GlobeNewswire Inc | Oct 20, 2021 04:00PM EDT

October 20, 2021

WALLA WALLA, Wash., Oct. 20, 2021 (GLOBE NEWSWIRE) -- Banner Corporation (NASDAQ GSM: BANR) (Banner), the parent company of Banner Bank, today reported net income of $49.9 million, or $1.44 per diluted share, for the third quarter of 2021, an 8% decrease compared to $54.4 million, or $1.56 per diluted share, for the second quarter of 2021 and a 36% increase compared to $36.5 million, or $1.03 per diluted share, for the third quarter of 2020. Banners third quarter 2021 results include $8.6 million in recapture of provision for credit losses, compared to $10.3 million in recapture of provision for credit losses in the preceding quarter and $15.2 million in provision for credit losses in the third quarter of 2020. The third quarter 2020 provision for credit losses was primarily the result of the impact of the COVID-19 pandemic. In the first nine months of 2021, net income was $151.1 million, or $4.32 per diluted share, compared to net income of $77.0 million, or $2.17 per diluted share for the same period a year earlier. Banners first nine months of 2021 results include $28.1 million in recapture of provision for credit losses, compared to $67.3 million in provision for credit losses in the first nine months of 2020.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.41 per share. The dividend will be payable November 12, 2021, to common shareholders of record on November 02, 2021.

Our third quarter 2021 performance continues to demonstrate the success of our super community bank model, which is based on responsive service that generates client loyalty and attracts new client relationships, said Mark Grescovich, President and CEO. We benefited from continued core deposit growth and an acceleration of SBA PPP loan fee income as a result of SBA PPP loan forgiveness. The unprecedented level of market liquidity and our continued focus on building client relationships contributed to our core deposits increasing 18% compared to September30, 2020. Additionally, Banner had provided 13,293 SBA PPP loans totaling nearly $1.61 billion as of September30, 2021. As of quarter end, SBA forgiveness had been received for 10,548 SBA PPP loans totaling $1.23billion. Our essential onsite employees, such as those working in our branches, continue to serve clients in person. In July 2021, we began to normalize our operations by returning additional groups of employees back to bank worksites; however, due to the recent increases in COVID-19 cases, we have currently suspended returning our remaining employees to bank worksites.

After a comprehensive review of our business, we implemented Banner Forward, a bank-wide initiative to drive revenue growth and reduce operating expense, said Grescovich. Implementation of this plan commenced during the third quarter of 2021 with full implementation expected in 2023, with the goal of producing meaningful results in the near term while staying true to our mission and value proposition of being connected, knowledgeable and responsive to our clients, communities and employees. The focus of Banner Forward is to accelerate growth in commercial banking, deepen relationships with retail customers, advance technology strategies to enhance our digital service channels, while streamlining underwriting and back office processes. As part of Banner Forward, we have identified potential additional opportunities to rationalize our physical footprint. During the third quarter of 2021, we incurred expenses of $7.6 million related to Banner Forward.

Due to improvements in economic forecasts and continued solid performance of the loan portfolio during the current quarter, we recorded an $8.6 million recapture to our provision for credit losses during the current quarter. This compares to a $10.3 million recapture to our provision for credit losses during the preceding quarter and a $15.2 million provision for credit losses in the third quarter a year ago. Our allowance for credit losses - loans remains strong at 1.52% of total loans and 485% of non-performing loans at September30, 2021, compared to 1.53% of total loans and 481% of non-performing loans at June 30, 2021, said Grescovich.

At September30, 2021, Banner Corporation had $16.64 billion in assets, $9.08 billion in net loans and $14.16 billion in deposits. Banner operates 150 branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

Third Quarter 2021 Highlights

-- Revenues increased 4% to $155.5 million, compared to $149.9 million in the preceding quarter, and increased 4% when compared to $149.2 million in the third quarter a year ago. -- Net interest income, before the recapture of provision for credit losses, increased to $130.1 million in the third quarter of 2021, compared to $127.6 million in the preceding quarter and $121.0 million in the third quarter a year ago. -- Net interest margin on a tax equivalent basis was 3.47%, compared to 3.52% in the preceding quarter and 3.72% in the third quarter a year ago. -- Mortgage banking revenues increased 30% to $9.8 million, compared to $7.5 million in the preceding quarter, and decreased 41% compared to $16.6 million in the third quarter a year ago. -- Return on average assets was 1.20%, compared to 1.36% in the preceding quarter and 1.01% in the third quarter a year ago. -- Net loans receivable decreased to $9.08 billion at September30, 2021, compared to $9.51 billion at June 30, 2021, and decreased 9% when compared to $10.00 billion at September30, 2020. -- Non-performing assets decreased to $29.7 million, or 0.18% of total assets, at September30, 2021, compared to $31.5 million, or 0.19% of total assets in the preceding quarter, and decreased from $36.7 million, or 0.25% of total assets, at September30, 2020. -- The allowance for credit losses - loans was $139.9 million, or 1.52% of total loans receivable, as of September30, 2021, compared to $148.0 million, or 1.53% of total loans receivable as of June 30, 2021 and $168.0 million or 1.65% of total loans receivable as of September30, 2020. -- Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased 4% to $13.31 billion at September30, 2021, compared to $12.76 billion at June 30, 2021, and increased 18% compared to $11.30 billion a year ago. Core deposits represented 94% of total deposits at September30, 2021. -- Dividends to shareholders were $0.41 per share in the quarter ended September30, 2021. -- Common shareholders equity per share increased 1% to $48.67 at September30, 2021, compared to $48.31 at the preceding quarter end, and increased 4% from $46.83 a year ago. -- Tangible common shareholders equity per share* increased 1% to $37.30 at September30, 2021, compared to $36.99 at the preceding quarter end, and increased 5% from $35.56 a year ago. -- Banner repurchased 300,000 shares of its common stock during the quarter at an average cost of $55.50 per share.

*Tangible common shareholders equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments and net gain (loss) on the sale of securities from the total of net interest income and non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of core deposit intangibles, real estate owned operations and state/municipal taxes from non-interest expense divided by adjusted revenue) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banners core operations reflected in the current quarters results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.

Significant Recent Initiatives and Events

In September 2021, Banner completed the consolidation of five branches as it continues to see migration of transactions to the digital space, reducing in-branch transactions. During the past year, client adoption of mobile and digital banking accelerated, while physical branch transaction volume declined. Banner anticipates this shift in client service delivery channel preference will continue after the COVID-19 pandemic related restrictions have ended.

Income Statement Review

Net interest income, before the recapture of provision for credit losses, was $130.1 million in the third quarter of 2021, compared to $127.6 million in the preceding quarter and $121.0 million in the third quarter a year ago.

Banners net interest margin on a tax equivalent basis was 3.47% for the third quarter of 2021, a five basis-point decrease compared to 3.52% in the preceding quarter and a 25 basis-point decrease compared to 3.72% in the third quarter a year ago.

Higher core deposit balances, resulting in an increase in low yielding short term investments, adversely affected our net interest margin during the quarter. This impact was partly offset by higher interest income, primarily as a result of the decline in low yielding SBA PPP loans and a corresponding acceleration of the recognition of deferred loan fee income due to loan repayments from SBA loan forgiveness, said Grescovich. Additionally, the ongoing low interest rate environment continues to place downward pressure on loan yields. Acquisition accounting adjustments added three basis points to the net interest margin in both the current and preceding quarter and seven basis points in the third quarter a year ago. The total purchase discount for acquired loans was $11.5 million at September30, 2021, compared to $12.5 million at June 30, 2021, and $17.9 million at September30, 2020. In the first nine months of 2021, Banners net interest margin on a tax equivalent basis was 3.48% compared to 3.93% in the first nine months of 2020.

