GlobeNewswire Inc | Jan 20, 2022 04:00PM EST

January 20, 2022

WALLA WALLA, Wash., Jan. 20, 2022 (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 fourth quarter of 2021, virtually unchanged from $49.9 million, or $1.44 per diluted share, for the third quarter of 2021 and compared to $39.0 million, or $1.10 per diluted share, for the fourth quarter of 2020. Banners fourth quarter 2021 results include $5.2 million in recapture of provision for credit losses, compared to $8.6 million in recapture of provision for credit losses in the preceding quarter and $602,000 in provision for credit losses in the fourth quarter of 2020. Net income for 2021 increased 73% to a record $201.0 million, or $5.76 per diluted share, compared to $115.9 million, or $3.26 per diluted share for 2020. Full year 2021 results include $33.4 million in recapture of provision for credit losses, compared to $67.9 million in provision for credit losses in 2020.

Banner announced that its Board of Directors increased its regular quarterly cash dividend by 7% to $0.44 per share. The dividend will be payable February 14, 2022, to common shareholders of record on February 3, 2022.

Banners record 2021 operating results reflect the continued execution of our super community bank strategy including implementation of Banner Forward. We are generating new client relationships and adding to our core funding position by growing core deposits while maintaining a moderate risk profile, said Mark Grescovich, President and CEO. Our performance for the fourth quarter benefited from lower operating expense, 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 16% compared to December31, 2020. We continue to live by our core values, summed up as doing the right thing for our clients, our communities, our colleagues, our company and our shareholders while providing a consistent and reliable source of capital through all economic cycles and changing events.

During the third quarter of 2021 we began implementing Banner Forward, a bank-wide initiative to drive revenue growth and reduce operating expense, said Grescovich. Full implementation is expected by 2023, with the goal of delivering sequential improvements in operating performance over the course of the next six quarters while staying true to our mission and value proposition of being connected, knowledgeable and responsive to our clients, communities and employees. Banner Forward is focused on accelerating growth in commercial banking, deepening relationships with retail clients, and advancing technology strategies to enhance our digital service channels, while streamlining underwriting and back office processes. During the fourth quarter of 2021, we incurred expenses of $1.2 million related to Banner Forward.

At December31, 2021, Banner Corporation had $16.80 billion in assets, $8.95 billion in net loans and $14.33 billion in deposits. Banner operates 150 branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

Fourth Quarter 2021 Highlights

-- Revenues decreased 6% to $146.0 million, primarily due to a decline in SBA PPP loan forgiveness related interest income, compared to $155.5 million in the preceding quarter, and increased 1% when compared to $144.9 million in the fourth quarter a year ago. -- Net interest income decreased to $121.5 million in the fourth quarter of 2021, compared to $130.1 million in the preceding quarter and increased compared to $121.4 million in the fourth quarter a year ago. -- Net interest margin on a tax equivalent basis was 3.17%, compared to 3.47% in the preceding quarter and 3.64% in the fourth quarter a year ago. -- Mortgage banking revenues decreased 41% to $5.6 million, compared to $9.6 million in the preceding quarter, and decreased 47% compared to $10.6 million in the fourth quarter a year ago. -- Return on average assets was 1.18%, compared to 1.20% in the preceding quarter and 1.04% in the fourth quarter a year ago. -- Net loans receivable decreased to $8.95 billion at December31, 2021, compared to $9.08 billion at September 30, 2021, and decreased 8% compared to $9.70 billion at December31, 2020. -- Non-performing assets decreased to $23.7 million, or 0.14% of total assets, at December31, 2021, compared to $29.7 million, or 0.18% of total assets in the preceding quarter, and decreased from $36.5 million, or 0.24% of total assets, at December31, 2020. -- The allowance for credit losses - loans was $132.1 million, or 1.45% of total loans receivable, as of December31, 2021, compared to $139.9 million, or 1.52% of total loans receivable as of September 30, 2021 and $167.3 million, or 1.69% of total loans receivable as of December31, 2020. -- Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased 1% to $13.49 billion at December31, 2021, compared to $13.31 billion at September 30, 2021, and increased 16% compared to $11.65 billion a year ago. Core deposits represented 94% of total deposits at December31, 2021. -- Dividends to shareholders were $0.41 per share in the quarter ended December31, 2021. -- Common shareholders equity per share increased 1% to $49.35 at December31, 2021, compared to $48.67 at the preceding quarter end, and increased 4% from $47.39 a year ago. -- Tangible common shareholders equity per share* increased 2% to $38.02 at December31, 2021, compared to $37.30 at the preceding quarter end, and increased 5% from $36.17 a year ago.

*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 total 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, loss on extinguishment of debt 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. In addition, Banner has made the decision to consolidate another seven branches in February 2022. 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 ends.

Income Statement Review

Net interest income was $121.5 million in the fourth quarter of 2021, compared to $130.1 million in the preceding quarter and $121.4 million in the fourth quarter a year ago.

Banners net interest margin on a tax equivalent basis was 3.17% for the fourth quarter of 2021, a 30 basis-point decrease compared to 3.47% in the preceding quarter and a 47 basis-point decrease compared to 3.64% in the fourth quarter a year ago.

Lower interest income, primarily as a result of the decline in the acceleration of the recognition of deferred loan fee income due to loan repayments from SBA PPP loan forgiveness, adversely affected our net interest margin during the quarter. This impact was partially offset by a decrease in the cost of funding liabilities, said Grescovich. Acquisition accounting adjustments added five basis points to the net interest margin in the current quarter, three basis points in the preceding quarter and five basis points in the fourth quarter a year ago. The total purchase discount for acquired loans was $9.7 million at December31, 2021, compared to $11.5 million at September 30, 2021, and $16.1 million at December31, 2020. For the year ended December31, 2021, Banners net interest margin on a tax equivalent basis was 3.39% compared to 3.85% in 2020.

Average yields on interest-earning assets decreased 33 basis points to 3.29% in the fourth quarter compared to 3.62% for the preceding quarter and decreased 58 basis points compared to 3.87% in the fourth quarter a year ago. These decreases in average yield between periods primarily reflects decreases in the average yield on investment securities and increases in the average balance of interest-bearing deposits, as excess liquidity was invested in low yielding short term investments. Average loan yields decreased 31 basis points to 4.57% compared to 4.88% in the preceding quarter and increased four basis points compared to 4.53% in the fourth quarter a year ago. The decrease in average loan yields during the current quarter compared to the preceding quarter was primarily the result of the decline in the acceleration of the recognition of deferred loan fee income due to loan repayments from SBA PPP loan forgiveness during the quarter. Loan discount accretion added eight basis points to average loan yields in the current quarter, five basis points in the preceding quarter and seven basis points in the fourth quarter a year ago. Deposit costs were 0.07% in the fourth quarter of 2021, a one basis-point decrease compared to the preceding quarter and a seven basis-point decrease compared to the fourth 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 funding liabilities was 0.13% during the fourth quarter of 2021, a three basis-point decrease compared to the preceding quarter and an 11 basis-point decrease compared to the fourth quarter a year ago.

