10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2021

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ to ______________

 Commission File Number 000-26584

BANNER CORPORATION

(Exact name of registrant as specified in its charter)

Washington	91-1691604
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

10 South First Avenue, Walla Walla, Washington 99362

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (509) 527-3636

Securities registered pursuant to Section 12(b) of the Act

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	BANR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
							Yes	[x]	No	[  ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
							Yes	[x]	No	[  ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer	[x]		Accelerated filer    [ ]	Non-accelerated filer   [  ]		Smaller reporting company				☐
Emerging growth company		☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).							Yes	☐	No	[x]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Title of class:					As of October 31, 2021
Common Stock, $.01 par value per share					34,252,367 shares

1

BANNER CORPORATION AND SUBSIDIARIES

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1 – Financial Statements.  The Unaudited Condensed Consolidated Financial Statements of Banner Corporation and Subsidiaries filed as a part of the report are as follows:
Consolidated Statements of Financial Condition as of September 30, 2021 and December 31, 2020	4
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	5
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020	6
Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2021 and the Year Ended December 31, 2020	7
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	11
Selected Notes to the Consolidated Financial Statements	13
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Overview	51
Comparison of Financial Condition at September 30, 2021 and December 31, 2020	60
Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	63
Asset Quality	71
Liquidity and Capital Resources	73
Capital Requirements	74
Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Market Risk and Asset/Liability Management	76
Sensitivity Analysis	76
Item 4 – Controls and Procedures	80
PART II – OTHER INFORMATION
Item 1 – Legal Proceedings	81
Item 1A – Risk Factors	81
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3 – Defaults upon Senior Securities	82
Item 4 – Mine Safety Disclosures	82
Item 5 – Other Information	82
Item 6 – Exhibits	83
SIGNATURES	85

2

Special Note Regarding Forward-Looking Statements

Certain matters in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements relate to our financial condition, liquidity, results of operations, plans, objectives, future performance or business.  Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.”  Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items.  These forward looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements. The novel coronavirus (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: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses and provisions for credit losses; the ability to manage loan delinquency rates; competitive pressures among financial services companies; changes in consumer spending or borrowing and spending habits; interest rate movements generally and the relative differences between short and long-term interest rates, loan and deposit interest rates, net interest margin and funding sources; uncertainty regarding the future of the London Interbank Offered Rate (LIBOR), and the potential transition away from LIBOR toward new interest rate benchmarks; the impact of repricing and competitors’ pricing initiatives on loan and deposit products; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values; the ability to adapt successfully to technological changes to meet clients’ needs and developments in the marketplace; the ability to access cost-effective funding; the ability to control operating costs and expenses, including the costs associated with our “Banner Forward” initiative; the use of estimates in determining fair value of certain assets and liabilities, which estimates may prove to be incorrect and result in significant changes in valuation; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect employees, and potential associated charges; 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; changes in financial markets; changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; secondary market conditions for loans and the ability to sell loans in the secondary market; the costs, effects and outcomes of litigation; legislation or regulatory changes or reforms, including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, results of safety and soundness and compliance examinations by the Board of Governors of the Federal Reserve System (the Federal Reserve), the Federal Deposit Insurance Corporation (the FDIC), the Washington State Department of Financial Institutions, Division of Banks, (the Washington DFI) or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require restitution or institute an informal or formal enforcement action which could require an increase in reserves for loan losses, write-downs of assets or changes in regulatory capital position, or affect the ability to borrow funds, or maintain or increase deposits, or impose additional requirements and restrictions, any of which could adversely affect liquidity and earnings; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; the inability of key third-party providers to perform their obligations; changes in accounting principles, policies or guidelines, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory and technological factors affecting operations, pricing, products and services; including the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act) and the Consolidated Appropriations Act, 2021 the (CAA); future acquisitions by Banner of other depository institutions or lines of business; and future goodwill impairment due to changes in Banner’s business, changes in market conditions, including as a result of the COVID-19 pandemic, including recent vaccination efforts, or other factors; and other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission (SEC), including this report on Form 10-Q.  Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made.  We do not undertake and specifically disclaim any obligation to update any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise.  These risks could cause our actual results to differ materially from those expressed in any forward-looking statements by, or on behalf of, us. Further, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the COVID-19 pandemic.  In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements.

As used throughout this report, the terms “we,” “our,” “us,” or the “Company” refer to Banner Corporation and its consolidated subsidiaries, unless the context otherwise requires.  All references to “Banner” refer to Banner Corporation and those to “the Bank” refer to its wholly-owned subsidiary, Banner Bank.

3

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) (In thousands, except shares)

September 30, 2021 and December 31, 2020

ASSETS	September 30, 2021		December 31, 2020
Cash and due from banks	$	392,035	$	311,899
Interest bearing deposits	1,808,547		922,284
Total cash and cash equivalents	2,200,582		1,234,183
Securities—trading	26,875		24,980
Securities—available-for-sale, amortized cost $3,443,516 and $2,256,189, respectively	3,446,575		2,322,593
Securities—held-to-maturity, net of allowance for credit losses of $104 and $94, respectively, fair value $466,002 and $448,681, respectively	447,708		421,713
Total securities	3,921,158		2,769,286
Federal Home Loan Bank (FHLB) stock	12,000		16,358
Securities purchased under agreements to resell	300,000		—
Loans held for sale (includes $41,480 and $133,554, at fair value, respectively)	63,678		243,795
Loans receivable	9,218,384		9,870,982
Allowance for credit losses – loans	(139,915)		(167,279)
Net loans receivable	9,078,469		9,703,703
Accrued interest receivable	43,644		46,617
Real estate owned (REO), held for sale, net	852		816
Property and equipment, net	151,503		164,556
Goodwill	373,121		373,121
Other intangibles, net	16,429		21,426
Bank-owned life insurance (BOLI)	192,950		191,830
Deferred tax assets, net	70,130		65,742
Operating lease right-of-use assets	58,523		55,367
Other assets	154,840		144,823
Total assets	$	16,637,879	$	15,031,623
LIABILITIES
Deposits:
Non-interest-bearing	$	6,400,864	$	5,492,924
Interest-bearing transaction and savings accounts	6,912,759		6,159,052
Interest-bearing certificates	851,054		915,320
Total deposits	14,164,677		12,567,296
Advances from FHLB	50,000		150,000
Other borrowings	247,358		184,785
Subordinated notes, net	98,472		98,201
Junior subordinated debentures at fair value (issued in connection with Trust Preferred Securities)	124,853		116,974
Operating lease liabilities	62,946		59,343
Accrued expenses and other liabilities	175,960		143,300
Deferred compensation	46,494		45,460
Total liabilities	14,970,760		13,365,359
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS’ EQUITY
Preferred stock - $0.01 par value per share, 500,000 shares authorized; no shares outstanding at September 30, 2021 and December 31, 2020	—		—
Common stock and paid in capital - $0.01 par value per share, 50,000,000 shares authorized; 34,251,991 shares issued and outstanding at September 30, 2021; 35,159,200 shares issued and outstanding at December 31, 2020	1,297,145		1,349,879
Common stock (non-voting) and paid in capital - $0.01 par value per share, 5,000,000 shares authorized; no shares issued and outstanding at September 30, 2021; no shares issued and outstanding at December 31, 2020	—		—
Retained earnings	355,035		247,316
Carrying value of shares held in trust for stock-based compensation plans	(7,421)		(7,636)
Liability for common stock issued to stock related compensation plans	7,421		7,636
Accumulated other comprehensive income	14,939		69,069
Total shareholders’ equity	1,667,119		1,666,264
Total liabilities and shareholders’ equity	$	16,637,879	$	15,031,623

See Selected Notes to the Consolidated Financial Statements

4

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited) (In thousands, except shares and per share amounts)

For the Three and Nine Months Ended September 30, 2021 and 2020

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
INTEREST INCOME:
Loans receivable	$	116,487	$	116,716	$	340,802	$	350,815
Mortgage-backed securities	11,695		7,234		32,503		24,354
Securities and cash equivalents	7,686		5,631		20,649		14,824
Total interest income	135,868		129,581		393,954		389,993
INTEREST EXPENSE:
Deposits	2,749		5,179		9,386		20,623
FHLB advances	655		988		2,244		4,036
Other borrowings	125		128		358		482
Subordinated debt	2,193		2,260		6,605		4,988
Total interest expense	5,722		8,555		18,593		30,129
Net interest income	130,146		121,026		375,361		359,864
(RECAPTURE)/PROVISION FOR CREDIT LOSSES	(8,638)		15,180		(28,145)		67,273
Net interest income after (recapture)/provision for credit losses	138,784		105,846		403,506		292,591
NON-INTEREST INCOME:
Deposit fees and other service charges	10,457		8,742		29,154		26,091
Mortgage banking operations	9,752		16,562		28,670		40,891
Bank-owned life insurance (BOLI)	1,245		1,286		3,797		4,653
Miscellaneous	2,046		951		7,808		5,017
	23,500		27,541		69,429		76,652
Net gain on sale of securities	56		644		618		815
Net change in valuation of financial instruments carried at fair value	1,778		37		1,895		(2,360)
Total non-interest income	25,334		28,222		71,942		75,107
NON-INTEREST EXPENSE:
Salary and employee benefits	59,799		61,171		186,553		184,494
Less capitalized loan origination costs	(8,290)		(8,517)		(26,754)		(25,433)
Occupancy and equipment	13,153		13,022		38,965		39,114
Information/computer data services	6,110		6,090		17,915		17,984
Payment and card processing expenses	6,181		4,044		15,482		12,135
Professional and legal expenses	12,324		2,368		20,023		6,450
Advertising and marketing	1,521		1,105		3,965		3,584
Deposit insurance expense	1,469		1,628		4,243		4,968
State/municipal business and use taxes	1,219		1,196		3,367		3,284
REO operations, net	53		(11)		(71)		93
Amortization of core deposit intangibles	1,575		1,864		4,997		5,867
Miscellaneous	6,977		5,285		18,642		16,841
	102,091		89,245		287,327		269,381
COVID-19 expenses	44		778		309		3,169
Merger and acquisition - related expenses	10		5		660		1,483
Total non-interest expense	102,145		90,028		288,296		274,033
Income before provision for income taxes	61,973		44,040		187,152		93,665
PROVISION FOR INCOME TAXES	12,089		7,492		36,031		16,694
NET INCOME	$	49,884	$	36,548	$	151,121	$	76,971
Earnings per common share:
Basic	$	1.45	$	1.04	$	4.35	$	2.18
Diluted	$	1.44	$	1.03	$	4.32	$	2.17
Cumulative dividends declared per common share	$	0.41	$	0.41	$	1.23	$	0.82
Weighted average number of common shares outstanding:
Basic	34,446,510		35,193,109		34,716,914		35,285,567
Diluted	34,669,492		35,316,679		35,012,228		35,524,771

See Selected Notes to the Consolidated Financial Statements

5

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands)

For the Three and Nine Months Ended September 30, 2021 and 2020

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
NET INCOME	$	49,884	$	36,548	$	151,121	$	76,971
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:
Unrealized holding (loss) gain on available-for-sale securities arising during the period	(23,223)		(3,090)		(62,711)		47,000
Income tax benefit (expense) related to available-for-sale securities unrealized holding (loss) gain	5,574		742		15,051		(11,280)
Reclassification for net gain on available-for-sale securities realized in earnings	(118)		(125)		(634)		(296)
Income tax expense related to available-for-sale securities realized in earnings	28		30		152		71
Changes in fair value of junior subordinated debentures related to instrument specific credit risk	(7,333)		(208)		(7,879)		9,483
Income tax benefit (expense) related to junior subordinated debentures	1,760		50		1,891		(2,276)
Other comprehensive (loss) income	(23,312)		(2,601)		(54,130)		42,702
COMPREHENSIVE INCOME	$	26,572	$	33,947	$	96,991	$	119,673

See Selected Notes to the Consolidated Financial Statements

6

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited) (In thousands, except shares)

For the Nine Months Ended September 30, 2021 and the Year Ended December 31, 2020

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2020	35,751,576	$	1,373,940	$	186,838	$	33,256	$	1,594,034
New credit standard (Accounting Standards Codification (ASC) 326) - impact in year of adoption				(11,215)				(11,215)
Net income				16,882				16,882
Other comprehensive income, net of income tax						46,823		46,823
Accrual of dividends on common stock ($0.41/share)				(14,583)				(14,583)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	(24,337)	1,534						1,534
Repurchase of common stock	(624,780)	(31,775)						(31,775)
Balance, March 31, 2020	35,102,459	$	1,343,699	$	177,922	$	80,079	$	1,601,700

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amount
Balance, April 1, 2020	35,102,459	$	1,343,699	$	177,922	$	80,079	$	1,601,700
Net income				23,541				23,541
Other comprehensive loss, net of income tax						(1,520)		(1,520)
Adjustment to previously accrued dividends				(15)				(15)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	55,440	1,397						1,397
Balance, June 30, 2020	35,157,899	$	1,345,096	$	201,448	$	78,559	$	1,625,103

Continued on next page

7

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amounts
Balance, July 1, 2020	35,157,899	$	1,345,096	$	201,448	$	78,559	$	1,625,103
Net income				36,548				36,548
Other comprehensive loss, net of income tax						(2,601)		(2,601)
Accrual of dividends on common stock ($0.41/share)				(15,037)				(15,037)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	669	2,516						2,516
Balance, September 30, 2020	35,158,568	$	1,347,612	$	222,959	$	75,958	$	1,646,529

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amounts
Balance, October 1, 2020	35,158,568	$	1,347,612	$	222,959	$	75,958	$	1,646,529
Net income				38,957				38,957
Other comprehensive loss, net of income tax						(6,889)		(6,889)
Accrual of dividends on common stock ($0.41/share)				(14,600)				(14,600)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	632	2,267						2,267
Balance, December 31, 2020	35,159,200	$	1,349,879	$	247,316	$	69,069	$	1,666,264

Continued on next page

8

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2021	35,159,200	$	1,349,879	$	247,316	$	69,069	$	1,666,264
Net income				46,855				46,855
Other comprehensive loss, net of income tax						(56,103)		(56,103)
Accrual of dividends on common stock ($0.41/share)				(14,589)				(14,589)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	76,143	1,714						1,714
Repurchase of common stock	(500,000)	(25,324)						(25,324)
Balance, March 31, 2021	34,735,343	$	1,326,269	$	279,582	$	12,966	$	1,618,817

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amount
Balance, April 1, 2021	34,735,343	$	1,326,269	$	279,582	$	12,966	$	1,618,817
Net income				54,382				54,382
Other comprehensive income, net of income tax						25,285		25,285
Accrual of dividends on common stock ($0.41/share)				(14,459)				(14,459)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	65,545	(259)						(259)
Repurchase of common stock	(250,000)	(14,555)						(14,555)
Balance, June 30, 2021	34,550,888	$	1,311,455	$	319,505	$	38,251	$	1,669,211

9

	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive Income		Shareholders’ Equity
	Shares	Amount
Balance, July 1, 2021	34,550,888	$	1,311,455	$	319,505	$	38,251	$	1,669,211
Net income				49,884				49,884
Other comprehensive loss, net of income tax						(23,312)		(23,312)
Accrual of dividends on common stock ($0.41/share)				(14,354)				(14,354)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	1,103	2,339						2,339
Repurchase of common stock	(300,000)	(16,649)						(16,649)
Balance, September 30, 2021	34,251,991	$	1,297,145	$	355,035	$	14,939	$	1,667,119

See Selected Notes to the Consolidated Financial Statements

10

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

For the Nine Months Ended September 30, 2021 and 2020

	Nine Months Ended September 30,
	2021		2020
OPERATING ACTIVITIES:
Net income	$	151,121	$	76,971
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation	13,071		13,677
Deferred income/expense and capitalized servicing rights, net of amortization	(34,389)		(8,503)
Amortization of core deposit intangibles	4,997		5,867
Gain on sale of securities, net	(618)		(815)
Net change in valuation of financial instruments carried at fair value	(1,895)		2,360
Reinvested dividends – equity securities	—		(255)
Increase in deferred taxes	(4,388)		(1,279)
Increase in current taxes payable	499		1,426
Stock-based compensation	7,012		6,893
Net change in cash surrender value of BOLI	(3,482)		(3,721)
Gain on sale of loans, excluding capitalized servicing rights	(22,623)		(34,951)
(Gain) loss on disposal of real estate held for sale and property and equipment, net	(1,452)		496
(Recapture) provision for credit losses	(28,145)		67,273
Provision for losses on real estate held for sale	—		18
Origination of loans held for sale	(912,467)		(1,032,523)
Proceeds from sales of loans held for sale	1,115,207		1,091,984
Net change in:
Other assets	23,630		(51,796)
Other liabilities	23,645		5,040
Net cash provided from operating activities	329,723		138,162
INVESTING ACTIVITIES:
Purchases of securities—available-for-sale	(2,390,756)		(608,192)
Principal repayments and maturities of securities—available-for-sale	1,136,965		311,781
Proceeds from sales of securities—available-for-sale	59,591		128,939
Purchases of securities—held-to-maturity	(52,440)		(215,780)
Principal repayments and maturities of securities—held-to-maturity	23,842		20,691
Purchases of equity securities	(4,750)		(1,060,000)
Proceeds from sales of equity securities	4,796		610,519
Loan repayments (originations), net	660,016		(855,936)
Purchases of loans and participating interest in loans	(4,258)		(18)
Proceeds from sales of other loans	38,386		8,454
Purchases of property and equipment	(6,355)		(9,936)
Proceeds from sale of real estate held for sale and sale of other property	8,299		2,869
Proceeds from FHLB stock repurchase program	4,358		52,164
Purchase of FHLB stock	—		(40,185)
Purchase of securities purchased under agreements to resell	(300,000)		—
Other	2,343		3,913
Net cash used in investing activities	(819,963)		(1,650,717)
FINANCING ACTIVITIES:
Increase in deposits, net	1,597,381		2,166,700
Repayment of long term FHLB advances	(100,000)		—
Repayment of overnight and short term FHLB advances, net	—		(300,000)
Increase in other borrowings, net	62,572		58,508
Net proceeds from issuance of subordinated notes	—		98,027
Cash dividends paid	(43,568)		(79,655)
Taxes paid related to net share settlement of equity awards	(3,218)		(1,447)
Cash paid for the repurchase of common stock	(56,528)		(31,775)
Net cash provided from financing activities	1,456,639		1,910,358
NET CHANGE IN CASH AND CASH EQUIVALENTS	966,399		397,803
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	1,234,183		307,735
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,200,582	$	705,538

Continued on next page

11

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited) (In thousands)

For the Nine Months Ended September 30, 2021 and 2020

	Nine Months Ended September 30,
	2021		2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid in cash	$	17,927	$	31,817
Tax paid (refunds received)	20,081		(27,515)
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Transfer of loans to real estate owned and other repossessed assets	512		1,588
Dividends accrued but not paid until after period end	1,191		1,179

See Selected Notes to the Consolidated Financial Statements

12

BANNER CORPORATION AND SUBSIDIARIES

SELECTED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1:  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements include the accounts of Banner Corporation (the Company or Banner), a bank holding company incorporated in the State of Washington and its wholly-owned subsidiary, Banner Bank (the Bank).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC). In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2021 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. Certain reclassifications have been made to the 2020 Consolidated Financial Statements and/or schedules to conform to the 2021 presentation. Prior to the first quarter of 2021, the (recapture) provision for credit losses - unfunded loan commitment was recorded as non-interest expense. Beginning in the first quarter of 2021 the (recapture) provision for credit losses - unfunded loan commitment is recorded as a component of the provision for credit losses. These reclassifications may have affected certain ratios for the prior periods. The effect of these reclassifications is considered immaterial. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are significant to an understanding of Banner’s financial statements. These policies relate to (i) the methodology for the recognition of interest income, (ii) determination of the provision and allowance for credit losses, (iii) the valuation of financial assets and liabilities recorded at fair value (iv) the valuation of intangibles, such as goodwill, core deposit intangibles (CDI) and mortgage servicing rights, (v) the valuation of real estate held for sale, (vi) the valuation of assets acquired and liabilities assumed in business combinations and subsequent recognition of related income and expense, and (vii) the valuation or recognition of deferred tax assets and liabilities. These policies and judgments, estimates and assumptions are described in greater detail in subsequent notes to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC (2020 Form 10-K).  There have been no significant changes in our application of these accounting policies during the first nine months of 2021.

The information included in this Form 10-Q should be read in conjunction with our 2020 Form 10-K.  Interim results are not necessarily indicative of results for a full year or any other interim period.

13

Note 2:  ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

Reference Rate Reform (Topic 848)

In March 2020, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, 2021. The amendments in this ASU provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this ASU also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. Upon adoption, an entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

The amendments in these ASUs are effective upon the issuance date of March 12, 2020 and once adopted will apply to contract modifications made and new hedging relationships entered into through December 31, 2022. The Company will be able to use the expedients in this guidance to manage through the transition away from LIBOR, specifically as they relate to loans and leases. The adoption of this accounting guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

14

Note 3:  SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

	September 30, 2021
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	26,875
	$	27,203	$	26,875

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	180,585	$	1,067	$	(600)	$	—	$	181,052
Municipal bonds	296,784		14,395		(788)		—		310,391
Corporate bonds	160,404		3,903		(63)		—		164,244
Mortgage-backed or related securities	2,599,229		25,918		(40,883)		—		2,584,264
Asset-backed securities	206,514		110		—		—		206,624
	$	3,443,516	$	45,393	$	(42,334)	$	—	$	3,446,575

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	317	$	6	$	—	$	323	$	—
Municipal bonds	391,583		18,716		(2,188)		408,111		(63)
Corporate bonds	3,124		—		(2)		3,122		(41)
Mortgage-backed or related securities	52,788		1,668		(10)		54,446		—
	$	447,812	$	20,390	$	(2,200)	$	466,002	$	(104)

	December 31, 2020
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	24,980
	$	27,203	$	24,980

15

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	141,668	$	1,002	$	(935)	$	—	$	141,735
Municipal bonds	283,997		19,523		(2)		—		303,518
Corporate bonds	219,086		2,762		(79)		—		221,769
Mortgage-backed or related securities	1,602,033		45,179		(1,060)		—		1,646,152
Asset-backed securities	9,405		77		(63)		—		9,419
	$	2,256,189	$	68,543	$	(2,139)	$	—	$	2,322,593

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	340	$	7	$	—	$	347	$	—
Municipal bonds	370,998		24,130		(94)		395,034		(59)
Corporate bonds	3,222		—		(12)		3,210		(35)
Mortgage-backed or related securities	47,247		2,843		—		50,090		—
	$	421,807	$	26,980	$	(106)	$	448,681	$	(94)

Accrued interest receivable on held-to-maturity debt securities was $2.7 million and $3.0 million as of September 30, 2021 and December 31, 2020, respectively, and was $9.3 million and $6.9 million on available-for-sale debt securities as of September 30, 2021 and December 31, 2020, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

At September 30, 2021 and December 31, 2020, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

	September 30, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	40,115	$	(39)	$	33,447	$	(561)	$	73,562	$	(600)
Municipal bonds	60,522		(788)		—		—		60,522		(788)
Corporate bonds	7,937		(63)		—		—		7,937		(63)
Mortgage-backed or related securities	1,503,114		(39,701)		54,570		(1,182)		1,557,684		(40,883)
	$	1,611,688	$	(40,591)	$	88,017	$	(1,743)	$	1,699,705	$	(42,334)

16

	December 31, 2020
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	3,126	$	(8)	$	50,603	$	(927)	$	53,729	$	(935)
Municipal bonds	495		(2)		—		—		495		(2)
Corporate bonds	3,586		(79)		—		—		3,586		(79)
Mortgage-backed or related securities	181,871		(1,046)		2,337		(14)		184,208		(1,060)
Asset-backed securities	—		—		5,676		(63)		5,676		(63)
	$	189,078	$	(1,135)	$	58,616	$	(1,004)	$	247,694	$	(2,139)

At September 30, 2021, there were 84 securities—available-for-sale with unrealized losses, compared to 54 at December 31, 2020.  Management does not believe that any individual unrealized loss as of September 30, 2021 or December 31, 2020 resulted from credit loss.  The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

There were no sales of securities—trading during the nine months ended September 30, 2021 or 2020. There were no securities—trading in a nonaccrual status at September 30, 2021 or December 31, 2020.  Net unrealized holding gains of $1.9 million were recognized during the nine months ended September 30, 2021 compared to $2.4 million of net unrealized holding losses recognized during the nine months ended September 30, 2020.

The following table presents gross gains and losses on sales of securities available-for-sale (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Available-for-Sale:
Gross Gains	$	140	$	557	$	766	$	729
Gross Losses	(22)		(432)		(132)		(433)
Balance, end of the period	$	118	$	125	$	634	$	296

There were no securities—available-for-sale in a nonaccrual status at September 30, 2021 or December 31, 2020.

During the nine months ended September 30, 2021, we sold one held-to-maturity security with a resulting net gain of $3,000 and had partial calls of securities that resulted in a net loss of $65,000. There were no sales of securities—held-to-maturity during the nine months ended September 30, 2020. There were no securities—held-to-maturity in a nonaccrual status or 30 days or more past due at September 30, 2021 or December 31, 2020.

During the nine months ended September 30, 2021, we sold a $4.8 million equity security with a resulting net gain of $46,000. There were no sales of equity securities during the nine months ended September 30, 2020. During the nine months ended September 30, 2020, the Company sold Visa Class B stock with a net gain of $519,000. The stock was previously carried at a zero-cost basis due to transfer restrictions and uncertainty of litigation.

17

The amortized cost and estimated fair value of securities at September 30, 2021, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2021
	Trading				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing in one year or less	$	—	$	—	$	59,150	$	59,360	$	5,444	$	5,471
Maturing after one year through five years	—		—		173,666		181,152		59,705		62,039
Maturing after five years through ten years	—		—		845,638		847,708		21,961		23,312
Maturing after ten years through twenty years	27,203		26,875		502,832		514,271		164,303		168,315
Maturing after twenty years	—		—		1,862,230		1,844,084		196,399		206,865
	$	27,203	$	26,875	$	3,443,516	$	3,446,575	$	447,812	$	466,002

The following table presents, as of September 30, 2021, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

	September 30, 2021
	Carrying Value		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	202,085	$	201,456	$	213,687
Interest rate swap counterparties	27,275		26,642		27,402
Repurchase agreements	278,087		285,068		278,087
Other	2,549		2,549		2,597
Total pledged securities	$	509,996	$	515,715	$	521,773

The Company monitors the credit quality of held-to-maturity debt securities through the use of credit rating. Credit ratings are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The balance is local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following table summarizes the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	375,865	$	500	$	—	$	376,365
Not Rated	317		15,718		2,624		52,788		71,447
	$	317	$	391,583	$	3,124	$	52,788	$	447,812

	December 31, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	349,123	$	500	$	—	$	349,623
Not Rated	340		21,875		2,722		47,247		72,184
	$	340	$	370,998	$	3,222	$	47,247	$	421,807

The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities by major type for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):

18

	For the Three Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	64	$	46	$	—	$	110
Recapture of provision for credit losses	—		(1)		(5)		—		(6)
Ending Balance	$	—	$	63	$	41	$	—	$	104
	For the Nine Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	59	$	35	$	—	$	94
Provision for credit losses	—		4		6		—		10
Ending Balance	$	—	$	63	$	41	$	—	$	104

	For the Three Months Ended September 30, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	61	$	41	$	—	$	102
Impact of adopting ASC 326	—		—		—		—		—
(Recapture)/provision for credit losses	—		(1)		1		—		—
Ending Balance	$	—	$	60	$	42	$	—	$	102
	For the Nine Months Ended September 30, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	—	$	—	$	—	$	—
Impact of adopting ASC 326	—		28		35		—		63
Provision for credit losses	—		32		7		—		39
Ending Balance	$	—	$	60	$	42	$	—	$	102

19

Note 4: LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES - LOANS

The following table presents the loans receivable at September 30, 2021 and December 31, 2020 by class (dollars in thousands).

	September 30, 2021				December 31, 2020
	Amount		Percent of Total		Amount		Percent of Total
Commercial real estate:
Owner-occupied	$	1,122,275	12.2	%	$	1,076,467	10.9	%
Investment properties	1,980,284		21.5		1,955,684		19.8
Small balance CRE	601,751		6.5		573,849		5.8
Multifamily real estate	532,760		5.8		428,223		4.4
Construction, land and land development:
Commercial construction	170,205		1.8		228,937		2.3
Multifamily construction	278,184		3.0		305,527		3.1
One- to four-family construction	571,431		6.2		507,810		5.1
Land and land development	308,164		3.4		248,915		2.5
Commercial business:
Commercial business (1)	1,346,707		14.6		2,178,461		22.1
Small business scored	775,554		8.4		743,451		7.5
Agricultural business, including secured by farmland (2)	287,469		3.1		299,949		3.0
One- to four-family residential	682,368		7.4		717,939		7.3
Consumer:
Consumer—home equity revolving lines of credit	462,819		5.0		491,812		5.0
Consumer—other	98,413		1.1		113,958		1.2
Total loans	9,218,384		100.0	%	9,870,982		100.0	%
Less allowance for credit losses – loans	(139,915)				(167,279)
Net loans	$	9,078,469			$	9,703,703

(1)    Includes $307.0 million and $1.04 billion of U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) loans as of September 30, 2021 and December 31, 2020, respectively.

(2)    Includes $3.2 million of SBA PPP loans as of September 30, 2021 and none as of December 31, 2020.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $12.2 million as of September 30, 2021 and $25.6 million as of December 31, 2020. Net loans include net discounts on acquired loans of $11.5 million and $16.1 million as of September 30, 2021 and December 31, 2020, respectively. Net loans does not include accrued interest receivable. Accrued interest receivable on loans was $31.5 million as of September 30, 2021 and $36.6 million as of December 31, 2020 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

Purchased credit-deteriorated and purchased non-credit-deteriorated loans. Loans acquired in business combinations are recorded at their fair value at the acquisition date. Acquired loans are evaluated upon acquisition and classified as either purchased credit-deteriorated (PCD) or purchased non-credit-deteriorated. There were no PCD loans acquired during the nine months ended September 30, 2021.

Troubled Debt Restructurings. Loans are reported as troubled debt restructures (TDRs) when the bank grants one or more concessions to a borrower experiencing financial difficulties that it would not otherwise consider.  Our TDRs have generally not involved forgiveness of amounts due, but almost always include a modification of multiple factors; the most common combination includes interest rate, payment amount and maturity date.

20

As of September 30, 2021 and December 31, 2020, the Company had TDRs of $5.6 million and $7.9 million, respectively, and no commitments to advance additional funds related to TDRs.

There were no new TDRs that occurred during the nine months ended September 30, 2021. The following table presents new TDRs that occurred during the three and nine months ended September 30, 2020 (dollars in thousands):

	Three Months Ended September 30, 2020					Nine months ended September 30, 2020
	Number of Contracts	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment		Number of Contracts	Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment
Recorded Investment
Commercial business:
Commercial business	—	—		—		2	4,796		4,796
Total	—	$	—	$	—	2	$	4,796	$	4,796

There were no TDRs which incurred a payment default within twelve months of the restructure date during the three and nine-month periods ended September 30, 2021 and 2020. A default on a TDR results in either a transfer to nonaccrual status or a partial charge-off, or both.

Credit Quality Indicators:  To appropriately and effectively manage the ongoing credit quality of the Company’s loan portfolio, management has implemented a risk-rating or loan grading system for its loans.  The system is a tool to evaluate portfolio asset quality throughout each applicable loan’s life as an asset of the Company.  Generally, loans are risk rated on an aggregate borrower/relationship basis with individual loans sharing similar ratings.  There are some instances when specific situations relating to individual loans will provide the basis for different risk ratings within the aggregate relationship.  Loans are graded on a scale of 1 to 9.  A description of the general characteristics of these categories is shown below:

Overall Risk Rating Definitions:  Risk-ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan or lease.  Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan or lease to exhibit characteristics of more than one risk-rating category.  Consideration for the final rating is centered in the borrower’s ability to repay, in a timely fashion, both principal and interest.  The Company’s risk-rating and loan grading policies are reviewed and approved annually. There were no material changes in the risk-rating or loan grading system for the periods presented.

Risk Ratings 1-5: Pass

Credits with risk ratings of 1 to 5 meet the definition of a pass risk rating. The strength of credits vary within the pass risk ratings, ranging from a risk rated 1 being an exceptional credit to a risk rated 5 being an acceptable credit that requires a more than normal level of supervision.