Average interest-earning asset yields decreased six basis points to 3.62% in the third quarter compared to 3.68% for the preceding quarter and decreased 36 basis points compared to 3.98% in the third quarter a year ago. Average loan yields increased 18 basis points to 4.88% compared to 4.70% in the preceding quarter and increased 41 basis points compared to 4.47% in the third quarter a year ago. The increase in average loan yields during the current quarter compared to the preceding quarter was primarily the result of the decline in the average balance of low yielding SBA PPP loans due to loan repayments from SBA loan forgiveness during the last two quarters, partially offset by lower rates on new originations and adjustable-rate loans resetting to lower current market rates. Loan discount accretion added five basis points to average loan yields in both the current and preceding quarter and nine basis points in the third quarter a year ago. Deposit costs were 0.08% in the third quarter of 2021, a one basis-point decrease compared to the preceding quarter and a nine basis-point decrease compared to the third quarter a year ago. The year-over-year decrease in quarterly deposit costs was primarily the result of decreases in market interest rates during 2020. The total cost of funds was 0.16% during the third quarter of 2021, a one basis-point decrease compared to the preceding quarter and an 11 basis-point decrease compared to the third quarter a year ago.

Banner recorded an $8.6 million recapture of provision for credit losses in the current quarter (comprised of an $8.9 million recapture of credit losses - loans and a $218,000 provision for credit losses - unfunded loan commitments). This recapture compares to a $10.3 million recapture of provision for credit losses in the prior quarter (comprised of an $8.1 million recapture of provision for credit losses - loans and a $2.2 million recapture of provision for credit losses - unfunded loan commitments) and a $15.2 million provision for credit losses in the third quarter a year ago (comprised of a $13.6 million provision for credit losses - loans and a $1.5 million recapture of provision for credit losses - unfunded loan commitments). The recapture of provision for credit losses for the current and preceding quarters primarily reflects improvement in forecasted economic indicators and a decrease in adversely classified loans. The provision for credit losses recorded in the third quarter a year ago primarily reflected expected lifetime credit losses based upon the economic conditions and the potential effects from forecasted deterioration of economic metrics due to the COVID-19 pandemic based on the outlook as of September 30, 2020.

Total non-interest income was $25.3 million in the third quarter of 2021, compared to $22.3 million in the preceding quarter and $28.2 million in the third quarter a year ago. Deposit fees and other service charges were $10.5 million in the third quarter of 2021, compared to $9.8 million in the preceding quarter and $8.7 million in the third quarter a year ago. The increase in deposit fees and other service charges from the third quarter a year ago is primarily a result of increased transaction deposit account activity and higher fees on certain transactions. Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, increased to $9.8 million in the third quarter, compared to $7.5 million in the preceding quarter and decreased compared to $16.6 million in the third quarter of 2020. The higher mortgage banking revenue quarter-over-quarter primarily reflects an increase in the gain on sale margin on one- to four-family held-for-sale loans and higher gains on the sale of multifamily held-for-sale loans. The decrease compared to the third quarter of 2020 was primarily due to a decrease in the gain on sale margin on one- to four-family held-for-sale loans, partially offset by higher gains on the sale of multifamily held-for-sale loans as well as a reduction in the volume of one- to four-family loans sold. Home purchase activity accounted for 68% of one- to four-family mortgage loan originations in the third quarter of 2021, compared to 66% in the prior quarter and 56% in the third quarter of 2020. In the first nine months of 2021, total non-interest income decreased 4% to $71.9 million, compared to $75.1 million in the first nine months of 2020.

Banners third quarter 2021 results included a $1.8 million net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading, and a $56,000 net gain on the sale of securities. In the preceding quarter, results included a $58,000 net gain for fair value adjustments and a $77,000 net gain on the sale of securities. In the third quarter a year ago, results included a $37,000 net gain for fair value adjustments and a $644,000 net gain on the sale of securities.

Total revenue increased 4% to $155.5 million for the third quarter of 2021, compared to $149.9 million in the preceding quarter, and increased 4% compared to $149.2 million in the third quarter a year ago. Year-to-date, total revenues increased 3% to $447.3 million compared to $435.0 million for the same period one year earlier. Adjusted revenue* (the total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $153.6 million in the third quarter of 2021, compared to $149.8 million in the preceding quarter and $148.6 million in the third quarter of 2020. In the first nine months of the year, adjusted revenue* was $444.8 million, compared to $436.5 million in the first nine months of 2020.

Total non-interest expense was $102.1 million in the third quarter of 2021, compared to $92.6 million in the preceding quarter and $90.0 million in the third quarter of 2020. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects an $8.0 million increase in professional and legal expenses, primarily due to increased consultant expense, which included $5.8million of expense related to the Banner Forward initiative in the current quarter, compared to $1.5million in the prior quarter, as well as a $4.0million accrual recorded related to pending litigation during the current quarter. Additionally, payment and card processing services expense increased $1.2 million primarily reflecting an increase in fraud related losses. These increases for the current quarter were partially offset by a $2.1 million decrease from the preceding quarter in salary and employee benefits expense related to a reduction in staffing. The year-over-year quarterly increase in non-interest expense also reflects increases in payment and card processing services expense, professional and legal expenses, and miscellaneous non-interest expense. The year-over-year quarterly increases in non-interest expense were partially offset by decreases in salary and employee benefits and COVID-19 expenses. COVID-19 expenses were $44,000 for the third quarter of 2021, compared to $117,000 for the preceding quarter and $778,000 in the third quarter a year ago. Year-to-date, total non-interest expense was $288.3 million, compared to $274.0 million in the same period a year earlier. Banners efficiency ratio was 65.70% for the current quarter, compared to 61.79% in the preceding quarter and 60.32% in the year ago quarter. Banners adjusted efficiency ratio* was 59.65% for the current quarter, compared to 58.50% in the preceding quarter and 58.02% in the year ago quarter.

For the third quarter of 2021, Banner had $12.1 million in state and federal income tax expense for an effective tax rate of 19.5%, reflecting the benefits from tax exempt income. Banners statutory income tax rate is 23.7%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

Balance Sheet Review

Total assets increased to $16.64 billion at September30, 2021, compared to $16.18 billion at June 30, 2021, and increased 14% when compared to $14.64 billion at September30, 2020. The total of securities and interest-bearing deposits held at other banks was $6.03 billion at September30, 2021, compared to $5.19 billion at June 30, 2021 and $2.63 billion at September30, 2020. The average effective duration of Banner's securities portfolio was approximately 4.4 years at September30, 2021, compared to 4.0 years at September30, 2020.

