1.04%** | **1.21%** | | Adjusted Return on Average Assets (non-GAAP) | **1.13%** | **1.04%** | **1.25%** | **1.08%** | **1.34%** | | Return on Average Equity (GAAP) | **10.39%** | **9.69%** | **11.68%** | **9.76%** | **12.27%** | | Adjusted Return on Average Equity (non-GAAP) | **10.39%** | **9.83%** | **12.51%** | **10.16%** | **13.60%** | [Adjusted Efficiency Ratio Reconciliation](index=17&type=section&id=Adjusted%20Efficiency%20Ratio%20Reconciliation) The **adjusted efficiency ratio**, a **non-GAAP measure**, is calculated by adjusting **non-interest expense** and **total revenue** for specific items; for Q3 2024, the **adjusted efficiency ratio** was **61.27%**, an improvement from the prior quarter's **63.60%** Adjusted Efficiency Ratio Reconciliation (in thousands) | Metric | Sep 30, 2024 (Q3) | Jun 30, 2024 (Q2) | Sep 30, 2023 (Q3) | Nine Months Sep 30, 2024 | Nine Months Sep 30, 2023 | | :----------------------------------- | :---------------- | :---------------- | :---------------- | :----------------------- | :----------------------- | | Non-Interest Expense (GAAP) | **$96,291** | **$98,128** | **$95,891** | **$292,060** | **$285,917** | | Exclude: CDI Amortization | (**$590**) | (**$724**) | (**$857**) | (**$2,037**) | (**$2,898**) | | State/Municipal Tax Expense | (**$1,432**) | (**$1,394**) | (**$1,359**) | (**$4,130**) | (**$3,888**) | | REO Operations | (**$103**) | (**$297**) | **$383** | (**$180**) | **$585** | | Adjusted Non-Interest Expense (non-GAAP) | **$94,166** | **$95,713** | **$93,062** | **$285,713** | **$278,382** | | Adjusted Revenue (non-GAAP) | **$153,699** | **$150,497** | **$157,735** | **$454,641** | **$486,746** | | Efficiency Ratio (GAAP) | **62.63%** | **65.53%** | **62.10%** | **65.19%** | **61.10%** | | Adjusted Efficiency Ratio (non-GAAP) | **61.27%** | **63.60%** | **59.00%** | **62.84%** | **57.19%** | [Tangible Common Equity Reconciliation](index=17&type=section&id=Tangible%20Common%20Equity%20Reconciliation) **Tangible common shareholders' equity** and **tangible assets** are **non-GAAP measures** that exclude **goodwill and other intangible assets**; at September 30, 2024, **tangible common shareholders' equity** was **$1.42 billion**, representing **8.96% of tangible assets**, and **tangible common shareholders' equity per share** was **$41.12** Tangible Common Shareholders' Equity to Tangible Assets Reconciliation (in thousands) | Metric | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Shareholders' Equity (GAAP) | **$1,793,721** | **$1,690,766** | **$1,652,691** | **$1,520,607** | | Exclude Goodwill and Other Intangible Assets, Net | **$376,768** | **$377,358** | **$378,805** | **$379,663** | | Tangible Common Shareholders' Equity (non-GAAP) | **$1,416,953** | **$1,313,408** | **$1,273,886** | **$1,140,944** | | Total Assets (GAAP) | **$16,188,676** | **$15,816,194** | **$15,670,391** | **$15,507,880** | | Exclude Goodwill and Other Intangible Assets, Net | **$376,768** | **$377,358** | **$378,805** | **$379,663** | | Total Tangible Assets (non-GAAP) | **$15,811,908** | **$15,438,836** | **$15,291,586** | **$15,128,217** | | Tangible Common Shareholders' Equity to Tangible Assets (non-GAAP) | **8.96%** | **8.51%** | **8.33%** | **7.54%** | Tangible Common Shareholders' Equity Per Share Reconciliation | Metric | Sep 30, 2024 | Jun 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | :----------- | | Common Shareholders' Equity (Book Value) per Share (GAAP) | **$52.06** | **$49.07** | **$48.12** | **$44.27** | | Tangible Common Shareholders' Equity (Tangible Book Value) per Share (non-GAAP) | **$41.12** | **$38.12** | **$37.09** | **$33.22** | ```