Risk Rating 6: Special Mention

A credit with potential weaknesses that deserves management’s close attention is risk rated a 6.  If left uncorrected, these potential weaknesses will result in deterioration in the capacity to repay debt.  A key distinction between Special Mention and Substandard is that in a Special Mention credit, there are identified weaknesses that pose potential risk(s) to the repayment sources, versus well defined weaknesses that pose risk(s) to the repayment sources.  Assets in this category are expected to be in this category no more than 9-12 months as the potential weaknesses in the credit are resolved.

Risk Rating 7: Substandard

A credit with well-defined weaknesses that jeopardize the ability to repay in full is risk rated a 7.  These credits are inadequately protected by either the sound net worth and payment capacity of the borrower or the value of pledged collateral.  These are credits with a distinct possibility of loss.  Loans headed for foreclosure and/or legal action due to deterioration are rated 7 or worse.

Risk Rating 8: Doubtful

A credit with an extremely high probability of loss is risk rated 8.  These credits have all the same critical weaknesses that are found in a substandard loan; however, the weaknesses are elevated to the point that based upon current information, collection or liquidation in full is improbable.  While some loss on doubtful credits is expected, pending events may make the amount and timing of any loss indeterminable.  In these situations taking the loss is inappropriate until the outcome of the pending event is clear.

Risk Rating 9: Loss

A credit that is considered to be currently uncollectible or of such little value that it is no longer a viable bank asset is risk rated 9.  Losses should be taken in the accounting period in which the credit is determined to be uncollectible.  Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

21

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	202,187	$	227,782	$	154,951	$	126,339	$	92,197	$	232,653	$	11,457	$	1,047,566
Special Mention	12,309		—		2,201		—		2,147		3,384		—		20,041
Substandard	1,968		—		13,770		—		3,058		35,872		—		54,668
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	216,464	$	227,782	$	170,922	$	126,339	$	97,402	$	271,909	$	11,457	$	1,122,275
Commercial real estate - investment properties
Risk Rating
Pass	$	286,605	$	227,093	$	266,240	$	246,056	$	227,915	$	612,438	$	19,726	$	1,886,073
Special Mention	—		—		—		4,167		—		—		—		4,167
Substandard	2,162		9,651		5,292		17,197		10,368		45,374		—		90,044
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	288,767	$	236,744	$	271,532	$	267,420	$	238,283	$	657,812	$	19,726	$	1,980,284
Multifamily real estate
Risk Rating
Pass	$	134,404	$	79,418	$	71,346	$	37,285	$	92,151	$	109,993	$	2,517	$	527,114
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		2,312		1,420		—		—		1,914		—		5,646
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	134,404	$	81,730	$	72,766	$	37,285	$	92,151	$	111,907	$	2,517	$	532,760

22

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial construction
Risk Rating
Pass	$	48,100	$	52,593	$	24,682	$	31,084	$	—	$	521	$	—	$	156,980
Special Mention	—		—		—		—		—		—		—		—
Substandard	4,272		—		4,035		4,820		—		98		—		13,225
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	52,372	$	52,593	$	28,717	$	35,904	$	—	$	619	$	—	$	170,205
Multifamily construction
Risk Rating
Pass	$	59,818	$	112,147	$	86,493	$	14,840	$	—	$	—	$	—	$	273,298
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		4,886		—		—		—		—		—		4,886
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	59,818	$	117,033	$	86,493	$	14,840	$	—	$	—	$	—	$	278,184
One- to four- family construction
Risk Rating
Pass	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431

23

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Land and land development
Risk Rating
Pass	$	149,447	$	112,761	$	18,967	$	9,189	$	4,218	$	8,174	$	2,118	$	304,874
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,874		14		267		—		—		135		—		3,290
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	152,321	$	112,775	$	19,234	$	9,189	$	4,218	$	8,309	$	2,118	$	308,164
Commercial business
Risk Rating
Pass	$	348,123	$	274,487	$	197,462	$	127,281	$	48,760	$	83,084	$	231,186	$	1,310,383
Special Mention	68		86		271		—		690		11		10,667		11,793
Substandard	2,277		2,422		1,090		10,019		3,318		892		4,513		24,531
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	350,468	$	276,995	$	198,823	$	137,300	$	52,768	$	83,987	$	246,366	$	1,346,707
Agricultural business including secured by farmland
Risk Rating
Pass	$	26,643	$	27,645	$	51,961	$	28,073	$	15,698	$	37,116	$	93,390	$	280,526
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		446		2,206		510		144		1,891		1,746		6,943
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	26,643	$	28,091	$	54,167	$	28,583	$	15,842	$	39,007	$	95,136	$	287,469

24

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	243,100	$	156,838	$	156,817	$	122,484	$	92,312	$	212,792	$	3,379	$	987,722
Special Mention	—		4,560		—		2,251		—		1,869		149		8,829
Substandard	7,923		26,914		3,040		2,516		11,731		27,792		—		79,916
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	251,023	$	188,312	$	159,857	$	127,251	$	104,043	$	242,453	$	3,528	$	1,076,467
Commercial real estate - investment properties
Risk Rating
Pass	$	237,553	$	262,543	$	299,452	$	218,018	$	278,348	$	502,914	$	20,062	$	1,818,890
Special Mention	—		2,712		—		—		2,730		1,856		—		7,298
Substandard	19,812		11,418		20,352		36,310		23,027		18,577		—		129,496
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	257,365	$	276,673	$	319,804	$	254,328	$	304,105	$	523,347	$	20,062	$	1,955,684
Multifamily real estate
Risk Rating
Pass	$	78,632	$	69,825	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	424,483
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,312		1,428		—		—		—		—		—		3,740
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	80,944	$	71,253	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	428,223

25

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial construction
Risk Rating
Pass	$	83,506	$	67,152	$	41,299	$	6,038	$	2,158	$	1,129	$	—	$	201,282
Special Mention	—		5,963		—		—		—		—		—		5,963
Substandard	12,913		3,808		4,873		—		98		—		—		21,692
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	96,419	$	76,923	$	46,172	$	6,038	$	2,256	$	1,129	$	—	$	228,937
Multifamily construction
Risk Rating
Pass	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
One- to four- family construction
Risk Rating
Pass	$	461,294	$	35,910	$	—	$	—	$	—	$	—	$	7,581	$	504,785
Special Mention	1,563		—		—		—		—		—		630		2,193
Substandard	501		331		—		—		—		—		—		832
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	463,358	$	36,241	$	—	$	—	$	—	$	—	$	8,211	$	507,810

26

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Land and land development
Risk Rating
Pass	$	156,450	$	37,397	$	16,560	$	6,801	$	6,264	$	4,840	$	17,020	$	245,332
Special Mention	—		—		—		—		—		—		—		—
Substandard	14		30		3,047		190		—		302		—		3,583
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	156,464	$	37,427	$	19,607	$	6,991	$	6,264	$	5,142	$	17,020	$	248,915
Commercial business
Risk Rating
Pass	$	1,243,276	$	230,845	$	203,051	$	65,524	$	38,757	$	66,206	$	264,741	$	2,112,400
Special Mention	103		412		—		829		—		115		9,507		10,966
Substandard	6,624		14,413		18,569		5,224		1,320		453		8,492		55,095
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	1,250,003	$	245,670	$	221,620	$	71,577	$	40,077	$	66,774	$	282,740	$	2,178,461
Agricultural business including secured by farmland
Risk Rating
Pass	$	32,032	$	62,058	$	31,381	$	22,635	$	22,394	$	24,950	$	91,660	$	287,110
Special Mention	—		—		—		810		—		537		—		1,347
Substandard	1,542		2,652		1,076		163		675		3,049		2,335		11,492
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	33,574	$	64,710	$	32,457	$	23,608	$	23,069	$	28,536	$	93,995	$	299,949

27

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Small balance CRE
Past Due Category
Current	$	48,385	$	80,778	$	74,482	$	85,597	$	73,371	$	238,549	$	544	$	601,706
30-59 Days Past Due	—		—		—		—		—		2		—		2
60-89 Days Past Due	43		—		—		—		—		—		—		43
90 Days + Past Due	—		—		—		—		—		—		—		—
Total small balance CRE	$	48,428	$	80,778	$	74,482	$	85,597	$	73,371	$	238,551	$	544	$	601,751
Small business scored
Past Due Category
Current	$	176,262	$	134,418	$	119,587	$	92,657	$	63,168	$	79,568	$	108,154	$	773,814
30-59 Days Past Due	—		132		10		128		14		50		172		506
60-89 Days Past Due	—		—		—		142		26		—		160		328
90 Days + Past Due	—		8		139		120		335		243		61		906
Total small business scored	$	176,262	$	134,558	$	119,736	$	93,047	$	63,543	$	79,861	$	108,547	$	775,554
One- to four- family residential
Past Due Category
Current	$	157,577	$	109,535	$	65,469	$	58,832	$	64,017	$	223,601	$	1,751	$	680,782
30-59 Days Past Due	—		—		—		—		—		107		—		107
60-89 Days Past Due	—		—		—		—		—		109		—		109
90 Days + Past Due	—		276		—		169		—		925		—		1,370
Total One- to four- family residential	$	157,577	$	109,811	$	65,469	$	59,001	$	64,017	$	224,742	$	1,751	$	682,368

28

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	7,044	$	1,125	$	1,711	$	1,772	$	2,089	$	3,007	$	444,348	$	461,096
30-59 Days Past Due	—		65		110		—		100		385		180		840
60-89 Days Past Due	—		—		—		—		71		91		2		164
90 Days + Past Due	—		—		197		193		108		31		190		719
Total Consumer—home equity revolving lines of credit	$	7,044	$	1,190	$	2,018	$	1,965	$	2,368	$	3,514	$	444,720	$	462,819
Consumer-other
Past Due Category
Current	$	13,921	$	15,239	$	9,426	$	9,524	$	6,917	$	18,640	$	24,394	$	98,061
30-59 Days Past Due	5		118		17		79		20		26		49		314
60-89 Days Past Due	1		—		—		3		7		6		17		34
90 Days + Past Due	—		4		—		—		—		—		—		4
Total Consumer-other	$	13,927	$	15,361	$	9,443	$	9,606	$	6,944	$	18,672	$	24,460	$	98,413

29

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Small balance CRE
Past Due Category
Current	$	56,544	$	80,090	$	84,749	$	77,637	$	68,791	$	202,653	$	2,550	$	573,014
30-59 Days Past Due	—		—		—		—		—		—		—		—
60-89 Days Past Due	—		—		—		45		—		—		—		45
90 Days + Past Due	—		—		—		567		—		223		—		790
Total small balance CRE	$	56,544	$	80,090	$	84,749	$	78,249	$	68,791	$	202,876	$	2,550	$	573,849
Small business scored
Past Due Category
Current	$	157,161	$	145,037	$	126,578	$	89,734	$	47,909	$	63,347	$	109,287	$	739,053
30-59 Days Past Due	129		62		310		723		4		1		230		1,459
60-89 Days Past Due	98		147		3		140		—		352		151		891
90 Days + Past Due	73		228		800		484		169		248		46		2,048
Total small business scored	$	157,461	$	145,474	$	127,691	$	91,081	$	48,082	$	63,948	$	109,714	$	743,451
One- to four- family residential
Past Due Category
Current	$	105,411	$	90,425	$	92,232	$	101,491	$	60,738	$	254,850	$	3,164	$	708,311
30-59 Days Past Due	1,051		—		1,302		829		—		1,438		—		4,620
60-89 Days Past Due	—		—		19		—		—		936		—		955
90 Days + Past Due	—		114		1,185		456		169		2,129		—		4,053
Total One- to four- family residential	$	106,462	$	90,539	$	94,738	$	102,776	$	60,907	$	259,353	$	3,164	$	717,939

30

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	10,522	$	2,617	$	2,553	$	3,359	$	1,372	$	2,154	$	466,490	$	489,067
30-59 Days Past Due	—		—		—		—		—		50		409		459
60-89 Days Past Due	—		202		—		—		—		237		—		439
90 Days + Past Due	—		312		198		564		286		255		232		1,847
Total Consumer—home equity revolving lines of credit	$	10,522	$	3,131	$	2,751	$	3,923	$	1,658	$	2,696	$	467,131	$	491,812
Consumer-other
Past Due Category
Current	$	21,811	$	13,377	$	13,936	$	11,433	$	8,575	$	18,802	$	25,460	$	113,394
30-59 Days Past Due	48		35		15		22		46		26		44		236
60-89 Days Past Due	242		—		—		33		21		14		18		328
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Consumer-other	$	22,101	$	13,412	$	13,951	$	11,488	$	8,642	$	18,842	$	25,522	$	113,958

31

The following tables provide the amortized cost basis of collateral-dependent loans as of September 30, 2021 and December 31, 2020 (in thousands). Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.

	September 30, 2021
	Real Estate		Accounts Receivable		Equipment		Total
Commercial real estate:
Owner-occupied	$	3,949	$	—	$	—	$	3,949
Investment properties	7,468		—		—		7,468
Small balance CRE	2,452		—		—		2,452
Commercial business
Commercial business	107		659		56		822
Small business scored	41		—		44		85
Agricultural business, including secured by farmland	427		—		594		1,021
Total	$	14,444	$	659	$	694	$	15,797

	December 31, 2020
	Real Estate		Accounts Receivable		Equipment		Total
Commercial real estate:
Owner-occupied	$	7,506	$	—	$	—	$	7,506
Investment properties	8,979		—		—		8,979
Small balance CRE	567		—		—		567
Land and land development	302		—		—		302
Commercial business
Commercial business	557		—		—		557
Small business scored	44		—		47		91
Agricultural business, including secured by farmland	427		—		984		1,411
One- to four-family residential	196		—		—		196
Total	$	18,578	$	—	$	1,031	$	19,609

32

The following tables provide additional detail on the age analysis of the Company’s past due loans as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	—	$	495	$	495	$	1,121,780	$	1,122,275	$	3,952	$	4,535	$	—
Investment properties	—		—		5,185		5,185		1,975,099		1,980,284		7,468		7,620		3,955
Small balance CRE	2		43		—		45		601,706		601,751		2,440		2,776		—
Multifamily real estate	—		342		—		342		532,418		532,760		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		170,107		170,205		—		98		—
Multifamily construction	4,886		—		—		4,886		273,298		278,184		—		—		—
One- to four-family construction	—		—		—		—		571,431		571,431		—		—		—
Land and land development	—		—		14		14		308,150		308,164		—		256		—
Commercial business
Commercial business	117		167		847		1,131		1,345,576		1,346,707		820		1,326		—
Small business scored	506		328		906		1,740		773,814		775,554		83		1,374		61
Agricultural business, including secured by farmland	—		—		1,022		1,022		286,447		287,469		1,021		1,022		—
One- to four-family residential	107		109		1,370		1,586		680,782		682,368		—		3,182		772
Consumer:
Consumer—home equity revolving lines of credit	840		164		719		1,723		461,096		462,819		—		1,831		30
Consumer—other	314		34		4		352		98,061		98,413		—		19		4
Total	$	6,772	$	1,187	$	10,660	$	18,619	$	9,199,765	$	9,218,384	$	15,784	$	24,039	$	4,822

33

	December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	182	$	1,447	$	1,629	$	1,074,838	$	1,076,467	$	7,509	$	8,429	$	—
Investment properties	—		—		7,981		7,981		1,947,703		1,955,684		8,979		8,979		—
Small balance CRE	—		45		790		835		573,014		573,849		567		791		—
Multifamily real estate	—		—		—		—		428,223		428,223		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		228,839		228,937		—		98		—
Multifamily construction	—		—		—		—		305,527		305,527		—		—		—
One- to four-family construction	356		—		331		687		507,123		507,810		—		331		—
Land and land development	—		—		317		317		248,598		248,915		302		507		—
Commercial business
Commercial business	3,247		31		2,088		5,366		2,173,095		2,178,461		555		1,988		889
Small business scored	1,459		891		2,048		4,398		739,053		743,451		91		3,419		136
Agricultural business, including secured by farmland	298		37		1,548		1,883		298,066		299,949		1,412		1,743		—
One-to four-family residential	4,620		955		4,053		9,628		708,311		717,939		171		3,556		1,899
Consumer:
Consumer secured by one- to four-family	459		439		1,847		2,745		489,067		491,812		—		2,697		130
Consumer—other	236		328		—		564		113,394		113,958		—		22		—
Total	$	10,675	$	2,908	$	22,548	$	36,131	$	9,834,851	$	9,870,982	$	19,586	$	32,560	$	3,054

(1)     The Company did not recognize any interest income on non-accrual loans during the three or nine months ended September 30, 2021 or the year ended December 31, 2020.

34

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	60,349	$	5,807	$	30,899	$	30,830	$	3,256	$	9,800	$	7,068	$	—	$	148,009
(Recapture)/provision for credit losses	(4,057)		850		(1,557)		(3,825)		83		(359)		15		—		(8,850)
Recoveries	923		—		—		230		17		19		227		—		1,416
Charge-offs	—		—		—		(362)		(179)		—		(119)		—		(660)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915
	For the Nine Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	57,791	$	3,893	$	41,295	$	35,007	$	4,914	$	9,913	$	14,466	$	—	$	167,279
Provision/(recapture) for credit losses	2,096		2,764		(12,053)		(8,390)		(1,581)		(605)		(7,216)		—		(24,985)
Recoveries	1,094		—		100		1,530		25		152		620		—		3,521
Charge-offs	(3,766)		—		—		(1,274)		(181)		—		(679)		—		(5,900)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915

The changes in the allowance for credit losses - loans during the three and nine months ended September 30, 2021 were primarily the result of the $8.9 million recapture of provision for credit losses - loans recorded during the current quarter and the $25.0 million recapture of provision recorded during the nine months ended September 30, 2021. The change in allowance for credit losses - loans during the nine months ended September 30, 2021 was also impacted by net charge offs of $2.4 million recognized during the period. The recapture of provision for credit losses - loans for the current quarter and the nine months ended September 30, 2021 primarily reflects improvement in the forecasted economic indicators used to calculate the allowance for credit losses - loans and a decrease in adversely classified loans.

35

	For the Three Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	53,166	$	3,504	$	36,916	$	33,870	$	4,517	$	12,746	$	11,633	$	—	$	156,352
Provision/(recapture) for credit losses	6,895		(248)		2,561		2,550		1,026		100		757		—		13,641
Recoveries	23		—		—		246		—		94		82		—		445
Charge-offs	(379)		—		—		(1,297)		(492)		(72)		(233)		—		(2,473)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965
	For the Nine Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	30,591	$	4,754	$	22,994	$	23,370	$	4,120	$	4,136	$	8,202	$	2,392	$	100,559
Impact of Adopting ASC 326	(2,864)		(2,204)		2,515		3,010		(351)		7,125		2,973		(2,392)		7,812
Provision/(recapture) for loan losses	32,213		772		13,963		14,402		64		1,470		1,994		—		64,878
Recoveries	244		—		105		821		1,772		273		238		—		3,453
Charge-offs	(479)		(66)		(100)		(6,234)		(554)		(136)		(1,168)		—		(8,737)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965

36

Note 5:  REAL ESTATE OWNED, NET

The following table presents the changes in REO for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	763	$	2,400	$	816	$	814
Additions from loan foreclosures	89		—		512		1,588
Proceeds from dispositions of REO	—		(707)		(783)		(805)
Gain on sale of REO	—		120		307		216
Valuation adjustments in the period	—		(18)		—		(18)
Balance, end of the period	$	852	$	1,795	$	852	$	1,795

REO properties are recorded at the estimated fair value of the property, less expected selling costs, establishing a new cost basis.  Subsequently, REO properties are carried at the lower of the new cost basis or updated fair market values, based on updated appraisals of the underlying properties, as received.  Valuation allowances on the carrying value of REO may be recognized based on updated appraisals or on management’s authorization to reduce the selling price of a property. The Company had no foreclosed one- to four-family residential real estate properties held as REO at both September 30, 2021 and December 31, 2020. The Company had $609,000 of one- to four-family residential loans in the process of foreclosure at both September 30, 2021 and December 31, 2020.

Note 6:  GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

Goodwill and Other Intangible Assets:  At September 30, 2021, intangible assets are comprised of goodwill and CDI acquired in business combinations. Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment. Banner has identified one reporting unit for purposes of evaluating goodwill for impairment. The Company completed an assessment of qualitative factors as of December 31, 2020 and as a result of the economic impact of the COVID-19 pandemic concluded further analysis was required. The Company completed a quantitative goodwill impairment test and concluded the fair value of Banner Bank, the reporting unit, exceeded the carrying value of the reporting unit including goodwill and therefore no impairment existed as of December 31, 2020.

CDI represents the value of transaction-related deposits and the value of the client relationships associated with the deposits. The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value. 

The following table summarizes the changes in the Company’s goodwill and other intangibles for the nine months ended September 30, 2021 and the year ended December 31, 2020 (in thousands):

	Goodwill		CDI		Total
Balance, December 31, 2019	$	373,121	$	29,158	$	402,279
Amortization	—		(7,732)		(7,732)
Balance, December 31, 2020	373,121		21,426		394,547
Amortization	—		(4,997)		(4,997)
Balance, September 30, 2021	$	373,121	$	16,429	$	389,550

The following table presents the estimated amortization expense with respect to CDI as of September 30, 2021 for the periods indicated (in thousands):

	Estimated Amortization
Remainder of 2021	$	1,574
2022	5,317
2023	3,814
2024	2,659
2025	1,575
Thereafter	1,490
	$	16,429

37

Mortgage Servicing Rights:  Mortgage servicing rights are reported in other assets. Mortgage servicing rights are initially recorded at fair value and are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.  Mortgage servicing rights are subsequently evaluated for impairment based upon the fair value of the rights compared to the amortized cost (remaining unamortized initial fair value).  If the fair value is less than the amortized cost, a valuation allowance is created through an impairment charge, which is recognized in servicing fee income within mortgage banking operations on the Consolidated Statement of Operations.  However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.  During the three and nine months ended September 30, 2021 and 2020, the Company did not record any impairment charges or recoveries against mortgage servicing rights. The unpaid principal balance for loans which mortgage servicing rights have been recorded totaled $2.68 billion and $2.64 billion at September 30, 2021 and December 31, 2020, respectively.  Custodial accounts maintained in connection with this servicing totaled $3.1 million and $3.8 million at September 30, 2021 and December 31, 2020, respectively.

An analysis of our mortgage servicing rights for the three and nine months ended September 30, 2021 and 2020 is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	15,612	$	14,424	$	15,223	$	14,148
Additions—amounts capitalized	1,621		2,426		5,418		6,030
Additions—through purchase	53		40		121		141
Amortization (1)	(1,533)		(2,075)		(5,009)		(5,504)
Balance, end of the period (2)	$	15,753	$	14,815	$	15,753	$	14,815

(1)    Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

(2)    There was no valuation allowance as of both September 30, 2021 and 2020.

Note 7:  DEPOSITS

Deposits consisted of the following at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Non-interest-bearing accounts	$	6,400,864	$	5,492,924
Interest-bearing checking	1,799,657		1,569,435
Regular savings accounts	2,773,995		2,398,482
Money market accounts	2,339,107		2,191,135
Total interest-bearing transaction and saving accounts	6,912,759		6,159,052
Certificates of deposit:
Certificates of deposit less than or equal to $250,000	663,592		718,256
Certificates of deposit greater than $250,000	187,462		197,064
Total certificates of deposit(1)	851,054		915,320
Total deposits	$	14,164,677	$	12,567,296
Included in total deposits:
Public fund transaction and savings accounts	$	354,821	$	302,875
Public fund interest-bearing certificates	40,851		59,127
Total public deposits	$	395,672	$	362,002

(1)     Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

38

At September 30, 2021 and December 31, 2020, the Company had certificates of deposit of $191.5 million and $203.6 million, respectively, that were equal to or greater than $250,000.

Scheduled maturities and weighted average interest rates of certificates of deposit at September 30, 2021 are as follows (dollars in thousands):

	September 30, 2021
	Amount		Weighted Average Rate
Maturing in one year or less	$	644,909	0.49	%
Maturing after one year through two years	130,384		0.80
Maturing after two years through three years	52,948		0.78
Maturing after three years through four years	11,044		1.27
Maturing after four years through five years	10,261		0.42
Maturing after five years	1,508		0.88
Total certificates of deposit	$	851,054	0.57	%

Note 8:  FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, whether or not measured at fair value in the Consolidated Statements of Financial Condition (dollars in thousands):

		September 30, 2021				December 31, 2020
	Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Assets:
Cash and cash equivalents	1	$	2,200,582	$	2,200,582	$	1,234,183	$	1,234,183
Securities—trading	3	26,875		26,875		24,980		24,980
Securities—available-for-sale	2	3,446,575		3,446,575		2,322,593		2,322,593
Securities—held-to-maturity	2	445,499		463,913		410,038		436,882
Securities—held-to-maturity	3	2,313		2,089		11,769		11,799
Securities purchased under agreements to resell	2	300,000		300,000		—		—
Loans held for sale	2	63,678		64,245		243,795		245,667
Loans receivable	3	9,218,384		9,271,840		9,870,982		9,810,293
FHLB stock	3	12,000		12,000		16,358		16,358
Bank-owned life insurance	1	192,950		192,950		191,830		191,830
Mortgage servicing rights	3	15,753		22,814		15,223		18,084
Derivatives:
Interest rate swaps	2	25,627		25,627		39,066		39,066
Interest rate lock and forward sales commitments	2,3	2,309		2,309		5,641		5,641
Liabilities:
Demand, interest checking and money market accounts	2	10,539,628		10,539,628		9,253,494		9,253,494
Regular savings	2	2,773,995		2,773,995		2,398,482		2,398,482
Certificates of deposit	2	851,054		851,780		915,320		919,920
FHLB advances	2	50,000		50,629		150,000		152,779
Other borrowings	2	247,358		247,358		184,785		184,785
Subordinated notes, net	2	98,472		105,875		98,201		98,201
Junior subordinated debentures	3	124,853		124,853		116,974		116,974
Derivatives:
Interest rate swaps	2	15,550		15,550		22,336		22,336
Interest rate lock and forward sales commitments	2	136		136		1,755		1,755

The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the accounting standard requires the reporting entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent

39

sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy:

•Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

•Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

•Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs from non-binding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period.

40

Items Measured at Fair Value on a Recurring Basis:

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	26,875	$	26,875
Securities—available-for-sale
U.S. Government and agency obligations	—		181,052		—		181,052
Municipal bonds	—		310,391		—		310,391
Corporate bonds	—		164,244		—		164,244
Mortgage-backed or related securities	—		2,584,264		—		2,584,264
Asset-backed securities	—		206,624		—		206,624
	—		3,446,575		—		3,446,575
Loans held for sale	—		41,480		—		41,480
Derivatives
Interest rate swaps	—		25,627		—		25,627
Interest rate lock and forward sales commitments	—		914		1,395		2,309
	$	—	$	3,514,596	$	28,270	$	3,542,866
Liabilities:
Junior subordinated debentures	$	—	$	—	$	124,853	$	124,853
Derivatives
Interest rate swaps	—		15,550		—		15,550
Interest rate lock and forward sales commitments	—		136		—		136
	$	—	$	15,686	$	124,853	$	140,539

41

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	24,980	$	24,980
Securities—available-for-sale
U.S. Government and agency obligations	—		141,735		—		141,735
Municipal bonds	—		303,518		—		303,518
Corporate bonds	—		221,769		—		221,769
Mortgage-backed securities	—		1,646,152		—		1,646,152
Asset-backed securities	—		9,419		—		9,419
	—		2,322,593		—		2,322,593
Loans held for sale	—		133,554		—		133,554
Derivatives
Interest rate swaps	—		39,066		—		39,066
Interest rate lock and forward sales commitments	—		420		5,221		5,641
	$	—	$	2,495,633	$	30,201	$	2,525,834
Liabilities:
Junior subordinated debentures, net of unamortized deferred issuance costs	$	—	$	—	$	116,974	$	116,974
Derivatives
Interest rate swaps	—		22,336		—		22,336
Interest rate lock and forward sales commitments	—		1,755		—		1,755
	$	—	$	24,091	$	116,974	$	141,065

The following methods were used to estimate the fair value of each class of financial instruments above:

Securities:  The estimated fair values of investment securities and mortgaged-backed securities are priced using current active market quotes, if available, which are considered Level 1 measurements.  For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value.  These measurements are considered Level 2.  Due to the continued limited activity in the trust preferred markets that have limited the observability of market spreads for some of the Company’s TPS securities, management has classified these securities as a Level 3 fair value measure. Management periodically reviews the pricing information received from third-party pricing services and tests those prices against other sources to validate the reported fair values.

Loans Held for Sale: Fair values for residential mortgage loans held for sale are determined by comparing actual loan rates to current secondary market prices for similar loans. Fair values for multifamily loans held for sale are calculated based on discounted cash flows using as a discount rate a combination of market spreads for similar loan types added to selected index rates.

Mortgage Servicing Rights: Fair values are estimated based on an independent dealer analysis of discounted cash flows.  The evaluation utilizes assumptions market participants would use in determining fair value including prepayment speeds, delinquency and foreclosure rates, the discount rate, servicing costs, and the timing of cash flows.  The mortgage servicing portfolio is stratified by loan type and fair value estimates are adjusted up or down based on the serviced loan interest rates versus current rates on new loan originations since the most recent independent analysis.

Junior Subordinated Debentures:  The fair value of junior subordinated debentures is estimated using an income approach technique. The significant inputs included in the estimation of fair value are the credit risk adjusted spread and three month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability. The Company utilizes an external valuation firm to validate the reasonableness of the credit risk adjusted spread used to determine the fair value. The junior subordinated debentures are carried at fair value which represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to inactivity in the trust preferred markets that have limited the observability of market spreads, management has classified this as a Level 3 fair value measure.

Derivatives: Derivatives include interest rate swap agreements, interest rate lock commitments to originate loans held for sale and forward sales contracts to sell loans and securities related to mortgage banking activities. Fair values for these instruments, which generally change as a result of changes in the level of market interest rates, are estimated based on dealer quotes and secondary market sources.

42

Off-Balance Sheet Items: Off-balance sheet financial instruments include unfunded commitments to extend credit, including standby letters of credit, and commitments to purchase investment securities. The fair value of these instruments is not considered to be material.

Limitations: The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2021 and December 31, 2020.  The factors used in the fair values estimates are subject to change subsequent to the dates the fair value estimates are completed, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3):

The following table provides a description of the valuation technique, unobservable inputs, and qualitative information about the unobservable inputs for certain of the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at September 30, 2021 and December 31, 2020:

			Weighted Average Rate / Range
Financial Instruments	Valuation Techniques	Unobservable Inputs	September 30, 2021		December 31, 2020
Corporate bonds (TPS securities)	Discounted cash flows	Discount rate	3.63	%	4.24	%
Junior subordinated debentures	Discounted cash flows	Discount rate	3.63	%	4.24	%
Loans individually evaluated	Collateral valuations	Discount to appraised value	8.5% to 20.0%		0.0% to 20.0%
REO	Appraisals	Discount to appraised value	60.91	%	51.86	%
Interest rate lock commitments	Pricing model	Pull-through rate	86.43	%	86.35	%

TPS securities: Management believes that the credit risk-adjusted spread used to develop the discount rate utilized in the fair value measurement of TPS securities is indicative of the risk premium a willing market participant would require under current market conditions for instruments with similar contractual rates and terms and conditions and issuers with similar credit risk profiles and with similar expected probability of default. Management attributes the change in fair value of these instruments, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of assets subsequent to their issuance.

Junior subordinated debentures: Similar to the TPS securities discussed above, management believes that the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the risk premium a willing market participant would require under current market conditions for an issuer with Banner’s credit risk profile. Management attributes the change in fair value of the junior subordinated debentures, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of liabilities subsequent to their issuance. Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of September 30, 2021, or the passage of time, will result in negative fair value adjustments. At September 30, 2021, the discount rate utilized was based on a credit spread of 350 basis points and three-month LIBOR of 13 basis points.

Interest rate lock commitments: The fair value of the interest rate lock commitments is based on secondary market sources adjusted for an estimated pull-through rate. The pull-through rate is based on historical loan closing rates for similar interest rate lock commitments. An increase or decrease in the pull-through rate would have a corresponding, positive or negative fair value adjustment.