Net loans receivable decreased 4% to $9.08 billion at September30, 2021, compared to $9.51 billion at June 30, 2021, and decreased 9% when compared to $10.00 billion at September30, 2020. The decrease in net loans compared to the prior quarter primarily reflects the forgiveness of SBA PPP loans. SBA PPP loans decreased 62% to $310.2 million at September30, 2021, compared to $825.1 million at June 30, 2021, and decreased 73% when compared to $1.15 billion at September30, 2020. The decrease in SBA PPP loans was partially offset by increases in commercial real estate, multifamily real estate and one- to four-family loans. Commercial real estate and multifamily real estate loans increased 2% to $4.24 billion at September30, 2021, compared to $4.14 billion at June 30, 2021, and increased 4% compared to $4.07 billion a year ago. Commercial business loans decreased 21% to $2.12 billion at September30, 2021, compared to $2.68 billion at June 30, 2021, and decreased 32% compared to $3.11 billion a year ago, primarily due to SBA PPP loans forgiven. Excluding PPP loans, commercial business loans decreased 3% to $1.82 billion at September30, 2021, compared to $1.87 billion at June 30, 2021, and decreased 7% compared to $1.96 billion a year ago. Agricultural business loans increased to $287.5 million at September30, 2021, compared to $265.4 million three months earlier and decreased from $326.2 million a year ago. Total construction, land and land development loans were $1.33 billion at September30, 2021, a 3% decrease from $1.37 billion at June 30, 2021, and a 5% increase compared to $1.27 billion a year earlier. Consumer loans increased slightly to $561.2 million at September30, 2021, compared to $560.7 million at June 30, 2021, and decreased from $622.8 million a year ago. One- to four-family loans increased to $682.4 million at September30, 2021, compared to $637.7 million at June 30, 2021, and decreased from $771.4 million a year ago. The year over year decrease primarily reflects held for investment loans being refinanced and sold as held for sale loans.

Loans held for sale were $63.7 million at September30, 2021, compared to $71.7 million at June 30, 2021, and $185.9 million at September30, 2020. The volume of one- to four- family residential mortgage loans sold was $232.2million in the current quarter, compared to $266.7million in the preceding quarter and $327.7million in the third quarter a year ago. During the third quarter of 2021, Banner sold $96.1million in multifamily loans, compared to $83.9million in the preceding quarter and $108.6million in the third quarter a year ago.

Total deposits increased 4% to $14.16 billion at September30, 2021, compared to $13.64 billion at June 30, 2021, and increased 16% when compared to $12.22 billion a year ago. The year-over-year increase in total deposits was due primarily to SBA PPP loan funds deposited into client accounts and an increase in general client liquidity due to reduced business investment and consumer spending during the COVID-19 pandemic. Non-interest-bearing account balances increased 5% to $6.40 billion at September30, 2021, compared to $6.09 billion at June 30, 2021, and increased 18% compared to $5.41 billion a year ago. Core deposits were 94% of total deposits at both September30, 2021 and June 30, 2021 and increased 18% compared to a year ago. Certificates of deposit decreased to $851.1 million at September30, 2021, compared to $873.0 million at June 30, 2021, and decreased 7% compared to $915.4 million a year earlier. FHLB borrowings decreased to $50.0 million at September30, 2021, compared to $100.0 million at June 30, 2021 and decreased from $150.0 million a year ago.

At September30, 2021, total common shareholders equity was $1.67 billion, or 10.02% of assets, compared to $1.67 billion or 10.32% of assets at June 30, 2021, and $1.65 billion or 11.25% of assets a year ago. At September30, 2021, tangible common shareholders equity*, which excludes goodwill and other intangible assets, net, was $1.28 billion, or 7.86% of tangible assets*, compared to $1.28 billion, or 8.09% of tangible assets, at June 30, 2021, and $1.25 billion, or 8.78% of tangible assets, a year ago. Banners tangible book value per share* increased to $37.30 at September30, 2021, compared to $35.56 per share a year ago.

Banner and its subsidiary bank continue to maintain capital levels in excess of the requirements to be categorized as well-capitalized. At September30, 2021, Banner's common equity Tier 1 capital ratio was 11.25%, its Tier 1 leverage capital to average assets ratio was 8.79%, and its total capital to risk-weighted assets ratio was 14.55%.

Credit Quality

The allowance for credit losses - loans was $139.9 million at September30, 2021, or 1.52% of total loans receivable outstanding and 485% of non-performing loans, compared to $148.0 million at June 30, 2021, or 1.53% of total loans receivable outstanding and 481% of non-performing loans, and $168.0 million at September30, 2020, or 1.65% of total loans receivable outstanding and 482% of non-performing loans. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $10.1 million at September30, 2021, compared to $9.9 million at June 30, 2021 and $12.1 million at September30, 2020. Net loan recoveries totaled $756,000 in the third quarter of 2021, compared to net loan recoveries of $55,000 in the preceding quarter and $2.0 million of net loan charge-offs in the third quarter a year ago. Non-performing loans were $28.9 million at September30, 2021, compared to $30.8 million at June 30, 2021, and $34.8 million a year ago. Real estate owned and other repossessed assets were $869,000 at September30, 2021, compared to $780,000 at June 30, 2021, and $1.8 million a year ago.

Banners total substandard loans were $225.8 million at September30, 2021, compared to $272.8 million at June 30, 2021, and $423.2 million a year ago. The quarter over quarter decrease reflects the payoff of substandard loans as well as risk rating upgrades as certain industries impacted by the COVID-19 pandemic have begun to stabilize.

Banners total non-performing assets were $29.7 million, or 0.18% of total assets, at September30, 2021, compared to $31.5 million, or 0.19% of total assets, at June 30, 2021, and $36.7 million, or 0.25% of total assets, a year ago.

At September30, 2021, Banner had 41 mortgage loans totaling $12.4million operating under forbearance agreements due to COVID-19. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these modifications are not considered to be troubled debt restructurings pursuant to applicable accounting and regulatory guidance.

Conference Call

Banner will host a conference call on Thursday, October 21, 2021, at 8:00 a.m. PDT, to discuss its third quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (866) 235-9915 to participate in the call. A replay will be available for one week at (877) 344-7529 using access code 10160533, or at www.bannerbank.com.

About the Company

Banner Corporation is a $16.64 billion bank holding company operating one commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the SEC), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases may, believe, will, will likely result, are expected to, will continue, is anticipated, estimate, project, plans, potential, or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banners operating and stock price performance.

The COVID-19, pandemic is adversely affecting us, our clients, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Deterioration in general business and economic conditions, including increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (2) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banners activities; (3) competitive pressures among depository institutions; (4) interest rate movements and their impact on client behavior and net interest margin; (5) the impact of repricing and competitors pricing initiatives on loan and deposit products; (6) fluctuations in real estate values; (7) the ability to adapt successfully to technological changes to meet clients needs and developments in the market place; (8) the ability to access cost-effective funding; (9) changes in financial markets; (10) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (11) the costs, effects and outcomes of litigation; (12) legislation or regulatory changes, including but not limited to the impact of the Dodd-Frank Act and regulations adopted thereunder, changes in regulatory capital requirements pursuant to the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (13) changes in accounting principles, policies or guidelines; (14) future acquisitions by Banner of other depository institutions or lines of business; (15) future goodwill impairment due to changes in Banners business, changes in market conditions, including as a result of the COVID-19 pandemic or other factors; (16) the costs associated with Banner Forward and (17) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks detailed from time to time in our filings with the Securities and Exchange Commission including our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K.