Banner recorded a $5.2 million recapture of provision for credit losses in the current quarter (comprised of an $8.1 million recapture provision for credit losses - loans, a $2.3 million provision for credit losses - unfunded loan commitments and a $579,000 provision for credit losses - held-to-maturity debt securities). This recapture compares to an $8.6 million recapture of provision for credit losses in the prior quarter (comprised of an $8.9 million recapture of provision for credit losses - loans and a $218,000 provision for credit losses - unfunded loan commitments) and a $602,000 provision for credit losses in the fourth quarter a year ago (comprised of a $593,000 recapture of provision for credit losses - loans and a $1.2 million provision for credit losses - unfunded loan commitments). The recapture of provision for credit losses for the current and preceding quarters primarily reflects improvement in the level of adversely classified loans as well as in the forecasted economic indicators utilized to calculate credit losses.

Total non-interest income was $24.5 million in the fourth quarter of 2021, compared to $25.3 million in the preceding quarter and $23.5 million in the fourth quarter a year ago. Deposit fees and other service charges were $10.3 million in the fourth quarter of 2021, compared to $10.5 million in the preceding quarter and $8.3 million in the fourth quarter a year ago. The increase in deposit fees and other service charges from the fourth 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, decreased to $5.6 million in the fourth quarter, compared to $9.6 million in the preceding quarter and decreased compared to $10.6 million in the fourth quarter of 2020. The lower mortgage banking revenue for the current quarter compared to the prior quarter is primarily due to no multifamily loan sales or related gains during the current quarter compared to the prior quarter, which included $2.4million of gain on the sale of multifamily loans. The decrease from the fourth quarter of 2020 reflects a reduction in the volume of one- to four-family loans sold as well as a decrease in the gain on sale margin on one- to four-family held-for-sale loans. Home purchase activity accounted for 64% of one- to four-family mortgage loan originations in the fourth quarter of 2021, compared to 68% in the prior quarter and 51% in the fourth quarter of 2020. Miscellaneous non-interest income increased to $4.7 million in the fourth quarter of 2021, compared to $2.2 million in the preceding quarter and $1.4 million in the fourth quarter a year ago. The increase in miscellaneous non-interest income from the prior quarter and fourth quarter a year ago is primarily a result of a valuation adjustment on the SBA servicing asset, higher gains related to SBA loans sold as well as gains related to the disposition of closed branch locations. For the year ended December31, 2021, total non-interest income decreased 2% to $96.4 million, compared to $98.6 million in 2020.

Banners fourth quarter 2021 results included a $2.7 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 limited partnership investments, and a $136,000 net loss on the sale of securities. In the preceding quarter, results included a $1.8 million net gain for fair value adjustments and a $56,000 net gain on the sale of securities. In the fourth quarter a year ago, results included a $1.7 million net gain for fair value adjustments and a $197,000 net gain on the sale of securities.

Total revenue decreased 6% to $146.0 million for the fourth quarter of 2021, compared to $155.5 million in the preceding quarter, and increased 1% compared to $144.9 million in the fourth quarter a year ago. For the year, total revenues increased 2% to $593.3 million compared to $579.9 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 $143.4 million in the fourth quarter of 2021, compared to $153.6 million in the preceding quarter and $143.0 million in the fourth quarter of 2020. For the year ended December31, 2021, adjusted revenue* was $588.2 million, compared to $579.6 million in 2020.

Total non-interest expense was $91.8 million in the fourth quarter of 2021, compared to $102.1 million in the preceding quarter and $95.6 million in the fourth quarter of 2020. The decrease in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $10.1 million decrease in professional and legal expenses. The decrease in professional and legal expenses was primarily due to $5.8million of consultant expense related to the Banner Forward initiative and a $4.0million accrual related to pending litigation recorded during the prior quarter. Additionally, salary and employee benefits expense decreased $2.0 million, primarily due to a reduction in staffing, and payment and card processing services expense decreased $1.1 million, primarily reflecting a decrease in fraud related losses. These decreases were partially offset by a $2.3 million loss on extinguishment of debt as a result of the redemption of $8.2million of junior subordinated debentures during the current quarter. The year-over-year quarterly decrease in non-interest expense also primarily reflects decreases in salary and employee benefits expense, and professional and legal expenses. The year-over-year quarterly decreases in non-interest expense were partially offset by an increase in payment and card processing services expense, a decrease in capitalized loan origination costs and the previously mentioned loss on extinguishment of debt. COVID-19 expenses were $127,000 for the fourth quarter of 2021, compared to $44,000 for the preceding quarter and $333,000 in the fourth quarter a year ago. For the year, total non-interest expense was $380.1 million, compared to $369.6 million in the same period a year earlier. Banners efficiency ratio was 62.88% for the current quarter, compared to 65.70% in the preceding quarter and 65.93% in the year ago quarter. Banners adjusted efficiency ratio* was 59.71% for the current quarter, compared to 59.65% in the preceding quarter and 64.31% in the year ago quarter.

For the fourth quarter of 2021, Banner had $9.5 million in state and federal income tax expense for an effective tax rate of 16.0%, reflecting the benefits from tax exempt income and an adjustment to the deferred tax asset during the quarter. 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 $16.80 billion at December31, 2021, compared to $16.64 billion at September 30, 2021, and increased 12% when compared to $15.03 billion at December31, 2020. The total of securities and interest-bearing deposits held at other banks was $6.26 billion at December31, 2021, compared to $6.03 billion at September 30, 2021 and $3.69 billion at December31, 2020. The average effective duration of Banner's securities portfolio was approximately 4.6 years at December31, 2021, compared to 3.6 years at December31, 2020.