43

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2021						September 30, 2021
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	25,097	$	117,520	$	2,574	$	24,980	$	116,974	$	5,221
Total gains or losses recognized
Assets gains (losses)	1,778		—		(1,179)		1,895		—		(3,826)
Liabilities losses	—		7,333		—				7,879		—
Ending balance at September 30, 2021	$	26,875	$	124,853	$	1,395	$	26,875	$	124,853	$	1,395
	Three Months Ended						Nine Months Ended
	September 30, 2020						September 30, 2020
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	23,239	$	109,613	$	5,816	$	25,636	$	119,304	$	791
Total gains or losses recognized
Assets (losses) gains	37		—		2,638		(2,360)		—		7,663
Liabilities gains	—		208		—		—		(9,483)		—
Ending balance at September 30, 2020	$	23,276	$	109,821	$	8,454	$	23,276	$	109,821	$	8,454

Interest income and dividends from the TPS securities are recorded as a component of interest income. Interest expense related to the junior subordinated debentures is measured based on contractual interest rates and reported in interest expense.  The change in fair value of the junior subordinated debentures, which represents changes in instrument specific credit risk, is recorded in other comprehensive income. See Note 13, Derivatives and Hedging, for detail on gains and losses on Level 3 interest rate lock commitments.

Items Measured at Fair Value on a Non-recurring Basis:

The following tables present financial assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,054	$	3,054
REO	—		—		852		852
	December 31, 2020
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,482	$	3,482
REO	—		—		816		816

44

The following table presents the losses resulting from non-recurring fair value adjustments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Loans individually evaluated	$	—	$	(492)	$	(303)	$	(2,492)
REO	—		—		—		—
Total loss from non-recurring measurements	$	—	$	(492)	$	(303)	$	(2,492)

Loans individually evaluated: Expected credit losses for loans evaluated individually are measured based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or when the Bank determines that foreclosure is probable, the expected credit loss is measured based on the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. As a practical expedient, the Bank measures the expected credit loss for a loan using the fair value of the collateral, if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Bank’s assessment as of the reporting date. In both cases, if the fair value of the collateral is less than the amortized cost basis of the loan, the Bank will recognize an allowance as the difference between the fair value of the collateral, less costs to sell (if applicable) at the reporting date and the amortized cost basis of the loan. If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off by the subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

REO: The Company records REO (acquired through a lending relationship) at fair value on a non-recurring basis. Fair value adjustments on REO are based on updated real estate appraisals which are based on current market conditions. All REO properties are recorded at the lower of the estimated fair value of the real estate, less expected selling costs, or the carrying amount of the defaulted loans. From time to time, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on an observable market price or current appraised value of property. Banner considers any valuation inputs related to REO to be Level 3 inputs. The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

Note 9:  INCOME TAXES AND DEFERRED TAXES

The Company files a consolidated income tax return including all of its wholly-owned subsidiaries on a calendar year basis. Income taxes are accounted for using the asset and liability method. Under this method, a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is recognized as a reduction to deferred tax assets when management determines it is more likely than not that deferred tax assets will not be available to offset future income tax liabilities.

Accounting standards for income taxes prescribe a recognition threshold and measurement process for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return, and also provide guidance on the de-recognition of previously recorded benefits and their classification, as well as the proper recording of interest and penalties, accounting in interim periods, disclosures and transition. The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

As of September 30, 2021, the Company has recognized $450,000 of unrecognized tax benefits for uncertain tax positions. The Company does not anticipate that there are additional uncertain tax positions or that any uncertain tax position which has not been recognized would materially affect the effective tax rate if recognized. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in the income tax expense. The Company files consolidated income tax returns in the U.S. federal jurisdiction and in the Oregon, California, Utah, Idaho and Montana state jurisdictions.

Tax credit investments: The Company invests in low income housing tax credit funds that are designed to generate a return primarily through the realization of federal tax credits. The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method and tax credit investment amortization expense is a component of the provision for income taxes.

45

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Tax credit investments	$	47,783	$	33,528
Unfunded commitments—tax credit investments	22,915		18,306

The following table presents other information related to the Company’s tax credit investments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Tax credits and other tax benefits recognized	$	1,114	$	981	$	3,341	$	2,943
Tax credit amortization expense included in provision for income taxes	915		849		2,745		2,507

Note 10:  CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and nine months ended September 30, 2021 and 2020 (in thousands, except shares and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	49,884	$	36,548	$	151,121	$	76,971
Basic weighted average shares outstanding	34,446,510		35,193,109		34,716,914		35,285,567
Dilutive effect of unvested restricted stock	222,982		123,570		295,314		239,204
Diluted weighted shares outstanding	34,669,492		35,316,679		35,012,228		35,524,771
Earnings per common share
Basic	$	1.45	$	1.04	$	4.35	$	2.18
Diluted	$	1.44	$	1.03	$	4.32	$	2.17

Note 11:  STOCK-BASED COMPENSATION PLANS

The Company operates the following stock-based compensation plans as approved by its shareholders:

•2014 Omnibus Incentive Plan (the 2014 Plan).

•2018 Omnibus Incentive Plan (the 2018 Plan).

The purpose of these plans is to promote the success and enhance the value of the Company by providing a means for attracting and retaining highly skilled employees, officers and directors of Banner Corporation and its affiliates and linking their personal interests with those of the Company’s shareholders. Under these plans the Company currently has outstanding restricted stock share grants and restricted stock unit grants.

2014 Omnibus Incentive Plan

The 2014 Plan was approved by shareholders on April 22, 2014. The 2014 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards and other cash awards, and provides for vesting requirements which may include time-based or performance-based conditions. The Company reserved 900,000 shares of its common stock for issuance under the 2014 Plan in connection with the exercise of awards. As of September 30, 2021, 302,167 restricted stock shares and 406,689 restricted stock units have been granted under the 2014 Plan of which 2,152 restricted stock shares and 113,906 restricted stock units are unvested.

2018 Omnibus Incentive Plan

The 2018 Plan was approved by shareholders on April 24, 2018. The 2018 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards and other cash awards, and provides for vesting requirements which may include time-based or performance-based conditions. The Company reserved 900,000 shares of common stock for issuance under the 2018 Plan in connection with the exercise of awards. As of

46

September 30, 2021, 481,361 restricted stock units have been granted under the 2018 Plan of which 394,416 restricted stock units are unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $2.4 million and $7.0 million for the three and nine month periods ended September 30, 2021 and was $2.5 million and $6.9 million for the three and nine month periods ended September 30, 2020, respectively. Unrecognized compensation expense for these awards as of September 30, 2021 was $13.3 million and will be amortized over the next 31 months.

Note 12:  COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk — The Company has financial instruments with off-balance-sheet risk generated in the normal course of business to meet the financing needs of our clients.  These financial instruments include commitments to extend credit, commitments related to standby letters of credit, commitments to originate loans, commitments to sell loans, commitments to buy and sell securities.  These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved in on-balance-sheet items recognized in our Consolidated Statements of Financial Condition.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument from commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.  We use the same credit policies in making commitments and conditional obligations as for on-balance-sheet instruments.

Outstanding commitments for which no asset or liability for the notional amount has been recorded consisted of the following at the dates indicated (in thousands):

	Contract or Notional Amount
	September 30, 2021		December 31, 2020
Commitments to extend credit	$	3,443,004	$	3,207,072
Standby letters of credit and financial guarantees	20,987		18,415
Commitments to originate loans	106,989		101,426
Risk participation agreement	40,325		40,949
Derivatives also included in Note 13:
Commitments to originate loans held for sale	139,578		169,653
Commitments to sell loans secured by one- to four-family residential properties	55,641		79,414
Commitments to sell securities related to mortgage banking activities	142,500		204,000

In addition to the commitments disclosed in the table above, the Company is committed to funding its’ unfunded tax credit investments (see Note 9, Income Taxes). During 2019, the Company entered into an agreement to invest $10 million in a limited partnership. The Company had funded $5.5 million of the commitment, with $4.5 million of the commitment remaining to be funded at September 30, 2021, compared to $2.8 million of the commitment funded, with $7.2 million to be funded at December 31, 2020. During the first quarter of 2021, the Company entered into an agreement to invest $4.5 million in another limited partnership. At September 30, 2021 the Company had funded $555,000 of the commitment, with $3.9 million of the commitment remaining to be funded. During the third quarter of 2021, the Company entered into an agreement to invest $3.0 million in an additional limited partnership. At September 30, 2021 the Company had funded $900,000 of the commitment with $2.1 million of the commitment remaining to be funded.

Commitments to extend credit are agreements to lend to a client, as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of the commitments may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. Each client’s creditworthiness is evaluated on a case-by-case basis.  The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the client. The type of collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties. The Company’s allowance for credit losses - unfunded loan commitments at September 30, 2021 and December 31, 2020 was $10.1 million and $13.3 million, respectively.

Standby letters of credit are conditional commitments issued to guarantee a client’s performance or payment to a third party.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients. Banner Bank has a risk participation agreement under which Banner Bank guarantees the financial performance of a borrower on the participated portion of an interest rate swap on a loan.

Interest rates on residential one- to four-family mortgage loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days. Traditionally, these loan applications with rate lock commitments had the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client. Banner Bank then attempts to deliver these loans before their rate locks expired. This arrangement generally required delivery of the loans prior to the expiration of the rate lock. Delays in funding the loans would require a lock extension. The cost of a lock extension at times was borne by the client and at times by Banner Bank. These lock extension costs have

47

not had a material impact to the Company’s operations. For mandatory delivery commitments the Company enters into forward commitments at specific prices and settlement dates to deliver either: (1) residential mortgage loans for purchase by secondary market investors (i.e., Freddie Mac or Fannie Mae), or (2) mortgage-backed securities to broker/dealers. The purpose of these forward commitments is to offset the movement in interest rates between the execution of its residential mortgage rate lock commitments with borrowers and the sale of those loans to the secondary market investor. There were no counterparty default losses on forward contracts during the three and nine months ended September 30, 2021 or September 30, 2020. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Company limits its exposure to market risk by monitoring differences between commitments to clients and forward contracts with market investors and securities broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the transaction is completed by either paying or receiving a fee to or from the investor or broker/dealer equal to the increase or decrease in the market value of the forward contract.

In the normal course of business, the Company and/or its subsidiaries have various legal proceedings and other contingent matters outstanding.  These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable.  These claims and counter-claims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest.  Based upon the information known to management at this time, the Company and the Bank are not a party to any legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at September 30, 2021.

In connection with certain asset sales, the Bank typically makes representations and warranties about the underlying assets conforming to specified guidelines.  If the underlying assets do not conform to the specifications, the Bank may have an obligation to repurchase the assets or indemnify the purchaser against any loss.  The Bank believes that the potential for material loss under these arrangements is remote.  Accordingly, the fair value of such obligations is not material.

NOTE 13: DERIVATIVES AND HEDGING

The Company, through its Banner Bank subsidiary, is party to various derivative instruments that are used for asset and liability management and client financing needs. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require no net investment and allow for the net settlement of positions. The notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. The underlying variable represents a specified interest rate, index, or other component. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the market value of the derivative contract. The Company obtains dealer quotations to value its derivative contracts.

The Company’s predominant derivative and hedging activities involve interest rate swaps related to certain term loans and forward sales contracts associated with mortgage banking activities. Generally, these instruments help the Company manage exposure to market risk and meet client financing needs. Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors.

Derivatives Designated in Hedge Relationships

The Company’s fixed-rate loans result in exposure to losses in value or net interest income as interest rates change. The risk management objective for hedging fixed-rate loans is to effectively convert the fixed-rate received to a floating rate. The Company has hedged exposure to changes in the fair value of certain fixed-rate loans through the use of interest rate swaps. For a qualifying fair value hedge, changes in the value of the derivatives are recognized in current period earnings along with the corresponding changes in the fair value of the designated hedged item attributable to the risk being hedged.

Under a prior program, clients received fixed interest rate commercial loans and Banner Bank subsequently hedged that fixed-rate loan by entering into an interest rate swap with a dealer counterparty. Banner Bank receives fixed-rate payments from the clients on the loans and makes similar fixed-rate payments to the dealer counterparty on the swaps in exchange for variable-rate payments based on the one-month LIBOR index. Some of these interest rate swaps are designated as fair value hedges. Through application of the “short cut method of accounting,” there is an assumption that the hedges are effective. Banner Bank discontinued originating interest rate swaps under this program in 2008.

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	63	$	1	$	338	$	9	$	63	$	1	$	338	$	9

(1)    Included in Loans receivable on the Consolidated Statements of Financial Condition.

48

(2)    Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Derivatives Not Designated in Hedge Relationships

Interest Rate Swaps: Banner Bank uses an interest rate swap program for commercial loan clients that provides the client with a variable-rate loan and enters into an interest rate swap in which the client receives a variable-rate payment in exchange for a fixed-rate payment. The Bank offsets its risk exposure by entering into an offsetting interest rate swap with a dealer counterparty for the same notional amount and length of term as the client interest rate swap providing the dealer counterparty with a fixed-rate payment in exchange for a variable-rate payment. These swaps do not qualify as designated hedges; therefore, each swap is accounted for as a free standing derivative.

Mortgage Banking: The Company sells originated one- to four-family mortgage loans into the secondary mortgage loan markets. During the period of loan origination and prior to the sale of the loans in the secondary market, the Company has exposure to movements in interest rates associated with written interest rate lock commitments with potential borrowers to originate one- to four-family loans that are intended to be sold and for closed one- to four-family mortgage loans held for sale, for which fair value accounting has been elected, that are awaiting sale and delivery into the secondary market. The Company economically hedges the risk of changing interest rates associated with these mortgage loan commitments by entering into forward sales contracts to sell one- to four-family mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates.

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives not designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	481,637	$	25,626	$	451,760	$	39,057	$	481,637	$	15,549	$	451,760	$	22,327
Mortgage loan commitments	109,986		1,395		140,390		5,221		50,496		49		72,511		199
Forward sales contracts	174,141		914		79,414		420		24,000		87		204,000		1,556
	$	765,764	$	27,935	$	671,564	$	44,698	$	556,133	$	15,685	$	728,271	$	24,082

(1)Included in Other assets on the Consolidated Statements of Financial Condition, with the exception of certain interest swaps and mortgage loan commitments (with a fair value of $177,000 at September 30, 2021 and $231,000 at December 31, 2020), which are included in Loans receivable.

(2)Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Gains (losses) recognized in income on derivatives not designated in hedge relationships for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Location on Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Mortgage loan commitments	Mortgage banking operations	$	(1,179)	$	2,639	$	(3,826)	$	7,664
Forward sales contracts	Mortgage banking operations	865		258		2,004		(779)
		$	(314)	$	2,897	$	(1,822)	$	6,885

The Company is exposed to credit-related losses in the event of nonperformance by the counterparty to these agreements. Credit risk of the financial contract is controlled through the credit approval, limits, and monitoring procedures and management does not expect the counterparties to fail their obligations.

In connection with the interest rate swaps between Banner Bank and the dealer counterparties, the agreements contain a provision where if Banner Bank fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and Banner Bank would be required to settle its obligations. Similarly, Banner Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required Banner Bank to maintain a specific capital level. If Banner Bank had breached any of these provisions at September 30, 2021 or December 31, 2020, it could have been required to settle its obligations under the agreements at the termination value. As of September 30, 2021 and December 31, 2020, the termination value of derivatives in a net liability position related to these agreements was $29.2 million and $48.6 million, respectively. The Company generally posts collateral against derivative liabilities in

49

the form of cash, government agency-issued bonds, mortgage-backed securities, or commercial mortgage-backed securities. Collateral posted against derivative liabilities was $50.8 million and $47.1 million as of September 30, 2021 and December 31, 2020, respectively.

Derivative assets and liabilities are recorded at fair value on the balance sheet. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis and to offset net derivative positions with related collateral where applicable. In addition, some of interest rate swap derivatives between Banner Bank and the dealer counterparties are cleared through central clearing houses. These clearing houses characterize the variation margin payments as settlements of the derivative’s market exposure and not as collateral. The variation margin is treated as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative liability. As of September 30, 2021 and December 31, 2020, the variation margin adjustment was a negative adjustment of $10.3 million and $16.9 million, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
Derivative liabilities
Interest rate swaps	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	December 31, 2020
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
Derivative liabilities
Interest rate swaps	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116
	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116

50

NOTE 14: REVENUE FROM CONTRACTS WITH CLIENTS

Disaggregation of Revenue:

Deposit fees and other service charges for the three and nine months ended September 30, 2021 and 2020 are summarized as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Deposit service charges	$	5,128	$	3,904	$	13,735	$	12,269
Debit and credit card interchange fees	6,032		5,207		17,265		14,762
Debit and credit card expense	(2,655)		(2,134)		(7,819)		(6,272)
Merchant services income	4,239		3,584		11,136		9,252
Merchant services expense	(3,439)		(2,839)		(8,964)		(7,378)
Other service charges	1,152		1,020		3,801		3,458
Total deposit fees and other service charges	$	10,457	$	8,742	$	29,154	$	26,091

Deposit fees and other service charges

Deposit fees and other service charges include transaction and non-transaction based deposit fees. Transaction based fees on deposit accounts are charged to deposit clients for specific services provided to the client. These fees include such items as wire fees, official check fees, and overdraft fees. These are contract specific to each individual transaction and do not extend beyond the individual transaction. The performance obligation is completed and the fees are recognized at the time the specific transactional service is provided to the client. Non-transactional deposit fees are typically monthly account maintenance fees charged on deposit accounts. These are day-to-day contracts that can be canceled by either party without notice. The performance obligation is satisfied and the fees are recognized on a monthly basis after the service period is completed.

Debit and credit card interchange income and expenses

Debit and credit card interchange income represent fees earned when a debit or credit card issued by the Bank is used to purchase goods or services at a merchant. The merchant’s bank pays the Bank a default interchange rate set by MasterCard on a transaction by transaction basis. The merchant acquiring bank can stop accepting the Bank’s cards at any time and the Bank can stop further use of cards issued by them at any time. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the Bank’s cardholders’ card. Direct expenses associated with the credit and debit card are recorded as a net reduction against the interchange income.

Merchant services income

Merchant services income represents fees earned by the Bank for card payment services provided to its merchant clients. The Bank has a contract with a third party to provide card payment services to the Bank’s merchants that contract for those services. The third party provider has contracts with the Bank’s merchants to provide the card payment services. The Bank does not have a direct contractual relationship with its merchants for these services. The Bank sets the rates for the services provided by the third party. The third party provider passes the payments made by the Bank’s merchants through to the Bank. The Bank, in turn, pays the third party provider for the services it provides to the Bank’s merchants. These payments to the third party provider are recorded as expenses as a net reduction against fee income. In addition, a portion of the payment received by the Bank represents interchange fees which are passed through to the card issuing bank. Income is primarily earned based on the dollar volume and number of transactions processed. The performance obligation is satisfied and the related fee is earned when each payment is accepted by the processing network.

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

We are a bank holding company incorporated in the State of Washington which owns one subsidiary bank, Banner Bank. Banner Bank is a Washington-chartered commercial bank that conducts business from its main office in Walla Walla, Washington and, as of September 30, 2021, it had 150 branch offices and 18 loan production offices located in Washington, Oregon, California, Idaho and Utah.  Banner Corporation is subject to regulation by the Board of Governors of the Federal Reserve System (the Federal Reserve Board).  Banner Bank (the Bank) is subject to regulation by the Washington State Department of Financial Institutions, Division of Banks and the Federal Deposit Insurance Corporation (the FDIC).  As of September 30, 2021, we had total consolidated assets of $16.64 billion, total loans of $9.22 billion, total deposits of $14.16 billion and total shareholders’ equity of $1.67 billion.

Banner Bank is a regional bank which offers a wide variety of commercial banking services and financial products to individuals, businesses and public sector entities in its primary market areas.  The Bank’s primary business is that of traditional banking institutions, accepting deposits and originating loans in locations surrounding their offices in Washington, Oregon, California and Idaho.  Banner Bank is also an

51

active participant in secondary loan markets, engaging in mortgage banking operations largely through the origination and sale of one- to four-family and multifamily residential loans.  Lending activities include commercial business and commercial real estate loans, agriculture business loans, construction and land development loans, one- to four-family and multifamily residential loans, U.S. Small Business Administration (SBA) loans and consumer loans.

Banner Corporation’s successful execution of its super community bank model and strategic initiatives have delivered solid core operating results and profitability over the last several years. Banner’s longer term strategic initiatives continue to focus on originating high quality assets and client acquisition, which we believe will continue to generate strong revenue while maintaining the Company’s moderate risk profile.

Our financial results for the quarter ended September 30, 2021 reflect the low interest rate environment, the unprecedented level of market liquidity and the reduction in business activity in some of our markets due the lingering impacts of the COVID-19 pandemic. At September 30, 2021, we had 41 mortgage loans totaling $12.4 million 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. In addition, the SBA provided assistance to small businesses impacted by COVID-19 through the Paycheck Protection Program (PPP), which was designed to provide near-term relief to help small businesses sustain operations. As of September 30, 2021, Banner had provided 13,293 SBA PPP loans totaling nearly $1.61 billion and received SBA forgiveness for 10,548 SBA PPP loans totaling $1.23 billion.

For the quarter ended September 30, 2021, our net income was $49.9 million, or $1.44 per diluted share, compared to net income of $36.5 million, or $1.03 per diluted share, for the quarter ended September 30, 2020. The current quarter was positively impacted by increased interest income, decreased funding costs and the recapture of provision for credit losses, partially offset by a decrease in mortgage banking income and increased non-interest expense.

After a comprehensive review of our business, we implemented Banner Forward, a bank-wide initiative to accelerate revenue growth and reduce operating expense. Implementation of this plan commenced during the third quarter of 2021 with full implementation expected by 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.

Our operating results depend primarily on our net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of loans and investment securities, and interest expense on interest-bearing liabilities, composed primarily of client deposits, FHLB advances, other borrowings, subordinated notes, and junior subordinated debentures. Net interest income is primarily a function of our interest rate spread, which is the difference between the yield earned on interest-earning assets and the rate paid on interest-bearing liabilities, as well as a function of the average balances of interest-earning assets, interest-bearing liabilities and non-interest-bearing funding sources including non-interest-bearing deposits. Our net interest income increased $9.1 million, or 8%, to $130.1 million for the quarter ended September 30, 2021, compared to $121.0 million for the same quarter one year earlier. This increase in net interest income is primarily a result of an acceleration of deferred loan fee income due to SBA PPP loan forgiveness payments from the SBA, growth in both our interest-earning assets and core deposits as well as decreases in the cost of funding liabilities, partially offset by lower yields on total interest-earning assets due declines in market rates. The growth in core deposits was largely the result of 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.

Our net income is also affected by the level of our non-interest income, including deposit fees and other service charges, results of mortgage banking operations, which includes gains and losses on the sale of loans and servicing fees, gains and losses on the sale of securities, as well as our non-interest expenses and provisions for credit losses and income taxes. In addition, our net income is affected by the net change in the value of certain financial instruments carried at fair value.

Our total revenues (net interest income plus total non-interest income) for the third quarter of 2021 increased $6.2 million, or 4%, to $155.5 million, compared to $149.2 million for the same period a year earlier, largely as a result of an increase in net interest income, partially offset by a decrease in non-interest income.  Our total non-interest income, which is a component of total revenue and includes the net gain on sale of securities and changes in the value of financial instruments carried at fair value, was $25.3 million for the quarter ended September 30, 2021, compared to $28.2 million for the quarter ended September 30, 2020, primarily due to the decrease in mortgage banking income, partially offset by an increase in deposit fees and other services charges. The year-over-year decrease in mortgage banking income 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 sold.

Our non-interest expense increased in the third quarter of 2021, compared to a year earlier largely as a result of increases in professional and legal expense, primarily due to increased consultant expense, which included $5.8 million of expense related to the Banner Forward initiative, as well as $4.0 million recorded related to litigation and legal matters during the current quarter, and increased payment and card processing services expense, partially offset by decreased salary and employee benefits expense compared to the same quarter a year ago. Non-interest expense was $102.1 million for the quarter ended September 30, 2021 and $90.0 million for the same quarter a year earlier.

52

We recorded an $8.6 million recapture of provision for credit losses in the quarter ended September 30, 2021, compared to a $15.2 million provision for credit losses for the quarter ended September 30, 2020. The recapture of provision for credit losses for the current quarter primarily reflects improvement in the forecasted economic indicators and a decrease in adversely classified loans. The provision for credit losses recorded in the third quarter a year ago reflected the deterioration in forecasted economic indicators as well as risk rating downgrades on loans that were considered at risk due to the COVID-19 pandemic. The allowance for credit losses - loans at September 30, 2021 was $139.9 million, representing 485% of non-performing loans compared to $167.3 million, or 470% of non-performing loans at December 31, 2020. 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 September 30, 2021 compared to $13.3 million at December 31, 2020. Non-performing loans were $28.9 million at September 30, 2021, compared to $35.6 million at December 31, 2020 and $34.8 million a year earlier. (See Note 4, Loans Receivable and the Allowance for Credit Losses, as well as “Asset Quality” below in this Form 10-Q.)

*Non-GAAP financial measures: Net income, revenues and other earnings and expense information excluding fair value adjustments, gains or losses on the sale of securities, merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of CDI, REO operations, state/municipal tax expense and the related tax benefit, are non-GAAP financial measures.  Management has presented these and other non-GAAP financial measures in this discussion and analysis because it believes that they provide useful and comparative information to assess trends in our core operations and to facilitate the comparison of our performance with the performance of our peers.  However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, we have also presented comparable earnings information using GAAP financial measures.  For a reconciliation of these non-GAAP financial measures, see the tables below.  Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. See “Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020” for more detailed information about our financial performance.

The following tables set forth reconciliations of non-GAAP financial measures discussed in this report (dollars in thousands except per share data):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
ADJUSTED REVENUE
Net interest income (GAAP)	$	130,146	$	121,026	$	375,361	$	359,864
Total non-interest income	25,334		28,222		71,942		75,107
Total GAAP revenue	155,480		149,248		447,303		434,971
Exclude net gain on sale of securities	(56)		(644)		(618)		(815)
Exclude change in valuation of financial instruments carried at fair value	(1,778)		(37)		(1,895)		2,360
Adjusted Revenue (non-GAAP)	$	153,646	$	148,567	$	444,790	$	436,516

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
ADJUSTED EARNINGS
Net income (GAAP)	$	49,884	$	36,548	$	151,121	$	76,971
Exclude net gain on sale of securities	(56)		(644)		(618)		(815)
Exclude change in valuation of financial instruments carried at fair value	(1,778)		(37)		(1,895)		2,360
Exclude merger and acquisition-related costs	10		5		660		1,483
Exclude COVID-19 expenses	44		778		309		3,169
Exclude Banner Forward expenses	7,592		—		10,447		—
Exclude related tax (benefit) expense	(1,395)		(24)		(2,137)		(1,476)
Total adjusted earnings (non-GAAP)	$	54,301	$	36,626	$	157,887	$	81,692
Diluted earnings per share (GAAP)	$	1.44	$	1.03	$	4.32	$	2.17
Diluted adjusted earnings per share (non-GAAP)	$	1.57	$	1.04	$	4.51	$	2.30

53

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2020			2021			2020
ADJUSTED EFFICIENCY RATIO
Non-interest expense (GAAP)	$	102,145		$	90,028		$	288,296		$	274,033
Exclude merger and acquisition-related costs	(10)			(5)			(660)			(1,483)
Exclude COVID-19 expenses	(44)			(778)			(309)			(3,169)
Exclude Banner forward expenses	(7,592)			—			(10,447)			—
Exclude CDI amortization	(1,575)			(1,864)			(4,997)			(5,867)
Exclude state/municipal tax expense	(1,219)			(1,196)			(3,367)			(3,284)
Exclude REO operations	(53)			11			71			(93)
Adjusted non-interest expense (non-GAAP)	$	91,652		$	86,196		$	268,587		$	260,137
Net interest income (GAAP)	$	130,146		$	121,026		$	375,361		$	359,864
Non-interest income (GAAP)	25,334			28,222			71,942			75,107
Total revenue	155,480			149,248			447,303			434,971
Exclude net gain on sale of securities	(56)			(644)			(618)			(815)
Exclude net change in valuation of financial instruments carried at fair value	(1,778)			(37)			(1,895)			2,360
Adjusted revenue (non-GAAP)	$	153,646		$	148,567		$	444,790		$	436,516
Efficiency ratio (GAAP)	65.70		%	60.32		%	64.45		%	63.00		%
Adjusted efficiency ratio (non-GAAP)	59.65		%	58.02		%	60.39		%	59.59		%

54

The ratio of tangible common shareholders’ equity to tangible assets is also a non-GAAP financial measure. We calculate tangible common equity by excluding goodwill and other intangible assets from shareholders’ equity. We calculate tangible assets by excluding the balance of goodwill and other intangible assets from total assets. We believe that this is consistent with the treatment by our bank regulatory agencies, which exclude goodwill and other intangible assets from the calculation of risk-based capital ratios. Management believes that this non-GAAP financial measure provides information to investors that is useful in understanding the basis of our capital position (dollars in thousands except per share data).

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
	September 30, 2021			December 31, 2020			September 30, 2020
Shareholders’ equity (GAAP)	$	1,667,119		$	1,666,264		$	1,646,529
Exclude goodwill and other intangible assets, net	389,550			394,547			396,412
Tangible common shareholders’ equity (non-GAAP)	$	1,277,569		$	1,271,717		$	1,250,117
Total assets (GAAP)	$	16,637,879		$	15,031,623		$	14,642,075
Exclude goodwill and other intangible assets, net	389,550			394,547			396,412
Total tangible assets (non-GAAP)	$	16,248,329		$	14,637,076		$	14,245,663
Common shareholders’ equity to total assets (GAAP)	10.02		%	11.09		%	11.25		%
Tangible common shareholders’ equity to tangible assets (non-GAAP)	7.86		%	8.69		%	8.78		%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Tangible common shareholders’ equity (non-GAAP)	$	1,277,569		$	1,271,717		$	1,250,117
Common shares outstanding at end of period	34,251,991			35,159,200			35,158,568
Common shareholders’ equity (book value) per share (GAAP)	$	48.67		$	47.39		$	46.83
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)	$	37.30		$	36.17		$	35.56

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding our financial condition and results of operations.  The information contained in this section should be read in conjunction with the Consolidated Financial Statements and accompanying Selected Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Summary of Critical Accounting Policies and Estimates

In the opinion of management, the accompanying Consolidated Statements of Financial Condition and related Consolidated Statements of Operations, Comprehensive Income, Changes in Shareholders’ Equity and Cash Flows reflect all adjustments (which include reclassification and normal recurring adjustments) that are necessary for a fair presentation in conformity with GAAP.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements.

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments.  In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of our financial statements.  These policies relate to (i) the methodology for the recognition of interest income, (ii) determination of the provision and allowance for credit losses, (iii) the valuation of financial assets and liabilities recorded at fair value, (iv) the valuation of intangibles, such as goodwill, core deposit intangibles and mortgage servicing rights, (v) the valuation of real estate held for sale, (vi) the valuation of assets and liabilities acquired in business combinations and subsequent recognition of related income and expense, and (vii) the valuation of or recognition of deferred tax assets and liabilities.  These policies and judgments, estimates and assumptions are described in greater detail below.  Management believes the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate based on the factual circumstances at the time.  However, given the sensitivity of the financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition.  Further, subsequent changes in economic or market conditions could have a material impact on these estimates and our financial condition and operating results in future periods.  There have been no significant changes in our application of accounting policies since December 31, 2020.  For additional information concerning critical accounting policies, see the Selected Notes to the Consolidated Financial Statements and the following:

Interest Income: (Notes 3 and 4) Interest on loans and securities is accrued as earned unless management doubts the collectability of the asset or the unpaid interest.  Interest accruals on loans are generally discontinued when loans become 90 days past due for payment of interest and

55

the loans are then placed on nonaccrual status.  All previously accrued but uncollected interest is deducted from interest income upon transfer to nonaccrual status.  For any future payments collected, interest income is recognized only upon management’s assessment that there is a strong likelihood that the full amount of a loan will be repaid or recovered.  Management’s assessment of the likelihood of full repayment involves judgment including determining the fair value of the underlying collateral which can be impacted by the economic environment. A loan may be put on nonaccrual status sooner than this policy would dictate if, in management’s judgment, the amounts owed, principal or interest, may be uncollectable.  While less common, similar interest reversal and nonaccrual treatment is applied to investment securities if their ultimate collectability becomes questionable. Loans modified due to the COVID-19 pandemic are considered current if they are less than 30 days past due on the contractual payments at the time the loan modification program was put in place and therefore continue to accrue interest unless the interest is being waived.