RESULTS OF Quarters Ended Nine Months EndedOPERATIONS(in thousandsexcept shares and Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020per share data) INTEREST INCOME: Loans receivable $ 116,487 $ 115,391 $ 116,716 $ 340,802 $ 350,815 Mortgage-backed 11,695 11,437 7,234 32,503 24,354 securitiesSecurities and cash 7,686 6,737 5,631 20,649 14,824 equivalents 135,868 133,565 129,581 393,954 389,993 INTEREST EXPENSE: Deposits 2,749 3,028 5,179 9,386 20,623 Federal Home Loan 655 655 988 2,244 4,036 Bank advancesOther borrowings 125 124 128 358 482 Junior subordinateddebentures and 2,193 2,204 2,260 6,605 4,988 subordinated notes 5,722 6,011 8,555 18,593 30,129 Net interest income 130,146 127,554 121,026 375,361 359,864 (RECAPTURE)/PROVISION FOR (8,638 ) (10,256 ) 15,180 (28,145 ) 67,273 CREDIT LOSSESNet interest incomeafter (recapture)/ 138,784 137,810 105,846 403,506 292,591 provision forcredit lossesNON-INTEREST INCOME:Deposit fees andother service 10,457 9,758 8,742 29,154 26,091 chargesMortgage banking 9,752 7,478 16,562 28,670 40,891 operationsBank-owned life 1,245 1,245 1,286 3,797 4,653 insuranceMiscellaneous 2,046 3,720 951 7,808 5,017 23,500 22,201 27,541 69,429 76,652 Net gain on sale of 56 77 644 618 815 securitiesNet change invaluation offinancial 1,778 58 37 1,895 (2,360 )instruments carriedat fair valueTotal non-interest 25,334 22,336 28,222 71,942 75,107 incomeNON-INTEREST EXPENSE:Salary and employee 59,799 61,935 61,171 186,553 184,494 benefitsLess capitalizedloan origination (8,290 ) (8,768 ) (8,517 ) (26,754 ) (25,433 )costsOccupancy and 13,153 12,823 13,022 38,965 39,114 equipmentInformation /computer data 6,110 5,602 6,090 17,915 17,984 servicesPayment and card 6,181 4,975 4,044 15,482 12,135 processing servicesProfessional and 12,324 4,371 2,368 20,023 6,450 legal expensesAdvertising and 1,521 1,181 1,105 3,965 3,584 marketingDeposit insurance 1,469 1,241 1,628 4,243 4,968 expenseState/municipalbusiness and use 1,219 1,083 1,196 3,367 3,284 taxesReal estate 53 118 (11 ) (71 ) 93 operationsAmortization ofcore deposit 1,575 1,711 1,864 4,997 5,867 intangiblesMiscellaneous 6,977 6,156 5,285 18,642 16,841 102,091 92,428 89,245 287,327 269,381 COVID-19 expenses 44 117 778 309 3,169 Merger andacquisition-related 10 79 5 660 1,483 expensesTotal non-interest 102,145 92,624 90,028 288,296 274,033 expenseIncome beforeprovision for 61,973 67,522 44,040 187,152 93,665 income taxesPROVISION 12,089 13,140 7,492 36,031 16,694 FORINCOME TAXESNET INCOME $ 49,884 $ 54,382 $ 36,548 $ 151,121 $ 76,971 Earnings per shareavailable to common shareholders:Basic $ 1.45 $ 1.57 $ 1.04 $ 4.35 $ 2.18 Diluted $ 1.44 $ 1.56 $ 1.03 $ 4.32 $ 2.17 Cumulativedividends declared $ 0.41 $ 0.41 $ 0.41 $ 1.23 $ 0.82 per common shareWeighted averagecommon shares outstanding:Basic 34,446,510 34,736,639 35,193,109 34,716,914 35,285,567 Diluted 34,669,492 34,933,714 35,316,679 35,012,228 35,524,771 (Decrease) increasein common shares (298,897 ) (184,455 ) 669 (907,209 ) (593,008 )outstanding

FINANCIAL CONDITION Percentage Change(in thousands except Prior Yrshares and per share Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020 Prior Qtr Qtrdata) ASSETS Cash and due from $ 392,035 $ 329,359 $ 311,899 $ 289,144 19.0 % 35.6 %banksInterest-bearing 1,808,547 1,138,572 922,284 416,394 58.8 % 334.3 %depositsTotal cash and cash 2,200,582 1,467,931 1,234,183 705,538 49.9 % 211.9 %equivalentsSecurities - trading 26,875 25,097 24,980 23,276 7.1 % 15.5 %Securities - 3,446,575 3,275,979 2,322,593 1,758,384 5.2 % 96.0 %available for saleSecurities - held to 447,708 455,256 421,713 429,033 (1.7 ) % 4.4 %maturityTotal securities 3,921,158 3,756,332 2,769,286 2,210,693 4.4 % 77.4 %Equity securities ? ? ? 450,255 nm (100.0 ) %Federal Home Loan 12,000 14,001 16,358 16,363 (14.3 ) % (26.7 ) %Bank stockSecurities purchasedunder agreements to 300,000 300,000 ? ? ? % nmresellLoans held for sale 63,678 71,741 243,795 185,938 (11.2 ) % (65.8 ) %Loans receivable 9,218,384 9,654,181 9,870,982 10,163,917 (4.5 ) % (9.3 ) %Allowance for credit (139,915 ) (148,009 ) (167,279 ) (167,965 ) (5.5 ) % (16.7 ) %losses - loansNet loans receivable 9,078,469 9,506,172 9,703,703 9,995,952 (4.5 ) % (9.2 ) %Accrued interest 43,644 46,979 46,617 48,321 (7.1 ) % (9.7 ) %receivableReal estate owned(REO) held for sale, 852 763 816 1,795 11.7 % (52.5 ) %netProperty and 151,503 156,063 164,556 171,576 (2.9 ) % (11.7 ) %equipment, netGoodwill 373,121 373,121 373,121 373,121 ? % ? %Other intangibles, 16,429 18,004 21,426 23,291 (8.7 ) % (29.5 ) %netBank-owned life 192,950 192,677 191,830 191,755 0.1 % 0.6 %insuranceOperating lease 58,523 55,287 55,367 58,114 5.9 % 0.7 %right-of-use assetsOther assets 224,970 222,786 210,565 209,363 1.0 % 7.5 %Total assets $ 16,637,879 $ 16,181,857 $ 15,031,623 $ 14,642,075 2.8 % 13.6 %LIABILITIES Deposits: Non-interest-bearing $ 6,400,864 $ 6,090,063 $ 5,492,924 $ 5,412,570 5.1 % 18.3 %Interest-bearingtransaction and 6,912,759 6,673,598 6,159,052 5,887,419 3.6 % 17.4 %savings accountsInterest-bearing 851,054 873,047 915,320 915,352 (2.5 ) % (7.0 ) %certificatesTotal deposits 14,164,677 13,636,708 12,567,296 12,215,341 3.9 % 16.0 %Advances fromFederal Home Loan 50,000 100,000 150,000 150,000 (50.0 ) % (66.7 ) %BankCustomer repurchaseagreements and other 247,358 237,736 184,785 176,983 4.0 % 39.8 %borrowingsSubordinated notes, 98,472 98,380 98,201 98,114 0.1 % 0.4 %netJunior subordinateddebentures at fair 124,853 117,520 116,974 109,821 6.2 % 13.7 %valueOperating lease 62,946 59,117 59,343 61,869 6.5 % 1.7 %liabilitiesAccrued expenses and 175,960 216,399 143,300 138,169 (18.7 ) % 27.4 %other liabilitiesDeferred 46,494 46,786 45,460 45,249 (0.6 ) % 2.8 %compensationTotal liabilities 14,970,760 14,512,646 13,365,359 12,995,546 3.2 % 15.2 %SHAREHOLDERS? EQUITY Common stock 1,297,145 1,311,455 1,349,879 1,347,612 (1.1 ) % (3.7 ) %Retained earnings 355,035 319,505 247,316 222,959 11.1 % 59.2 %Other components of 14,939 38,251 69,069 75,958 (60.9 ) % (80.3 ) %shareholders? equityTotal shareholders? 1,667,119 1,669,211 1,666,264 1,646,529 (0.1 ) % 1.3 %equityTotal liabilitiesand shareholders? $ 16,637,879 $ 16,181,857 $ 15,031,623 $ 14,642,075 2.8 % 13.6 %equityCommon Shares Issued:Shares outstanding 34,251,991 34,550,888 35,159,200 35,158,568 at end of periodCommon shareholders?equity per share ^ $ 48.67 $ 48.31 $ 47.39 $ 46.83 (1)Common shareholders?tangible equity per $ 37.30 $ 36.99 $ 36.17 $ 35.56 share ^(1) (2)Common shareholders?tangible equity to 7.86 % 8.09 % 8.69 % 8.78 % tangible assets ^(2)Consolidated Tier 1leverage capital 8.79 % 8.86 % 9.50 % 9.56 % ratio