Analysts on Wall Street project that Banner (BANR) will announce quarterly earnings of $1.18 per share in its forthcoming report, representing a decline of 17.5% year over year. Revenues are projected to reach $150.28 million, declining 2.7% from the same quarter last year.The consensus EPS estimate for the quarter has been revised 0.6% lower over the last 30 days to the current level. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timefra ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20%E2%80%93%20Financial%20Statements%20(unaudited)) This section presents Banner Corporation's unaudited condensed consolidated financial statements and selected explanatory notes for periods ending June 30, 2024 [Consolidated Statements of Financial Condition](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased to **$15.82 billion** by June 30, 2024, driven by loan growth, with deposits and shareholders' equity also showing modest increases Consolidated Balance Sheet Highlights (in thousands) | Financial Metric | June 30, 2024 | December 31, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | **$15,816,194** | **$15,670,391** | **$145,803** | **0.9%** | | Net Loans Receivable | $10,991,000 | $10,660,812 | $330,188 | 3.1% | | Total Securities | $3,220,721 | $3,432,838 | ($212,117) | -6.2% | | **Total Deposits** | **$13,079,263** | **$13,029,497** | **$49,766** | **0.4%** | | Total Liabilities | $14,125,428 | $14,017,700 | $107,728 | 0.8% | | **Total Shareholders' Equity** | **$1,690,766** | **$1,652,691** | **$38,075** | **2.3%** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for Q2 2024 was **$39.8 million**, nearly flat year-over-year, while year-to-date net income decreased to **$77.4 million** due to higher interest expense Key Operating Results (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $132,546 | $142,518 | $265,505 | $295,830 | | Provision for Credit Losses | $2,369 | $6,764 | $2,889 | $6,240 | | **Net Income** | **$39,795** | **$39,591** | **$77,354** | **$95,146** | | Diluted EPS | $1.15 | $1.15 | $2.24 | $2.76 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q2 2024 increased to **$41.7 million**, primarily due to a smaller other comprehensive loss from less severe unrealized securities losses Comprehensive Income Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $39,795 | $39,591 | $77,354 | $95,146 | | Other Comprehensive Income (Loss) | $1,933 | ($13,812) | ($8,414) | $23,321 | | **Comprehensive Income** | **$41,728** | **$25,779** | **$68,940** | **$118,467** | [Consolidated Statements of Changes in Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' equity grew to **$1.69 billion** by June 30, 2024, driven by **$77.4 million** in net income, partially offset by dividends and other comprehensive loss Shareholders' Equity Movement - YTD 2024 (in thousands) | Description | Amount | | :--- | :--- | | Balance, January 1, 2024 | $1,652,691 | | Net Income | $77,354 | | Other Comprehensive Loss, net of tax | ($8,414) | | Dividends Accrued | ($33,450) | | Stock-based Compensation & Other | $2,585 | | **Balance, June 30, 2024** | **$1,690,766** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was **$130.2 million** for H1 2024, while investing activities used **$209.3 million**, leading to a **$7.0 million** net decrease in cash and equivalents Net Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $130,154 | $117,955 | | Net Cash (Used by) Provided from Investing Activities | ($209,319) | $298,277 | | Net Cash Provided from (Used by) Financing Activities | $72,159 | ($377,969) | | **Net Change in Cash and Cash Equivalents** | **($7,006)** | **$38,263** | [Selected Notes to the Consolidated Financial Statements](index=10&type=section&id=Selected%20Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on significant accounting policies and key financial statement line items, including securities, loans, deposits, and fair value measurements [Management's Discussion and Analysis (MD&A)](index=48&type=section&id=Item%202%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, covering loan and deposit trends, net interest margin, strong asset quality, and robust liquidity and capital positions [Executive Overview](index=48&type=section&id=Executive%20Overview) Banner Corporation reported solid Q2 2024 results, with **$149.7 million** in revenue, a **3.70%** net interest margin, **3%** loan growth, and increased tangible book value per share Q2 2024 Financial Highlights (vs. Q1 2024) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $149.7 million | $144.6 million | | Net Interest Margin (tax equiv.) | 3.70% | 3.74% | | Net Loans Receivable | $10.99 billion | $10.72 billion | | Non-performing Assets / Total Assets | 0.21% | 0.19% | | Tangible Common Equity per Share* | $38.12 | $37.40 | - The company's strategic initiatives continue to focus on originating high-quality assets and client acquisition to generate strong revenue while maintaining a moderate risk profile[191](index=191&type=chunk) [Comparison of Financial Condition](index=50&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew by **$145.8 million** to **$15.82 billion** by June 30, 2024, driven by **$333.4 million** in loan growth, while deposits and shareholders' equity also increased - Total loans receivable increased by **$333.4 million (3%)** to **$11.14 billion** at June 30, 2024, from December 31, 2023, with notable growth in multifamily construction loans (up **32%**) and one- to four-family residential loans (up **6%**)[203](index=203&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - Total deposits increased by **$49.8 million** to **$13.08 billion**, with core deposits remaining stable at **$11.55 billion** and representing **88%** of total deposits[215](index=215&type=chunk) - Shareholders' equity increased by **$38.1 million** to **$1.69 billion**, mainly due to **$77.4 million** in net income, partially offset by dividends and a **$8.4 million** increase in accumulated other comprehensive loss[218](index=218&type=chunk) [Comparison of Results of Operations](index=54&type=section&id=Comparison%20of%20Results%20of%20Operations) Q2 2024 net income was **$39.8 million**, improving from Q1 due to higher non-interest income, though net interest margin compressed slightly due to rising funding costs Net Interest Margin Analysis | Period | Net Interest Margin (tax equiv.) | Key Driver | | :--- | :--- | :--- | | Q2 2024 | 3.70% | Increased funding costs partially offset by higher loan yields | | Q1 2024 | 3.74% | N/A | | YTD 2024 | 3.72% | Significant increase in funding costs outpacing asset yield growth | | YTD 2023 | 