Provision and Allowance for Credit Losses - Loans: (Note 4) The methodology for determining the allowance for credit losses - loans is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for credit losses. Among the material estimates required to establish the allowance for credit losses - loans are: a reasonable and supportable forecast; a reasonable and supportable forecast period and the reversion period; value of collateral; strength of guarantors; the amount and timing of future cash flows for loans individually evaluated; and determination of the qualitative loss factors. All of these estimates are susceptible to significant change. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans. The Bank has elected to exclude accrued interest receivable from the amortized cost basis in their estimate of the allowance for credit losses. The provision for credit losses reflects the amount required to maintain the allowance for credit losses at an appropriate level based upon management’s evaluation of the adequacy of collective and individual loss reserves.  The Company has established systematic methodologies for the determination of the adequacy of the Company’s allowance for credit losses.  The methodologies are set forth in a formal policy and take into consideration the need for a valuation allowance for loans evaluated on a collective (pool) basis which have similar risk characteristics as well as allowances that are tied to individual loans that do not share risk characteristics.  The Company increases its allowance for credit losses by charging provisions for credit losses on its consolidated statement of operations. Losses related to specific assets are applied as a reduction of the carrying value of the assets and charged against the allowance for credit loss reserve when management believes the uncollectibility of a loan balance is confirmed.  Recoveries on previously charged off loans are credited to the allowance for credit losses.  

Management estimates the allowance for credit losses - loans using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loan based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio.  These factors include, among others, changes in the size and composition of the loan portfolio, differences in underwriting standards, delinquency rates, actual loss experience and current economic conditions.

The allowance for credit losses - loans is measured on a collective (pool) basis when similar risk characteristics exist. In estimating the component of the allowance for credit losses for loans that share common risk characteristics, loans are pooled based on loan type and areas of risk concentration. For loans evaluated collectively, the allowance for credit losses is calculated using life of loan historical losses adjusted for economic forecasts and current conditions.

For commercial real estate, multifamily real estate, construction and land, commercial business and agricultural loans with risk rating segmentation, historical credit loss assumptions are estimated using a model that categorizes loan pools based on loan type and risk rating. For one- to four- family residential loans, consumer loans, home equity lines of credit, small business loans, and small balance commercial real estate loans, historical credit loss assumptions are estimated using a model that categorizes loan pools based on loan type and delinquency status. These models calculate an expected life-of-loan loss percentage for each loan category by calculating the probability of default, based on the migration of loans from performing to loss by risk rating or delinquency categories using historical life-of-loan analysis and the severity of loss, based on the aggregate net lifetime losses incurred for each loan pool. For credit cards, historical credit loss assumptions are estimated using a model that calculates an expected life-of-loan loss percentage for each loan category by considering the historical cumulative losses based on the aggregate net lifetime losses incurred for each loan pool. The model captures historical loss data back to the first quarter of 2008. For loans evaluated collectively, management uses economic indicators to adjust the historical loss rates so that they better reflect management’s expectations of future conditions over the remaining lives of the loans in the portfolio based on reasonable and supportable forecasts. These economic indicators are selected based on correlation to the Company’s historical credit loss experience and are evaluated for each loan category. The economic indicators evaluated include the unemployment rate, gross domestic product, real estate price indices and growth, industrial employment, corporate profits, the household consumer debt service ratio, the household mortgage debt service ratio, and single family median home price growth. Management considers various economic scenarios and forecasts when evaluating the economic indicators and probability weights the various scenarios to arrive at the forecast that most reflects management’s expectations of future conditions. The allowance for credit losses is then adjusted for the period in which those forecasts are considered to be reasonable and supportable. To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made, the adjustments discontinue to be applied so that the model reverts back to the historical loss rates using a straight line reversion method. Management selected an initial reasonable and supportable forecast period of 12 months with a reversion period of 12 months. Both the reasonable and supportable forecast period and the reversion period are periodically reviewed by management.

Further, for loans evaluated collectively, management also considers qualitative and environmental factors for each loan category to adjust for differences between the historical periods used to calculate historical loss rates and expected conditions over the remaining lives of the loans in the portfolio. In determining the aggregate adjustment needed management considers the financial condition of the borrowers, the nature

56

and volume of the loans, the remaining terms and the extent of prepayments on the loans, the volume and severity of past due and classified loans as well as the value of the underlying collateral on loans in which the collateral dependent practical expedient has not been used. Management also considers the Company’s lending policies, the quality of the Company’s credit review system, the quality of the Company’s management and lending staff, and the regulatory and economic environments in the areas in which the Company’s lending activities are concentrated.

Loans that do not share risk characteristics with other loans in the portfolio are individually evaluated for impairment and are not included in the collective evaluation.  Factors involved in determining whether a loan should be individually evaluated include, but are not limited to, the financial condition of the borrower and the value of the underlying collateral.  Expected credit losses for loans evaluated individually are measured based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or when the Bank determines that foreclosure is probable, the expected credit loss is measured based on the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. As a practical expedient, the Bank measures the expected credit loss for a loan using the fair value of the collateral, if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Bank’s assessment as of the reporting date.

In both cases, if the fair value of the collateral is less than the amortized cost basis of the loan, the Bank will recognize an allowance as the difference between the fair value of the collateral, less costs to sell (if applicable) at the reporting date and the amortized cost basis of the loan. If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off. Subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Bank.

Some of the Bank’s loans are reported as troubled debt restructures (TDRs).  Loans are reported as TDRs when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider.  Examples of such concessions include forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk.  The allowance for credit losses on a TDR is determined using the same method as all other loans held for investment, except when the value of the concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method the allowance for credit losses is determined by discounting the expected future cash flows at the original interest rate of the loan. The Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) and the Consolidated Appropriations Act, 2021 (CAA) provided guidance around the modification of loans as a result of the COVID-19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current under the CARES Act and regulatory guidance if they are less than 30 days past due on their contractual payments at the time a modification program is implemented. The CAA extends relief offered under the CARES Act related to TDRs as a result of COVID-19 through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier.

Fair Value Accounting and Measurement: (Note 8) We use fair value measurements to record fair value adjustments to certain financial assets and liabilities and to determine fair value disclosures.  We include in the Notes to the Consolidated Financial Statements information about the extent to which fair value is used to measure financial assets and liabilities, the valuation methodologies used and the impact on our results of operations and financial condition.  Additionally, for financial instruments not recorded at fair value we disclose, where required, our estimate of their fair value.  

Loans Acquired in Business Combinations: (Notes 2 and 4) Loans acquired in business combinations are recorded at their fair value at the acquisition date. Establishing the fair value of acquired loans involves a significant amount of judgment, including determining the credit discount based upon historical data adjusted for current economic conditions and other factors. If any of these assumptions are inaccurate actual credit losses could vary significantly from the credit discount used to calculate the fair value of the acquired loans. Acquired loans are evaluated upon acquisition and classified as either purchased credit-deteriorated or purchased non-credit-deteriorated. Purchased credit-deteriorated (PCD) loans have experienced more than insignificant credit deterioration since origination. For PCD loans, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The loan’s fair value grossed up for the allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through a provision for credit losses.

For purchased non-credit-deteriorated loans, the difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loans. While credit discounts are included in the determination of the fair value for non-credit-deteriorated loans, since these discounts are expected to be accreted over the life of the loans, they cannot be used to offset the allowance for credit losses that must be recorded at the acquisition date. As a result, an allowance for credit losses is determined at

57

the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses. Any subsequent deterioration (improvement) in credit quality is recognized by recording (recapturing) a provision for credit losses.

Goodwill: (Note 6) Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination and is not amortized but is reviewed annually, or more frequently as current circumstances and conditions warrant, for impairment. An assessment of qualitative factors is completed to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The qualitative assessment involves judgment by management on determining whether there have been any triggering events that have occurred which would indicate potential impairment. If the qualitative analysis concludes that further analysis is required, then a quantitative impairment test would be completed. The quantitative goodwill impairment test is used to identify the existence of impairment and the amount of impairment loss and compares the reporting unit’s estimated fair values, including goodwill, to its carrying amount. If the fair value exceeds the carry amount then goodwill is not considered impaired. If the carrying amount exceeds its fair value, an impairment loss would be recognized equal to the amount of excess, limited to the amount of total goodwill allocated to the reporting unit. The impairment loss would be recognized as a charge to earnings. The Company completed an assessment of qualitative factors as of December 31, 2020 and as a result of the economic impact of the COVID-19 pandemic concluded further analysis was required. The Company completed a quantitative goodwill impairment test and concluded the fair value of the reporting unit, Banner Bank, exceeded the carrying value of the reporting unit including goodwill and therefore no impairment existed as of December 31, 2020. Changes in the economic environment, operations of the reporting unit or other adverse events could result in future impairment charges which could have a material adverse impact on the Company’s operating results.

Other Intangible Assets: (Note 6) Other intangible assets consists primarily of core deposit intangibles (CDI), which are amounts recorded in business combinations or deposit purchase transactions related to the value of transaction-related deposits and the value of the client relationships associated with the deposits.  Core deposit intangibles are being amortized on an accelerated basis over a weighted average estimated useful life of eight years.  The determination of the estimated useful life of the core deposit intangible involves judgment by management. The actual life of the core deposit intangible could vary significantly from the estimated life. These assets are reviewed at least annually for events or circumstances that could impact their recoverability.  These events could include loss of the underlying core deposits, increased competition or adverse changes in the economy.  To the extent other identifiable intangible assets are deemed unrecoverable, impairment losses are recorded in other non-interest expense to reduce the carrying amount of the assets.

Mortgage Servicing Rights: (Note 6) Mortgage servicing rights (MSRs) are recognized as separate assets when rights are acquired through purchase or through sale of loans.  Generally, purchased MSRs are capitalized at the cost to acquire the rights.  For sales of mortgage loans, the value of the MSR is estimated and capitalized.  Fair value is based on market prices for comparable mortgage servicing contracts.  The fair value of the MSRs includes an estimate of the life of the underlying loans which is affected by estimated prepayment speeds. The estimate of prepayment speeds is based on current market conditions. Actual market conditions could vary significantly from current conditions which could result in the estimated life of the underlying loans being different which would change the fair value of the MSR. Capitalized MSRs are reported in other assets and are amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

Real Estate Owned Held for Sale: (Note 5) Property acquired by foreclosure or deed in lieu of foreclosure is recorded at the estimated fair value of the property, less expected selling costs.  Development and improvement costs relating to the property may be capitalized, while other holding costs are expensed.  The carrying value of the property is periodically evaluated by management. Property values are influenced by current economic and market conditions, changes in economic conditions could result in a decline in property value. To the extent that property values decline, allowances are established to reduce the carrying value to net realizable value.  Gains or losses at the time the property is sold are charged or credited to operations in the period in which they are realized.  The amounts the Bank will ultimately recover from real estate held for sale may differ substantially from the carrying value of the assets because of market factors beyond the Bank’s control or because of changes in the Bank’s strategies for recovering the investment.

Income Taxes and Deferred Taxes: (Note 9) The Company and its wholly-owned subsidiaries file consolidated U.S. federal income tax returns, as well as state income tax returns in Oregon, California, Utah, Idaho and Montana.  Income taxes are accounted for using the asset and liability method.  Under this method a deferred tax asset or liability is determined based on the enacted tax rates which are expected to be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s income tax returns.  The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.  We assess the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent and other pertinent information and maintain tax accruals consistent with our evaluation. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations by the tax authorities and newly enacted statutory, judicial and regulatory guidance that could impact the relative merits of tax positions. These changes, when they occur, impact accrued taxes and can materially affect our operating results. A valuation allowance is required to be recognized if it is more likely than not that all or a portion of our deferred tax assets will not be realized. The evaluation pertaining to the tax expense and related deferred tax asset and liability balances involves a high degree of judgment and subjectivity around the measurement and resolution of these matters. The ultimate realization of the deferred tax assets is dependent upon the existence, or generation, of taxable income in the periods when those temporary differences and net operating loss and credit carryforwards are deductible.

Legal Contingencies: In the normal course of our business, we have various legal proceedings and other contingent matters pending. We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis

58

of potential results, assuming a combination of litigation and settlement strategies. The estimated losses often involve a level of subjectivity and usually are a range of reasonable losses and not an exact number, in those situations we accrue the best estimate within the range or the low end of the range if no estimate within the range is better than another.

59

Comparison of Financial Condition at September 30, 2021 and December 31, 2020

General:  Total assets increased $1.61 billion, to $16.64 billion at September 30, 2021, from $15.03 billion at December 31, 2020. The increase was largely the result of excess liquidity from increases in retail deposits being invested in short term investments, including interest bearing deposits and securities, partially offset by a decrease in total loans receivable due to SBA PPP loan forgiveness during the first nine months of 2021.

Loans and lending: Loans are our most significant and generally highest yielding earning assets. We attempt to maintain a portfolio of loans to total deposits ratio at a level designed to enhance our revenues, while adhering to sound underwriting practices and appropriate diversification guidelines in order to maintain a moderate risk profile. Our loan to deposit ratio at September 30, 2021 was 66%, which reflects the unprecedented level of market liquidity and decrease in business activity due to the impacts of the COVID-19 pandemic and is below our historical range of 90% to 95%. We expect the loan to deposit ratio to remain below historical levels for the foreseeable future We offer a wide range of loan products to meet the demands of our clients. Our lending activities are primarily directed toward the origination of real estate and commercial loans. Total loans receivable decreased $652.6 million during the nine months ended September 30, 2021, primarily reflecting decreased commercial business loan balances due to SBA PPP loan forgiveness repayments, as well as decreased commercial construction, multifamily construction, one-to-four family residential, consumer, and agricultural business loan balances, partially offset by increased commercial real estate, multifamily real estate, one- to four-family construction, and land and land development loan balances. Excluding SBA PPP loans, total loans receivable increased $81.7 million during the nine months ended September 30, 2021. At September 30, 2021, our loans receivable totaled $9.22 billion compared to $9.87 billion at December 31, 2020 and $10.16 billion at September 30, 2020.

The following table sets forth the composition of the Company’s loans receivable by type of loan as of the dates indicated (dollars in thousands):

							Percentage Change
	Sep 30, 2021		Dec 31, 2020		Sep 30, 2020		Prior Year End		Prior Year
Commercial real estate:
Owner-occupied	$	1,122,275	$	1,076,467	$	1,049,877	4.3	%	6.9	%
Investment properties	1,980,284		1,955,684		1,991,258		1.3		(0.6)
Small balance CRE	601,751		573,849		597,971		4.9		0.6
Multifamily real estate	532,760		428,223		426,659		24.4		24.9
Construction, land and land development:
Commercial construction	170,205		228,937		220,285		(25.7)		(22.7)
Multifamily construction	278,184		305,527		291,105		(8.9)		(4.4)
One- to four-family construction	571,431		507,810		518,085		12.5		10.3
Land and land development	308,164		248,915		240,803		23.8		28.0
Commercial business:
Commercial business	1,039,731		1,133,989		1,193,651		(8.3)		(12.9)
SBA PPP	306,976		1,044,472		1,149,968		(70.6)		(73.3)
Small business scored	775,554		743,451		763,824		4.3		1.5
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland	284,255		299,949		326,169		(5.2)		(12.9)
SBA PPP	3,214		—		—		nm		nm
One- to four-family residential	682,368		717,939		771,431		(5.0)		(11.5)
Consumer:
Consumer—home equity revolving lines of credit	462,819		491,812		504,523		(5.9)		(8.3)
Consumer—other	98,413		113,958		118,308		(13.6)		(16.8)
Total loans receivable	$	9,218,384	$	9,870,982	$	10,163,917	(6.6)	%	(9.3)	%

Our commercial real estate loans for owner-occupied, investment properties, and small balance CRE totaled $3.70 billion, or 40% of our loan portfolio at September 30, 2021. In addition, multifamily residential real estate loans totaled $532.8 million and comprised 6% of our loan portfolio. Commercial real estate loans increased by $98.3 million during the first nine months of 2021 while multifamily real estate loans increased by $104.5 million.

We also originate commercial, multifamily, and one- to four-family construction, land and land development loans, which totaled $1.33 billion, or 14% of our loan portfolio at September 30, 2021, compared to $1.29 billion at December 31, 2020 and $1.27 billion at

60

September 30, 2020. One- to four-family construction balances increased $63.6 million, or 13%, to $571.4 million at September 30, 2021 compared to $507.8 million at December 31, 2020 and increased $53.3 million, or 10%, compared to $518.1 million at September 30, 2020. We also originate one- to four-family construction loans for owner occupants, although construction balances for these loans are modest as the loans convert to one- to four-family residential loans upon completion of the homes and are often sold in the secondary market. One- to four-family construction loans represented approximately 6% of our total loan portfolio at September 30, 2021.

Our commercial business lending is directed toward meeting the credit and related deposit needs of various small- to medium-sized business and agribusiness borrowers operating in our primary market areas.  Our commercial business lending, to a lesser extent, includes participation in certain syndicated loans, including shared national credits, which totaled $152.6 million at September 30, 2021. Our commercial and agricultural business loans decreased $812.1 million to $2.41 billion at September 30, 2021, compared to $3.22 billion at December 31, 2020, and decreased $1.02 billion, or 30%, compared to $3.43 billion at September 30, 2020. The decrease reflects SBA PPP loan repayments from SBA loan forgiveness during the first nine months of 2021 and to a lesser extent lower line of credit usage due to decreased business activity and seasonal decreases in agricultural loan balances. SBA PPP loans decreased 70% to $310.2 million at September 30, 2021, compared to $1.04 billion at December 31, 2020, and decreased 73% when compared to $1.15 billion at September 30, 2020. Commercial and agricultural business loans represented approximately 26% of our portfolio at September 30, 2021.

Our one- to four-family residential loan originations have been strong, as interest rates have declined during the last year. We are active originators of one- to four-family residential loans in most communities where we have established offices in Washington, Oregon, California and Idaho. Most of the one- to four-family residential loans that we originate are sold in secondary markets with net gains on sales and loan servicing fees reflected in our revenues from mortgage banking. At September 30, 2021, our outstanding balance of one- to four-family residential loans retained in our portfolio decreased $35.6 million, to $682.4 million, compared to $717.9 million at December 31, 2020, and decreased $89.1 million, or 12%, compared to $771.4 million at September 30, 2020. The decrease in one-to-four family residential loans since September 30, 2020 primarily reflects portfolio loans being refinanced and sold as held for sale loans. One- to four-family residential loans represented 7% of our loan portfolio at September 30, 2021.

Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At September 30, 2021, consumer loans, including home equity revolving lines of credit, decreased $44.5 million to $561.2 million, compared to $605.8 million at December 31, 2020, and decreased $61.6 million compared to $622.8 million at September 30, 2020.

The following table shows the commitment amount for loan origination (excluding loans held for sale) activity for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	Three Months Ended				Nine months ended
	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020
Commercial real estate	$	174,827	$	74,400	$	369,459	$	262,524
Multifamily real estate	26,155		2,664		84,707		19,219
Construction and land	496,386		412,463		1,453,583		1,073,031
Commercial business:
Commercial business	229,859		128,729		527,766		495,869
SBA PPP	907		24,848		485,077		1,176,018
Agricultural business	9,223		16,990		48,936		64,544
One-to four- family residential	49,594		32,733		154,411		88,311
Consumer	145,102		132,100		363,848		326,110
Total commitment amount for loan originations (excluding loans held for sale)	$	1,132,053	$	824,927	$	3,487,787	$	3,505,626

The origination table above includes loan participations and loan purchases. There were $4.3 million of loan purchases during the nine months ended September 30, 2021 and $18,000 of loan purchases during the nine months ended September 30, 2020.

Loans held for sale decreased to $63.7 million at September 30, 2021, compared to $243.8 million at December 31, 2020, as the sales of held-for-sale loans exceeded originations of held-for-sale loans during the nine months ended September 30, 2021. Loans held for sale were $185.9 million at September 30, 2020. Originations of loans held for sale decreased to $912.5 million for the nine months ended September 30, 2021 compared to $1.03 billion for the same period last year, primarily due to decreased refinance activity for one- to four-family residential mortgage loans. The volume of one- to four-family residential mortgage loans sold was $799.3 million during the nine months ended September 30, 2021, compared to $824.0 million in the same period a year ago. During the nine months ended September 30, 2021, we sold $287.7 million in multifamily loans compared to $231.4 million for the same period last year. Loans held for sale at September 30, 2021 included $9.7 million of multifamily loans and $54.0 million of one- to four-family residential mortgage loans compared to $60.8 million of multifamily loans and $125.2 million of one- to four-family residential mortgage loans at September 30, 2020.

61

The following table presents loans by geographic concentration at September 30, 2021, December 31, 2020 and September 30, 2020 (dollars in thousands):

	Sep 30, 2021				Dec 31, 2020		Sep 30, 2020		Percentage Change
	Amount		Percentage		Amount		Amount		Prior Year End		Prior Year Qtr
Washington	$	4,319,008	46.9	%	$	4,647,553	$	4,767,113	(7.1)	%	(9.4)	%
California	2,160,280		23.4		2,279,749		2,316,739		(5.2)		(6.8)
Oregon	1,679,452		18.2		1,792,156		1,858,465		(6.3)		(9.6)
Idaho	536,128		5.8		537,996		576,983		(0.3)		(7.1)
Utah	89,620		1.0		80,704		76,314		11.0		17.4
Other	433,896		4.7		532,824		568,303		(18.6)		(23.7)
Total loans receivable	$	9,218,384	100.0	%	$	9,870,982	$	10,163,917	(6.6)	%	(9.3)	%

Investment Securities: Our total investment in securities increased $1.15 billion to $3.92 billion at September 30, 2021 from December 31, 2020. Securities purchased increased during the nine-month period ended September 30, 2021, as we deployed excess balance sheet liquidity. Purchases were primarily in securities issued by government-sponsored entities. The average effective duration of Banner’s securities portfolio was approximately 4.4 years at September 30, 2021. Net fair value adjustments to the portfolio of securities held for trading, which were included in net income, were an increase of $1.9 million in the nine months ended September 30, 2021. In addition, fair value adjustments for securities designated as available-for-sale reflected a decrease of $62.7 million for the nine months ended September 30, 2021, which was included net of the associated tax benefit of $15.1 million as a component of other comprehensive income, and largely occurred as a result of decreased market yields and spreads on certain types of securities. (See Note 3 of the Selected Notes to the Consolidated Financial Statements in this Form 10-Q.) The Company held $300.0 million of securities purchased under resell agreements at September 30, 2021 compared to none at December 31, 2020.

Deposits: Deposits, client retail repurchase agreements and loan repayments are the major sources of our funds for lending and other investment purposes.  We compete with other financial institutions and financial intermediaries in attracting deposits and we generally attract deposits within our primary market areas. Increasing core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) is a fundamental element of our business strategy. Much of the focus of our branch strategy and current marketing efforts have been directed toward attracting additional deposit client relationships and balances.  This effort has been particularly directed towards emphasizing core deposit activity in non-interest-bearing and other transaction and savings accounts. The long-term success of our deposit gathering activities is reflected not only in the growth of core deposit balances, but also in the level of deposit fees, service charges and other payment processing revenues compared to prior periods.

The following table sets forth the Company’s deposits by type of deposit account as of the dates indicated (dollars in thousands):

							Percentage Change
	Sep 30, 2021		Dec 31, 2020		Sep 30, 2020		Prior Year End		Prior Year Quarter
Non-interest-bearing	$	6,400,864	$	5,492,924	$	5,412,570	16.5	%	18.3	%
Interest-bearing checking	1,799,657		1,569,435		1,434,224		14.7		25.5
Regular savings accounts	2,773,995		2,398,482		2,332,287		15.7		18.9
Money market accounts	2,339,107		2,191,135		2,120,908		6.8		10.3
Interest-bearing transaction & savings accounts	6,912,759		6,159,052		5,887,419		12.2		17.4
Total core deposits	13,313,623		11,651,976		11,299,989		14.3		17.8
Interest-bearing certificates	851,054		915,320		915,352		(7.0)		(7.0)
Total deposits	$	14,164,677	$	12,567,296	$	12,215,341	12.7	%	16.0	%

Total deposits were $14.16 billion at September 30, 2021, compared to $12.57 billion at December 31, 2020 and $12.22 billion a year ago. The $1.60 billion increase in total deposits compared to December 31, 2020 reflects a $1.66 billion increase in core deposits. The increase in total deposits from year end was due primarily to SBA PPP loan funds deposited into client accounts, fiscal stimulus payments, and an increase in client deposit accounts due to reduced business investment and changes in consumer spending habits during the COVID-19 pandemic. Non-interest-bearing account balances increased 17% to $6.40 billion at September 30, 2021, compared to $5.49 billion at December 31, 2020, and increased 18% compared to $5.41 billion a year ago. Interest-bearing transaction and savings accounts increased 12% to $6.91 billion at September 30, 2021, compared to $6.16 billion at December 31, 2020, and increased 17% compared to $5.89 billion a

62

year ago. Certificates of deposit decreased 7% to $851.1 million at September 30, 2021, compared to $915.3 million at December 31, 2020 and decreased 7% compared to $915.4 million a year ago. We had no brokered deposits at September 30, 2021, December 31, 2020, or September 30, 2020. Core deposits represented 94% of total deposits at September 30, 2021, compared to 93% at December 31, 2020.

The following table presents deposits by geographic concentration at September 30, 2021, December 31, 2020 and September 30, 2020 (dollars in thousands):

	Sep 30, 2021				Dec 31, 2020		Sep 30, 2020		Percentage Change
	Amount		Percentage		Amount		Amount		Prior Year End		Prior Year Quarter
Washington	$	7,877,919	55.6	%	$	7,058,404	$	6,820,329	11.6	%	15.5	%
Oregon	3,030,109		21.4		2,604,908		2,486,760		16.3		21.8
California	2,501,521		17.7		2,237,949		2,254,681		11.8		10.9
Idaho	755,128		5.3		666,035		653,571		13.4		15.5
Total deposits	$	14,164,677	100.0	%	$	12,567,296	$	12,215,341	12.7	%	16.0	%

Borrowings: FHLB advances decreased to $50.0 million at September 30, 2021 from $150.0 million at December 31, 2020 as increased core deposits were sufficient to fund our asset growth, primarily growth in the securities portfolio. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, increased $62.6 million, or 34%, to $247.4 million at September 30, 2021, compared to $184.8 million at December 31, 2020. On June 30, 2020, Banner issued and sold in an underwritten offer subordinated notes, resulting in net proceeds, after underwriting discounts and offering expenses, of $98.1 million. No additional junior subordinated debentures were issued or matured during the nine months ended September 30, 2021; however, the estimated fair value of these instruments increased by $7.9 million, reflecting tighter market spreads. Junior subordinated debentures totaled $124.9 million at September 30, 2021 compared to $117.0 million at December 31, 2020.

Shareholders’ Equity: Total shareholders’ equity increased $855,000 to $1.67 billion at September 30, 2021. The increase in shareholders’ equity is primarily due to the $151.1 million of year-to-date net income, partially offset by the $54.1 million decrease in accumulated other comprehensive income, primarily representing the decrease in the fair value of securities available-for-sale, net of tax, the accrual of $43.4 million of cash dividends to common shareholders and the repurchase of 1,050,000 shares of common stock at a total cost of $56.5 million. During the nine months ended September 30, 2021, no shares of restricted stock were forfeited and 59,550 shares were surrendered by employees to satisfy tax withholding obligations upon the vesting of restricted stock grants. (See Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds” in this Form 10-Q.) Tangible common shareholders’ equity, which excludes goodwill and other intangible assets, increased $5.9 million to $1.28 billion, or 7.86% of tangible assets at September 30, 2021, compared to $1.27 billion, or 8.69% of tangible assets at December 31, 2020. The decrease in tangible common shareholders’ equity as a percentage of tangible assets was primarily due to the increase in tangible assets, due to an increase in excess liquidity primarily in the form of interest bearing deposits and securities.

Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

For the quarter ended September 30, 2021, our net income was $49.9 million, or $1.44 per diluted share, compared to $36.5 million, or $1.03 per diluted share, for the quarter ended September 30, 2020. For the nine months ended September 30, 2021 our 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. Our net income for the current quarter was positively impacted by increased net interest income and a recapture of provision for credit losses, partially offset by a decrease in mortgage banking income and increased non-interest expense. Our net income for the nine months ended September 30, 2021 included a recapture of provision for credit losses of $28.1 million and decreased funding costs, partially offset by decreased mortgage banking income and reduced interest income due to lower yields on total interest earning assets. Our results for the nine months ended September 30, 2021 included $309,000 of COVID-19 related expenses and $660,000 of acquisition-related expenses. This compares to $3.2 million of COVID-19 related expenses and $1.5 million of acquisition-related expenses for the nine months ended September 30, 2020.

An acceleration of deferred loan fee income due to SBA PPP loan repayments from SBA loan forgiveness coupled with growth in the balance of average interest-earning assets and decreased funding costs, partially offset by the decline in the average yield on interest-earning assets, produced increased net interest income for the quarter and nine months ended September 30, 2021 compared to the same periods a year earlier. The increase in net interest income, partially offset by decreased mortgage banking income, resulted in revenues increasing for the quarter and nine months ended September 30, 2021, compared to the same periods a year earlier. Banner recorded an $8.6 million recapture of provision for credit losses for the quarter ended September 30, 2021, compared to a $15.2 million provision for credit losses in the same quarter a year ago. The recapture of provision for credit losses for the current quarter primarily reflects an improvement in forecasted economic conditions and a decrease in adversely classified loans. Non-interest expenses increased in the quarter and nine months ended September 30, 2021 compared to the same periods a year ago. The increase in non-interest expense for the quarter and nine months ended September 30, 2021, compared to the same periods a year earlier was primarily due to increases in professional and legal expenses, primarily due to increased consultant expense related to Banner Forward, expenses for litigation matters as well as increased payment and card processing services expense.

63

Our adjusted earnings, which excludes net gain or loss on sales of securities, changes in the valuation of financial instruments carried at fair value, merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses and related tax expenses or benefits, were $54.3 million, or $1.57 per diluted share, for the quarter ended September 30, 2021, compared to $36.6 million, or $1.04 per diluted share, for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, our adjusted earnings were $157.9 million, or $4.51 per diluted share, compared with $81.7 million, or $2.30 per diluted share, for the same period a year earlier.

Net Interest Income. Net interest income increased by $9.1 million, or 8%, to $130.1 million for the quarter ended September 30, 2021, compared to $121.0 million for the same quarter one year earlier, due to an acceleration of deferred loan fee income due to SBA PPP loan repayments from SBA loan forgiveness resulting in an increase in average loan yields, decreases in the cost of funding liabilities and an increase of $1.93 billion in the average balance of interest-earning assets, partially offset by lower yields on other average interest-earning assets. The lower yields reflect the growth in the average balance of interest-earning assets primarily being invested in short term investments including interest bearing deposits and securities available for sale. The net interest margin on a tax equivalent basis of 3.47% for the quarter ended September 30, 2021 was enhanced by three basis points as a result of acquisition accounting adjustments. This compares to a net interest margin on a tax equivalent basis of 3.72% for the quarter ended September 30, 2020, which included seven basis points from acquisition accounting adjustments. The decrease in net interest margin compared to a year earlier primarily reflects lower yields on average interest-earning assets and a larger percentage of interest-earnings assets being invested in short term investments, partially offset by decreases in the cost of funding liabilities. The lower yields on average interest-earning assets compared to a year earlier were largely due to the impact of decreases to the targeted Fed Funds Rate during the first quarter of 2020, resulting in a prolonged low rate environment which resulted in the yields on adjustable rate loan repricing lower and the yields on new loan originations and security purchases being lower than the existing portfolios as well as a higher percentage of assets being invested in low yielding short term investments. The decrease in interest-earnings asset yields were partially offset by decreases in the costs of funding liabilities compared to a year earlier which were also largely due to the prolonged low rate environment.

Net interest income for the nine months ended September 30, 2021 increased by $15.5 million, or 4%, to $375.4 million compared to $359.9 million for the same period one year earlier, as a result of a $2.27 billion increase in average interest-earning assets and the decreases in the cost of funding liabilities. The net interest margin on a tax equivalent basis decreased to 3.48% for the nine months ended September 30, 2021 compared to 3.93% for the same period in the prior year, as a result of lower yields on interest-earning assets. The net interest margin included three basis points of accretion acquisition accounting adjustments for the nine months ended September 30, 2021 and eight basis points of accretion acquisition accounting adjustments for the nine months ended September 30, 2020.