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

ADDITIONALFINANCIAL INFORMATION(dollars in thousands) Percentage ChangeLOANS Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020 Prior Qtr Prior Yr Qtr Commercial real estate:Owner-occupied $ 1,122,275 $ 1,066,237 $ 1,076,467 $ 1,049,877 5.3 % 6.9 %Investment 1,980,284 1,950,211 1,955,684 1,991,258 1.5 % (0.6 ) %propertiesSmall balance 601,751 621,102 573,849 597,971 (3.1 ) % 0.6 %CREMultifamily 532,760 504,445 428,223 426,659 5.6 % 24.9 %real estateConstruction,land and land development:Commercial 170,205 182,868 228,937 220,285 (6.9 ) % (22.7 ) %constructionMultifamily 278,184 295,661 305,527 291,105 (5.9 ) % (4.4 ) %constructionOne- tofour-family 571,431 603,895 507,810 518,085 (5.4 ) % 10.3 %constructionLand and land 308,164 290,404 248,915 240,803 6.1 % 28.0 %developmentCommercial business:Commercial 1,039,731 1,124,359 1,133,989 1,193,651 (7.5 ) % (12.9 ) %businessSBA PPP 306,976 807,172 1,044,472 1,149,968 (62.0 ) % (73.3 ) %Small business 775,554 743,975 743,451 763,824 4.2 % 1.5 %scoredAgriculturalbusiness,including secured byfarmland:Agriculturalbusiness,including 284,255 247,467 299,949 326,169 14.9 % (12.9 ) %secured byfarmlandSBA PPP 3,214 17,962 ? ? (82.1 ) % nmOne- tofour-family 682,368 637,701 717,939 771,431 7.0 % (11.5 ) %residentialConsumer: Consumer?homeequityrevolving 462,819 458,915 491,812 504,523 0.9 % (8.3 ) %lines ofcreditConsumer?other 98,413 101,807 113,958 118,308 (3.3 ) % (16.8 ) %Total loans $ 9,218,384 $ 9,654,181 $ 9,870,982 $ 10,163,917 (4.5 ) % (9.3 ) %receivableRestructuredloansperforming $ 5,273 $ 5,472 $ 6,673 $ 5,790 under theirrestructuredtermsLoans 30 - 89days past due $ 6,911 $ 5,656 $ 12,291 $ 18,158 and on accrualTotaldelinquentloans(including $ 18,619 $ 23,582 $ 36,131 $ 37,464 loans onnon-accrual),netTotaldelinquentloans/ 0.20 % 0.24 % 0.37 % 0.37 % Total loansreceivable

LOANS BYGEOGRAPHIC Percentage ChangeLOCATION Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020 Prior Qtr Prior Yr Qtr Amount Percentage Amount Amount Amount Washington $ 4,319,008 46.9 % $ 4,541,792 $ 4,647,553 $ 4,767,113 (4.9 ) % (9.4 ) %California 2,160,280 23.4 % 2,246,580 2,279,749 2,316,739 (3.8 ) % (6.8 ) %Oregon 1,679,452 18.2 % 1,753,285 1,792,156 1,858,465 (4.2 ) % (9.6 ) %Idaho 536,128 5.8 % 525,610 537,996 576,983 2.0 % (7.1 ) %Utah 89,620 1.0 % 92,103 80,704 76,314 (2.7 ) % 17.4 %Other 433,896 4.7 % 494,811 532,824 568,303 (12.3 ) % (23.7 ) %Totalloans $ 9,218,384 100.0 % $ 9,654,181 $ 9,870,982 $ 10,163,917 (4.5 ) % (9.3 ) %receivable

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) LOAN ORIGINATIONS Quarters Ended Sep 30, 2021 Jun 30, 2021 Sep 30, 2020Commercial real estate $ 174,827 $ 103,415 $ 74,400 Multifamily real estate 26,155 45,674 2,664 Construction and land 496,386 509,828 412,463 Commercial business: Commercial business 229,859 181,996 128,729 SBA PPP 907 55,990 24,848 Agricultural business 9,223 12,546 16,990 One-to four-family 49,594 47,086 32,733 residentialConsumer 145,102 131,424 132,100 Total loan originations(excluding loans held for $ 1,132,053 $ 1,087,959 $ 824,927 sale)

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) Quarters EndedCHANGE IN THE Sep 30, 2021 Jun 30, 2021 Sep 30, 2020ALLOWANCE FOR CREDIT LOSSES - LOANSBalance, beginning of period $ 148,009 $ 156,054 $ 156,352 (Recapture)/provision for (8,850 ) (8,100 ) 13,641 credit losses - loansRecoveries of loans previously charged off:Commercial real estate 923 147 23 One- to four-family real estate 19 20 94 Commercial business 230 321 246 Agricultural business, 17 8 ? including secured by farmlandConsumer 227 97 82 1,416 593 445 Loans charged off: Commercial real estate ? (3 ) (379 ) One- to four-family real estate ? ? (72 ) Commercial business (362 ) (123 ) (1,297 ) Agricultural business, (179 ) (2 ) (492 ) including secured by farmlandConsumer (119 ) (410 ) (233 ) (660 ) (538 ) (2,473 ) Net recoveries (charge-offs) 756 55 (2,028 ) Balance, end of period $ 139,915 $ 148,009 $ 167,965 Net recoveries (charge-offs) / 0.008 % 0.001 % (0.019 ) %Average loans receivable

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES - Sep 30, 2021 Jun 30, 2021 Sep 30, 2020LOANSSpecific or allocated credit loss allowance:Commercial real estate $ 57,215 $ 60,349 $ 59,705 Multifamily real estate 6,657 5,807 3,256 Construction and land 29,342 30,899 39,477 One- to four-family real estate 9,460 9,800 12,868 Commercial business 26,873 30,830 35,369 Agricultural business, 3,177 3,256 5,051 including secured by farmlandConsumer 7,191 7,068 12,239 Total allowance for credit $ 139,915 $ 148,009 $ 167,965 losses - loansAllowance for credit losses - 1.52 % 1.53 % 1.65 %loans / Total loans receivableAllowance for credit losses - 485 % 481 % 482 %loans / Non-performing loans

Quarters EndedCHANGE IN THE Sep 30, 2021 Jun 30, 2021 Sep 30, 2020ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTSBalance, beginning of period $ 9,909 $ 12,077 $ 10,555 Provision/(recapture) forcredit losses - unfunded 218 (2,168 ) 1,539 loan commitmentsBalance, end of period $ 10,127 $ 9,909 $ 12,094