Total loans receivable decreased 1% to $9.08 billion at December31, 2021, compared to $9.22 billion at September 30, 2021, and decreased 8% when compared to $9.87 billion at December31, 2020. The decrease in total loans receivable compared to the prior quarter primarily reflects the forgiveness of SBA PPP loans. Excluding SBA PPP loans, total loans receivable increased $42.6 million during the current quarter. SBA PPP loans decreased 57% to $133.9 million at December31, 2021, compared to $310.2 million at September 30, 2021, and decreased 87% when compared to $1.04 billion at December31, 2020. The decrease in SBA PPP loans was partially offset by increases in commercial real estate and multifamily real estate. Commercial real estate and multifamily real estate loans increased 1% to $4.28 billion at December31, 2021, compared to $4.24 billion at September 30, 2021, and increased 6% compared to $4.03 billion a year ago. Commercial business loans decreased 7% to $1.96 billion at December31, 2021, compared to $2.12 billion at September 30, 2021, and decreased 33% compared to $2.92 billion a year ago, primarily due to SBA PPP loans forgiven. Excluding SBA PPP loans, commercial business loans increased 1% to $1.83 billion at December31, 2021, compared to $1.82 billion at September 30, 2021, and decreased 2% compared to $1.88 billion a year ago. Agricultural business loans decreased to $285.8 million at December31, 2021, compared to $287.5 million at September 30, 2021 and decreased from $299.9 million a year ago. Total construction, land and land development loans were $1.31 billion at December31, 2021, a 1% decrease from $1.33 billion at September 30, 2021, and a 2% increase compared to $1.29 billion a year earlier. Consumer loans decreased to $555.9 million at December31, 2021, compared to $561.2 million at September 30, 2021, and decreased from $605.8 million a year ago. One- to four-family loans increased slightly to $683.3 million at December31, 2021, compared to $682.4 million at September 30, 2021, and decreased from $717.9 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 $96.5 million at December31, 2021, compared to $63.7 million at September 30, 2021, and $243.8 million at December31, 2020. The volume of one- to four- family residential mortgage loans sold was $245.9million in the current quarter, compared to $232.2million in the preceding quarter and $356.6million in the fourth quarter a year ago. Banner sold no multifamily loans during the fourth quarter of 2021, compared to $96.1million in the preceding quarter and $10.4million in the fourth quarter a year ago.

Total deposits increased 1% to $14.33 billion at December31, 2021, compared to $14.16 billion at September 30, 2021, and increased 14% when compared to $12.57 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 decreased to $6.39 billion at December31, 2021, compared to $6.40 billion at September 30, 2021, and increased 16% compared to $5.49 billion a year ago. Core deposits were 94% of total deposits at both December31, 2021 and September 30, 2021. Certificates of deposit decreased to $838.6 million at December31, 2021, compared to $851.1 million at September 30, 2021, and decreased 8% compared to $915.3 million a year earlier. FHLB borrowings were $50.0 million at both December31, 2021 and September 30, 2021 and decreased from $150.0 million a year ago.

At December31, 2021, total common shareholders equity was $1.69 billion, or 10.06% of assets, compared to $1.67 billion or 10.02% of assets at September 30, 2021, and $1.67 billion or 11.09% of assets a year ago. At December31, 2021, tangible common shareholders equity*, which excludes goodwill and other intangible assets, net, was $1.30 billion, or 7.93% of tangible assets*, compared to $1.28 billion, or 7.86% of tangible assets, at September 30, 2021, and $1.27 billion, or 8.69% of tangible assets, a year ago. Banners tangible book value per share* increased to $38.02 at December31, 2021, compared to $36.17 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 December31, 2021, Banner's common equity Tier 1 capital ratio was 11.54%, its Tier 1 leverage capital to average assets ratio was 8.76%, and its total capital to risk-weighted assets ratio was 14.71%.

Credit Quality

The allowance for credit losses - loans was $132.1 million at December31, 2021, or 1.45% of total loans receivable outstanding and 578% of non-performing loans, compared to $139.9 million at September 30, 2021, or 1.52% of total loans receivable outstanding and 485% of non-performing loans, and $167.3 million at December31, 2020, or 1.69% of total loans receivable outstanding and 470% 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 $12.4 million at December31, 2021, compared to $10.1 million at September 30, 2021 and $13.3 million at December31, 2020. Net loan recoveries totaled $311,000 in the fourth quarter of 2021, compared to $756,000 in the preceding quarter and $93,000 of net loan charge-offs in the fourth quarter a year ago. Non-performing loans were $22.8 million at December31, 2021, compared to $28.9 million at September 30, 2021, and $35.6 million a year ago. Real estate owned and other repossessed assets were $869,000 at both December31, 2021 and September 30, 2021, compared to $867,000 a year ago.

Banners total substandard loans were $198.4 million at December31, 2021, compared to $225.8 million at September 30, 2021, and $340.2 million a year ago. The quarter over quarter decrease primarily reflects the payoff of substandard loans as well as balance paydowns and risk rating upgrades.

Banners total non-performing assets were $23.7 million, or 0.14% of total assets, at December31, 2021, compared to $29.7 million, or 0.18% of total assets, at September 30, 2021, and $36.5 million, or 0.24% of total assets, a year ago.

At December31, 2021, Banner had 21 mortgage loans totaling $6.4million 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 Friday, January 21, 2022, at 8:00 a.m. PST, to discuss its fourth quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (844) 200-6205 using access code 579750 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 905147, or at www.bannerbank.com.