Interest Income. Interest income for the quarter ended September 30, 2021 was $135.9 million, compared to $129.6 million for the same quarter in the prior year, an increase of $6.3 million, or 5%.  The increase in interest income occurred as a result of an acceleration of deferred loan fee income due to SBA PPP loan repayments from SBA loan forgiveness, increases in the average balances of investment securities, partially offset by the decrease in the yield on total interest-earning assets. The average balance of interest-earning assets was $15.13 billion for the quarter ended September 30, 2021, compared to $13.21 billion for the same period a year earlier. The average yield on total interest-earning assets was 3.62% for the quarter ended September 30, 2021, compared to 3.98% for the same quarter one year earlier. This decrease in average yield between periods reflects a 58 basis-point decrease in the average yield on investment securities, as a larger percentage of interest earning assets were invested in low yielding short term investments partially offset by a 41 basis-point increase in the average yield on loans due to the previously mentioned acceleration of deferred loan fee income. Average loans receivable for the quarter ended September 30, 2021 decreased $920.8 million, or 9%, to $9.58 billion, compared to $10.50 billion for the same quarter in the prior year reflecting the forgiveness of SBA PPP loans. Interest income on loans decreased by $229,000 to $116.5 million for the current quarter from $116.7 million for the quarter ended September 30, 2020, reflecting the impact of the previously mentioned decrease in the average balance of loans receivable.  The increase in average loan yields reflects the yield on SBA PPP loans increasing to 10.80% for the quarter ended September 30, 2021, compared to 2.73% for the same quarter in the prior year, as a result of an acceleration of deferred loan fee income due to SBA PPP loan repayments from SBA loan forgiveness during the current quarter. The acquisition accounting loan discount accretion and the related balance sheet impact added five basis points to the current quarter’s average loan yield, compared to nine basis points for the same quarter one year earlier.

The combined average balance of mortgage-backed securities, other investment securities, equity securities, interest-bearing deposits and FHLB stock (total investment securities or combined portfolio) increased to $5.55 billion for the quarter ended September 30, 2021 (excluding the effect of fair value adjustments), compared to $2.70 billion for the quarter ended September 30, 2020; and the interest and dividend income from those investments increased by $6.5 million compared to the same quarter in the prior year. The average yield on the combined portfolio decreased to 1.46% for the quarter ended September 30, 2021, from 2.04% for the same quarter one year earlier. The decrease in average yield reflects the overall decline in market interest rates as well as the investment of excess liquidity in short term investments.

Interest income for the nine months ended September 30, 2021 was $394.0 million, compared to $390.0 million for the same period in the prior year, an increase of $4.0 million. The nine months results primarily reflect increases in the average balances of investment securities, partially offset by a decrease in the average yield on interest-earning assets.

Interest Expense. Interest expense for the quarter ended September 30, 2021 was $5.7 million, compared to $8.6 million for the same quarter in the prior year. The interest expense decrease between periods reflects an 11 basis-point decrease in the average cost of all funding liabilities, partially offset by a $1.91 billion, or 15%, increase in the average balance of funding liabilities.

64

Interest expense for the nine months ended September 30, 2021 was $18.6 million, compared to $30.1 million for the same period in the prior year. As with the quarterly results, the nine month results reflect a 16 basis-point decrease in the average cost of all funding liabilities, partially offset by a $2.25 billion or 19%, increase in the average balance of funding liabilities.

Deposit interest expense decreased $2.4 million, or 47%, to $2.7 million for the quarter ended September 30, 2021, compared to $5.2 million for the same quarter in the prior year, primarily as a result of a decrease in the cost of deposits, partially offset by an increase in the average balances. The average rate paid on total deposits decreased to 0.08% in the third quarter of 2021 from 0.17% for the quarter ended September 30, 2020, primarily reflecting decreases in the costs of interest-bearing checking, money market, savings, and certificates of deposit accounts, as well as an increase in the percentage of non-interest bearing deposits. The cost of interest-bearing deposits decreased by 17 basis points to 0.14% for the quarter ended September 30, 2021 compared to 0.31% in the same quarter a year earlier. Average deposit balances increased to $13.95 billion for the quarter ended September 30, 2021, from $12.07 billion for the quarter ended September 30, 2020.

Deposit interest expense decreased $11.2 million or 54%, to $9.4 million for the nine months ended September 30, 2021, compared to $20.6 million for the same period in the prior year. Average deposit balances increased to $13.50 billion for the nine months ended September 30, 2021, from $11.23 billion for the same period a year earlier, while the average rate paid on deposits decreased to 0.09% in the nine months ended September 30, 2021 from 0.25% in the nine months ended September 30, 2020. The cost of interest-bearing deposits decreased by 25 basis points to 0.17% for the nine months ended September 30, 2021 compared to 0.42% in the same period a year earlier.

The decrease in the cost of interest-bearing deposits between the periods was driven by market and competitive factors in response to the decreases in the target Fed Funds Rate last year as changes in market yields typically lag changes in the Fed Funds Rate.

Interest expense on total borrowings decreased to $3.0 million for the quarter ended September 30, 2021 from $3.4 million for the quarter ended September 30, 2020. The decrease was primarily due to decreases in the average rate paid on total borrowings and in the average balance of FHLB advances. The average rate paid on total borrowings for the quarter ended September 30, 2021 decreased to 1.97% from 2.33% for the same quarter one year earlier. Average total borrowings were $599.0 million for the quarter ended September 30, 2021, compared to $575.6 million for the same quarter one year earlier.

Interest expense on total borrowings decreased to $9.2 million for the nine months ended September 30, 2021 from $9.5 million for the nine months ended September 30, 2020. Average total borrowings were $594.2 million for the nine months ended September 30, 2021, compared to $614.8 million for the same period a year earlier and the average rate paid on total borrowings was 2.07% for both the nine months ended September 30, 2021 and September 30, 2020.

Analysis of Net Interest Spread. The following tables present for the periods indicated our condensed average balance sheet information, together with interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities with additional comparative data on our operating performance (dollars in thousands):

65

	Three Months Ended September 30, 2021						Three Months Ended September 30, 2020
	Average Balance		Interest and Dividends		Yield/    Cost (3)		Average Balance		Interest and Dividends		Yield/    Cost (3)
Interest-earning assets:
Held for sale loans	$	114,938	$	996	3.44	%	$	161,385	$	1,535	3.78	%
Mortgage loans	7,245,962		83,803		4.59		7,339,181		88,011		4.77
Commercial/agricultural loans	1,534,978		15,776		4.08		1,721,186		18,553		4.29
SBA PPP loans	566,515		15,421		10.80		1,141,105		7,843		2.73
Consumer and other loans	120,112		1,774		5.86		140,493		2,195		6.22
Total loans(1)(3)	9,582,505		117,770		4.88		10,503,350		118,137		4.47
Mortgage-backed securities	2,560,027		11,820		1.83		1,250,759		7,333		2.33
Other securities	1,491,035		7,873		2.09		884,916		6,036		2.71
Equity securities	—		—		—		379,483		186		0.19
Interest-bearing deposits with banks	1,486,839		586		0.16		171,894		123		0.28
FHLB stock	13,957		135		3.84		16,363		163		3.96
Total investment securities (3)	5,551,858		20,414		1.46		2,703,415		13,841		2.04
Total interest-earning assets	15,134,363		138,184		3.62		13,206,765		131,978		3.98
Non-interest-earning assets	1,301,383						1,259,816
Total assets	$	16,435,746					$	14,466,581
Deposits:
Interest-bearing checking accounts	$	1,771,869	282		0.06		$	1,413,085	321		0.09
Savings accounts	2,721,028		458		0.07		2,251,294		813		0.14
Money market accounts	2,322,453		668		0.11		2,096,037		1,224		0.23
Certificates of deposit	863,971		1,341		0.62		966,028		2,821		1.16
Total interest-bearing deposits	7,679,321		2,749		0.14		6,726,444		5,179		0.31
Non-interest-bearing deposits	6,275,634		—		—		5,340,688		—		—
Total deposits	13,954,955		2,749		0.08		12,067,132		5,179		0.17
Other interest-bearing liabilities:
FHLB advances	98,370		655		2.64		150,000		988		2.62
Other borrowings	252,720		125		0.20		177,628		128		0.29
Subordinated debt	247,944		2,193		3.51		247,944		2,260		3.63
Total borrowings	599,034		2,973		1.97		575,572		3,376		2.33
Total funding liabilities	14,553,989		5,722		0.16		12,642,704		8,555		0.27
Other non-interest-bearing liabilities (2)	202,918						193,256
Total liabilities	14,756,907						12,835,960
Shareholders’ equity	1,678,839						1,630,621
Total liabilities and shareholders’ equity	$	16,435,746					$	14,466,581
Net interest income/rate spread (tax equivalent)			$	132,462	3.46	%			$	123,423	3.71	%
Net interest margin (tax equivalent)					3.47	%					3.72	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis			(2,316)						(2,397)
Net interest income and margin			$	130,146	3.41	%			$	121,026	3.65	%
Additional Key Financial Ratios:
Return on average assets					1.20	%					1.01	%
Return on average equity					11.79						8.92
Average equity / average assets					10.21						11.27
Average interest-earning assets / average interest-bearing liabilities					182.82						180.86
Average interest-earning assets / average funding liabilities					103.99						104.46
Non-interest income / average assets					0.61						0.78
Non-interest expense / average assets					2.47						2.48
Efficiency ratio (4)					65.70						60.32
Adjusted efficiency ratio (5)					59.65						58.02

(1)Average balances include loans accounted for on a nonaccrual basis and 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.

(3)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 the three months ended September 30, 2021 and $1.4 million for the three months ended September 30, 2020. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million and $976,000 for the three months ended September 30, 2021 and September 30, 2020, respectively.

(4)Non-interest expense divided by the total of net interest income and non-interest income.

(5)Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP reconciliation tables above under “Executive Overview—Non-GAAP Financial Measures.”

66

	Nine months ended September 30, 2021						Nine months ended September 30, 2020
	Average Balance		Interest and Dividends		Yield/ Cost (3)		Average Balance		Interest and Dividends		Yield/ Cost (3)
Interest-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/agricultural loans	1,511,723		47,513		4.20		1,811,854		61,424		4.53
SBA PPP loans	958,848		44,009		6.14		638,380		13,131		2.75
Consumer and other loans	123,483		5,549		6.01		151,968		7,151		6.29
Total loans(1)(3)	9,875,293		344,592		4.67		10,078,979		354,456		4.70
Mortgage-backed securities	2,320,474		32,855		1.89		1,297,020		24,652		2.54
Other securities	1,265,056		21,648		2.29		710,967		15,205		2.86
Equity securities	574		—		—		165,395		309		0.25
Interest-bearing deposits with banks	1,221,241		1,224		0.13		159,065		688		0.58
FHLB stock	14,629		457		4.18		19,822		785		5.29
Total investment securities (3)	4,821,974		56,184		1.56		2,352,269		41,639		2.36
Total interest-earning assets	14,697,267		400,776		3.65		12,431,248		396,095		4.26
Non-interest-earning assets	1,255,512						1,232,997
Total assets	$	15,952,779					$	13,664,245
Deposits:
Interest-bearing checking accounts	$	1,714,920	899		0.07		$	1,352,369	1,164		0.11
Savings accounts	2,611,046		1,433		0.07		2,133,780		3,566		0.22
Money market accounts	2,284,904		2,111		0.12		1,940,096		5,228		0.36
Certificates of deposit	888,502		4,943		0.74		1,069,145		10,665		1.33
Total interest-bearing deposits	7,499,372		9,386		0.17		6,495,390		20,623		0.42
Non-interest-bearing deposits	6,001,354		—		—		4,738,559		—		—
Total deposits	13,500,726		9,386		0.09		11,233,949		20,623		0.25
Other interest-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 subordinated debentures and subordinated notes	247,944		6,605		3.56		181,886		4,988		3.66
Total borrowings	594,189		9,207		2.07		614,812		9,506		2.07
Total funding liabilities	14,094,915		18,593		0.18		11,848,761		30,129		0.34
Other non-interest-bearing liabilities (2)	203,349						197,912
Total liabilities	14,298,264						12,046,673
Shareholders’ equity	1,654,515						1,617,572
Total liabilities and shareholders’ equity	$	15,952,779					$	13,664,245
Net interest income/rate spread (tax equivalent)			$	382,183	3.47	%			$	365,966	3.92	%
Net interest margin (tax equivalent)					3.48	%					3.93	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis			(6,822)						(6,102)
Net interest income and margin			$	375,361	3.41	%			$	359,864	3.87	%
Additional Key Financial Ratios:
Return on average assets					1.27	%					0.75	%
Return on average equity					12.21						6.36
Average equity / average assets					10.37						11.84
Average interest-earning assets / average interest-bearing liabilities					181.59						174.84
Average interest-earning assets / average funding liabilities					104.27						104.92
Non-interest income / average assets					0.60						0.73
Non-interest expense / average assets					2.42						2.68
Efficiency ratio (4)					64.45						63.00
Adjusted efficiency ratio (5)					60.39						59.59

(1)Average balances include loans accounted for on a nonaccrual basis and 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.

(3)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $3.8 million for the nine months ended September 30, 2021 and $3.6 million for the nine months ended September 30, 2020. 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 September 30, 2021 and September 30, 2020, respectively.

(4)Non-interest expense divided by the total of net interest income and non-interest income.

(5)Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP reconciliation tables above under “Executive Overview—Non-GAAP Financial Measures.”

67

Provision and Allowance for Credit Losses. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loan based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio.  These factors include, among others, changes in the size and composition of the loan portfolio, differences in underwriting standards, delinquency rates, actual loss experience and current economic conditions. The following table sets forth an analysis of our allowance for credit losses - loans for the periods indicated (dollars in thousands):

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
	Quarters Ended
CHANGE IN THE	Sep 30, 2021			June 30, 2021			Sep 30, 2020
ALLOWANCE FOR CREDIT LOSSES - LOANS
Balance, beginning of period	$	148,009		$	156,054		$	156,352
(Recapture)/provision for credit losses – loans	(8,850)			(8,100)			13,641
Recoveries of loans previously charged off:
Commercial real estate	923			147			23
One- to four-family residential	19			20			94
Commercial business	230			321			246
Agricultural business, including secured by farmland	17			8			—
Consumer	227			97			82
	1,416			593			445
Loans charged off:
Commercial real estate	—			(3)			(379)
One- to four-family residential	—			—			(72)
Commercial business	(362)			(123)			(1,297)
Agricultural business, including secured by farmland	(179)			(2)			(492)
Consumer	(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) / Average loans receivable	0.008		%	0.001		%	(0.019)		%

The provision for credit losses - loans reflects the amount required to maintain the allowance for credit losses - loans at an appropriate level based upon management’s evaluation of the adequacy of collective and individual loss reserves. During the three months ended September 30, 2021, we recorded a recapture of provision for credit losses - loans of $8.9 million, compared to a recapture of provision for credit losses - loans of $8.1 million during the prior quarter and a provision for credit losses - loans of $13.6 million during the quarter a year ago. The recapture of provision for credit losses - loans for the current quarter and prior quarter primarily reflects improvement in the forecasted economic indicators and a decrease in adversely classified loans. In addition, management has updated its assessment of qualitative factors including assessing the current conditions within the specific markets we serve compared to the nationally forecasted economic indicators. The provision for credit losses recorded in the third quarter a year ago reflected the deterioration in forecasted economic indicators, including higher forecasted unemployment rates and lower gross domestic product as a result of the COVID-19 pandemic as well as risk rating downgrades on loans that were considered at heightened risk due to the COVID-19 pandemic. Future assessments of the expected credit losses will not only be impacted by changes to the reasonable and supportable forecast, but will also include an updated assessment of qualitative factors, as well as consideration of any required changes in the reasonable and supportable forecast reversion period. No allowance for credit losses-loans was recorded on the $310.2 million balance of SBA PPP loans at September 30, 2021 as these loans are fully guaranteed by the SBA.

Net loan recoveries were $756,000 for the quarter ended September 30, 2021 compared to net loan charge-offs of $2.0 million for the same quarter in the prior year. The allowance for credit losses - loans was $139.9 million at September 30, 2021 compared to $148.0 million at June 30, 2021 and $168.0 million at September 30, 2020. The allowance for credit losses - loans as a percentage of total loans (loans receivable excluding allowance for credit losses) was 1.52% at September 30, 2021 as compared to 1.53% at June 30, 2021 and 1.65% at September 30, 2020. The decrease in the allowance for credit losses - loans as a percentage of loans at September 30, 2021 compared to September 30, 2020 reflects the recapture of provision for credit losses - loans recorded during 2021, primarily as the result of the improvement in the forecasted economic indicators as well as the decrease in adversely classified loans.

The provision for credit losses - unfunded loan commitments reflects the amount required to maintain the allowance for credit losses - unfunded loan commitments at an appropriate level based upon management’s evaluation of the adequacy of collective and individual loss reserves. The following table sets forth an analysis of our allowance for credit losses - unfunded loan commitments for the periods indicated (dollars in thousands):

68

	Quarters Ended				Nine Months Ended
CHANGE IN THE	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period	$	9,909	$	10,555	$	13,297	$	2,716
Beginning balance adjustment for adoption of ASC 326	—		—		—		7,022
Provision/(recapture) for credit losses - unfunded loan commitments	218		1,539		(3,170)		2,356
Balance, end of period	$	10,127	$	12,094	$	10,127	$	12,094

The allowance for credit losses - unfunded loan commitments was $10.1 million at September 30, 2021 compared to $12.1 million at September 30, 2020. The decrease in the allowance for credit losses - unfunded loan commitments reflects the recapture of provision for credit losses - unfunded loan commitments recorded during the nine months ended September 30, 2021. During the quarter ended September 30, 2021, we recorded a provision for credit losses - unfunded loan commitments of $218,000, compared to a $1.5 million provision for loan losses - unfunded loan commitments during the comparable quarter a year ago. During the nine months ended September 30, 2021, we recorded a recapture of provision for credit losses - unfunded loan commitments of $3.2 million, compared to a provision for loan losses - unfunded loan commitments of $2.4 million during the same period a year earlier. The recapture of provision for credit losses - unfunded loan commitments for the nine months ended September 30, 2021 was primarily the result of an improvement in the forecasted economic indicators.

Non-interest Income. The following table presents the key components of non-interest income for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Three months ended September 30,								Nine months ended September 30,
	2021		2020		Change Amount		Change Percent		2021		2020		Change Amount		Change Percent
Deposit fees and other service charges	$	10,457	$	8,742	$	1,715	19.6	%	$	29,154	$	26,091	$	3,063	11.7	%
Mortgage banking operations	9,752		16,562		(6,810)		(41.1)		28,670		40,891		(12,221)		(29.9)
Bank owned life insurance	1,245		1,286		(41)		(3.2)		3,797		4,653		(856)		(18.4)
Miscellaneous	2,046		951		1,095		115.1		7,808		5,017		2,791		55.6
	23,500		27,541		(4,041)		(14.7)		69,429		76,652		(7,223)		(9.4)
Net gain on sale of securities	56		644		(588)		(91.3)		618		815		(197)		(24.2)
Net change in valuation of financial instruments carried at fair value	1,778		37		1,741		nm		1,895		(2,360)		4,255		(180.3)
Total non-interest income	$	25,334	$	28,222	$	(2,888)	(10.2)		$	71,942	$	75,107	$	(3,165)	(4.2)

Non-interest income was $25.3 million for the quarter ended September 30, 2021, compared to $28.2 million for the same quarter in the prior year and $71.9 million for the nine months ended September 30, 2021, compared to $75.1 million for the same period in the prior year. Our non-interest income for the quarter ended September 30, 2021 included a $1.8 million net gain for fair value adjustments and a net gain of $56,000 on sales of securities. For the quarter ended September 30, 2020, fair value adjustments resulted in a net gain of $37,000 and we had a net gain of $644,000 on sale of securities. Our non-interest income for the nine months ended September 30, 2021 included a net gain of $1.9 million for fair value adjustments and a $618,000 net gain on sale of securities. During the nine months ended September 30, 2020, fair value adjustments resulted in a net loss of $2.4 million and we had a $815,000 net gain on sale of securities. For a more detailed discussion of our fair value adjustments, please refer to Note 8 in the Selected Notes to the Consolidated Financial Statements in this Form 10-Q.

Deposit fees and other service charges increased by $1.7 million, or 20%, for the quarter ended September 30, 2021 and increased $3.1 million, or 12%, for the nine months ended September 30, 2021, compared to the same periods a year ago. The increase in deposit fees and other service charges for the quarter and nine months ended September 30, 2021 compared to the same periods 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 $6.8 million for the quarter ended September 30, 2021 and $12.2 million for the nine months ended September 30, 2021, compared to the same periods a year ago. Gains on sales of multifamily loans in the current quarter resulted in income of $2.4 million for the quarter ended September 30, 2021, compared to $1.1 million for the same period a year ago, and $5.8 million for the nine months ended September 30, 2021, compared to $1.4 million for the same period a year ago. Gains on sales of one- to four-family loans in the current quarter resulted in income of $6.9 million for the quarter ended September 30, 2021, compared to $15.7 million in the same period a year ago, and $22.3 million for the nine months ended September 30, 2021, compared to $39.6 million for the same period a year ago. The lower mortgage banking revenue reflected a decrease in the gain on sale margin on one- to four-family held-for-sale loans, as well as a reduction in the volume of one- to four-family loans sold, reflecting a decrease in refinance activity, partially offset by higher gains on the sale of multifamily held-for-sale loans. Home purchase activity accounted for 68% of one- to four-family mortgage banking loan originations during the quarter ended September 30, 2021, compared to 56% during the quarter ended September 30, 2020. The decrease in bank owned life insurance income for quarter and nine months ended September 30, 2021 compared to the same periods a year ago was due to death benefit proceeds received in the second quarter of 2020. The increase in miscellaneous income for the quarter and nine months ended September 30, 2021 compared to the same periods a year ago was a result of higher gains on sales of

69

SBA loans during the current quarter. The increase in miscellaneous income for the nine months ended September 30, 2021 was also impacted by higher gains related to the disposition of closed branch locations.

Non-interest Expense.  The following table represents key elements of non-interest expense for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Three months ended September 30,								Nine months ended September 30,
	2021		2020		Change Amount		Change Percent		2021		2020		Change Amount		Change Percent
Salaries and employee benefits	$	59,799	$	61,171	$	(1,372)	(2.2)	%	$	186,553	$	184,494	$	2,059	1.1	%
Less capitalized loan origination costs	(8,290)		(8,517)		227		(2.7)		(26,754)		(25,433)		(1,321)		5.2
Occupancy and equipment	13,153		13,022		131		1.0		38,965		39,114		(149)		(0.4)
Information/computer data services	6,110		6,090		20		0.3		17,915		17,984		(69)		(0.4)
Payment and card processing expenses	6,181		4,044		2,137		52.8		15,482		12,135		3,347		27.6
Professional and legal expenses	12,324		2,368		9,956		420.4		20,023		6,450		13,573		210.4
Advertising and marketing	1,521		1,105		416		37.6		3,965		3,584		381		10.6
Deposit insurance expense	1,469		1,628		(159)		(9.8)		4,243		4,968		(725)		(14.6)
State/municipal business and use taxes	1,219		1,196		23		1.9		3,367		3,284		83		2.5
REO operations	53		(11)		64		(581.8)		(71)		93		(164)		(176.3)
Amortization of core deposit intangibles	1,575		1,864		(289)		(15.5)		4,997		5,867		(870)		(14.8)
Miscellaneous	6,977		5,285		1,692		32.0		18,642		16,841		1,801		10.7
	102,091		89,245		12,846		14.4		287,327		269,381		17,946		6.7
COVID-19 expenses	44		778		(734)		(94.3)		309		3,169		(2,860)		(90.2)
Merger and acquisition-related expenses	10		5		5		100.0		660		1,483		(823)		(55.5)
Total non-interest expense	$	102,145	$	90,028	$	12,117	13.5	%	$	288,296	$	274,033	$	14,263	5.2	%

Non-interest expenses were $102.1 million for the quarter ended September 30, 2021, compared to $90.0 million for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, non-interest expense increased by $14.3 million, to $288.3 million, compared to $274.0 million for the same period last year. The current quarter non-interest expense includes increased professional and legal expenses, payment and card processing services expenses, and miscellaneous non-interest expenses, partially offset by decreased salary and employee benefits. In addition, the quarter ended September 30, 2021 included $44,000 of COVID-19 expenses, compared to $778,000 for the quarter ended September 30, 2020. The increase in non-interest expenses for the nine months ended September 30, 2021 reflects increases in professional and legal expenses, payment and card processing services expenses, salary and employee benefits expenses, and miscellaneous expenses, partially offset by increased capitalized loan origination costs. The nine months ended September 30, 2021 included $309,000 of COVID-19 expenses, compared to $3.2 million for the same period last year.

Salary and employee benefits expenses decreased $1.4 million to $59.8 million for the quarter ended September 30, 2021, compared to $61.2 million for the quarter ended September 30, 2020, primarily reflecting a reduction in staffing. Salary and employee benefits expenses increased to $186.6 million for the nine months ended September 30, 2021, compared to $184.5 million for the nine months ended September 30, 2020, primarily reflecting $1.3 million of severance expense related to a reduction in staffing as well as a $1.2 million adjustment recorded in the first quarter of 2021 to increase the liability related to deferred compensation plans and normal salary and wage adjustments. Capitalized loan origination costs increased $1.3 million for the nine months ended September 30, 2021, compared to the same period in the prior year, primarily related to the origination of SBA PPP loans during the first quarter of 2021. Professional and legal expenses increased $10.0 million for the quarter ended September 30, 2021 and $13.6 million for the nine months ended September 30, 2021, compared to the same periods in the prior year, primarily due to an increase in consulting expenses, which included $5.8 million of expense related to Banner Forward for the quarter ended September 30, 2021 and $8.3 million of expense related to the Banner Forward initiative for the nine months ended September 30, 2021, as well as a $4.0 million accrual recorded related to pending litigation during the current quarter. Miscellaneous expenses increased $1.7 million for the quarter ended September 30, 2021 and $1.8 million for the nine months ended September 30, 2021, compared to the same periods in the prior year, primarily reflecting increased loan related expenses.

Banner’s efficiency ratio was 65.70% for the current quarter, compared to 60.32% in the year ago quarter. Banner’s adjusted efficiency ratio was 59.65% for the current quarter, compared to 58.02% in the year ago quarter. See the discussion and reconciliation of non-GAAP financial information in the Executive Overview section of Management’s Discussion and Analysis of Financial Condition and Results of Operation in this Form 10-Q for more detailed information with respect to the efficiency ratio.

70

Income Taxes. For the quarter ended September 30, 2021, we recognized $12.1 million in income tax expense for an effective tax rate of 19.5%, which reflects our normal statutory tax rate reduced by the effect of tax-exempt income, certain tax credits, and tax benefits related to restricted stock vesting. Our 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. For the quarter ended September 30, 2020, we recognized $7.5 million in income tax expense for an effective tax rate of 17.0%. For the nine months ended September 30, 2021, we recognized $36.0 million in income tax expense for an effective tax rate of 19.3%, compared to $16.7 million in income tax expense for an effective tax rate of 17.8% for the nine months ended September 30, 2020. For more discussion on our income taxes, please refer to Note 9 in the Selected Notes to the Consolidated Financial Statements in this report on Form 10-Q.

Asset Quality

Maintaining a moderate risk profile by employing appropriate underwriting standards, avoiding excessive asset concentrations and aggressively managing troubled assets has been and will continue to be a primary focus for us. We actively engage our borrowers to resolve classified loans, problem assets and effectively manage REO as a result of foreclosures.

Non-Performing Assets:  Non-performing assets decreased to $29.7 million, or 0.18% of total assets, at September 30, 2021, from $36.5 million, or 0.24% of total assets, at December 31, 2020, and decreased compared to $36.7 million, or 0.25% of total assets, at September 30, 2020. Our allowance for credit losses - loans was $139.9 million, or 485% of non-performing loans at September 30, 2021 compared to $167.3 million, or 470% of non-performing loans at December 31, 2020 and $168.0 million, or 482% of non-performing loans at September 30, 2020.  In addition to the allowance for credit losses - loans, the Company maintains an allowance for credit losses - unfunded loan commitments which was $10.1 million at September 30, 2021, compared to $13.3 million at December 31, 2020 and $12.1 million at September 30, 2020. We believe our level of non-performing loans and assets continues to be manageable at September 30, 2021. The primary components of the $29.7 million in non-performing assets were $24.0 million in nonaccrual loans, $4.8 million in loans more than 90 days delinquent and still accruing interest, and $869,000 in REO and other repossessed assets.

Loans are reported as TDRs when we grant concessions to a borrower experiencing financial difficulties that we would not otherwise consider.  If any TDR loan becomes delinquent or other matters call into question the borrower’s ability to repay full interest and principal in accordance with the restructured terms, the TDR loan would be reclassified as nonaccrual.  At September 30, 2021, we had $5.3 million of restructured loans performing under their restructured repayment terms.

71

The following table sets forth information with respect to our non-performing assets and restructured loans at the dates indicated (dollars in thousands):

	September 30, 2021			December 31, 2020			September 30, 2020
Nonaccrual Loans: (1)
Secured by real estate:
Commercial	$	14,931		$	18,199		$	7,824
Construction and land	354			936			937
One- to four-family	3,182			3,556			2,978
Commercial business	2,700			5,407			14,867
Agricultural business, including secured by farmland	1,022			1,743			2,066
Consumer	1,850			2,719			2,896
	24,039			32,560			31,568
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Commercial	3,955			—			—
One- to four-family	772			1,899			2,649
Commercial business	61			1,025			425
Consumer	34			130			181
	4,822			3,054			3,255
Total non-performing loans	28,861			35,614			34,823
REO, net (2)	852			816			1,795
Other repossessed assets held for sale	17			51			37
Total non-performing assets	$	29,730		$	36,481		$	36,655
Total non-performing loans to loans before allowance for credit losses	0.31		%	0.36		%	0.34		%
Total non-performing loans to total assets	0.17		%	0.24		%	0.24		%
Total non-performing assets to total assets	0.18		%	0.24		%	0.25		%
Total nonaccrual loans to loans before allowance for credit losses	0.26		%	0.33		%	0.31		%
Restructured loans performing under their restructured terms (3)	$	5,273		$	6,673		$	5,790
Loans 30-89 days past due and on accrual	$	6,911		$	12,291		$	18,158

(1)Includes $355,000 of nonaccrual TDR loans at September 30, 2021. For the nine months ended September 30, 2021, interest income was reduced by $740,000 as a result of nonaccrual loan activity, which includes the reversal of $116,000 of accrued interest as of the date the loan was placed on nonaccrual. There was no interest income recognized on nonaccrual loans for the nine months ended September 30, 2021.

(2)Real estate acquired by us as a result of foreclosure or by deed-in-lieu of foreclosure is classified as REO until it is sold. When property is acquired, it is recorded at the estimated fair value of the property, less expected selling costs. Subsequent to foreclosure, the property is carried at the lower of the foreclosed amount or net realizable value. Upon receipt of a new appraisal and market analysis, the carrying value is written down through the establishment of a specific reserve to the anticipated sales price, less selling and holding costs.

(3)These loans were performing under their restructured repayment terms at the dates indicated.

In addition to the non-performing loans as of September 30, 2021, we had other classified loans with an aggregate outstanding balance of $197.4 million that are not on nonaccrual status, with respect to which known information concerning possible credit problems with the borrowers or the cash flows of the properties securing the respective loans has caused management to be concerned about the ability of the borrowers to comply with present loan repayment terms.  This may result in the future inclusion of such loans in the nonaccrual loan category.

72

The following table presents the Company’s portfolio of risk-rated loans and non-risk-rated loans by grade at the dates indicated (in thousands):

	September 30, 2021		December 31, 2020		September 30, 2020
Pass	$	8,956,604	$	9,494,147	$	9,699,098
Special Mention	36,001		36,598		41,575
Substandard	225,779		340,237		423,244
Total	$	9,218,384	$	9,870,982	$	10,163,917

The decrease in substandard loans during the nine months ended September 30, 2021 primarily 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.