4.15% | N/A | - Non-interest income for Q2 2024 increased to **$17.2 million** from **$11.6 million** in Q1 2024, primarily due to a **$4.3 million** reduction in net loss on the sale of securities[244](index=244&type=chunk) - Non-interest expense increased slightly to **$98.1 million** in Q2 2024 from **$97.6 million** in Q1 2024, driven by higher salary and benefits costs[249](index=249&type=chunk) [Asset Quality](index=62&type=section&id=Asset%20Quality) Asset quality remains strong with non-performing assets at **0.21%** of total assets, and the allowance for credit losses provides **498%** coverage of non-performing loans Non-Performing Assets (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Non-performing Loans | $30,722 | $29,602 | | REO, net | $2,564 | $526 | | **Total Non-performing Assets (NPAs)** | **$33,286** | **$30,128** | | NPAs to Total Assets | 0.21% | 0.19% | - The allowance for credit losses on loans was **$152.8 million**, or **1.37%** of total loans, covering non-performing loans by **498%**[253](index=253&type=chunk) - Special mention loans increased to **$50.0 million** from **$13.7 million** at year-end 2023, primarily due to loan downgrades, while substandard loans decreased to **$122.0 million** from **$125.4 million**[256](index=256&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial borrowing capacity, including **$3.02 billion** from FHLB, and continues its **$0.48** quarterly dividend - Primary sources of funds are deposits, borrowings, and cash flows from assets, with the company primarily using funds for loan growth in the first half of 2024[257](index=257&type=chunk)[262](index=262&type=chunk) - At June 30, 2024, the company had significant off-balance sheet liquidity, including **$3.02 billion** in available FHLB credit and a **$1.59 billion** facility with the Federal Reserve[217](index=217&type=chunk)[263](index=263&type=chunk) - The quarterly cash dividend is maintained at **$0.48** per share, which management believes balances investment in the bank with shareholder returns[265](index=265&type=chunk) [Capital Requirements](index=65&type=section&id=Capital%20Requirements) Both Banner Corporation and Banner Bank exceed all regulatory capital requirements, with the corporation's CET1 ratio at **12.02%**, categorizing them as 'well-capitalized' Regulatory Capital Ratios as of June 30, 2024 | Ratio | Banner Corporation (Consolidated) | Banner Bank | Minimum to be "Well-Capitalized" (Bank) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 12.02% | 12.49% | 6.50% | | Tier 1 Capital | 12.66% | 12.49% | 8.00% | | Total Capital | 14.62% | 13.70% | 10.00% | | Tier 1 Leverage | 10.80% | 10.66% | 5.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk through simulation modeling, showing short-term asset sensitivity with a **$1.72 billion** positive gap, benefiting from rising rates but vulnerable to falling rates [Market Risk and Asset/Liability Management](index=65&type=section&id=Market%20Risk%20and%20Asset%2FLiability%20Management) The company actively manages interest rate risk from asset-liability repricing mismatches, with **$5.05 billion** in loans having interest rate floors to protect yields - The greatest source of interest rate risk is the mismatch of maturities and repricing intervals for assets and liabilities, with liabilities generally having shorter maturities than assets[273](index=273&type=chunk) - As of June 30, 2024, loans with interest rate floors totaled **$5.05 billion** with a weighted average floor of **4.59%**, of which **$1.29 billion** in loans were at their floors[273](index=273&type=chunk) [Sensitivity Analysis](index=66&type=section&id=Sensitivity%20Analysis) Sensitivity analysis shows a **100 bps** rate increase would boost NII by **0.7%** but decrease EVE by **3.0%**, while a **100 bps** rate cut would decrease NII by **3.0%** and increase EVE by **1.7%** Interest Rate Shock Sensitivity Analysis (as of June 30, 2024) | Change in Rates (bps) | Estimated Change in NII (Next 12 Months) | Estimated Change in EVE | | :--- | :--- | :--- | | +200 | -0.3% | -6.9% | | +100 | +0.7% | -3.0% | | **Base Case** | **0.0%** | **0.0%** | | -100 | -3.0% | +1.7% | | -200 | -6.0% | +1.5% | - The company has a positive one-year cumulative interest sensitivity gap of **$1.72 billion**, representing **10.85%** of total assets, indicating an asset-sensitive position in the short term[284](index=284&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of June 30, 2024, the company's disclosure controls and procedures were effective[288](index=288&type=chunk) - No changes in internal control over financial reporting occurred in Q2 2024 that materially affected, or are reasonably likely to materially affect, these controls[289](index=289&type=chunk) [PART II – OTHER INFORMATION](index=70&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=70&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) The company is involved in various legal proceedings, with a class action lawsuit settled in February 2024, and **$702,000** accrued for outstanding matters as of June 30, 2024 - The class action lawsuit Bolding et al. v. Banner Bank received final settlement approval on February 22, 2024[292](index=292&type=chunk) - As of June 30, 2024, the company had accrued **$702,000** for all outstanding legal proceedings[291](index=291&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K were reported - No material changes in risk factors were reported from the 2023 Form 10-K[293](index=293&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a new repurchase program for up to **1,722,787 shares** on July 25, 2024, while **13,563 shares** were acquired for tax withholding in Q2 2024 - On July 25, 2024, the Board of Directors authorized a new stock repurchase program for up to **1,722,787 shares** (approx. **5%** of outstanding shares)[295](index=295&type=chunk) - In Q2 2024, **13,563 shares** were surrendered by employees to satisfy tax withholding obligations related to vested restricted stock, which is treated as a repurchase but not under a formal buyback plan[297](index=297&type=chunk) [Other Information](index=71&type=section&id=Item%205%20%E2%80%93%20Other%20Information) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2024 - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by any director or officer during Q2 2024[298](index=298&type=chunk) [Exhibits](index=72&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, compensatory plans, and required CEO and CFO certifications - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[301](index=301&type=chunk)[302](index=302&type=chunk)