About the Company

Banner Corporation is a $16.80 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) uncertainty regarding the future of the London Interbank Offered Rate (LIBOR), and the potential transition away from LIBOR toward new interest rate benchmarks; (6) the impact of repricing and competitors pricing initiatives on loan and deposit products; (7) fluctuations in real estate values; (8) the ability to adapt successfully to technological changes to meet clients needs and developments in the market place; (9) the ability to access cost-effective funding; (10) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (11) changes in financial markets; (12) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (13) the costs, effects and outcomes of litigation; (14) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (15) changes in accounting principles, policies or guidelines; (16) future acquisitions by Banner of other depository institutions or lines of business; (17) 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; (18) the costs associated with Banner Forward and (19) 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 Twelve Months EndedOPERATIONS(in thousandsexcept shares and Dec 31, 2021 Sep 30, 2021 Dec 31, 2020 Dec 31, 2021 Dec 31, 2020per share data) INTEREST INCOME: Loans receivable $ 104,929 $ 116,487 $ 115,545 $ 445,731 $ 466,360 Mortgage-backed 13,220 11,695 7,438 45,723 31,792 securitiesSecurities and cash 8,397 7,686 6,170 29,046 20,994 equivalents 126,546 135,868 129,153 520,500 519,146 INTEREST EXPENSE: Deposits 2,384 2,749 4,392 11,770 25,015 Federal Home Loan 348 655 987 2,592 5,023 Bank advancesOther borrowings 109 125 121 467 603 Junior subordinateddebentures and 2,175 2,193 2,216 8,780 7,204 subordinated notes 5,016 5,722 7,716 23,609 37,845 Net interest income 121,530 130,146 121,437 496,891 481,301 (RECAPTURE)/PROVISION FOR (5,243 ) (8,638 ) 602 (33,388 ) 67,875 CREDIT LOSSESNet interest incomeafter (recapture)/ 126,773 138,784 120,835 530,279 413,426 provision forcredit lossesNON-INTEREST INCOME:Deposit fees andother service 10,341 10,457 8,293 39,495 34,384 chargesMortgage banking 5,643 9,613 10,586 33,948 51,083 operationsBank-owned life 1,203 1,245 1,319 5,000 5,972 insuranceMiscellaneous 4,702 2,185 1,410 12,875 6,821 21,889 23,500 21,608 91,318 98,260 Net (loss) gain on (136 ) 56 197 482 1,012 sale of securitiesNet change invaluation offinancial 2,721 1,778 1,704 4,616 (656 )instruments carriedat fair valueTotal non-interest 24,474 25,334 23,509 96,416 98,616 incomeNON-INTEREST EXPENSE:Salary and employee 57,798 59,799 60,906 244,351 245,400 benefitsLess capitalizedloan origination (7,647 ) (8,290 ) (9,415 ) (34,401 ) (34,848 )costsOccupancy and 13,885 13,153 14,248 52,850 53,362 equipmentInformation /computer data 6,441 6,110 6,402 24,356 24,386 servicesPayment and card 5,062 6,181 3,960 20,544 16,095 processing servicesProfessional and 2,251 12,324 5,643 22,274 12,093 legal expensesAdvertising and 2,071 1,521 2,828 6,036 6,412 marketingDeposit insurance 1,340 1,469 1,548 5,583 6,516 expenseState/municipalbusiness and use 976 1,219 1,071 4,343 4,355 taxesReal estate 49 53 (283 ) (22 ) (190 )operationsAmortization ofcore deposit 1,574 1,575 1,865 6,571 7,732 intangiblesLoss onextinguishment of 2,284 ? ? 2,284 ? debtMiscellaneous 5,594 6,977 5,871 24,236 22,712 91,678 102,091 94,644 379,005 364,025 COVID-19 expenses 127 44 333 436 3,502 Merger andacquisition-related ? 10 579 660 2,062 expensesTotal non-interest 91,805 102,145 95,556 380,101 369,589 expenseIncome beforeprovision for 59,442 61,973 48,788 246,594 142,453 income taxesPROVISION 9,515 12,089 9,831 45,546 26,525 FORINCOME TAXESNET INCOME $ 49,927 $ 49,884 $ 38,957 $ 201,048 $ 115,928 Earnings per shareavailable to common shareholders:Basic $ 1.46 $ 1.45 $ 1.11 $ 5.81 $ 3.29 Diluted $ 1.44 $ 1.44 $ 1.10 $ 5.76 $ 3.26 Cumulativedividends declared $ 0.41 $ 0.41 $ 0.41 $ 1.64 $ 1.23 per common shareWeighted averagecommon shares outstanding:Basic 34,292,967 34,446,510 35,200,769 34,610,056 35,264,252 Diluted 34,575,607 34,669,492 35,425,810 34,919,188 35,528,848 Increase (decrease)in common shares 641 (298,897 ) 632 (906,568 ) (592,376 )outstanding

FINANCIALCONDITION Percentage Change(in thousands except Prior Yrshares and per share Dec 31, 2021 Sep 30, 2021 Dec 31, 2020 Prior Qtr Qtrdata) ASSETS Cash and due from $ 358,461 $ 392,035 $ 311,899 (8.6) % 14.9 %banksInterest-bearing 1,775,839 1,808,547 922,284 (1.8) % 92.5 %depositsTotal cash and cash 2,134,300 2,200,582 1,234,183 (3.0) % 72.9 %equivalentsSecurities - trading 26,981 26,875 24,980 0.4 % 8.0 %Securities - 3,638,993 3,446,575 2,322,593 5.6 % 56.7 %available for saleSecurities - held to 520,922 447,708 421,713 16.4 % 23.5 %maturityTotal securities 4,186,896 3,921,158 2,769,286 6.8 % 51.2 %Federal Home Loan 12,000 12,000 16,358 ? % (26.6) %Bank stockSecurities purchasedunder agreements to 300,000 300,000 ? ? % nmresellLoans held for sale 96,487 63,678 243,795 51.5 % (60.4) %Loans receivable 9,084,763 9,218,384 9,870,982 (1.4) % (8.0) %Allowance for credit (132,099 ) (139,915 ) (167,279 ) (5.6) % (21.0) %losses - loansNet loans receivable 8,952,664 9,078,469 9,703,703 (1.4) % (7.7) %Accrued interest 42,916 43,644 46,617 (1.7) % (7.9) %receivableReal estate owned(REO) held for sale, 852 852 816 ? % 4.4 %netProperty and 148,759 151,503 164,556 (1.8) % (9.6) %equipment, netGoodwill 373,121 373,121 373,121 ? % ? %Other intangibles, 14,855 16,429 21,426 (9.6) % (30.7) %netBank-owned life 244,156 192,950 191,830 26.5 % 27.3 %insuranceOperating lease 55,257 58,523 55,367 (5.6) % (0.2) %right-of-use assetsOther assets 242,609 224,970 210,565 7.8 % 15.2 %Total assets $ 16,804,872 $ 16,637,879 $ 15,031,623 1.0 % 11.8 %LIABILITIES Deposits: Non-interest-bearing $ 6,385,177 $ 6,400,864 $ 5,492,924 (0.2) % 16.2 %Interest-bearingtransaction and 7,103,125 6,912,759 6,159,052 2.8 % 15.3 %savings accountsInterest-bearing 838,631 851,054 915,320 (1.5) % (8.4) %certificatesTotal deposits 14,326,933 14,164,677 12,567,296 1.1 % 14.0 %Advances fromFederal Home Loan 50,000 50,000 150,000 ? % (66.7) %BankCustomer repurchaseagreements and other 264,490 247,358 184,785 6.9 % 43.1 %borrowingsSubordinated notes, 98,564 98,472 98,201 0.1 % 0.4 %netJunior subordinateddebentures at fair 119,815 124,853 116,974 (4.0) % 2.4 %valueOperating lease 59,756 62,946 59,343 (5.1) % 0.7 %liabilitiesAccrued expenses and 148,303 175,960 143,300 (15.7) % 3.5 %other liabilitiesDeferred 46,684 46,494 45,460 0.4 % 2.7 %compensationTotal liabilities 15,114,545 14,970,760 13,365,359 1.0 % 13.1 %SHAREHOLDERS? EQUITY Common stock 1,299,381 1,297,145 1,349,879 0.2 % (3.7) %Retained earnings 390,762 355,035 247,316 10.1 % 58.0 %Other components of 184 14,939 69,069 (98.8) % (99.7) %shareholders? equityTotal shareholders? 1,690,327 1,667,119 1,666,264 1.4 % 1.4 %equityTotal liabilitiesand shareholders? $ 16,804,872 $ 16,637,879 $ 15,031,623 1.0 % 11.8 %equityCommon Shares Issued:Shares outstanding 34,252,632 34,251,991 35,159,200 at end of periodCommon shareholders?equity per share ^ $ 49.35 $ 48.67 $ 47.39 (1)Common shareholders?tangible equity per $ 38.02 $ 37.30 $ 36.17 share ^(1) (2)Common shareholders?tangible equity to 7.93 % 7.86 % 8.69 % tangible assets ^(2)Consolidated Tier 1leverage capital 8.76 % 8.79 % 9.50 % 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 Dec 31, 2021 Sep 30, 2021 Dec 31, 2020 Prior Prior Yr Qtr Qtr Commercial real estate:Owner-occupied $ 1,131,828 $ 1,122,275 $ 1,076,467 0.9 % 5.1 %Investment 1,990,461 1,980,284 1,955,684 0.5 % 1.8 %propertiesSmall balance 598,212 601,751 573,849 (0.6) % 4.2 %CREMultifamily 564,100 532,760 428,223 5.9 % 31.7 %real estateConstruction,land and land development:Commercial 169,530 170,205 228,937 (0.4) % (25.9) %constructionMultifamily 259,116 278,184 305,527 (6.9) % (15.2) %constructionOne- tofour-family 568,753 571,431 507,810 (0.5) % 12.0 %constructionLand and land 313,454 308,164 248,915 1.7 % 25.9 %developmentCommercial business:Commercial 1,039,502 1,039,731 1,133,989 ? % (8.3) %businessSBA PPP 132,574 306,976 1,044,472 (56.8) % (87.3) %Small business 792,310 775,554 743,451 2.2 % 6.6 %scoredAgriculturalbusiness,including secured byfarmland:Agriculturalbusiness,including 284,399 284,255 299,949 0.1 % (5.2) %secured byfarmlandSBA PPP 1,354 3,214 ? (57.9) % nmOne- tofour-family 683,268 682,368 717,939 0.1 % (4.8) %residentialConsumer: Consumer?homeequityrevolving 458,533 462,819 491,812 (0.9) % (6.8) %lines ofcreditConsumer?other 97,369 98,413 113,958 (1.1) % (14.6) %Total loans $ 9,084,763 $ 9,218,384 $ 9,870,982 (1.4) % (8.0) %receivableRestructuredloansperforming $ 5,309 $ 5,273 $ 6,673 under theirrestructuredtermsLoans 30 - 89days past due $ 11,558 $ 6,911 $ 12,291 and on accrualTotaldelinquentloans(including $ 18,688 $ 18,619 $ 36,131 loans onnon-accrual),netTotaldelinquentloans/ 0.21 % 0.20 % 0.37 % Total loansreceivable