REO: REO was $852,000 at September 30, 2021 compared to $816,000 at December 31, 2020. The following table shows REO activity for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	Three Months Ended				Nine months ended
	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020
Balance, beginning of period	$	763	$	2,400	$	816	$	814
Additions from loan foreclosures	89		—		512		1,588
Proceeds from dispositions of REO	—		(707)		(783)		(805)
Gain on sale of REO	—		120		307		216
Valuation adjustments in the period	—		(18)		—		(18)
Balance, end of period	$	852	$	1,795	$	852	$	1,795

Non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on an observable market price or current appraised value of property. The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

Liquidity and Capital Resources

Our primary sources of funds are deposits, borrowings, proceeds from loan principal and interest payments and sales of loans, and the maturity of and interest income on mortgage-backed and investment securities. While maturities and scheduled amortization of loans and mortgage-backed securities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, economic conditions, competition and our pricing strategies.

Our primary investing activity is the origination of loans and, in certain periods, the purchase of securities or loans.  During the nine months ended September 30, 2021 and September 30, 2020, our loan originations, including originations of loans held for sale, exceeded our loan repayments by $252.5 million and $1.89 billion, respectively. There were $4.3 million of loan purchases during the nine months ended September 30, 2021 and $18,000 of loan purchases during the nine months ended September 30, 2020. This activity was funded primarily by increased core deposits and the sale of loans in 2021. During the nine months ended September 30, 2021 and September 30, 2020, we received proceeds of $1.15 billion and $1.10 billion, respectively, from the sale of loans. Securities purchased during the nine months ended September 30, 2021 and September 30, 2020 totaled $2.44 billion and $824.0 million, respectively, and securities repayments, maturities and sales in those periods were $1.22 billion and $461.4 million, respectively.

Our primary financing activity is gathering deposits. Total deposits increased by $1.60 billion during the first nine months of 2021, as core deposits increased by $1.66 billion, partially offset by a $64.3 million decrease in certificates of deposits. The increase in total deposits during the first nine months of 2021 was due primarily to SBA PPP loan funds deposited into client accounts, fiscal stimulus payments, and an increase in average deposit account balances due to client’s maintaining a higher level of liquidity during the COVID-19 pandemic. Certificates of deposit are generally more vulnerable to competition and more price sensitive than other retail deposits and our pricing of those deposits varies significantly based upon our liquidity management strategies at any point in time.  At September 30, 2021, certificates of deposit totaled $851.1 million, or 6% of our total deposits, including $644.9 million which were scheduled to mature within one year.  While no assurance can be given as to future periods, historically, we have been able to retain a significant amount of our certificates of deposit as they mature.

FHLB advances decreased $100.0 million during the first nine months of 2021 to $50.0 million at September 30, 2021. Other borrowings increased $62.6 million to $247.4 million at September 30, 2021 from $184.8 million at December 31, 2020.

We must maintain an adequate level of liquidity to ensure the availability of sufficient funds to accommodate deposit withdrawals, to support loan growth, to satisfy financial commitments and to take advantage of investment opportunities. During the nine months ended

73

September 30, 2021 and 2020, we used our sources of funds primarily to fund loan commitments and purchase securities. At September 30, 2021, we had outstanding loan commitments totaling $3.75 billion, primarily relating to undisbursed loans in process and unused credit lines. While representing potential growth in the loan portfolio and lending activities, this level of commitments is proportionally consistent with our historical experience and does not represent a departure from normal operations.

We generally maintain sufficient cash and readily marketable securities to meet short-term liquidity needs; however, our primary liquidity management practice to supplement deposits is to increase or decrease short-term borrowings.  We maintain credit facilities with the FHLB-Des Moines, which provided for advances that in the aggregate would equal the lesser of 45% of Banner Bank’s assets or adjusted qualifying collateral (subject to a sufficient level of ownership of FHLB stock).  At September 30, 2021, under these credit facilities based on pledged collateral, Banner Bank had $2.24 billion of available credit capacity. Advances under these credit facilities totaled $50.0 million at September 30, 2021. In addition, Banner Bank has been approved for participation in the Borrower-In-Custody (BIC) program by the Federal Reserve Bank of San Francisco (FRBSF).  Under this program, based on pledged collateral, Banner Bank had available lines of credit of approximately $813.2 million as of September 30, 2021.  We had no funds borrowed from the FRBSF at September 30, 2021 or December 31, 2020.

Banner Corporation is a separate legal entity from the Bank and, on a stand-alone level, must provide for its own liquidity and pay its own operating expenses and cash dividends. Banner Corporation’s primary sources of funds consist of capital raised through dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At September 30, 2021, the Company on an unconsolidated basis had liquid assets of $103.8 million. On June 30, 2020, Banner issued and sold in an underwritten offer of subordinated notes, resulting in net proceeds, after underwriting discounts and offering expenses, of $98.1 million.  The subordinated notes qualify as Tier 2 capital for regulatory capital purposes.

As noted below, Banner Corporation and its subsidiary bank continued to maintain capital levels significantly in excess of the requirements to be categorized as “Well-Capitalized” under applicable regulatory standards.  During the nine months ended September 30, 2021, total shareholders’ equity increased $855,000, to $1.67 billion.  At September 30, 2021, tangible common shareholders’ equity, which excludes goodwill and other intangible assets, was $1.28 billion, or 7.86% of tangible assets.  See the discussion and reconciliation of non-GAAP financial information in the Executive Overview section of Management’s Discussion and Analysis of Financial Condition and Results of Operation in this Form 10-Q for more detailed information with respect to tangible common shareholders’ equity.  Also, see the capital requirements discussion and table below with respect to our regulatory capital positions.

Capital Requirements

Banner Corporation is a bank holding company registered with the Federal Reserve.  Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended (BHCA), and the regulations of the Federal Reserve.  Banner Bank, as state-chartered, federally insured commercial bank, is subject to the capital requirements established by the FDIC.

The capital adequacy requirements are quantitative measures established by regulation that require Banner Corporation and the Bank to maintain minimum amounts and ratios of capital.  The Federal Reserve requires Banner Corporation to maintain capital adequacy that generally parallels the FDIC requirements.  The FDIC requires the Bank to maintain minimum ratios of Total Capital, Tier 1 Capital, and Common Equity Tier 1 Capital to risk-weighted assets as well as Tier 1 Leverage Capital to average assets.  In addition to the minimum capital ratios, both Banner Corporation and the Bank are required to maintain a capital conservation buffer consisting of additional Common Equity Tier 1 Capital of more than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses. At September 30, 2021, Banner Corporation and the Bank each exceeded all regulatory capital requirements. (See Item 1, “Business–Regulation,” and Note 15 of the Notes to the Consolidated Financial Statements included in the 2020 Form 10-K for additional information regarding regulatory capital requirements for Banner Corporation and the Bank.)

74

The actual regulatory capital ratios calculated for Banner Corporation and Banner Bank as of September 30, 2021, along with the minimum capital amounts and ratios, were as follows (dollars in thousands):

	Actual				Minimum to be Categorized as “Adequately Capitalized”				Minimum to be Categorized as “Well-Capitalized”
	Amount		Ratio		Amount		Ratio		Amount		Amount
Banner Corporation—consolidated
Total capital to risk-weighted assets	$	1,635,458	14.71	%	$	889,533	8.00	%	$	1,111,916	10.00	%
Tier 1 capital to risk-weighted assets	1,407,993		12.66		667,149		6.00		667,149		6.00
Tier 1 leverage capital to average assets	1,407,993		8.79		640,528		4.00		n/a		n/a
Common equity tier 1 capital	1,264,493		11.37		500,362		4.50		n/a		n/a
Banner Bank
Total capital to risk-weighted assets	1,524,897		13.72		889,034		8.00		1,111,292		10.00
Tier 1 capital to risk-weighted assets	1,397,432		12.57		666,775		6.00		889,034		8.00
Tier 1 leverage capital to average assets	1,397,432		8.73		640,385		4.00		800,482		5.00
Common equity tier 1 capital	1,397,432		12.57		500,081		4.50		722,340		6.50

75

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

Market Risk and Asset/Liability Management

Our financial condition and operations are influenced significantly by general economic conditions, including the absolute level of interest rates as well as changes in interest rates and the slope of the yield curve.  Our profitability is dependent to a large extent on our net interest income, which is the difference between the interest received from our interest-earning assets and the interest expense incurred on our interest-bearing liabilities.

Our activities, like all financial institutions, inherently involve the assumption of interest rate risk.  Interest rate risk is the risk that changes in market interest rates will have an adverse impact on the institution’s earnings and underlying economic value.  Interest rate risk is determined by the maturity and repricing characteristics of an institution’s assets, liabilities and off-balance-sheet contracts.  Interest rate risk is measured by the variability of financial performance and economic value resulting from changes in interest rates.  Interest rate risk is the primary market risk affecting our financial performance.

The greatest source of interest rate risk to us results from the mismatch of maturities or repricing intervals for rate sensitive assets, liabilities and off-balance-sheet contracts.  This mismatch or gap is generally characterized by a substantially shorter maturity structure for interest-bearing liabilities than interest-earning assets, although our floating-rate assets tend to be more immediately responsive to changes in market rates than most deposit liabilities.  Additional interest rate risk results from mismatched repricing indices and formula (basis risk and yield curve risk), and product caps and floors and early repayment or withdrawal provisions (option risk), which may be contractual or market driven, that are generally more favorable to clients than to us.  An exception to this generalization is the beneficial effect of interest rate floors on a portion of our performing floating-rate loans, which help us maintain higher loan yields in periods when market interest rates decline significantly. The Company actively manages its exposure to interest rate risk through on-going adjustments to the mix of interest-earning assets and funding sources that affect the repricing speeds of loans, investments, interest-bearing deposits and borrowings.

The principal objectives of asset/liability management are: to evaluate the interest rate risk exposure; to determine the level of risk appropriate given our operating environment, business plan strategies, performance objectives, capital and liquidity constraints, and asset and liability allocation alternatives; and to manage our interest rate risk consistent with regulatory guidelines and policies approved by the Board of Directors.  Through such management, we seek to reduce the vulnerability of our earnings and capital position to changes in the level of interest rates.  Our actions in this regard are taken under the guidance of the Asset/Liability Management Committee, which is comprised of members of our senior management.  The Committee closely monitors our interest sensitivity exposure, asset and liability allocation decisions, liquidity and capital positions, and local and national economic conditions and attempts to structure the loan and investment portfolios and funding sources to maximize earnings within acceptable risk tolerances.

Sensitivity Analysis

Our primary monitoring tool for assessing interest rate risk is asset/liability simulation modeling, which is designed to capture the dynamics of balance sheet, interest rate and spread movements and to quantify variations in net interest income resulting from those movements under different rate environments.  The sensitivity of net interest income to changes in the modeled interest rate environments provides a measurement of interest rate risk.  We also utilize economic value analysis, which addresses changes in estimated net economic value of equity arising from changes in the level of interest rates.  The net economic value of equity is estimated by separately valuing our assets and liabilities under varying interest rate environments.  The extent to which assets gain or lose value in relation to the gains or losses of liability values under the various interest rate assumptions determines the sensitivity of net economic value to changes in interest rates and provides an additional measure of interest rate risk.

The interest rate sensitivity analysis performed by us incorporates beginning-of-the-period rate, balance and maturity data, using various levels of aggregation of that data, as well as certain assumptions concerning the maturity, repricing, amortization and prepayment characteristics of loans and other interest-earning assets and the repricing and withdrawal of deposits and other interest-bearing liabilities into an asset/liability computer simulation model.  We update and prepare simulation modeling at least quarterly for review by senior management and oversight by the directors. We believe the data and assumptions are realistic representations of our portfolio and possible outcomes under the various interest rate scenarios.  Nonetheless, the interest rate sensitivity of our net interest income and net economic value of equity could vary substantially if different assumptions were used or if actual experience differs from the assumptions used.

76

The following table sets forth, as of September 30, 2021, the estimated changes in our net interest income over one-year and two-year time horizons and the estimated changes in economic value of equity based on the indicated interest rate environments (dollars in thousands):

	Estimated Increase (Decrease) in
Change (in Basis Points) in Interest Rates (1)	Net Interest Income Next 12 Months				Net Interest Income Next 24 Months				Economic Value of Equity
+400	$	87,175	18.7	%	$	204,162	22.1	%	$	(256,477)	(10.7)	%
+300	75,127		16.1		176,495		19.1		(173,602)		(7.2)
+200	56,016		12.0		132,671		14.3		(80,481)		(3.4)
+100	30,740		6.6		73,833		8.0		4,991		0.2
0	—		—		—		—		—		—
-25	(5,892)		(1.3)		(14,677)		(1.6)		(30,725)		(1.3)

(1)    Assumes an instantaneous and sustained uniform change in market interest rates at all maturities; however, no rates are allowed to go below zero.  The targeted Federal Funds Rate was between 0.00% and 0.25% at September 30, 2021.

Another (although less reliable) monitoring tool for assessing interest rate risk is gap analysis.  The matching of the repricing characteristics of assets and liabilities may be analyzed by examining the extent to which assets and liabilities are interest sensitive and by monitoring an institution’s interest sensitivity gap.  An asset or liability is said to be interest sensitive within a specific time period if it will mature or reprice within that time period.  The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets anticipated, based upon certain assumptions, to mature or reprice within a specific time period and the amount of interest-bearing liabilities anticipated to mature or reprice, based upon certain assumptions, within that same time period.  A gap is considered positive when the amount of interest-sensitive assets exceeds the amount of interest-sensitive liabilities.  A gap is considered negative when the amount of interest-sensitive liabilities exceeds the amount of interest-sensitive assets.  Generally, during a period of rising rates, a negative gap would tend to adversely affect net interest income while a positive gap would tend to result in an increase in net interest income.  During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to adversely affect net interest income.

Certain shortcomings are inherent in gap analysis.  For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market rates.  Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market rates, while interest rates on other types may lag behind changes in market rates.  Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset.  Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table.  Finally, the ability of some borrowers to service their debt may decrease in the event of a severe change in market rates.

The following table presents our interest sensitivity gap between interest-earning assets and interest-bearing liabilities at September 30, 2021 (dollars in thousands).  The table sets forth the amounts of interest-earning assets and interest-bearing liabilities which are anticipated by us, based upon certain assumptions, to reprice or mature in each of the future periods shown.  At September 30, 2021, total interest-earning assets maturing or repricing within one year exceeded total interest-bearing liabilities maturing or repricing in the same time period by $5.38 billion, representing a one-year cumulative gap to total assets ratio of 32.34%.  Management is aware of the sources of interest rate risk and in its opinion actively monitors and manages it to the extent possible.  The interest rate risk indicators and interest sensitivity gaps as of September 30, 2021 are within our internal policy guidelines and management considers that our current level of interest rate risk is reasonable.

77

	Within 6 Months			After 6 Months Within 1 Year			After 1 Year Within 3 Years			After 3 Years Within 5 Years			After 5 Years Within 10 Years			Over 10 Years			Total
Interest-earning assets: (1)
Construction loans	$	784,648		$	59,360		$	114,830		$	28,353		$	13,380		$	1,003		$	1,001,574
Fixed-rate mortgage loans	375,542			270,857			789,520			446,125			400,857			19,207			2,302,108
Adjustable-rate mortgage loans	1,184,707			363,898			1,078,868			817,080			172,314			1,830			3,618,697
Fixed-rate mortgage-backed securities	192,802			173,608			538,576			404,216			749,163			374,014			2,432,379
Adjustable-rate mortgage-backed securities	398,775			66,051			21,698			2,607			7,136			—			496,267
Fixed-rate commercial/agricultural loans	125,785			158,801			334,445			209,729			117,345			38,641			984,746
Adjustable-rate commercial/agricultural loans	649,515			32,818			73,414			35,628			9,625			—			801,000
Consumer and other loans	442,104			29,499			40,083			14,827			16,236			33,268			576,017
Investment securities and interest-earning deposits	2,258,787			17,995			91,235			143,224			377,641			153,921			3,042,803
Total rate sensitive assets	6,412,665			1,172,887			3,082,669			2,101,789			1,863,697			621,884			15,255,591
Interest-bearing liabilities: (2)
Regular savings	272,979			175,140			582,937			432,955			660,351			649,633			2,773,995
Interest checking accounts	178,653			72,695			254,751			208,930			382,201			702,427			1,799,657
Money market deposit accounts	272,734			141,936			473,504			354,977			551,040			544,915			2,339,106
Certificates of deposit	387,542			257,369			183,333			21,305			1,508			—			851,057
FHLB advances	50,000			—			—			—			—			—			50,000
Subordinated notes	—			—			—			100,000			—			—			100,000
Junior subordinated debentures	147,944			—			—			—			—			—			147,944
Retail repurchase agreements	247,358			—			—			—			—			—			247,358
Total rate sensitive liabilities	1,557,210			647,140			1,494,525			1,118,167			1,595,100			1,896,975			8,309,117
Excess (deficiency) of interest-sensitive assets over interest-sensitive liabilities	$	4,855,455		$	525,747		$	1,588,144		$	983,622		$	268,597		$	(1,275,091)		$	6,946,474
Cumulative excess of interest-sensitive assets	$	4,855,455		$	5,381,202		$	6,969,346		$	7,952,968		$	8,221,565		$	6,946,474		$	6,946,474
Cumulative ratio of interest-earning assets to interest-bearing liabilities	411.80		%	344.12		%	288.42		%	265.10		%	228.22		%	183.60		%	183.60		%
Interest sensitivity gap to total assets	29.18			3.16			9.55			5.91			1.61			(7.66)			41.75
Ratio of cumulative gap to total assets	29.18			32.34			41.89			47.80			49.41			41.75			41.75

(Footnotes on following page)

78

Footnotes for Table of Interest Sensitivity Gap

(1)Adjustable-rate assets are included in the period in which interest rates are next scheduled to adjust rather than in the period in which they are due to mature, and fixed-rate assets are included in the period in which they are scheduled to be repaid based upon scheduled amortization, in each case adjusted to take into account estimated prepayments.  Mortgage loans and other loans are not reduced for allowances for credit losses and non-performing loans.  Mortgage loans, mortgage-backed securities, other loans and investment securities are not adjusted for deferred fees, unamortized acquisition premiums and discounts.

(2)Adjustable-rate liabilities are included in the period in which interest rates are next scheduled to adjust rather than in the period they are due to mature.  Although regular savings, demand, interest checking, and money market deposit accounts are subject to immediate withdrawal, based on historical experience management considers a substantial amount of such accounts to be core deposits having significantly longer maturities.  For the purpose of the gap analysis, these accounts have been assigned decay rates to reflect their longer effective maturities.  If all of these accounts had been assumed to be short-term, the one-year cumulative gap of interest-sensitive assets would have been $(417.4) million, or (2.51)% of total assets at September 30, 2021.  Interest-bearing liabilities for this table exclude certain non-interest-bearing deposits which are included in the average balance calculations in the table contained in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Comparison of Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020” of this report on Form 10-Q.

79

ITEM 4 – Controls and Procedures

The management of Banner Corporation is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934 (Exchange Act).  A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met.  Also, because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  As a result of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Further, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(a)Evaluation of Disclosure Controls and Procedures:  An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management as of the end of the period covered by this report.  Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports it files or submits under the Exchange Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b)Changes in Internal Controls Over Financial Reporting:  In the quarter ended September 30, 2021, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

80

PART II – OTHER INFORMATION

ITEM 1 – Legal Proceedings

In the normal course of our business, we have various legal proceedings and other contingent matters pending. These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable. Furthermore, in some matters, it is difficult to assess potential exposure because the legal proceeding is still in the pretrial stage. These claims and counter claims typically arise during the course of collection efforts on problem loans or with respect to actions to enforce liens on properties in which we hold a security interest, although we also are subject to claims related to employment matters. Claims related to employment matters may include, but are not limited to: claims by our employees of discrimination, harassment, violations of wage and hour requirements, or violations of other federal, state, or local laws and claims of misconduct or negligence on the part of our employees. Some or all of these claims may lead to litigation, including class action litigation, and these matters may cause us to incur negative publicity with respect to alleged claims. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our financial condition and results of operation for any period. At September 30, 2021, we had accrued $12.1 million related to these legal proceedings. The ultimate outcome of these legal proceedings could be more or less than what we have accrued. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, operations or cash flows, except as set forth below.

A class and collective action lawsuit, Bolding et al. v. Banner Bank, US Dist. Ct., WD WA., was filed against Banner Bank on April 17, 2017. The plaintiffs are former and/or current mortgage loan officers of AmericanWest Bank and/or Banner Bank, who allege that the employer bank failed to pay all required regular and overtime wages that were due pursuant to the Fair Labor Standards Act (“FLSA”) and related laws of the state respective to each individual plaintiff. The plaintiffs seek regular and overtime wages, plus certain penalty amounts and legal fees. On December 15, 2017, the court granted the plaintiffs’ motion for conditional certification of a class with regard to the FLSA claims; following notice given to approximately 160 potential class members, 33 persons elected to “opt-in” as plaintiffs in the class. On October 10, 2018, the Court granted plaintiffs’ motion for certification of a different class of approximately 200 members, with regard to state law claims. Significant pre-trial motions were filed by both parties, including various motions by Banner Bank seeking to dismiss and/or limit the class claims. The court granted in part and denied in part Banner Bank’s motions and has ultimately allowed the case to proceed. The Court ruled on the last of the pre-trial motions on September 13, 2021, increasing the likelihood of trial or settlement. If the case goes to trial and the Company is unsuccessful in defending the claims, damages could be higher than the amount the Company has accrued as a litigation contingency reserve for this case. We believe that there are substantial defenses to this lawsuit, and we have, and will continue to, defend this case vigorously. The ultimate outcome is unknown at this time. The trial for this case will be bifurcated between a liability phase and a damages phase. The liability phase of the trial is set to begin in September 2022.

ITEM 1A – Risk Factors

There have been no material changes in the risk factors previously disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020.

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table provides information about repurchases of common stock by the Company during the quarter ended September 30, 2021:

Period	Total Number of Common Shares Purchased	Average Price Paid per Common Share		Total Number of Shares Purchased as Part of Publicly Announced authorization	Maximum Number of Remaining Shares that May be Purchased as Part of Publicly Announced Authorization
July 1, 2021 - July 31, 2021	407	$	52.53	—	1,007,781
August 1, 2021 - August 31, 2021	300,000	55.50		300,000	707,781
September 1, 2021 - September 30, 2021	—	—		—	707,781
Total for quarter	300,407	55.49		300,000	707,781

Employees surrendered 407 shares to satisfy tax withholding obligations upon the vesting of restricted stock grants during the three months ended September 30, 2021.

On December 21, 2020, the Company announced that its Board of Directors had renewed its authorization to repurchase up to 5% of the Company’s common stock, or 1,757,781 of the Company’s outstanding shares. Under the authorization, shares may be repurchased by the

81

Company in open market purchases. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations. During the quarter ended September 30, 2021, the Company repurchased 300,000 shares under the repurchase authorization, leaving 707,781 available for future repurchase.

ITEM 3 – Defaults upon Senior Securities

Not Applicable.

ITEM 4 – Mine Safety Disclosures

Not Applicable.

ITEM 5 – Other Information

Not Applicable.

82

ITEM 6 – Exhibits

Exhibit	Index of Exhibits
3{a}	Amended and Restated Articles of Incorporation of Registrant [incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 29, 2010 (File No. 000-26584)].
3{b}	Articles of Amendment of Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 1, 2011 (File No. 000-26584)).
3{c}	Articles of Amendment to Amended and Restated Articles of Incorporation of Registrant for non-voting common stock [incorporated by reference to the Registrant’s Current Report on Form 8-K filed on March 18, 2015 (File No. 000-26584)]
3{d}	Amended and Restated Bylaws of Registrant [incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 29, 2020 (File No. 000-26584)].
10{a}	Amended and Restated Employment Agreement, with Mark J. Grescovich [incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 4, 2013 (File No. 000-26584].
10{b}	Form of Supplemental Executive Retirement Program Agreement with Gary Sirmon, Michael K. Larsen, Lloyd W. Baker, Cynthia D. Purcell and Richard B. Barton [incorporated by reference to exhibits filed with the Annual Report on Form 10-K for the year ended December 31, 2001 and the exhibits filed with the Form 8-K on May 6, 2008 (File No. 000-26584)].
10{c}	Form of Employment Contract entered into with Peter J. Conner, Cynthia D. Purcell and Judith A. Steiner [incorporated by reference to exhibits filed with the Form 8-K on June 25, 2014 (File No. 000-26584)].
10{d}	2005 Executive Officer and Director Stock Account Deferred Compensation Plan [incorporated by reference to exhibits filed with the Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-26584)].
10{e}	Entry into an Indemnification Agreement with each of the Registrant’s Directors [incorporated by reference to exhibits filed with the Form 8-K on January 29, 2010 (File No. 000-26584)].
10{f}	2014 Omnibus Incentive Plan [incorporated by reference as Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 24, 2014 (File No. 000-26584)] and amendments [incorporated by reference to the Form 8-K filed on March 25, 2015 (File No. 000-26584)].
10{g}	Forms of Equity-Based Award Agreements: Incentive Stock Option Award Agreement, Non-Qualified Stock Option Award Agreement, Restricted Stock Award Agreement, Restricted Stock Unit Award Agreement, Stock Appreciation Right Award Agreement, and Performance Unit Award Agreement [incorporated by reference to Exhibits 10.2 - 10.7 included in the Registration Statement on Form S-8 dated May 9, 2014 (File No. 333-195835)].
10{h}	2018 Omnibus Incentive Plan [incorporated by reference as Appendix D to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 23, 2018 (File No. 000-26584)]
10{i}	Forms of Equity-Based Award Agreements: Incentive Stock Option Award Agreement, Non-Qualified Stock Option Award Agreement under the Banner Corporation 2018 Omnibus Incentive Plan; Director Restricted Stock Award Agreement; Director Restricted Stock Unit Award Agreement; Employee Time-based Restricted Stock Unit Award Agreement; Employee performance-based Restricted Stock Unit Award Agreement; Stock Appreciation Right Award Agreement; and Performance Unit Award Agreement [incorporated by reference to Exhibits 10.2 - 10.9 included in the Registration Statement on Form S-8 dated May 4, 2018 (File No. 333-224693)]
10{j}	Amended and Restated Executive Severance and Change in Control Plan and Summary Plan Description (Amended and Restated effective as of October 1, 2021)
31.1	Certification of Chief Executive Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the XBRL document

83

Exhibit	Index of Exhibits
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included in Exhibit 101)

84

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Banner Corporation
November 4, 2021	/s/ Mark J. Grescovich
	Mark J. Grescovich
	President and Chief Executive Officer (Principal Executive Officer)
November 4, 2021	/s/ Peter J. Conner
	Peter J. Conner
	Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)

85

EX-10.J

EXHIBIT 10 {j}

BANNER BANK

AMENDED AND RESTATED

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLAN AND

SUMMARY PLAN DESCRIPTION

(Amended and Restated effective as of October 1, 2021)

86

TABLE OF CONTENTS

SECTION 1.    INTRODUCTION

SECTION 2.    DEFINITIONS

SECTION 3.    PARTICIPATION

SECTION 4.    SEVERANCE AND CHANGE IN CONTROL BENEFITS

SECTION 5.    BENEFIT CONDITIONS

SECTION 6.    CODE SECTION 280G REDUCTIONS

SECTION 7.    PLAN ADMINISTRATION

SECTION 8.    CLAIMS PROCEDURES

SECTION 9.    GENERAL PROVISIONS

SECTION 10.    ERISA RIGHTS AND INFORMATION

87

BANNER BANK

AMENDED AND RESTATED

EXECUTIVE SEVERANCE AND CHANGE IN CONTROL PLAN

Section 1.    Introduction.

Banner Bank (the “Bank”), a wholly-owned subsidiary of Banner Corporation (the “Company”), established the Executive Severance and Change in Control Plan (as amended and restated in this document, the “Plan”) on January 1, 2018 (the “Effective Date”), to provide certain executive employees of the Bank with the opportunity to receive severance benefits in connection with certain terminations of employment, including a termination of employment after a change in control of the Bank or the Company. The purpose of the Plan is to attract and retain qualified executives and to assure the present and future continuity, objectivity, and dedication of management in the event of any change in control.

The Bank previously amended and restated the Plan, effective as of January 1, 2020, to revise the non-competition obligations of Plan participants. The Bank is now amending and restating the Plan, effective as of October 1, 2021, to update the severance payable upon a termination of employment in connection with a change in control.

The Plan, as a “severance pay arrangement” within the meaning of Section 3(2)(B)(i) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is intended to be and shall be administered and maintained as an unfunded, top-hat welfare benefit plan under ERISA Section 3(1).

This document is intended to serve as both the summary plan description of the Plan and its plan document for purposes of ERISA.

Section 2.    Definitions.

When used in this Plan, the following terms are defined as set forth below:

2.1“Administrator” means the Compensation Committee or any other committee of the Board or other person that is duly authorized by the Board to administer the Plan.1

2.2“Applicable CIC Multiplier” means the multiplier that is set forth next to a Participant’s name in Appendix A.

2.3“Applicable Severance Multiplier” means the multiplier that is set forth next to a Participant’s name in Appendix A.

2.4“Board” means the Bank’s Board of Directors.

88

2.5“Cause,” with respect to any particular Participant, means “cause” as described in the Participant’s employment agreement (or offer letter of employment or other written contract of engagement) with the Company, the Bank or another Subsidiary. If the Participant does not have an employment agreement, or the agreement does not define “cause” or an equivalent concept, then a Termination of Employment with the Company, the Bank or another Subsidiary will be deemed to be for “cause” if it is as a result of the Participant’s (a) personal dishonesty, willful misconduct, breach of a fiduciary duty involving personal profit, intentional failure to perform stated duties (unless the Participant is prevented from performing such duties because the Participant is disabled (as defined in the Participant’s employment agreement, or if the Participant does not have an employment agreement or the agreement does not define “disabled”, the Participant is suffering from a medical condition that reasonably prevents the Participant from performing such duties despite following a treatment plan provided by a physician or licensed medical specialist); (b) willful violation of any law, rule, or regulation (other than traffic violations or offenses that are classified as misdemeanors) or final cease-and- desist order; (c) acts or failures to act that may have a material detrimental effect on the reputation or business of the Company or the Bank or would be reasonably likely to result in regulatory sanctions, penalties or restrictions on the Company’s or the Bank’s operations; or (d) material breach of any provision of the Participant’s employment agreement (if any) unless the Participant cures such material breach within thirty (30) days after a written notice describing such material breach is received by the Participant. A Participant’s Termination of Employment will be deemed to have been for Cause if, after such termination, facts and circumstances are discovered that would have justified a termination for Cause.

2.6“Change in Control” means:

(a)Any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, any of the Consolidated Subsidiaries (as hereinafter defined), any person (as defined above) acting on behalf of the Company as underwriter pursuant to an offering who is temporarily holding securities in connection with such offering, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or the Bank, or any corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company or the Bank representing 25% or more of the combined voting power of the Company’s or the Bank’s then-outstanding securities;

(b)Individuals who are members of the Company’s Board of Directors on the Effective Date (in each case, the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the Effective Date

(i) whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board or whose nomination for election by the Company’s shareholders was approved by the nominating committee serving under an Incumbent Board or (ii) who was appointed as a result of a change at the direction of the Washington Department of Financial Institutions (“DFI”) or the Federal Deposit Insurance Corporation (“FDIC”), shall be considered a member of the Incumbent Board;

89

(c)The shareholders of the Company or the Bank approve a merger or consolidation of the Company or the Bank with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company or the Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or the Bank, or such surviving entity outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company or the Bank (or similar transaction) in which no person (as hereinabove defined) acquires more than 25% of the combined voting power of the Company’s or the Bank’s then outstanding securities; or

(d)The shareholders of the Company or the Bank approve a plan of complete liquidation of the Company or the Bank, or an agreement for the sale or disposition by the Company or the Bank of all or substantially all of the Company’s or the Bank’s assets (or any transaction having a similar effect);

provided that the term “Change in Control” shall not include an acquisition of securities by an employee benefit plan of the Company or the Bank or a change in the composition of the Company’s Board of Directors or the Board at the direction of the DFI or the FDIC. Notwithstanding anything herein to the contrary, no Change in Control shall be considered to have occurred pursuant to a transaction or event described herein, if such transaction or event occurred pursuant to, or in connection with, a public offering approved by the Company’s Board of Directors.

2.7“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

2.8“Compensation Committee” means the Compensation Committee of the

Board.

2.9“Covered Period” means the period of time beginning on the first

occurrence of a Change in Control and lasting through the two (2)-year anniversary of the occurrence of the Change in Control. The Covered Period shall also include the six (6)-month period before the occurrence of the Change in Control if a Qualifying Termination occurs during such period and the Change in Control occurs.