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) Sep 30, Jun 30, Dec 31, Sep 30, 2021 2021 2020 2020NON-PERFORMING ASSETS Loans on non-accrual status: Secured by real estate: Commercial $ 14,931 $ 17,427 $ 18,199 $ 7,824 Construction and land 354 541 936 937 One- to four-family 3,182 4,007 3,556 2,978 Commercial business 2,700 3,673 5,407 14,867 Agricultural business, 1,022 1,200 1,743 2,066 including secured by farmlandConsumer 1,850 1,799 2,719 2,896 24,039 28,647 32,560 31,568 Loans more than 90 days delinquent, still on accrual:Secured by real estate: Commercial 3,955 911 ? ? One- to four-family 772 579 1,899 2,649 Commercial business 61 495 1,025 425 Consumer 34 131 130 181 4,822 2,116 3,054 3,255 Total non-performing loans 28,861 30,763 35,614 34,823 REO 852 763 816 1,795 Other repossessed assets 17 17 51 37 Total non-performing assets $ 29,730 $ 31,543 $ 36,481 $ 36,655 Total non-performing assetsto 0.18 % 0.19 % 0.24 % 0.25 %total assets

Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020LOANS BYCREDIT RISK RATING Pass $ 8,956,604 $ 9,315,264 $ 9,494,147 $ 9,699,098 Special 36,001 66,103 36,598 41,575 MentionSubstandard 225,779 272,814 340,237 423,244 Total $ 9,218,384 $ 9,654,181 $ 9,870,982 $ 10,163,917

Quarters Ended Nine Months EndedREAL ESTATE OWNED Sep 30, Jun 30, Sep 30, Sep 30, Sep 30, 2021 2021 2020 2021 2020Balance, beginning of $ 763 $ 340 $ 2,400 $ 816 $ 814 periodAdditions from loan 89 423 ? 512 1,588 foreclosuresProceeds from ? ? (707 ) (783 ) (805 ) dispositions of REOGain on sale of REO ? ? 120 307 216 Valuation adjustments ? ? (18 ) ? (18 ) in the periodBalance, end of period $ 852 $ 763 $ 1,795 $ 852 $ 1,795

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) DEPOSIT COMPOSITION Percentage Change Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020 Prior Qtr Prior Yr Qtr Non-interest-bearing $ 6,400,864 $ 6,090,063 $ 5,492,924 $ 5,412,570 5.1 % 18.3 %Interest-bearing 1,799,657 1,736,696 1,569,435 1,434,224 3.6 % 25.5 %checkingRegular savings 2,773,995 2,646,302 2,398,482 2,332,287 4.8 % 18.9 %accountsMoney market 2,339,107 2,290,600 2,191,135 2,120,908 2.1 % 10.3 %accountsTotalinterest-bearing 6,912,759 6,673,598 6,159,052 5,887,419 3.6 % 17.4 %transaction andsavings accountsTotal core deposits 13,313,623 12,763,661 11,651,976 11,299,989 4.3 % 17.8 %Interest-bearing 851,054 873,047 915,320 915,352 (2.5 ) % (7.0 ) %certificatesTotal deposits $ 14,164,677 $ 13,636,708 $ 12,567,296 $ 12,215,341 3.9 % 16.0 %

GEOGRAPHICCONCENTRATION OF DEPOSITS Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020 Percentage Change Amount Percentage Amount Amount Amount Prior Prior Qtr Yr QtrWashington $ 7,877,919 55.6 % $ 7,547,591 $ 7,058,404 $ 6,820,329 4.4 % 15.5 %Oregon 3,030,109 21.4 % 2,939,667 2,604,908 2,486,760 3.1 % 21.8 %California 2,501,521 17.7 % 2,417,387 2,237,949 2,254,681 3.5 % 10.9 %Idaho 755,128 5.3 % 732,063 666,035 653,571 3.2 % 15.5 %Total $ 14,164,677 100.0 % $ 13,636,708 $ 12,567,296 $ 12,215,341 3.9 % 16.0 %deposits

INCLUDED IN TOTAL Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020DEPOSITSPublicnon-interest-bearing $ 193,414 $ 187,702 $ 175,352 $ 142,415 accountsPublicinterest-bearing 161,407 156,987 127,523 117,514 transaction &savings accountsPublicinterest-bearing 40,851 41,444 59,127 54,219 certificatesTotal public $ 395,672 $ 386,133 $ 362,002 $ 314,148 deposits

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) Minimum to be Minimum to be Actual categorized as categorized as "Adequately "Well Capitalized" Capitalized"REGULATORY CAPITAL RATIOS Amount Ratio Amount Ratio Amount RatioAS OF SEPTEMBER 30, 2021 Banner Corporation-consolidated:Total capital to $ 1,635,458 14.55 % $ 899,302 8.00 % $ 1,124,128 10.00 %risk-weighted assetsTier 1 capital to 1,407,993 12.53 % 674,477 6.00 % 674,477 6.00 %risk-weighted assetsTier 1 leverage capital 1,407,993 8.79 % 640,528 4.00 % n/a n/ato average assetsCommon equity tier 1capital to risk-weighted 1,264,493 11.25 % 505,857 4.50 % n/a n/aassetsBanner Bank: Total capital to 1,524,897 13.57 % 898,803 8.00 % 1,123,504 10.00 %risk-weighted assetsTier 1 capital to 1,397,432 12.44 % 674,102 6.00 % 898,803 8.00 %risk-weighted assetsTier 1 leverage capital 1,397,432 8.73 % 640,385 4.00 % 800,482 5.00 %to average assetsCommon equity tier 1capital to risk-weighted 1,397,432 12.44 % 505,577 4.50 % 730,278 6.50 %assets