Banner Corporation (NASDAQ:BANR) Q2 2024 Earnings Conference Call July 18, 2024 11:00 AM ET Company Participants Mark Grescovich - President and Chief Executive Officer Rich Arnold - Head of Investor Relations Rob Butterfield - Chief Financial Officer Jill Rice - Chief Credit Officer Conference Call Participants David Feaster - Raymond James Andrew Liesch - Piper Sandler Andrew Terrell - Stephens, Inc. Kelly Motta - KBW Operator Hello, all, and welcome to Banner Corporation's Second Quarter 2024 Conference ...

Second Quarter 2024 Photo by Salvador Saldana Photo by Yvonne McDonald Photo by Maria DeVecchio Photo by Siti Alimah Disclosure Statement This presentation includes forward-looking statements. These statements include descriptions of management's plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner's general outlook for economic and other conditions. Additional forward-looking statements may be made in the que ...

Banner (BANR) reported $149.75 million in revenue for the quarter ended June 2024, representing a year-over-year decline of 0.8%. EPS of $1.17 for the same period compares to $1.32 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $149.66 million, representing a surprise of +0.06%. The company delivered an EPS surprise of +2.63%, with the consensus EPS estimate being $1.14.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how th ...

Banner (BANR) came out with quarterly earnings of $1.17 per share, beating the Zacks Consensus Estimate of $1.14 per share. This compares to earnings of $1.32 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.63%. A quarter ago, it was expected that this regional bank would post earnings of $1.17 per share when it actually produced earnings of $1.22, delivering a surprise of 4.27%.Over the last four quarters, the company has s ...

Exhibit 99.1 NEWS RELEASE CONTACT: MARK J. GRESCOVICH, PRESIDENT & CEO ROBERT G. BUTTERFIELD, CFO (509) 527-3636 Banner Corporation Reports Net Income of $39.8 Million, or $1.15 Per Diluted Share, for Second Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share Walla Walla, WA - July 17, 2024 - Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent company of Banner Bank, today reported net income of $39.8 million, or $1.15 per diluted share, for the second quarter of 2024, compared to $37 ...

In its upcoming report, Banner (BANR) is predicted by Wall Street analysts to post quarterly earnings of $1.14 per share, reflecting a decline of 13.6% compared to the same period last year. Revenues are forecasted to be $149.66 million, representing a year-over-year decrease of 0.9%.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Ahead of a c ...