2.10“Eligible Employees” means any full-time employee of the Company who is recommended by the Bank’s chief executive officer to the Administrator to be a key employee who should be eligible to participate in the Plan. Eligible Employees shall be limited to a select group of management or highly compensated employees within the meaning of Sections 201, 301, and 404 of ERISA.

2.11“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, including valid regulations promulgated under ERISA.

2.12“Good Reason” means:

90

(a)A material reduction in the Participant’s then-current base (other than as part of a Company-wide or the Bank-wide reduction in staff or similar reduction or unless such action was effected to comply with a regulatory compliance requirement);

(b)A material, adverse change in the Participant’s title, reporting relationship, authority, duties or responsibilities (other than temporarily while the Participant is physically or mentally incapacitated, other than as part of a Company-wide or the Bank-wide reduction in staff or similar reduction or unless such action was effected to comply with a regulatory compliance requirement or as otherwise required by applicable law); or

(c)A relocation of the Participant’s principal place of employment by more than 50 miles, except for reasonable travel on Bank business;

provided that a Participant cannot terminate the Participant’s employment for Good Reason unless the Participant has provided written notice to the Bank of the existence of the circumstances providing grounds for termination for Good Reason within thirty (30) days of the initial existence of such grounds and the Bank has had at least thirty (30) days from the date on which such notice is provided to cure such circumstances, if curable. If the Participant does not terminate the Participant’s employment for Good Reason within ninety (90) days after the first occurrence of the applicable grounds, then the Participant will be deemed to have waived the Participant’s right to terminate for Good Reason with respect to such grounds.

2.13“Participant” has the meaning set forth in Section 3.1.

2.14“Qualifying Termination” means a Participant’s Termination of Employment (a) by the Company without Cause, if the Termination of Employment does not occur during the Covered Period, or (b) by the Company without Cause or by the Participant for Good Reason if the Termination of Employment occurs during the Covered Period. A Qualifying Termination that occurs during the six (6)-month period before the first occurrence of a Change in Control will be deemed to occur upon the occurrence of the Change in Control for purposes of the Plan.

2.15“Subsidiary” means any corporation, limited liability company or other entity in an unbroken chain of such entities beginning with the Company if each of the entities, other than the last such entity in the chain, then owns equity interests possessing fifty percent (50%) or more of the total combined voting power of all classes of equity interests in one of the other entities in such chain.

2.16“Termination of Employment” means a “separation from service,” as defined pursuant to Code Section 409A and corresponding regulations, that is a termination of services as an employee of the Bank. Transferring employment from the Company to the Bank or another Subsidiary (or vice versa) will not be considered a Termination of Employment.

91

Section 3.    Participation.

3.1    Participants.

The Administrator shall designate and provide written notice to each Eligible Employee chosen by the Administrator to participate in the Plan (each, a “Participant”). Appendix A of the Plan, as it may be updated from time to time by the Administrator, shall at all times contain a current list of Participants.

Section 4.    Severance and Change in Control Benefits.

4.1Severance.

If a Participant experiences a Qualifying Termination that does not occur during the Covered Period, then, subject to Section 5, the Bank will provide the Participant with the following, in addition to any amounts due by the Bank to the Participant in connection with services performed by the Participant for the Bank prior to the date of the Termination of Employment:

(a)Severance in an amount equal to the product of the Participant’s Applicable Severance Multiplier times the Participant’s base salary in effect immediately prior to the date of the Qualifying Termination (the “Severance”). Subject to Section 9.11, the Severance will be paid in substantially equal installment payments over the one (1)-year period following the Qualifying Termination, payable in accordance with the Bank’s normal payroll practices, but no less frequently than monthly, which payments in the aggregate are equal to the Severance and which shall begin on the sixty-first (61st) day following the Qualifying Termination.

(b)Reimbursement for the monthly COBRA premium paid by the Participant for the Participant and the Participant’s eligible dependents for the twelve (12)-month period following the date of the Qualifying Termination (the “Benefit Reimbursement”). Notwithstanding the foregoing, the Bank’s obligation to make payments under this Section 4.1(b) is subject to the Bank’s reasonable determination that providing such payments does not violate applicable law or give rise to any penalty or excise tax under applicable law. If the Bank reasonably determines that providing such payments may violate applicable law or give rise to a penalty or excise tax under applicable law, the Bank shall reform this Section 4.1(b) in a manner as is necessary to avoid such penalty or excise tax or make an after-tax payment to the Participant in an amount that is equal to the monthly COBRA premium that the Participant would be required to pay to continue the Participant’s group health coverage in effect on the date of the Participant’s Termination of Employment for the twelve (12)-month period following the date of the Participant’s Termination of Employment (less any payments that have already been made pursuant the first sentence of this Section 4.1(b) prior to such determination by the Bank). Subject to Section 9.11, the Benefit Reimbursement shall be paid to the Participant no later than the fifteenth (15th) day of the month immediately following the month in which the Participant timely remits the premium payment.

92

4.2Change in Control Benefits.

If a Participant experiences a Qualifying Termination during the Covered Period, then, subject to Section 5, the Bank will provide the Participant with the following, in addition to any amounts due by the Bank to the Participant in connection with services performed by the Participant for the Bank prior to the date of the Termination of Employment:

(a)Severance in an amount equal to the product of the Participant’s Applicable CIC Multiplier times the sum of (i) Participant’s base salary in effect on the date of the Qualifying Termination or, if greater, in effect on the first occurrence of a Change in Control, plus (ii) the Participant’s target annual cash incentive compensation for the incentive plan year in which the Qualifying Termination occurs (the “CIC Severance”). Subject to Section 9.11, the CIC Severance will be paid in a single lump-sum payment on the sixty-first (61st) day following the Qualifying Termination.

(b)A pro-rated annual bonus equal to the product of (i) the annual bonus, if any, that the Participant would have earned for the entire year in which the Qualifying Termination occurs at target level; and (ii) a fraction, the numerator of which is the number of days the Participant was employed by the Company during the year in which the Qualifying Termination occurs and the denominator of which is the number of days in such year (a “Pro- Rata Bonus”). Subject to Section 9.11, the Pro-Rata Bonus will be paid in a single lump-sum payment on the sixty-first (61st) day following the Qualifying Termination.

(c)Reimbursement for the monthly COBRA premium paid by the Participant for the Participant and the Participant’s eligible dependents until the earliest of (i) the date on which the Participant becomes eligible to receive substantially similar coverage from another employer and (ii) the date the Participant is no longer eligible to receive COBRA continuation coverage (the “CIC Benefit Reimbursement”). Notwithstanding the foregoing, the Bank’s obligation to make payments under this Section 4.2(c) is subject to the Bank’s reasonable determination that providing such payments does not violate applicable law or give rise to any penalty or excise tax under applicable law. If the Bank reasonably determines that providing such payments may violate applicable law or give rise to a penalty or excise tax under applicable law, the Bank shall reform this Section 4.2(c) in a manner as is necessary to avoid such penalty or excise tax or make an after-tax payment to the Participant in an amount that is equal to the monthly COBRA premium that the Participant would be required to pay to continue the

Participant’s group health coverage in effect on the date of the Participant’s Termination of Employment for the eighteen (18)-month period following the date of the Participant’s Termination of Employment (less any payments that have already been made pursuant the first sentence of this Section 4.2(c) prior to such determination by the Bank). Subject to Section 9.11, the CIC Benefit Continuation shall be paid to the Participant no later than the fifteenth (15th) day of the month immediately following the month in which the Participant timely remits the premium payment.

4.3Equity Awards.

The Plan does not affect the terms of any outstanding equity awards of the Company. The treatment of any outstanding equity awards will be determined in accordance with the terms of

93

the Company’s equity plan or plans under which they were granted and any applicable award agreements.

4.4No Duplication of Benefits.

A Participant shall be entitled to payments under only one of Section 4.1 and Section 4.2.

Without limiting the scope of the preceding sentence, no payments shall be made under both Section 4.1 and 4.2. If payments are made under Section 4.1, and payments become due under Section 4.2, then any payments made in accordance with Section 4.1 shall be applied against the amounts due under Section 4.2.

Section 5.    Benefit Conditions.

5.1Conditions.

Notwithstanding any provisions in this Plan or the Appendices to the contrary, a Participant’s entitlement to any benefits under Section 4 of this Plan will be subject to the following conditions:

(a)The Participant must experience a Qualifying Termination.

(b)The Participant must execute a severance agreement (the “Severance Agreement”) to the reasonable satisfaction of the Bank and the Company and such Severance Agreement must become effective and irrevocable within sixty (60) days following the Participant’s Qualifying Termination. Any such Severance Agreement will include, without limitation, (i) a release of claims in favor of the Company, the Bank, their affiliates and their respective officers and directors; (ii) non-solicitation, non-disparagement, confidentiality and further cooperation provisions substantially similar to those set forth in Appendix B hereto; and

(iii) non-competition provisions no more restrictive than those set forth in Appendix C hereto (and limited to the one (1)-year period following the Qualifying Termination); provided that if the period for the Participant to provide and not revoke the Severance Agreement spans two (2) calendar years, any payment of Severance, CIC Severance or Pro-Rata Bonus payable under Section 4 shall, as applicable, commence or be paid in the second of such two (2) years. If the Severance Agreement is not executed and has not become irrevocable by the ninetieth (90th) day following the date of the Participant’s Qualifying Termination, no Plan benefits will be paid.

(c)With respect to the Benefit Reimbursement or the CIC Benefit Reimbursement, as applicable, the Participant must timely and properly elect continuation coverage under COBRA.

5.2Right to Offset.

Notwithstanding any provisions in this Plan or the Appendices to the contrary, benefits under Section 4 of this Plan will be subject to the following:

(a)The Severance or the CIC Severance, as applicable, will be reduced by an amount equal to the outstanding balance of any loan from the Company or the Bank to the

94

Participant or any other amounts the Participant owes to the Company or the Bank (which reduction shall not exceed $5,000).

(b)The benefits will be determined without reference to any period of time after the date of the Participant’s Qualifying Termination, regardless of whether the Participant receives compensation from the Company or the Bank or is providing services to the Company or the Bank during that time, as an employee, consultant or in any other capacity; provided that benefits under this Plan are conditioned upon the Participant’s separation from service (as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein).

(c)The Severance or the CIC Severance, as applicable, will be reduced by any payments required to be paid by the Bank or the Company to the Participant under any federal or state law, including without limitation the Worker Adjustment Retraining Notification Act of 1988, as amended (except unemployment benefits payable in accordance with state law and payment for accrued but unused vacation and personal time off).

5.3Regulatory Conditions.

Notwithstanding any provisions in this Plan or the Appendices to the contrary, benefits under Section 4 of this Plan will be subject to the following:

(a)If, at the time benefits under Section 4 are otherwise payable to a Participant, the Participant is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12

U.S.C. Section 1818(e)(3) and (g)(1), or pursuant to Chapter 30A.12 of the Revised Code of Washington (“RCW”), the Bank’s obligations to pay such benefits shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion (i) pay the Participant all or part of the benefits withheld while its obligations under this Agreement were suspended and (ii) reinstate in whole or in part any of its obligations which were suspended, all in a manner that does not violate Section 409A of the Code.

(b)If, at the time benefits under Section 4 are otherwise payable to a Participant, the Participant is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12 USC Section 1818(e)(4) and (g)(1), or pursuant to RCW Chapter 30.12, all obligations of the Bank under this Plan with respect to the Participant shall terminate as of the effective date of the order.

(c)If the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Plan shall terminate as of the date of default.

(d)All obligations of the Bank under this Plan shall be terminated, except to the extent determined by the Bank to be necessary for the continued operation of the Bank: (i) at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA; or (ii) by the FDIC or the Federal

95

Reserve, at the time either agency approves a supervisory merger to resolve problems related to operation of the Bank or the Company, respectively.

(e)No payment shall be made under Section 4 that would cause the Bank to be “undercapitalized” for purposes of 12 CFR Part 225 or any successor A provision.

(f)No payment of any type or amount of compensation or benefits shall be made or owed by Bank to any Participant pursuant to the Plan or otherwise if payment of such type or amount is prohibited by, is not permitted under, or has not received any required approval under, any applicable governmental statute, regulation, rule, order (including any cease and desist order), determination, opinion, or similar provision whether now in existence or hereafter adopted or imposed, including without limitation, by or under (i) any provisions of the Dodd- Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and regulations promulgated thereunder, (ii) any governmental provisions relating to indemnification by the Bank or an affiliate, including without limitation any applicable prohibitions or restrictions on depository institutions and their affiliates set forth in 12 USC 1828(k) or in 12 CFR Part 359, or

(iii) any governmental provisions relating to payment of golden parachutes or similar payments, including without limitation any prohibitions or restrictions on such payments by troubled institutions and companies and their affiliates set forth in 12 USC 1828(k) or in 12 CFR Part 359. If any payment to a Participant is prohibited or otherwise restricted, (x) such payment shall, to the extent allowed by law, order or regulatory determination and not objected to by applicable banking or other regulatory agencies, be reinstated as an obligation of the obligor(s) without further action immediately upon the cessation of such prohibition or restriction, and (y) the Bank shall use its best efforts to secure the consent, if any shall be required, of the FDIC or other applicable, banking or other regulatory agencies to make such payments in the highest amount permissible, up to the amount provided for in Section 4.

(g)All amounts payable to a Participant under the Plan shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company or the Bank adopted pursuant to any such law, rule, regulation or stock exchange listing requirement. If any payment made to a Participant under the Plan is required under any applicable governmental provision (including, without limitation, Dodd-Frank and regulations promulgated thereunder) to be paid back to the Bank, the Participant shall, upon written demand from the Bank or the Company, promptly pay such amount back to the Bank.

Section 6.    Code Section 280G Reductions.

6.1Reductions of Benefits to Avoid Violation of Code Section 280G.

Notwithstanding any other provision of the Plan or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Bank, the Company or its affiliates to a Participant or for a Participant’s benefit pursuant to the terms of the Plan or otherwise (“Covered Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code and would, but for this Section 6, be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or

96

penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be either:

(a)Reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”); or

(b)Payable in full if the Participant’s receipt on an after-tax basis of the full amount of payments and benefits (after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax)) would result in the Participant receiving an amount at least twenty-five percent (25%) greater than the Reduced Amount.

6.2Order of Reduction.

Any such reduction shall be made by the Bank in its sole discretion consistent with the requirements of Section 409A of the Code; provided that the Bank will, to the extent the Board determines is reasonable, make such reduction in a manner that maximizes the Participant’s economic position after the reduction.

6.3Determination.

Any determination required under this Section 6, including whether any payments or benefits are Parachute Payments, shall be made by the Bank in its sole discretion. The Participant shall provide the Company and the Bank with such information and documents as the Company or the Bank may reasonably request in order to make a determination under this Section 6. The Bank’s determination shall be final and binding on the Participant.

Section 7.    Plan Administration.

7.1Administration.

The Plan is administered and operated by the Administrator, who has complete and exclusive authority in its sole discretion to construe the terms of the Plan (and any related or underlying documents or policies), to make any findings of fact needed in the administration of the Plan, to determine the eligibility for, and amount of, benefits due under the Plan, and to establish and enforce such rules and regulations as the Administrator shall deem proper for the efficient administration of the Plan. All such interpretations and determinations of the Administrator will be made in its sole discretion and will be final, conclusive, and binding upon all persons to the fullest extent permitted by law. Any decision by the Administrator that does not constitute an abuse of discretion must be upheld by a court of law. The Administrator may delegate any of its duties under the Plan to such individuals or entities from time to time as it may designate. The Administrator is authorized, on behalf of the Plan, to engage accountants, legal counsel and such other personnel as it deems necessary or advisable to assist it in the performance of its duties under the Plan. The Plan Administrator shall utilize the Company’s and the Bank’s records with respect to a Participant’s service with the Bank, employment history, salary, absences, illnesses and all other relevant matters and such records shall be conclusive for all purposes under the Plan.

97

7.2Scope and Delegation of Authority.

Notwithstanding the delegation of administrative authority with respect to the Plan to the Administrator, the Board has exclusive authority to amend or terminate this Plan as provided in Section 9.1. The Administrator may further its delegate administrative duties to those officers of the Bank as it so determines.

7.3Liability.

The Administrator will not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan.

Section 8.    Claims Procedures.

8.1Initial Claims.

To file a claim to receive benefits under the Plan, the Participant or the Participant’s authorized representative must submit a written claim for benefits to the Plan within 60 days after the date of the Participant’s Qualifying Termination. Claims must be addressed and sent to the Administrator at the address set forth in Section 10.2.

8.2Denied Claims.

If the Participant’s claim is denied, in whole or in part, the Participant will be furnished with written notice of the denial within 90 days after the Administrator’s receipt of the Participant’s written claim, unless special circumstances require an extension of time for processing the claim, in which case a period not to exceed 180 days will apply. If such an extension of time is required, written notice of the extension will be furnished to the Participant before the termination of the initial 90 day period and will describe the special circumstances requiring the extension, and the date on which a decision is expected to be rendered. Written notice of the denial of the Participant’s claim will contain the following information:

(a)The specific reason(s) for the denial of the Participant’s claim;

(b)References to the specific Plan provisions on which the denial of the Participant’s claim was based;

(c)A description of any additional information or material required by the Administrator to reconsider the Participant’s claim (to the extent applicable) and an explanation of why such material or information is necessary; and

(d)A description of the Plan’s review procedure and time limits applicable to such procedures, including a statement of the Participant’s right to bring a civil action under Section 502(a) of ERISA following a benefit claim denial on review.

98

8.3Appeal of Denied Claims.

If the Participant’s claim is denied and he wishes to submit a request for a review of the denied claim, the Participant or the Participant’s authorized representative must follow the procedures described below:

(a)Upon receipt of the denied claim, the Participant (or the Participant’s authorized representative) may file a request for review of the claim in writing with the Administrator. This request for review must be filed no later than 60 days after the Participant has received written notification of the denial.

(b)The Participant has the right to submit in writing to the Administrator any comments, documents, records or other information relating to the Participant’s claim for benefits.

(c)The Participant has the right to be provided with, upon request and free of charge, reasonable access to and copies of all pertinent documents, records and other information that is relevant to the Participant’s claim for benefits.

(d)The review of the denied claim will take into account all comments, documents, records and other information that the Participant submitted relating to the

Participant’s claim, without regard to whether such information was submitted or considered in the initial denial of the Participant’s claim.

8.4Administrator’s Response to Appeal.

The Administrator will provide the Participant with written notice of its decision within 60 days after the Administrator’s receipt of the Participant’s written claim for review. There may be special circumstances which require an extension of this 60-day period. In any such case, the Administrator will notify the Participant in writing within the 60-day period and the final decision will be made no later than 120 days after the Administrator’s receipt of the Participant’s written claim for review. The Plan Administrator’s decision on the Participant’s claim for review will be communicated to the Participant in writing and will clearly state:

(a)The specific reason or reasons for the denial of the Participant’s claim;

(b)Reference to the specific Plan provisions on which the denial of the Participant’s claim is based;

(c)A statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, the Plan and all documents, records and other information relevant to the Participant’s claim for benefits; and

(d)A statement describing the Participant’s right to bring an action under Section 502(a) of ERISA.

99

8.5Exhaustion of Administrative Remedies.

The exhaustion of these claims procedures is mandatory for resolving every claim and dispute arising under the Plan. As to such claims and disputes:

(a)No claimant shall be permitted to commence any legal action to recover benefits or to enforce or clarify rights under the Plan under Section 502 or Section 510 of ERISA or under any other provision of law, whether or not statutory, until these claims procedures have been exhausted in their entirety; and

(b)In any such legal action, all explicit and implicit determinations by the Administrator (including, but not limited to, determinations as to whether the claim, or a request for a review of a denied claim, was timely filed) shall be afforded the maximum deference permitted by law.

Section 9.    General Provisions.

9.1Amendment and Termination.

There is no legal requirement for the Bank to provide the severance benefits detailed in the Plan. Benefits will be payable only in accordance with the terms of the Plan and the Appendices that may be in effect from time to time, if any. The Bank reserves the right, in its sole discretion and by action of the Board, to terminate, amend, or modify the Plan, in whole or in part, at any time, and from time to time, for any reason, including with respect to Section 409A of the Code as described below. The benefits provided for in this Plan are not vested benefits. If the Plan is terminated, amended, or modified, eligibility to participate in or to receive benefits under the Plan may be terminated or changed.

9.2Unfunded Plan.

The Plan is unfunded. All benefits paid under this Plan shall be paid from the general assets of the Bank, and the status of any claim to any benefit shall be the same as the status of a claim against the Bank by any general and unsecured creditor. The Company is not required to segregate any monies or other assets from its general funds with respect to these obligations. No Participant, employee of the Bank or any other person shall have any rights to or interest in any specific assets or accounts of the Company, the Bank or any of their respective affiliates by reason of the Plan.

9.3Death of Participant.

In the event of the death of a Participant after a Qualifying Termination but prior to receipt of all benefits payable to the Participant under this Plan, any unpaid benefits due under this Plan shall be paid no later than March 15th following the calendar year in which the Participant’s death occurs to the Participant’s surviving spouse, children or estate, as the Bank determines in its sole discretion. No benefits shall be paid under this Plan to beneficiaries if the Participant dies prior to a Qualifying Termination.

100

9.4Limitation on Liability.

Neither the establishment of the Plan, nor any modification of the Plan, nor the payment of any benefits under the Plan shall be construed as giving to any Participant, Eligible Employee or any other person any legal or equitable right against any officer, director, employee, or agent of the Bank or the Company in his or her individual capacity, and in no event shall the terms and conditions of employment of any employee of the Bank be modified or affected in any way by the terms of the Plan.

9.5Records.

The records of the Bank with respect to employment history, salary and all other relevant matters shall be conclusive for all purposes of this Plan.

9.6Not a Contract of Employment.

Nothing contained in the Plan shall be held or construed to impose any obligation on the Bank to retain any Participant or Eligible Employee in its service or be deemed to give any Participant the right to remain employed by the Bank or to interfere with the rights of the Bank to terminate the employment of any Participant at any time, with or without Cause. All Participants shall remain subject to discharge or discipline by the Bank to the same extent as if the Plan had not been put into effect.

9.7Severability.

If any provision of the Plan is deemed or held to be unlawful or invalid for any reason, that fact will not adversely affect the other provisions of the Plan unless such determination renders the functioning of the Plan impossible or impracticable, and in that case an appropriate provision or provisions shall be adopted so that the Plan may continue to function properly.

9.8Incompetence.

In the event the Administrator finds that a Participant who is eligible to receive benefits under the Plan is unable to care for his or her affairs because of illness or accident, then all benefits not yet paid to that Participant under the Plan may be paid in such manner as the Administrator shall determine, unless a claim has been made therefore by a duly appointed guardian, committee, or other legal representative, and such payment shall be a complete discharge of all liability for any payments or benefits to which that Participant was or would otherwise have been entitled under the Plan.

9.9Transfer and Assignment.

Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge, anticipate or otherwise encumber, transfer, hypothecate or convey any amounts payable under the Plan prior to the date that such amounts are paid, except that, in the case of a Participant’s death, such amounts shall be paid to the Participant’s beneficiaries.

101

9.10Governing Law.

To the extent no preempted by ERISA or other applicable federal law, the Plan shall be construed according to the laws of the State of Washington, without regard to conflicts of law principles.

9.11Section 409A of the Code.

(a)The Plan is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and administered in accordance with Section 409A of the Code. Notwithstanding any other provision of the Plan, payments provided under the Plan may only be made upon an event and in a manner that complies with Section 409A of the Code or an applicable exemption. Any payments under the Plan that may be excluded from Section 409A of the Code either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A of the Code to the maximum extent possible. For purposes of Section 409A of the Code, each installment payment provided under the Plan shall be treated as a separate payment. Any payments to be made under the Plan upon a termination of employment shall only be made upon a “separation from service” under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under the Plan comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by a Participant on account of any failure or alleged failure to comply with, or be exempt from, Section 409A of the Code.

(b)Notwithstanding any other provision of the Plan, if any payment or benefit provided to a Participant in connection with the Participant’s Qualifying Termination is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Participant is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i) of the Code, then such payment or benefit shall not be paid until the first payroll date to occur following the six (6)-month anniversary of the Qualifying Termination or, if earlier, on the Participant’s death (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Participant in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. Notwithstanding any other provision of the Plan, if any payment or benefit is conditioned on the Participant’s execution of a Severance Agreement, the first payment shall include all amounts that would otherwise have been paid to the Participant during the period beginning on the date of the Qualifying Termination and ending on the payment date if no delay had been imposed. Notwithstanding any other provision of the Plan, if a Qualifying Termination occurs during the six (6)-month period before the first occurrence of a Change in Control, payment of the CIC Severance shall not commence and payment of the CIC Benefit Reimbursement shall not begin until after the Change in Control occurs and the first CIC Severance payment and the first CIC Benefit Reimbursement shall include all amounts that would otherwise have been paid to the Participant during the period beginning on the date the Participant’s employment with the Company terminates and ending on the payment date if no delay had been imposed.

102

(c)To the extent required by Section 409A of the Code, each reimbursement or in-kind benefit provided under the Plan shall be provided in accordance with the following: (i) no reimbursement of such expenses incurred by a Participant during any taxable year of the Participant shall be made after the last day of the following taxable year; (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; and (iii) any right to reimbursements or in-kind benefits under the Plan shall not be subject to liquidation or exchange for another benefit.

(d)In the event that Involuntary Termination payment(s) made on account of a Change in Control pursuant to Section 4.2 should be determined to be an alternative form of payment on account of a Separation from Service, then payments under Section 4.2 shall be permitted in accordance with its terms if the event constituting a Change in Control (as defined under this Agreement) either: (i) qualifies as one of the change in control events within the meaning of Code Section 409A(a)(2)(A)(v) and the regulations thereunder (a “Section 409A Change in Control Event”), (ii) qualifies as a short-term deferral that is exempt from the application of Section 409A of the Code, or (iii) is otherwise exempt from the application of Section 409A of the Code. If neither (i), (ii) or (iii) is applicable, then that portion of the payment that does not qualify as made under a “separation pay plan” (within the meaning of Treasury Regulations Section 1.409A-1(b)(9)(iii)) shall be paid as if such involuntary termination payments were not made in connection with a Change in Control (i.e., as if such payments were made pursuant to Section 4.1) commencing on the earliest date that such payments could have been made had the involuntary termination payments not been made on account of a Section 409A Change in Control Event, taking into account the other requirements of Section 409A of the Code (e.g., the six-month payment delay rule for specified employees).

9.12Headings.

The headings of sections herein are included solely for convenience and shall not affect the meaning of any of the provisions of the Plan.

Section 10.    ERISA Rights and Information.

10.1Participant’s Rights under ERISA.

Participants are entitled to certain rights and protections under ERISA. ERISA provides that all Participants in the Plan are entitled to (1) examine, without charge, at the Plan Administrator’s office, and at other specified locations, all Plan documents; and (2) obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may impose a reasonable charge for the copies.

In addition to creating rights for Participants, ERISA imposes duties upon the people who are responsible for the operation of employee welfare benefits plans such as the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of Participants and beneficiaries. No one, including the employer or any other person, may fire or otherwise discriminate against an employee in any way to prevent an employee from obtaining a benefit under the Plan or for exercising rights under ERISA.

103

If a claim for benefits under the Plan is denied in whole or in part, a written explanation of the reason for the denial is required. Individuals dissatisfied with this decision have the right to have the Plan review and reconsider the claim. Under ERISA, there are steps an individual can take to enforce the above rights.

For instance, if a Participant requests materials from the Plan and does not receive them within thirty (30) days, the Participant may file suit in federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay up to $110 a day until the materials are received, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.

If a Participant has a claim for benefits under the Plan which is denied or ignored, in whole or in part, the Participant may file suit in state or federal court. If it should happen that

Plan fiduciaries misuse the Plan’s money, or if a Participant is discriminated against for asserting his or her rights, he or she may seek assistance from the U.S. Department of Labor, or may file suit in federal court. The court will decide who should pay court costs and legal fees. If the Participant is successful, the court may order the person sued to pay these costs and fees. If the Participant loses, the court may order the Participant to pay these costs and fees, for example, if it finds that the claim was frivolous. If an individual has any questions about the Plan, he or she should contact the Plan Administrator. Any questions about this statement or about rights under ERISA should be directed to the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration..

10.2Other Important Facts.

•The name of the Plan is the Banner Bank Executive Severance and Change in Control Plan.

•The Plan is sponsored by Banner Bank.

•The Employer Identification Number assigned by the Internal Revenue Service to Banner Bank is 91-1645638.

•The Plan was established as of January 1, 2018. The effective date of the amended and restated Plan, as described in this document, is October 1, 2021.

•The name of the Administrator is the Compensation Committee of the Board of Directors of Banner Bank. The address and telephone number of the Administrator is:

Kayleen Kohler

Executive Vice President, Human Resources 3001 112th Ave NE, Suite 200

104

Bellevue, WA 98004

Telephone: 425-576-4392

E-mail: kayleen.kohler@bannerbank.com

•The Plan is a welfare severance benefit plan.

•The Plan is an employer-administered plan.

•The Administrator keeps records of the Plan on a plan-year basis. The plan year is the calendar year. The Administrator also will answer any questions about the Plan you may have.

•Service of legal process may be made upon the Administrator at the address set forth above.

•The Plan is not funded and has no assets.

105

This Amended and Restated Executive Severance and Change in Control Plan is hereby adopted by Banner Bank as of October 1, 2021.

BANNER BANK

By: /s/ Kayleen Kohler

Name: Kayleen Kohler

Title: Chief Human Resources and Diversity Officer

106

APPENDIX A

Participants

Level	Applicable Severance Multiplier	Applicable CIC Multiplier
Direct Reports of CEO	1x Base Salary	2x Base Salary and 2x Annual Cash Incentive
Executive Officer Level 1 (reports to an Executive)	1x Base Salary	1x Base Salary and 1x Annual Cash Incentive

107

APPENDIX B

Post-Termination Obligations

Confidential Information

The Participant acknowledges that, in the course of employment, the Participant has access to confidential information and trade secrets relating to the business of the Company, the Bank and their affiliates. Except as required in the course of employment by the Company and the Bank, the Participant shall not, without the prior written consent of the Board, directly or indirectly before or after a Termination of Employment, disclose to anyone any confidential information relating to the Bank, the Company or any of their Affiliates, or any financial information, trade secrets or “know-how” that is germane to the Bank’s, the Company’s or any of their affiliates’ business and operations. The Participant also recognizes and acknowledges that any financial information concerning any of the customers of the Bank, the Company or any of their affiliates, as may exist from time to time, is strictly confidential and is a valuable, special and unique asset of their businesses. The Participant shall not, either before or after a Termination of Employment, disclose to anyone this financial information, or any part thereof, for any reason or purposes whatsoever.

Nothing in the Plan or the Severance Agreement shall be construed to prevent disclosure of confidential information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order. In the event the Participant is requested, or required by judicial or other governmental order, to disclose confidential information about the Bank, the Company or their affiliates, to the extent allowed by law the Participant agrees the Participant will promptly notify an authorized officer of the Bank so that it may seek a protective order or other remedy. The Participant will cooperate with the Bank on a reasonable basis in connection with any effort to obtain a protective order or other remedy, including seeking a protective order himself or herself, if necessary.

Non-Solicitation

Participant agrees that during the period of the Participant’s employment and for a further period of two (2) years after the Participant’s Termination of Employment, the Participant will not, without the prior written consent of the Bank, directly or indirectly solicit, influence, or assist anyone in the solicitation or influencing of (i) any customer or depositor of the Bank, the Company or any of their affiliates for the purpose of causing, encouraging, or attempting to cause or encourage such customer to divert its current, ongoing, or future business from the Bank, the Company or any of their affiliates to another financial institution or (ii) any other employee of the Bank, the Company or any of their affiliates for the purpose of causing, encouraging, or attempting to cause or encourage such other employee to leave the employment of the Company, the Bank or any of their affiliates.

108

Non-Disparagement

The Participant agrees and covenants that the Participant will not at any time make, publish, or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Bank, Company, or their affiliates or their businesses, or any of their employees, officers, and existing and prospective customers, suppliers, investors, and other associated third parties.