LOANS BY PercentageGEOGRAPHIC ChangeLOCATION Dec 31, 2021 Sep 30, Dec 31, Prior Prior 2021 2020 Qtr Yr Qtr Amount Percentage Amount Amount Washington $ 4,264,590 47.0% $ 4,319,008 $ 4,647,553 (1.3)% (8.2)%California 2,138,340 23.5% 2,160,280 2,279,749 (1.0)% (6.2)%Oregon 1,652,364 18.2% 1,679,452 1,792,156 (1.6)% (7.8)%Idaho 525,141 5.8% 536,128 537,996 (2.0)% (2.4)%Utah 74,913 0.8% 89,620 80,704 (16.4) (7.2)% %Other 429,415 4.7% 433,896 532,824 (1.0)% (19.4) %Totalloans $ 9,084,763 100.0% $ 9,218,384 $ 9,870,982 (1.4)% (8.0)%receivable

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands)

LOAN Quarters Ended Twelve Months EndedORIGINATIONS Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020Commercial $ 196,350 $ 174,827 $ 93,838 $ 565,809 $ 356,361real estateMultifamily 25,933 26,155 7,900 110,640 27,119real estateConstruction 522,081 496,386 515,280 1,975,664 1,588,311and landCommercial business:Commercial 203,549 229,859 133,112 731,315 628,981businessSBA PPP ? 907 ? 485,077 1,176,018Agricultural 13,061 9,223 11,552 61,997 76,096businessOne-tofour-family 52,251 49,594 28,402 206,662 116,713residentialConsumer 101,365 145,102 97,416 465,213 423,526Total loanoriginations(excluding $ 1,114,590 $ 1,132,053 $ 887,500 $ 4,602,377 $ 4,393,125loans heldfor sale)

ADDITIONALFINANCIAL INFORMATION(dollars in thousands) Quarters Ended Twelve Months EndedCHANGE IN THE Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020ALLOWANCE FORCREDIT LOSSES - LOANSBalance,beginning of $ 139,915 $ 148,009 $ 167,965 $ 167,279 $ 100,559 periodBeginningbalanceadjustment ? ? ? ? 7,812 for adoptionof ASC 326(Recapture)/provision for (8,127 ) (8,850 ) (593 ) (33,112 ) 64,285 credit losses- loansRecoveries ofloans previouslycharged off:Commercial 635 923 31 1,729 275 real estateConstruction ? ? ? 100 105 and landOne- tofour-family 47 19 194 199 467 real estateCommercial 267 230 2,444 1,797 3,265 businessAgriculturalbusiness,including 5 17 51 30 1,823 secured byfarmlandConsumer 140 227 90 760 328 1,094 1,416 2,810 4,615 6,263 Loans charged off:Commercial (1 ) ? (1,375 ) (3,767 ) (1,854 )real estateMultifamily (59 ) ? ? (59 ) (66 )real estateConstruction ? ? ? ? (100 )and landOne- tofour-family ? ? ? ? (136 )real estateCommercial (488 ) (362 ) (1,019 ) (1,762 ) (7,253 )businessAgriculturalbusiness,including ? (179 ) (37 ) (181 ) (591 )secured byfarmlandConsumer (235 ) (119 ) (472 ) (914 ) (1,640 ) (783 ) (660 ) (2,903 ) (6,683 ) (11,640 )Netrecoveries 311 756 (93 ) (2,068 ) (5,377 )(charge-offs)Balance, end $ 132,099 $ 139,915 $ 167,279 $ 132,099 $ 167,279 of periodNetrecoveries(charge-offs) 0.003 % 0.008 % (0.001 ) (0.021 ) (0.053 )/ Average % % %loansreceivable

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES Dec 31, 2021 Sep 30, 2021 Dec 31, 2020- LOANSSpecific or allocated credit loss allowance:Commercial real estate $ 52,995 $ 57,215 $ 57,791 Multifamily real estate 7,043 6,657 3,893 Construction and land 27,294 29,342 41,295 One- to four-family real 8,205 9,460 9,913 estateCommercial business 26,421 26,873 35,007 Agricultural business,including secured by 3,190 3,177 4,914 farmlandConsumer 6,951 7,191 14,466 Total allowance for credit $ 132,099 $ 139,915 $ 167,279 losses - loansAllowance for credit losses- loans / Total loans 1.45 % 1.52 % 1.69 %receivableAllowance for credit losses- loans / Non-performing 578 % 485 % 470 %loans