ADDITIONAL FINANCIAL INFORMATION (dollars in thousands) (rates / ratios annualized) ANALYSIS OF NET INTEREST SPREAD Quarters Ended Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Average Interest Yield / Average Interest Yield / Average Interest Yield / Balance and Cost^(3) Balance and Cost^(3) Balance and Cost^(3) Dividends Dividends DividendsInterest-earning assets: Held for sale loans $ 114,938 $ 996 3.44 % $ 69,908 $ 544 3.12 % $ 161,385 $ 1,535 3.78 %Mortgage loans 7,245,962 83,803 4.59 % 7,147,733 80,673 4.53 % 7,339,181 88,011 4.77 %Commercial/agricultural loans 1,534,978 15,776 4.08 % 1,480,954 15,818 4.28 % 1,721,186 18,553 4.29 %SBA PPP loans 566,515 15,421 10.80 % 1,144,195 17,796 6.24 % 1,141,105 7,843 2.73 %Consumer and other loans 120,112 1,774 5.86 % 122,951 1,828 5.96 % 140,493 2,195 6.22 %Total loans^(1)(3) 9,582,505 117,770 4.88 % 9,965,741 116,659 4.70 % 10,503,350 118,137 4.47 %Mortgage-backed securities 2,560,027 11,820 1.83 % 2,440,913 11,563 1.90 % 1,250,759 7,333 2.33 %Other securities 1,491,035 7,873 2.09 % 1,250,417 7,088 2.27 % 884,916 6,036 2.71 %Equity securities ? ? ? % ? ? ? % 379,483 186 0.19 %Interest-bearing deposits with 1,486,839 586 0.16 % 1,139,749 376 0.13 % 171,894 123 0.28 %banksFHLB stock 13,957 135 3.84 % 14,001 161 4.61 % 16,363 163 3.96 %Total investment securities ^(3) 5,551,858 20,414 1.46 % 4,845,080 19,188 1.59 % 2,703,415 13,841 2.04 %Total interest-earning assets 15,134,363 138,184 3.62 % 14,810,821 135,847 3.68 % 13,206,765 131,978 3.98 %Non-interest-earning assets 1,301,383 1,227,167 1,259,816 Total assets $ 16,435,746 $ 16,037,988 $ 14,466,581 Deposits: Interest-bearing checking accounts $ 1,771,869 282 0.06 % $ 1,754,363 302 0.07 % $ 1,413,085 321 0.09 %Savings accounts 2,721,028 458 0.07 % 2,622,716 454 0.07 % 2,251,294 813 0.14 %Money market accounts 2,322,453 668 0.11 % 2,288,638 668 0.12 % 2,096,037 1,224 0.23 %Certificates of deposit 863,971 1,341 0.62 % 889,020 1,604 0.72 % 966,028 2,821 1.16 %Total interest-bearing deposits 7,679,321 2,749 0.14 % 7,554,737 3,028 0.16 % 6,726,444 5,179 0.31 %Non-interest-bearing deposits 6,275,634 ? ? % 6,057,884 ? ? % 5,340,688 ? ? %Total deposits 13,954,955 2,749 0.08 % 13,612,621 3,028 0.09 % 12,067,132 5,179 0.17 %Other interest-bearing liabilities:FHLB advances 98,370 655 2.64 % 100,000 655 2.63 % 150,000 988 2.62 %Other borrowings 252,720 125 0.20 % 240,229 124 0.21 % 177,628 128 0.29 %Junior subordinated debentures and 247,944 2,193 3.51 % 247,944 2,204 3.57 % 247,944 2,260 3.63 %subordinated notesTotal borrowings 599,034 2,973 1.97 % 588,173 2,983 2.03 % 575,572 3,376 2.33 %Total funding liabilities 14,553,989 5,722 0.16 % 14,200,794 6,011 0.17 % 12,642,704 8,555 0.27 %Other non-interest-bearing 202,918 199,619 193,256 liabilities^(2)Total liabilities 14,756,907 14,400,413 12,835,960 Shareholders? equity 1,678,839 1,637,575 1,630,621 Total liabilities and $ 16,435,746 $ 16,037,988 $ 14,466,581 shareholders? equityNet interest income/rate spread $ 132,462 3.46 % $ 129,836 3.51 % $ 123,423 3.71 %(tax equivalent)Net interest margin (tax 3.47 % 3.52 % 3.72 %equivalent)Reconciliation to reported net interest income:Adjustments for taxable equivalent (2,316 ) (2,282 ) (2,397 ) basisNet interest income and margin, as $ 130,146 3.41 % $ 127,554 3.45 % $ 121,026 3.65 %reportedAdditional Key Financial Ratios: Return on average assets 1.20 % 1.36 % 1.01 %Return on average equity 11.79 % 13.32 % 8.92 %Average equity/average assets 10.21 % 10.21 % 11.27 %Average interest-earning assets/average interest-bearing 182.82 % 181.89 % 180.86 %liabilitiesAverage interest-earning assets/ 103.99 % 104.30 % 104.46 %average funding liabilitiesNon-interest income/average assets 0.61 % 0.56 % 0.78 %Non-interest expense/average 2.47 % 2.32 % 2.48 %assetsEfficiency ratio^(4) 65.70 % 61.79 % 60.32 %Adjusted efficiency ratio^(5) 59.65 % 58.50 % 58.02 %

Average balances include loans accounted for on a nonaccrual basis and(1) loans 90 days or more past due. Amortization of net deferred loan fees/ costs is included with interest on loans.(2) Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures. Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.3 million, $1.3 million, and $1.4 million for the three months ended(3) September30, 2021, June 30, 2021, and September30, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million, $1.0 million, and $976,000 for the three months ended September30, 2021, June 30, 2021, and September30, 2020, respectively.(4) Non-interest expense divided by the total of net interest income and non-interest income. Adjusted non-interest expense divided by adjusted revenue. These(5) represent non-GAAP financial measures. See the non-GAAP Financial Measures on the final two pages of the press release tables.

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands)(rates / ratios annualized)ANALYSIS OF NET Nine Months EndedINTEREST SPREAD Sep 30, 2021 Sep 30, 2020 Average Interest Yield/ Average Interest Yield/ Balance and Cost^(3) Balance and Cost^(3) Dividends DividendsInterest-earning assets:Held for sale loans $ 101,380 $ 2,465 3.25 % $ 155,571 $ 4,506 3.87 %Mortgage loans 7,179,859 245,056 4.56 % 7,321,206 268,244 4.89 %Commercial/ 1,511,723 47,513 4.20 % 1,811,854 61,424 4.53 %agricultural loansSBA PPP loans 958,848 44,009 6.14 % 638,380 13,131 2.75 %Consumer and other 123,483 5,549 6.01 % 151,968 7,151 6.29 %loansTotal loans^(1)(3) 9,875,293 344,592 4.67 % 10,078,979 354,456 4.70 %Mortgage-backed 2,320,474 32,855 1.89 % 1,297,020 24,652 2.54 %securitiesOther securities 1,265,056 21,648 2.29 % 710,967 15,205 2.86 %Equity securities 574 ? ? % 165,395 309 0.25 %Interest-bearing 1,221,241 1,224 0.13 % 159,065 688 0.58 %deposits with banksFHLB stock 14,629 457 4.18 % 19,822 785 5.29 %Total investment 4,821,974 56,184 1.56 % 2,352,269 41,639 2.36 %securities^(3)Totalinterest-earning 14,697,267 400,776 3.65 % 12,431,248 396,095 4.26 %assetsNon-interest-earning 1,255,512 1,232,997 assetsTotal assets $ 15,952,779 $ 13,664,245 Deposits: Interest-bearing $ 1,714,920 899 0.07 % $ 1,352,369 1,164 0.11 %checking accountsSavings accounts 2,611,046 1,433 0.07 % 2,133,780 3,566 0.22 %Money market 2,284,904 2,111 0.12 % 1,940,096 5,228 0.36 %accountsCertificates of 888,502 4,943 0.74 % 1,069,145 10,665 1.33 %depositTotalinterest-bearing 7,499,372 9,386 0.17 % 6,495,390 20,623 0.42 %depositsNon-interest-bearing 6,001,354 ? ? % 4,738,559 ? ? %depositsTotal deposits 13,500,726 9,386 0.09 % 11,233,949 20,623 0.25 %Otherinterest-bearing liabilities:FHLB advances 114,103 2,244 2.63 % 236,949 4,036 2.28 %Other borrowings 232,142 358 0.21 % 195,977 482 0.33 %Junior subordinateddebentures and 247,944 6,605 3.56 % 181,886 4,988 3.66 %subordinated notesTotal borrowings 594,189 9,207 2.07 % 614,812 9,506 2.07 %Total funding 14,094,915 18,593 0.18 % 11,848,761 30,129 0.34 %liabilitiesOthernon-interest-bearing 203,349 197,912 liabilities^(2)Total liabilities 14,298,264 12,046,673 Shareholders? equity 1,654,515 1,617,572 Total liabilitiesand shareholders? $ 15,952,779 $ 13,664,245 equityNet interest income/rate spread (tax $ 382,183 3.47 % $ 365,966 3.92 %equivalent)Net interest margin 3.48 % 3.93 %(tax equivalent)Reconciliation toreported net interest income:Adjustments fortaxable equivalent (6,822 ) (6,102 ) basisNet interest incomeand margin, as $ 375,361 3.41 % $ 359,864 3.87 %reportedAdditional Key Financial Ratios:Return on average 1.27 % 0.75 %assetsReturn on average 12.21 % 6.36 %equityAverage equity/ 10.37 % 11.84 %average assetsAverageinterest-earningassets/average ' 181.59 % 174.84 %interest-bearingliabilitiesAverageinterest-earning 104.27 % 104.92 %assets/averagefunding liabilitiesNon-interest income/ 0.60 % 0.73 %average assetsNon-interest expense 2.42 % 2.68 %/average assetsEfficiency ratio^(4) 64.45 % 63.00 %Adjusted efficiency 60.39 % 59.59 %ratio^(5)

Average balances include loans accounted for on a nonaccrual basis and(1) loans 90 days or more past due. Amortization of net deferred loan fees/ costs is included with interest on loans.(2) Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures. Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $3.8 million and $3.6 million for the nine months ended September30, 2021 and(3) September30, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.0 million and $2.5 million for the nine months ended September30, 2021 and September30, 2020, respectively.(4) Non-interest expense divided by the total of net interest income and non-interest income. Adjusted non-interest expense divided by adjusted revenue. These(5) represent non-GAAP financial measures. See the non-GAAP Financial Measures on the final two pages of the press release tables.