Quarters Ended Twelve Months EndedCHANGE IN THE Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020ALLOWANCE FOR CREDITLOSSES - UNFUNDED LOAN COMMITMENTSBalance, beginning of $ 10,127 $ 9,909 $ 12,094 $ 13,297 $ 2,716periodBeginning balanceadjustment for ? ? ? ? 7,022adoption of ASC 326Provision/(recapture)for credit losses - 2,305 218 1,203 (865 ) 3,559unfunded loancommitmentsBalance, end of period $ 12,432 $ 10,127 $ 13,297 $ 12,432 $ 13,297

ADDITIONAL FINANCIAL INFORMATION (dollars in thousands) Dec 31, Sep 30, Dec 31, 2021 2021 2020NON-PERFORMING ASSETS Loans on non-accrual status: Secured by real estate: Commercial $ 14,159 $ 14,931 $ 18,199 Construction and land 479 354 936 One- to four-family 2,711 3,182 3,556 Commercial business 2,156 2,700 5,407 Agricultural business, including secured 1,022 1,022 1,743 by farmlandConsumer 1,754 1,850 2,719 22,281 24,039 32,560 Loans more than 90 days delinquent, still on accrual:Secured by real estate: Commercial ? 3,955 ? One- to four-family 436 772 1,899 Commercial business 2 61 1,025 Consumer 117 34 130 555 4,822 3,054 Total non-performing loans 22,836 28,861 35,614 REO 852 852 816 Other repossessed assets 17 17 51 Total non-performing assets $ 23,705 $ 29,730 $ 36,481 Total non-performing assetsto total 0.14 % 0.18 % 0.24 %assets

Dec 31, 2021 Sep 30, 2021 Dec 31, 2020LOANS BY CREDIT RISK RATING Pass $ 8,874,468 $ 8,956,604 $ 9,494,147Special Mention 11,932 36,001 36,598Substandard 198,363 225,779 340,237Total $ 9,084,763 $ 9,218,384 $ 9,870,982

Quarters Ended Twelve Months EndedREAL ESTATE OWNED Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020Balance, beginning of $ 852 $ 763 $ 1,795 $ 816 $ 814 periodAdditions from loan ? 89 ? 512 1,588 foreclosuresProceeds from ? ? (1,555 ) (783 ) (2,360 )dispositions of REOGain on sale of REO ? ? 603 307 819 Valuation adjustments ? ? (27 ) ? (45 )in the periodBalance, end of period $ 852 $ 852 $ 816 $ 852 $ 816

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands) DEPOSIT COMPOSITION Percentage Change Dec 31, 2021 Sep 30, 2021 Dec 31, 2020 Prior Prior Yr Qtr Qtr Non-interest-bearing $ 6,385,177 $ 6,400,864 $ 5,492,924 (0.2) % 16.2 %Interest-bearing 1,947,414 1,799,657 1,569,435 8.2 % 24.1 %checkingRegular savings 2,784,716 2,773,995 2,398,482 0.4 % 16.1 %accountsMoney market 2,370,995 2,339,107 2,191,135 1.4 % 8.2 %accountsTotalinterest-bearing 7,103,125 6,912,759 6,159,052 2.8 % 15.3 %transaction andsavings accountsTotal core deposits 13,488,302 13,313,623 11,651,976 1.3 % 15.8 %Interest-bearing 838,631 851,054 915,320 (1.5) % (8.4) %certificatesTotal deposits $ 14,326,933 $ 14,164,677 $ 12,567,296 1.1 % 14.0 %

GEOGRAPHICCONCENTRATION OF DEPOSITS Dec 31, 2021 Sep 30, 2021 Dec 31, 2020 Percentage Change Amount Percentage Amount Amount Prior Prior Yr Qtr QtrWashington $ 7,952,376 55.5 % $ 7,877,919 $ 7,058,404 0.9 % 12.7 %Oregon 3,067,054 21.4 % 3,030,109 2,604,908 1.2 % 17.7 %California 2,524,296 17.6 % 2,501,521 2,237,949 0.9 % 12.8 %Idaho 783,207 5.5 % 755,128 666,035 3.7 % 17.6 %Total $ 14,326,933 100.0 % $ 14,164,677 $ 12,567,296 1.1 % 14.0 %deposits

INCLUDED IN TOTAL DEPOSITS Dec 31, Sep 30, Dec 31, 2021 2021 2020Public non-interest-bearing accounts $ 193,917 $ 193,414 $ 175,352Public interest-bearing transaction & 159,957 161,407 127,523savings accountsPublic interest-bearing certificates 39,961 40,851 59,127Total public deposits $ 393,835 $ 395,672 $ 362,002

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 DECEMBER 31, 2021 Banner Corporation-consolidated:Total capital to $ 1,663,943 14.71 % $ 904,633 8.00 % $ 1,130,791 10.00 %risk-weighted assetsTier 1 capital to 1,440,694 12.74 % 678,474 6.00 % 678,474 6.00 %risk-weighted assetsTier 1 leverage capital 1,440,694 8.76 % 658,091 4.00 % n/a n/ato average assetsCommon equity tier 1capital to risk-weighted 1,305,194 11.54 % 508,856 4.50 % n/a n/aassetsBanner Bank: Total capital to 1,552,204 13.73 % 904,159 8.00 % 1,130,199 10.00 %risk-weighted assetsTier 1 capital to 1,428,955 12.64 % 678,119 6.00 % 904,159 8.00 %risk-weighted assetsTier 1 leverage capital 1,428,955 8.69 % 657,882 4.00 % 822,353 5.00 %to average assetsCommon equity tier 1capital to risk-weighted 1,428,955 12.64 % 508,589 4.50 % 734,629 6.50 %assets

ADDITIONAL FINANCIAL INFORMATION(dollars in thousands)(rates / ratios annualized)ANALYSIS OF NET Quarters EndedINTEREST SPREAD Dec 31, 2021 Sep 30, 2021 Dec 31, 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 $ 73,101 $ 601 3.26 % $ 114,938 $ 996 3.44 % $ 110,414 $ 976 3.52 %Mortgage loans 7,362,363 83,059 4.48 % 7,245,962 83,803 4.59 % 7,251,101 84,634 4.64 %Commercial/ 1,460,486 14,966 4.07 % 1,534,978 15,776 4.08 % 1,626,508 19,143 4.68 %agricultural loansSBA PPP loans 209,776 5,845 11.05 % 566,515 15,421 10.80 % 1,125,844 10,002 3.53 %Consumer and other 119,658 1,749 5.80 % 120,112 1,774 5.86 % 135,498 2,057 6.04 %loansTotal loans^(1)(3) 9,225,384 106,220 4.57 % 9,582,505 117,770 4.88 % 10,249,365 116,812 4.53 %Mortgage-backed 2,838,759 13,344 1.86 % 2,560,027 11,820 1.83 % 1,429,635 7,536 2.10 %securitiesOther securities 1,550,383 8,466 2.17 % 1,491,035 7,873 2.09 % 975,166 6,634 2.71 %Equity securities ? ? ? % ? ? ? % 234,822 64 0.11 %Interest-bearing 1,901,165 731 0.15 % 1,486,839 586 0.16 % 611,234 219 0.14 %deposits with banksFHLB stock 12,000 135 4.46 % 13,957 135 3.84 % 16,361 162 3.94 %Total investment 6,302,307 22,676 1.43 % 5,551,858 20,414 1.46 % 3,267,218 14,615 1.78 %securities ^(3)Totalinterest-earning 15,527,691 128,896 3.29 % 15,134,363 138,184 3.62 % 13,516,583 131,427 3.87 %assetsNon-interest-earning 1,306,437 1,301,383 1,349,055 assetsTotal assets $ 16,834,128 $ 16,435,746 $ 14,865,638 Deposits: Interest-bearing $ 1,875,097 289 0.06 % $ 1,771,869 282 0.06 % $ 1,483,183 315 0.08 %checking accountsSavings accounts 2,773,597 400 0.06 % 2,721,028 458 0.07 % 2,375,015 691 0.12 %Money market 2,367,861 559 0.09 % 2,322,453 668 0.11 % 2,165,960 1,047 0.19 %accountsCertificates of 840,920 1,136 0.54 % 863,971 1,341 0.62 % 916,286 2,339 1.02 %depositTotalinterest-bearing 7,857,475 2,384 0.12 % 7,679,321 2,749 0.14 % 6,940,444 4,392 0.25 %depositsNon-interest-bearing 6,523,149 ? ? % 6,275,634 ? ? % 5,499,240 ? ? %depositsTotal deposits 14,380,624 2,384 0.07 % 13,954,955 2,749 0.08 % 12,439,684 4,392 0.14 %Otherinterest-bearing liabilities:FHLB advances 50,000 348 2.76 % 98,370 655 2.64 % 150,000 987 2.62 %Other borrowings 266,559 109 0.16 % 252,720 125 0.20 % 187,560 121 0.26 %Junior subordinateddebentures and 246,510 2,175 3.50 % 247,944 2,193 3.51 % 247,944 2,216 3.56 %subordinated notesTotal borrowings 563,069 2,632 1.85 % 599,034 2,973 1.97 % 585,504 3,324 2.26 %Total funding 14,943,693 5,016 0.13 % 14,553,989 5,722 0.16 % 13,025,188 7,716 0.24 %liabilitiesOthernon-interest-bearing 216,940 202,918 195,965 liabilities^(2)Total liabilities 15,160,633 14,756,907 13,221,153 Shareholders? equity 1,673,495 1,678,839 1,644,485 Total liabilitiesand shareholders? $ 16,834,128 $ 16,435,746 $ 14,865,638 equityNet interest income/rate spread (tax $ 123,880 3.16 % $ 132,462 3.46 % $ 123,711 3.63 %equivalent)Net interest margin 3.17 % 3.47 % 3.64 %(tax equivalent)Reconciliation toreported net interest income:Adjustments fortaxable equivalent (2,350 ) (2,316 ) (2,274 ) basisNet interest incomeand margin, as $ 121,530 3.11 % $ 130,146 3.41 % $ 121,437 3.57 %reportedAdditional Key Financial Ratios:Return on average 1.18 % 1.20 % 1.04 %assetsReturn on average 11.84 % 11.79 % 9.42 %equityAverage equity/ 9.94 % 10.21 % 11.06 %average assetsAverageinterest-earningassets/average 184.40 % 182.82 % 179.60 %interest-bearingliabilitiesAverageinterest-earning 103.91 % 103.99 % 103.77 %assets/averagefunding liabilitiesNon-interest income/ 0.58 % 0.61 % 0.63 %average assetsNon-interest expense 2.16 % 2.47 % 2.56 %/average assetsEfficiency ratio^(4) 62.88 % 65.70 % 65.93 %Adjusted efficiency 59.71 % 59.65 % 64.31 %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 $1.3 million for each of the three months ended December31, 2021, September 30,(3) 2021 and December31, 2020. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.1 million for the three months ended December31, 2021 and $1.0 million for both the three months ended September 30, 2021 and December31, 2020.(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 Twelve Months EndedINTEREST SPREAD Dec 31, 2021 Dec 31, 2020 Average Interest Yield/ Average Interest Yield/ Balance and Cost^(3) Balance and Cost^(3) Dividends DividendsInterest-earning assets:Held for sale loans $ 94,252 $ 3,066 3.25 % $ 144,220 $ 5,482 3.80 %Mortgage loans 7,225,860 328,115 4.54 % 7,303,584 352,878 4.83 %Commercial/ 1,498,808 62,479 4.17 % 1,765,265 80,567 4.56 %agricultural loansSBA PPP loans 770,041 49,854 6.47 % 760,912 23,133 3.04 %Consumer and other 122,520 7,298 5.96 % 147,827 9,208 6.23 %loansTotal loans^(1)(3) 9,711,481 450,812 4.64 % 10,121,808 471,268 4.66 %Mortgage-backed 2,451,110 46,199 1.88 % 1,330,355 32,188 2.42 %securitiesOther securities 1,336,974 30,114 2.25 % 777,378 21,839 2.81 %Equity securities 429 ? ? % 182,846 373 0.20 %Interest-bearing 1,392,619 1,955 0.14 % 272,725 907 0.33 %deposits with banksFHLB stock 13,966 592 4.24 % 18,952 947 5.00 %Total investment 5,195,098 78,860 1.52 % 2,582,256 56,254 2.18 %securities^(3)Totalinterest-earning 14,906,579 529,672 3.55 % 12,704,064 527,522 4.15 %assetsNon-interest-earning 1,268,348 1,262,170 assetsTotal assets $ 16,174,927 $ 13,966,234 Deposits: Interest-bearing $ 1,755,293 1,188 0.07 % $ 1,385,252 1,479 0.11 %checking accountsSavings accounts 2,652,018 1,833 0.07 % 2,194,418 4,257 0.19 %Money market 2,305,814 2,670 0.12 % 1,996,870 6,275 0.31 %accountsCertificates of 876,509 6,079 0.69 % 1,030,722 13,004 1.26 %depositTotalinterest-bearing 7,589,634 11,770 0.16 % 6,607,262 25,015 0.38 %depositsNon-interest-bearing 6,132,875 ? ? % 4,929,768 ? ? %depositsTotal deposits 13,722,509 11,770 0.09 % 11,537,030 25,015 0.22 %Otherinterest-bearing liabilities:FHLB advances 97,945 2,592 2.65 % 215,093 5,023 2.34 %Other borrowings 240,817 467 0.19 % 193,862 603 0.31 %Junior subordinateddebentures and 247,583 8,780 3.55 % 198,490 7,204 3.63 %subordinated notesTotal borrowings 586,345 11,839 2.02 % 607,445 12,830 2.11 %Total funding 14,308,854 23,609 0.16 % 12,144,475 37,845 0.31 %liabilitiesOthernon-interest-bearing 206,774 197,422 liabilities^(2)Total liabilities 14,515,628 12,341,897 Shareholders? equity 1,659,299 1,624,337 Total liabilitiesand shareholders? $ 16,174,927 $ 13,966,234 equityNet interest income/rate spread (tax $ 506,063 3.39 % $ 489,677 3.84 %equivalent)Net interest margin 3.39 % 3.85 %(tax equivalent)Reconciliation toreported net interest income:Adjustments fortaxable equivalent (9,172 ) (8,376 ) basisNet interest incomeand margin, as $ 496,891 3.33 % $ 481,301 3.79 %reportedAdditional Key Financial Ratios:Return on average 1.24 % 0.83 %assetsReturn on average 12.12 % 7.14 %equityAverage equity/ 10.26 % 11.63 %average assetsAverageinterest-earningassets/average ' 182.32 % 176.09 %interest-bearingliabilitiesAverageinterest-earning 104.18 % 104.61 %assets/averagefunding liabilitiesNon-interest income/ 0.60 % 0.71 %average assetsNon-interest expense 2.35 % 2.65 %/average assetsEfficiency ratio^(4) 64.06 % 63.73 %Adjusted efficiency 60.22 % 60.76 %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 $5.1 million and $4.9 million for the twelve months ended December31, 2021 and(3) December31, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $4.1 million and $3.5 million for the twelve months ended December31, 2021 and December31, 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 Twelve Months EndedREVENUE Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020Net interest $ 121,530 $ 130,146 $ 121,437 $ 496,891 $ 481,301 incomeTotalnon-interest 24,474 25,334 23,509 96,416 98,616 incomeTotalrevenue 146,004 155,480 144,946 593,307 579,917 (GAAP)Exclude netloss (gain) 136 (56 ) (197 ) (482 ) (1,012 )on sale ofsecuritiesExclude netchange invaluation offinancial (2,721 ) (1,778 ) (1,704 ) (4,616 ) 656 instrumentscarried atfair valueAdjustedrevenue $ 143,419 $ 153,646 $ 143,045 $ 588,209 $ 579,561 (non-GAAP)