ADDITIONALFINANCIAL INFORMATION(dollars in thousands) * Non-GAAPFinancial MeasuresIn addition to results presented in accordance with generally acceptedaccounting principles in the United States of America (GAAP), this pressrelease contains certain non-GAAP financial measures. Management has presentedthese non-GAAP financial measures in this earnings release because it believesthat they provide useful and comparative information to assess trends inBanner?s core operations reflected in the current quarter?s results andfacilitate the comparison of our performance with the performance of our peers.However, these non-GAAP financial measures are supplemental and are not asubstitute for any analysis based on GAAP. Where applicable, comparableearnings information using GAAP financial measures is also presented. Becausenot all companies use the same calculations, our presentation may not becomparable to other similarly titled measures as calculated by other companies.For a reconciliation of these non-GAAP financial measures, see the tablesbelow: ADJUSTED Quarters Ended Nine Months EndedREVENUE Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020Net interest $ 130,146 $ 127,554 $ 121,026 $ 375,361 $ 359,864 incomeTotalnon-interest 25,334 22,336 28,222 71,942 75,107 incomeTotalrevenue 155,480 149,890 149,248 447,303 434,971 (GAAP)Exclude netgain on sale (56 ) (77 ) (644 ) (618 ) (815 ) ofsecuritiesExclude netchange invaluation offinancial (1,778 ) (58 ) (37 ) (1,895 ) 2,360 instrumentscarried atfair valueAdjustedrevenue $ 153,646 $ 149,755 $ 148,567 $ 444,790 $ 436,516 (non-GAAP)

ADJUSTED EARNINGS Quarters Ended Nine Months Ended Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020Net income (GAAP) $ 49,884 $ 54,382 $ 36,548 $ 151,121 $ 76,971 Exclude net gain on (56 ) (77 ) (644 ) (618 ) (815 ) sale of securitiesExclude net changein valuation offinancial (1,778 ) (58 ) (37 ) (1,895 ) 2,360 instruments carriedat fair valueExclude merger andacquisition-related 10 79 5 660 1,483 expensesExclude COVID-19 44 117 778 309 3,169 expensesExclude Banner 7,592 1,905 ? 10,447 ? Forward expensesExclude related nettax expense (1,395 ) (472 ) (24 ) (2,137 ) (1,476 ) (benefit)Total adjusted $ 54,301 $ 55,876 $ 36,626 $ 157,887 $ 81,692 earnings (non-GAAP) Diluted earnings $ 1.44 $ 1.56 $ 1.03 $ 4.32 $ 2.17 per share (GAAP)Diluted adjustedearnings per share $ 1.57 $ 1.60 $ 1.04 $ 4.51 $ 2.30 (non-GAAP)

ADDITIONALFINANCIAL INFORMATION(dollars in thousands)ADJUSTED EFFICIENCY Quarters Ended Nine Months EndedRATIO Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020Non-interest $ 102,145 $ 92,624 $ 90,028 $ 288,296 $ 274,033 expense (GAAP)Exclude merger andacquisition-related (10 ) (79 ) (5 ) (660 ) (1,483 ) expensesExclude COVID-19 (44 ) (117 ) (778 ) (309 ) (3,169 ) expensesExclude Banner (7,592 ) (1,905 ) ? (10,447 ) ? Forward expensesExclude CDI (1,575 ) (1,711 ) (1,864 ) (4,997 ) (5,867 ) amortizationExclude state/municipal tax (1,219 ) (1,083 ) (1,196 ) (3,367 ) (3,284 ) expenseExclude REO (53 ) (118 ) 11 71 (93 ) operationsAdjustednon-interest $ 91,652 $ 87,611 $ 86,196 $ 268,587 $ 260,137 expense (non-GAAP) Net interest income $ 130,146 $ 127,554 $ 121,026 $ 375,361 $ 359,864 (GAAP)Non-interest income 25,334 22,336 28,222 71,942 75,107 (GAAP)Total revenue 155,480 149,890 149,248 447,303 434,971 Exclude net gain on (56 ) (77 ) (644 ) (618 ) (815 ) sale of securitiesExclude net changein valuation offinancial (1,778 ) (58 ) (37 ) (1,895 ) 2,360 instruments carriedat fair valueAdjusted revenue $ 153,646 $ 149,755 $ 148,567 $ 444,790 $ 436,516 (non-GAAP) Efficiency ratio 65.70 % 61.79 % 60.32 % 64.45 % 63.00 %(GAAP)Adjusted efficiency 59.65 % 58.50 % 58.02 % 60.39 % 59.59 %ratio (non-GAAP)

TANGIBLECOMMONSHAREHOLDERS? Sep 30, 2021 Jun 30, 2021 Dec 31, 2020 Sep 30, 2020EQUITY TOTANGIBLEASSETSShareholders? $ 1,667,119 $ 1,669,211 $ 1,666,264 $ 1,646,529 equity (GAAP)Excludegoodwill andother 389,550 391,125 394,547 396,412 intangibleassets, netTangiblecommonshareholders? $ 1,277,569 $ 1,278,086 $ 1,271,717 $ 1,250,117 equity(non-GAAP) Total assets $ 16,637,879 $ 16,181,857 $ 15,031,623 $ 14,642,075 (GAAP)Excludegoodwill andother 389,550 391,125 394,547 396,412 intangibleassets, netTotaltangible $ 16,248,329 $ 15,790,732 $ 14,637,076 $ 14,245,663 assets(non-GAAP)Commonshareholders?equity to 10.02 % 10.32 % 11.09 % 11.25 %total assets(GAAP)Tangiblecommonshareholders?equity to 7.86 % 8.09 % 8.69 % 8.78 %tangibleassets(non-GAAP) TANGIBLECOMMONSHAREHOLDERS? EQUITY PERSHARETangiblecommonshareholders? $ 1,277,569 $ 1,278,086 $ 1,271,717 $ 1,250,117 equity(non-GAAP)Common sharesoutstanding 34,251,991 34,550,888 35,159,200 35,158,568 at end ofperiodCommonshareholders?equity (book $ 48.67 $ 48.31 $ 47.39 $ 46.83 value) pershare (GAAP)Tangiblecommonshareholders?equity $ 37.30 $ 36.99 $ 36.17 $ 35.56 (tangiblebook value)per share(non-GAAP)

MARK J. GRESCOVICH,CONTACT: PRESIDENT & CEO PETER J. CONNER, CFO (509) 527-3636