ADJUSTED EARNINGS Quarters Ended Twelve Months Ended Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020Net income (GAAP) $ 49,927 $ 49,884 $ 38,957 $ 201,048 $ 115,928 Exclude net loss(gain) on sale of 136 (56 ) (197 ) (482 ) (1,012 )securitiesExclude net changein valuation offinancial (2,721 ) (1,778 ) (1,704 ) (4,616 ) 656 instruments carriedat fair valueExclude merger andacquisition-related ? 10 579 660 2,062 expensesExclude COVID-19 127 44 333 436 3,502 expensesExclude Banner 1,157 7,592 ? 11,604 ? Forward expensesExclude loss onextinguishment of 2,284 ? ? 2,284 ? debtExclude related nettax (benefit) (236 ) (1,395 ) 237 (2,373 ) (1,239 )expenseTotal adjusted $ 50,674 $ 54,301 $ 38,205 $ 208,561 $ 119,897 earnings (non-GAAP) Diluted earnings $ 1.44 $ 1.44 $ 1.10 $ 5.76 $ 3.26 per share (GAAP)Diluted adjustedearnings per share $ 1.47 $ 1.57 $ 1.08 $ 5.97 $ 3.37 (non-GAAP)

ADDITIONALFINANCIAL INFORMATION(dollars in thousands)ADJUSTED EFFICIENCY Quarters Ended Twelve Months EndedRATIO Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, 2021 2021 2020 2021 2020Non-interest $ 91,805 $ 102,145 $ 95,556 $ 380,101 $ 369,589 expense (GAAP)Exclude merger andacquisition-related ? (10 ) (579 ) (660 ) (2,062 )expensesExclude COVID-19 (127 ) (44 ) (333 ) (436 ) (3,502 )expensesExclude Banner (1,157 ) (7,592 ) ? (11,604 ) ? Forward expensesExclude CDI (1,574 ) (1,575 ) (1,865 ) (6,571 ) (7,732 )amortizationExclude state/municipal tax (976 ) (1,219 ) (1,071 ) (4,343 ) (4,355 )expenseExclude REO (49 ) (53 ) 283 22 190 operationsExclude loss onextinguishment of (2,284 ) ? ? (2,284 ) ? debtAdjustednon-interest $ 85,638 $ 91,652 $ 91,991 $ 354,225 $ 352,128 expense (non-GAAP) Net interest income $ 121,530 $ 130,146 $ 121,437 $ 496,891 $ 481,301 (GAAP)Non-interest income 24,474 25,334 23,509 96,416 98,616 (GAAP)Total revenue 146,004 155,480 144,946 593,307 579,917 Exclude net loss(gain) on sale of 136 (56 ) (197 ) (482 ) (1,012 )securitiesExclude net changein valuation offinancial (2,721 ) (1,778 ) (1,704 ) (4,616 ) 656 instruments carriedat fair valueAdjusted revenue $ 143,419 $ 153,646 $ 143,045 $ 588,209 $ 579,561 (non-GAAP) Efficiency ratio 62.88 % 65.70 % 65.93 % 64.06 % 63.73 %(GAAP)Adjusted efficiency 59.71 % 59.65 % 64.31 % 60.22 % 60.76 %ratio (non-GAAP)

TANGIBLE COMMONSHAREHOLDERS? EQUITY TO Dec 31, 2021 Sep 30, 2021 Dec 31, 2020TANGIBLE ASSETSShareholders? equity (GAAP) $ 1,690,327 $ 1,667,119 $ 1,666,264 Exclude goodwill and other 387,976 389,550 394,547 intangible assets, netTangible commonshareholders? equity $ 1,302,351 $ 1,277,569 $ 1,271,717 (non-GAAP) Total assets (GAAP) $ 16,804,872 $ 16,637,879 $ 15,031,623 Exclude goodwill and other 387,976 389,550 394,547 intangible assets, netTotal tangible assets $ 16,416,896 $ 16,248,329 $ 14,637,076 (non-GAAP)Common shareholders? equity 10.06 % 10.02 % 11.09 %to total assets (GAAP)Tangible commonshareholders? equity to 7.93 % 7.86 % 8.69 %tangible assets (non-GAAP) TANGIBLE COMMONSHAREHOLDERS? EQUITY PER SHARETangible commonshareholders? equity $ 1,302,351 $ 1,277,569 $ 1,271,717 (non-GAAP)Common shares outstanding at 34,252,632 34,251,991 35,159,200 end of periodCommon shareholders? equity(book value) per share $ 49.35 $ 48.67 $ 47.39 (GAAP)Tangible commonshareholders? equity $ 38.02 $ 37.30 $ 36.17 (tangible book value) pershare (non-GAAP)

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