The preceding sentence does not, in any way, restrict or impede the Participant from exercising protected rights to the extent that such rights cannot be waived by agreement, including but not limited to the Participant’s Section 7 rights under the NLRA or rights to communicate with any other administrative or regulatory agency to report suspected unlawful conduct or from complying with any applicable law or regulation or a valid order of a court of competent

jurisdiction or an authorized government agency, provided further that such compliance does not exceed that required by the law, regulation, or order. The Participant shall promptly provide written notice of any such order to an authorized officer of the Bank.

109

APPENDIX C

Non-Competition Obligations

Upon a Qualifying Termination, for a period of one (1) year from the Participant’s Qualifying Termination, the Participant shall not be a director, officer or employee of or consultant to any bank, savings bank, savings and loan association, credit union or similar financial institution or holding company of any such entity that maintains a full service branch office or lending center in any county in which the Bank, the Company or any of their affiliates operates a full service branch office or lending center on the date of the Qualifying Termination.

The preceding sentence shall not, in any way (a) prohibit the Participant from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation, provided that such ownership represents a passive investment and that the Participant is not a controlling person of, or a member of a group that controls, such corporation; or (b) restrict or impede the Participant from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order. The Participant shall promptly provide written notice of any such order to an authorized officer of the Bank.

110

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF BANNER CORPORATION

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES ACT OF 1934

I, Mark J. Grescovich, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 of Banner Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2021		/s/Mark J. Grescovich
	Mark J. Grescovich
	Chief Executive Officer

111

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER OF BANNER CORPORATION

PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES ACT OF 1934

I, Peter J. Conner, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 of Banner Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 4, 2021		/s/ Peter J. Conner
	Peter J. Conner
	Chief Financial Officer

112

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

OF BANNER CORPORATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify in his capacity as an officer of Banner Corporation, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, that:

•the report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and

•the information contained in the report fairly presents, in all material respects, the Company’s financial condition and results of operations as of the dates and for the periods presented in the financial statements included in such report.

November 4, 2021	/s/ Mark J. Grescovich
	Mark J. Grescovich
	Chief Executive Officer
November 4, 2021	/s/ Peter J. Conner
	Peter J. Conner
	Chief Financial Officer

113

XML

Document and Entity Information Document - shares	9 Months Ended
	Sep. 30, 2021	Oct. 31, 2021
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-26584
Entity Registrant Name	BANNER CORPORATION
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1691604
Entity Address, Address Line One	10 South First Avenue
Entity Address, City or Town	Walla Walla
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	99362
City Area Code	509
Local Phone Number	527-3636
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	BANR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		34,252,367
Amendment Flag	false
Entity Central Index Key	0000946673
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
ASSETS
Cash and due from banks		$ 392,035	$ 311,899
Interest bearing deposits		1,808,547	922,284
Total cash and cash equivalents		2,200,582	1,234,183
Securities—trading		26,875	24,980
Debt Securities, Available-for-sale		3,446,575	2,322,593
Securities—held-to-maturity, net of allowance for credit losses of $104 and $94, respectively, fair value $466,002 and $448,681, respectively		447,708	421,713
Total securities		3,921,158	2,769,286
Federal Home Loan Bank (FHLB) stock		12,000	16,358
Securities purchased under agreements to resell		300,000	0
Loans held for sale (includes $41,480 and $133,554, at fair value, respectively)		63,678	243,795
Loans receivable		9,218,384	9,870,982
Allowance for credit losses – loans		139,915	167,279
Net loans receivable		9,078,469	9,703,703
Accrued interest receivable		43,644	46,617
Real estate owned (REO), held for sale, net		852	816
Property and equipment, net		151,503	164,556
Goodwill		373,121	373,121
Other intangibles, net		16,429	21,426
Bank-owned life insurance (BOLI)		192,950	191,830
Deferred tax assets, net		70,130	65,742
Operating lease right-of-use assets		58,523	55,367
Other assets		154,840	144,823
Total assets		16,637,879	15,031,623
Deposits:
Non-interest-bearing		6,400,864	5,492,924
Interest-bearing transaction and savings accounts		6,912,759	6,159,052
Interest-bearing certificates	[1]	851,054	915,320
Total deposits		14,164,677	12,567,296
Advances from FHLB		50,000	150,000
Other borrowings		247,358	184,785
Subordinated notes, net		98,472	98,201
Junior subordinated debentures at fair value (issued in connection with Trust Preferred Securities)		124,853	116,974
Operating lease liabilities		62,946	59,343
Accrued expenses and other liabilities		175,960	143,300
Deferred compensation		46,494	45,460
Total liabilities		14,970,760	13,365,359
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS’ EQUITY
Preferred stock - $0.01 par value per share, 500,000 shares authorized; no shares outstanding at September 30, 2021 and December 31, 2020		0	0
Retained earnings		355,035	247,316
Carrying value of shares held in trust for stock-based compensation plans		(7,421)	(7,636)
Liability for common stock issued to stock related compensation plans		7,421	7,636
Accumulated other comprehensive income		14,939	69,069
Total shareholders’ equity		1,667,119	1,666,264
Total liabilities and shareholders’ equity		16,637,879	15,031,623
Voting Common Stock [Member]
SHAREHOLDERS’ EQUITY
Common stock and paid in capital		1,297,145	1,349,879
Nonvoting Common Stock [Member]
SHAREHOLDERS’ EQUITY
Common stock and paid in capital		$ 0	$ 0

[1] Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

XML

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
ASSETS
Debt Securities, Available-for-sale, Amortized Cost	$ 3,443,516	$ 2,256,189
Allowance for Credit Losses	(104)	94
Securities—held-to-maturity, fair value	$ 466,002	$ 448,681
SHAREHOLDERS’ EQUITY
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	500,000	500,000
Preferred Stock, Shares Outstanding	0	0
Voting Common Stock [Member]
SHAREHOLDERS’ EQUITY
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	50,000,000	50,000,000
Common Stock, Shares, Issued	34,251,991	35,159,200
Common Stock, Shares, Outstanding	34,251,991	35,159,200
Nonvoting Common Stock [Member]
SHAREHOLDERS’ EQUITY
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	5,000,000	5,000,000
Common Stock, Shares, Issued	0	0
Common Stock, Shares, Outstanding	0	0
Loans [Member] | Recurring [Member]
ASSETS
Loans Held-for-sale, Fair Value Disclosure	$ 41,480	$ 133,554

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
INTEREST INCOME:
Loans receivable	$ 116,487	$ 116,716	$ 340,802	$ 350,815
Mortgage-backed securities	11,695	7,234	32,503	24,354
Securities and cash equivalents	7,686	5,631	20,649	14,824
Total interest income	135,868	129,581	393,954	389,993
INTEREST EXPENSE:
Deposits	2,749	5,179	9,386	20,623
FHLB advances	655	988	2,244	4,036
Other borrowings	125	128	358	482
Subordinated debt	2,193	2,260	6,605	4,988
Total interest expense	5,722	8,555	18,593	30,129
Net interest income	130,146	121,026	375,361	359,864
(RECAPTURE)/PROVISION FOR CREDIT LOSSES	(8,638)	15,180	(28,145)	67,273
Net interest income after (recapture)/provision for credit losses	138,784	105,846	403,506	292,591
NON-INTEREST INCOME:
Deposit fees and other service charges	10,457	8,742	29,154	26,091
Mortgage banking operations	9,752	16,562	28,670	40,891
Bank-owned life insurance (BOLI)	1,245	1,286	3,797	4,653
Miscellaneous	2,046	951	7,808	5,017
Other operating income	23,500	27,541	69,429	76,652
Net gain on sale of securities	56	644	618	815
Net change in valuation of financial instruments carried at fair value	1,778	37	1,895	(2,360)
Total non-interest income	25,334	28,222	71,942	75,107
NON-INTEREST EXPENSE:
Salary and employee benefits	59,799	61,171	186,553	184,494
Less capitalized loan origination costs	(8,290)	(8,517)	(26,754)	(25,433)
Occupancy and equipment	13,153	13,022	38,965	39,114
Information/computer data services	6,110	6,090	17,915	17,984
Payment and card processing expenses	6,181	4,044	15,482	12,135
Professional and legal expenses	12,324	2,368	20,023	6,450
Advertising and marketing	1,521	1,105	3,965	3,584
Deposit insurance expense	1,469	1,628	4,243	4,968
State/municipal business and use taxes	1,219	1,196	3,367	3,284
REO operations, net	53	(11)	(71)	93
Amortization of core deposit intangibles	1,575	1,864	4,997	5,867
Miscellaneous	6,977	5,285	18,642	16,841
Noninterest Operating Expense, Before COVID-19 and Acquisition Related Costs	102,091	89,245	287,327	269,381
COVID-19 Expenses	44	778	309	3,169
Acquisition-related costs	10	5	660	1,483
Total non-interest expense	102,145	90,028	288,296	274,033
Income before provision for income taxes	61,973	44,040	187,152	93,665
PROVISION FOR INCOME TAXES	12,089	7,492	36,031	16,694
NET INCOME	$ 49,884	$ 36,548	$ 151,121	$ 76,971
Earnings per common share:
Basic	$ 1.45	$ 1.04	$ 4.35	$ 2.18
Diluted	1.44	1.03	4.32	2.17
Cumulative dividends declared per common share	$ 0.41	$ 0.41	$ 1.23	$ 0.82
Weighted average number of common shares outstanding, Basic	34,446,510	35,193,109	34,716,914	35,285,567
Weighted average number of common shares outstanding, Diluted	34,669,492	35,316,679	35,012,228	35,524,771

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Statement of Comprehensive Income [Abstract]
NET INCOME	$ 49,884	$ 36,548	$ 151,121	$ 76,971
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES:
Unrealized holding (loss) gain on available-for-sale securities arising during the period	(23,223)	(3,090)	(62,711)	47,000
Income tax benefit (expense) related to available-for-sale securities unrealized holding (loss) gain	5,574	742	15,051	(11,280)
Reclassification for net gain on available-for-sale securities realized in earnings	(118)	(125)	(634)	(296)
Income tax expense related to available-for-sale securities realized in earnings	28	30	152	71
Changes in fair value of junior subordinated debentures related to instrument specific credit risk	(7,333)	(208)	(7,879)	9,483
Income tax benefit (expense) related to junior subordinated debentures	1,760	50	1,891	(2,276)
Other comprehensive (loss) income	(23,312)	(2,601)	(54,130)	42,702
COMPREHENSIVE INCOME	$ 26,572	$ 33,947	$ 96,991	$ 119,673

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock [Member]	Common Stock and Paid in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance, beginning of the period at Dec. 31, 2019	$ 1,594,034		$ 1,373,940	$ 186,838	$ 33,256
Balance, beginning of the period (in shares) at Dec. 31, 2019		35,751,576
Increase (Decrease) in Stockholders' Equity [Roll Forward]
New credit standard (ASC 326) - impact in year of adoption	11,215			11,215
Net income	16,882			16,882
Other comprehensive income, net of income tax	46,823				46,823
Accrual of dividends on common stock	(14,583)			(14,583)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	1,534		1,534
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		(24,337)
Repurchase of common stock	(31,775)		(31,775)
Repurchase of common stock (in shares)		(624,780)
Balance, end of the period at Mar. 31, 2020	$ 1,601,700		1,343,699	177,922	80,079
Balance, end of the period (in shares) at Mar. 31, 2020		35,102,459
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41
Balance, beginning of the period at Dec. 31, 2019	$ 1,594,034		1,373,940	186,838	33,256
Balance, beginning of the period (in shares) at Dec. 31, 2019		35,751,576
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	76,971
Balance, end of the period at Sep. 30, 2020	$ 1,646,529		1,347,612	222,959	75,958
Balance, end of the period (in shares) at Sep. 30, 2020		35,158,568
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.82
Balance, beginning of the period at Mar. 31, 2020	$ 1,601,700		1,343,699	177,922	80,079
Balance, beginning of the period (in shares) at Mar. 31, 2020		35,102,459
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	23,541			23,541
Other comprehensive income, net of income tax	(1,520)				(1,520)
Accrual of dividends on common stock	(15)			(15)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	1,397		1,397
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		55,440
Balance, end of the period at Jun. 30, 2020	1,625,103		1,345,096	201,448	78,559
Balance, end of the period (in shares) at Jun. 30, 2020		35,157,899
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	36,548			36,548
Other comprehensive income, net of income tax	(2,601)				(2,601)
Accrual of dividends on common stock	(15,037)			(15,037)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	2,516		2,516
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		669
Balance, end of the period at Sep. 30, 2020	$ 1,646,529		1,347,612	222,959	75,958
Balance, end of the period (in shares) at Sep. 30, 2020		35,158,568
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41
Net income	$ 38,957			38,957
Other comprehensive income, net of income tax	(6,889)				(6,889)
Accrual of dividends on common stock	(14,600)			(14,600)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	2,267		2,267
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		632
Balance, end of the period at Dec. 31, 2020	$ 1,666,264		1,349,879	247,316	69,069
Balance, end of the period (in shares) at Dec. 31, 2020		35,159,200
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41
Net income	$ 46,855			46,855
Other comprehensive income, net of income tax	(56,103)				(56,103)
Accrual of dividends on common stock	(14,589)			(14,589)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	1,714		1,714
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		76,143
Repurchase of common stock	(25,324)		(25,324)
Repurchase of common stock (in shares)		(500,000)
Balance, end of the period at Mar. 31, 2021	$ 1,618,817		1,326,269	279,582	12,966
Balance, end of the period (in shares) at Mar. 31, 2021		34,735,343
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41
Balance, beginning of the period at Dec. 31, 2020	$ 1,666,264		1,349,879	247,316	69,069
Balance, beginning of the period (in shares) at Dec. 31, 2020		35,159,200
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	151,121
Balance, end of the period at Sep. 30, 2021	$ 1,667,119		1,297,145	355,035	14,939
Balance, end of the period (in shares) at Sep. 30, 2021		34,251,991
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 1.23
Balance, beginning of the period at Mar. 31, 2021	$ 1,618,817		1,326,269	279,582	12,966
Balance, beginning of the period (in shares) at Mar. 31, 2021		34,735,343
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	54,382			54,382
Other comprehensive income, net of income tax	25,285				25,285
Accrual of dividends on common stock	(14,459)			(14,459)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	(259)		(259)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		65,545
Repurchase of common stock	(14,555)		(14,555)
Repurchase of common stock (in shares)		(250,000)
Balance, end of the period at Jun. 30, 2021	$ 1,669,211		1,311,455	319,505	38,251
Balance, end of the period (in shares) at Jun. 30, 2021		34,550,888
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41
Net income	$ 49,884			49,884
Other comprehensive income, net of income tax	(23,312)				(23,312)
Accrual of dividends on common stock	(14,354)			(14,354)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	2,339		2,339
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)		1,103
Repurchase of common stock	(16,649)		(16,649)
Repurchase of common stock (in shares)		(300,000)
Balance, end of the period at Sep. 30, 2021	$ 1,667,119		$ 1,297,145	$ 355,035	$ 14,939
Balance, end of the period (in shares) at Sep. 30, 2021		34,251,991
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative dividends declared per common share	$ 0.41

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended							9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]
Cumulative dividends declared per common share	$ 0.41	$ 0.41	$ 0.41	$ 0.41	$ 0.41		$ 0.41	$ 1.23	$ 0.82
New credit standard (ASC 326) - impact in year of adoption							$ (11,215)
NET INCOME	$ 49,884	$ 54,382	$ 46,855	$ 38,957	$ 36,548	$ 23,541	16,882	$ 151,121	$ 76,971
Other comprehensive income, net of income tax	(23,312)	25,285	(56,103)	(6,889)	(2,601)	(1,520)	46,823
Accrual of dividends on common stock	(14,354)	(14,459)	(14,589)	(14,600)	(15,037)	(15)	(14,583)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	2,339	(259)	1,714	2,267	2,516	1,397	1,534
Repurchase of common stock	(16,649)	(14,555)	(25,324)				(31,775)
Total shareholders’ equity	$ 1,667,119	$ 1,669,211	$ 1,618,817	$ 1,666,264	$ 1,646,529	$ 1,625,103	$ 1,601,700	$ 1,667,119	$ 1,646,529	$ 1,594,034
Cumulative dividends declared per common share	$ 0.41	$ 0.41	$ 0.41	$ 0.41	$ 0.41		$ 0.41	$ 1.23	$ 0.82
Common Stock [Member]
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered (in shares)	1,103	65,545	76,143	632	669	55,440	(24,337)
Stock Repurchased and Retired During Period, Shares	(300,000)	(250,000)	(500,000)				(624,780)
Shares, Outstanding	34,251,991	34,550,888	34,735,343	35,159,200	35,158,568	35,157,899	35,102,459	34,251,991	35,158,568	35,751,576
Common Stock and Paid in Capital [Member]
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	$ 2,339	$ (259)	$ 1,714	$ 2,267	$ 2,516	$ 1,397	$ 1,534
Repurchase of common stock	(16,649)	(14,555)	(25,324)				(31,775)
Total shareholders’ equity	1,297,145	1,311,455	1,326,269	1,349,879	1,347,612	1,345,096	1,343,699	$ 1,297,145	$ 1,347,612	$ 1,373,940
Retained Earnings [Member]
New credit standard (ASC 326) - impact in year of adoption							(11,215)
NET INCOME	49,884	54,382	46,855	38,957	36,548	23,541	16,882
Accrual of dividends on common stock	(14,354)	(14,459)	(14,589)	(14,600)	(15,037)	(15)	(14,583)
Total shareholders’ equity	355,035	319,505	279,582	247,316	222,959	201,448	177,922	355,035	222,959	186,838
Accumulated Other Comprehensive Income (Loss) [Member]
Other comprehensive income, net of income tax	(23,312)	25,285	(56,103)	(6,889)	(2,601)	(1,520)	46,823
Total shareholders’ equity	$ 14,939	$ 38,251	$ 12,966	$ 69,069	$ 75,958	$ 78,559	$ 80,079	$ 14,939	$ 75,958	$ 33,256

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
OPERATING ACTIVITIES:
Net income	$ 151,121	$ 76,971
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation	13,071	13,677
Deferred income/expense and capitalized servicing rights, net of amortization	(34,389)	(8,503)
Amortization of core deposit intangibles	4,997	5,867
Gain on sale of securities, net	(618)	(815)
Net change in valuation of financial instruments carried at fair value	(1,895)	2,360
Dividend Income Reinvested, Equity Securities, Operating	0	(255)
Increase in deferred taxes	4,388	1,279
Increase in current taxes payable	499	1,426
Stock-based compensation	7,012	6,893
Net change in cash surrender value of BOLI	(3,482)	(3,721)
Gain on sale of loans, excluding capitalized servicing rights	(22,623)	(34,951)
(Gain) loss on disposal of real estate held for sale and property and equipment, net	(1,452)	496
(Recapture) provision for credit losses	(28,145)	67,273
Real Estate Owned, Valuation Allowance, Provision Increase (Decrease)	0	18
Origination of loans held for sale	(912,467)	(1,032,523)
Proceeds from sales of loans held for sale	1,115,207	1,091,984
Net change in:
Other assets	23,630	(51,796)
Other liabilities	23,645	5,040
Net cash provided from operating activities	329,723	138,162
INVESTING ACTIVITIES:
Payments to Acquire Debt Securities, Available-for-sale	2,390,756	608,192
Principal repayments and maturities of securities—available-for-sale	1,136,965	311,781
Available-for-sale Securities, Sale Proceeds	59,591	128,939
Purchases of securities—held-to-maturity	(52,440)	(215,780)
Principal repayments and maturities of securities—held-to-maturity	23,842	20,691
Purchases of equity securities	(4,750)	(1,060,000)
Proceeds from sales of equity securities	4,796	610,519
Loan repayments (originations), net	660,016	(855,936)
Purchases of loans and participating interest in loans	(4,258)	(18)
Proceeds from sales of other loans	38,386	8,454
Purchases of property and equipment	(6,355)	(9,936)
Proceeds from sale of real estate held for sale and sale of other property	8,299	2,869
Proceeds from FHLB stock repurchase program	4,358	52,164
Purchase of FHLB stock	0	(40,185)
Payments for Securities Purchased under Agreements to Resell	(300,000)	0
Other	2,343	3,913
Net cash used in investing activities	(819,963)	(1,650,717)
FINANCING ACTIVITIES:
Increase in deposits, net	1,597,381	2,166,700
Repayment of long term FHLB advances	(100,000)	0
Repayment of overnight and short term FHLB advances, net	0	(300,000)
Increase in other borrowings, net	62,572	58,508
Proceeds from Issuance of Subordinated Long-term Debt	0	98,027
Cash dividends paid	(43,568)	(79,655)
Taxes paid related to net share settlement of equity awards	3,218	1,447
Cash paid for the repurchase of common stock	56,528	31,775
Net cash provided from financing activities	1,456,639	1,910,358
NET CHANGE IN CASH AND CASH EQUIVALENTS	966,399	397,803
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	1,234,183	307,735
CASH AND CASH EQUIVALENTS, END OF PERIOD	2,200,582	705,538
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid in cash	17,927	31,817
Tax paid (refunds received)	20,081	(27,515)
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Transfer of loans to real estate owned and other repossessed assets	512	1,588
Dividends Payable	$ 1,191	$ 1,179

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements include the accounts of Banner Corporation (the Company or Banner), a bank holding company incorporated in the State of Washington and its wholly-owned subsidiary, Banner Bank (the Bank).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC). In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2021 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. Certain reclassifications have been made to the 2020 Consolidated Financial Statements and/or schedules to conform to the 2021 presentation. Prior to the first quarter of 2021, the (recapture) provision for credit losses - unfunded loan commitment was recorded as non-interest expense. Beginning in the first quarter of 2021 the (recapture) provision for credit losses - unfunded loan commitment is recorded as a component of the provision for credit losses. These reclassifications may have affected certain ratios for the prior periods. The effect of these reclassifications is considered immaterial. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are significant to an understanding of Banner’s financial statements. These policies relate to (i) the methodology for the recognition of interest income, (ii) determination of the provision and allowance for credit losses, (iii) the valuation of financial assets and liabilities recorded at fair value (iv) the valuation of intangibles, such as goodwill, core deposit intangibles (CDI) and mortgage servicing rights, (v) the valuation of real estate held for sale, (vi) the valuation of assets acquired and liabilities assumed in business combinations and subsequent recognition of related income and expense, and (vii) the valuation or recognition of deferred tax assets and liabilities. These policies and judgments, estimates and assumptions are described in greater detail in subsequent notes to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC (2020 Form 10-K).  There have been no significant changes in our application of these accounting policies during the first nine months of 2021.

The information included in this Form 10-Q should be read in conjunction with our 2020 Form 10-K.  Interim results are not necessarily indicative of results for a full year or any other interim period.

XML

ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

9 Months Ended

Sep. 30, 2021

Accounting Changes and Error Corrections [Abstract]

ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

Reference Rate Reform (Topic 848)

In March 2020, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, in response to the scheduled discontinuation of LIBOR on December 31, 2021. The amendments in this ASU provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform. Since the issuance of this guidance, the publication cessation of U.S. dollar LIBOR has been extended to June 30, 2023.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: 1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; 2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts; 3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives; and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this ASU also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. Upon adoption, an entity may make a one-time election to sell, transfer, or both sell and transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform and that are classified as held to maturity before January 1, 2020.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

The amendments in these ASUs are effective upon the issuance date of March 12, 2020 and once adopted will apply to contract modifications made and new hedging relationships entered into through December 31, 2022. The Company will be able to use the expedients in this guidance to manage through the transition away from LIBOR, specifically as they relate to loans and leases. The adoption of this accounting guidance is not expected to have a material impact on the Company’s Consolidated Financial Statements.

XML

SECURITIES

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

	September 30, 2021
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	26,875
	$	27,203	$	26,875

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	180,585	$	1,067	$	(600)	$	—	$	181,052
Municipal bonds	296,784		14,395		(788)		—		310,391
Corporate bonds	160,404		3,903		(63)		—		164,244
Mortgage-backed or related securities	2,599,229		25,918		(40,883)		—		2,584,264
Asset-backed securities	206,514		110		—		—		206,624
	$	3,443,516	$	45,393	$	(42,334)	$	—	$	3,446,575

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	317	$	6	$	—	$	323	$	—
Municipal bonds	391,583		18,716		(2,188)		408,111		(63)
Corporate bonds	3,124		—		(2)		3,122		(41)
Mortgage-backed or related securities	52,788		1,668		(10)		54,446		—
	$	447,812	$	20,390	$	(2,200)	$	466,002	$	(104)

	December 31, 2020
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	24,980
	$	27,203	$	24,980

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	141,668	$	1,002	$	(935)	$	—	$	141,735
Municipal bonds	283,997		19,523		(2)		—		303,518
Corporate bonds	219,086		2,762		(79)		—		221,769
Mortgage-backed or related securities	1,602,033		45,179		(1,060)		—		1,646,152
Asset-backed securities	9,405		77		(63)		—		9,419
	$	2,256,189	$	68,543	$	(2,139)	$	—	$	2,322,593

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	340	$	7	$	—	$	347	$	—
Municipal bonds	370,998		24,130		(94)		395,034		(59)
Corporate bonds	3,222		—		(12)		3,210		(35)
Mortgage-backed or related securities	47,247		2,843		—		50,090		—
	$	421,807	$	26,980	$	(106)	$	448,681	$	(94)

Accrued interest receivable on held-to-maturity debt securities was $2.7 million and $3.0 million as of September 30, 2021 and December 31, 2020, respectively, and was $9.3 million and $6.9 million on available-for-sale debt securities as of September 30, 2021 and December 31, 2020, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

At September 30, 2021 and December 31, 2020, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

	September 30, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	40,115	$	(39)	$	33,447	$	(561)	$	73,562	$	(600)
Municipal bonds	60,522		(788)		—		—		60,522		(788)
Corporate bonds	7,937		(63)		—		—		7,937		(63)
Mortgage-backed or related securities	1,503,114		(39,701)		54,570		(1,182)		1,557,684		(40,883)
	$	1,611,688	$	(40,591)	$	88,017	$	(1,743)	$	1,699,705	$	(42,334)

	December 31, 2020
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	3,126	$	(8)	$	50,603	$	(927)	$	53,729	$	(935)
Municipal bonds	495		(2)		—		—		495		(2)
Corporate bonds	3,586		(79)		—		—		3,586		(79)
Mortgage-backed or related securities	181,871		(1,046)		2,337		(14)		184,208		(1,060)
Asset-backed securities	—		—		5,676		(63)		5,676		(63)
	$	189,078	$	(1,135)	$	58,616	$	(1,004)	$	247,694	$	(2,139)

At September 30, 2021, there were 84 securities—available-for-sale with unrealized losses, compared to 54 at December 31, 2020.  Management does not believe that any individual unrealized loss as of September 30, 2021 or December 31, 2020 resulted from credit loss.  The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

There were no sales of securities—trading during the nine months ended September 30, 2021 or 2020. There were no securities—trading in a nonaccrual status at September 30, 2021 or December 31, 2020.  Net unrealized holding gains of $1.9 million were recognized during the nine months ended September 30, 2021 compared to $2.4 million of net unrealized holding losses recognized during the nine months ended September 30, 2020.

The following table presents gross gains and losses on sales of securities available-for-sale (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Available-for-Sale:
Gross Gains	$	140	$	557	$	766	$	729
Gross Losses	(22)		(432)		(132)		(433)
Balance, end of the period	$	118	$	125	$	634	$	296

There were no securities—available-for-sale in a nonaccrual status at September 30, 2021 or December 31, 2020.

During the nine months ended September 30, 2021, we sold one held-to-maturity security with a resulting net gain of $3,000 and had partial calls of securities that resulted in a net loss of $65,000. There were no sales of securities—held-to-maturity during the nine months ended September 30, 2020. There were no securities—held-to-maturity in a nonaccrual status or 30 days or more past due at September 30, 2021 or December 31, 2020.

During the nine months ended September 30, 2021, we sold a $4.8 million equity security with a resulting net gain of $46,000. There were no sales of equity securities during the nine months ended September 30, 2020. During the nine months ended September 30, 2020, the Company sold Visa Class B stock with a net gain of $519,000. The stock was previously carried at a zero-cost basis due to transfer restrictions and uncertainty of litigation.

The amortized cost and estimated fair value of securities at September 30, 2021, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2021
	Trading				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing in one year or less	$	—	$	—	$	59,150	$	59,360	$	5,444	$	5,471
Maturing after one year through five years	—		—		173,666		181,152		59,705		62,039
Maturing after five years through ten years	—		—		845,638		847,708		21,961		23,312
Maturing after ten years through twenty years	27,203		26,875		502,832		514,271		164,303		168,315
Maturing after twenty years	—		—		1,862,230		1,844,084		196,399		206,865
	$	27,203	$	26,875	$	3,443,516	$	3,446,575	$	447,812	$	466,002

The following table presents, as of September 30, 2021, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

	September 30, 2021
	Carrying Value		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	202,085	$	201,456	$	213,687
Interest rate swap counterparties	27,275		26,642		27,402
Repurchase agreements	278,087		285,068		278,087
Other	2,549		2,549		2,597
Total pledged securities	$	509,996	$	515,715	$	521,773

The Company monitors the credit quality of held-to-maturity debt securities through the use of credit rating. Credit ratings are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The balance is local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following table summarizes the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	375,865	$	500	$	—	$	376,365
Not Rated	317		15,718		2,624		52,788		71,447
	$	317	$	391,583	$	3,124	$	52,788	$	447,812

	December 31, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	349,123	$	500	$	—	$	349,623
Not Rated	340		21,875		2,722		47,247		72,184
	$	340	$	370,998	$	3,222	$	47,247	$	421,807

The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities by major type for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	For the Three Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	64	$	46	$	—	$	110
Recapture of provision for credit losses	—		(1)		(5)		—		(6)
Ending Balance	$	—	$	63	$	41	$	—	$	104
	For the Nine Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	59	$	35	$	—	$	94
Provision for credit losses	—		4		6		—		10
Ending Balance	$	—	$	63	$	41	$	—	$	104

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2021

Receivables [Abstract]

LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES - LOANS

The following table presents the loans receivable at September 30, 2021 and December 31, 2020 by class (dollars in thousands).

	September 30, 2021				December 31, 2020
	Amount		Percent of Total		Amount		Percent of Total
Commercial real estate:
Owner-occupied	$	1,122,275	12.2	%	$	1,076,467	10.9	%
Investment properties	1,980,284		21.5		1,955,684		19.8
Small balance CRE	601,751		6.5		573,849		5.8
Multifamily real estate	532,760		5.8		428,223		4.4
Construction, land and land development:
Commercial construction	170,205		1.8		228,937		2.3
Multifamily construction	278,184		3.0		305,527		3.1
One- to four-family construction	571,431		6.2		507,810		5.1
Land and land development	308,164		3.4		248,915		2.5
Commercial business:
Commercial business (1)	1,346,707		14.6		2,178,461		22.1
Small business scored	775,554		8.4		743,451		7.5
Agricultural business, including secured by farmland (2)	287,469		3.1		299,949		3.0
One- to four-family residential	682,368		7.4		717,939		7.3
Consumer:
Consumer—home equity revolving lines of credit	462,819		5.0		491,812		5.0
Consumer—other	98,413		1.1		113,958		1.2
Total loans	9,218,384		100.0	%	9,870,982		100.0	%
Less allowance for credit losses – loans	(139,915)				(167,279)
Net loans	$	9,078,469			$	9,703,703

(1)    Includes $307.0 million and $1.04 billion of U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) loans as of September 30, 2021 and December 31, 2020, respectively.

(2)    Includes $3.2 million of SBA PPP loans as of September 30, 2021 and none as of December 31, 2020.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $12.2 million as of September 30, 2021 and $25.6 million as of December 31, 2020. Net loans include net discounts on acquired loans of $11.5 million and $16.1 million as of September 30, 2021 and December 31, 2020, respectively. Net loans does not include accrued interest receivable. Accrued interest receivable on loans was $31.5 million as of September 30, 2021 and $36.6 million as of December 31, 2020 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

Purchased credit-deteriorated and purchased non-credit-deteriorated loans. Loans acquired in business combinations are recorded at their fair value at the acquisition date. Acquired loans are evaluated upon acquisition and classified as either purchased credit-deteriorated (PCD) or purchased non-credit-deteriorated. There were no PCD loans acquired during the nine months ended September 30, 2021.

Troubled Debt Restructurings. Loans are reported as troubled debt restructures (TDRs) when the bank grants one or more concessions to a borrower experiencing financial difficulties that it would not otherwise consider.  Our TDRs have generally not involved forgiveness of amounts due, but almost always include a modification of multiple factors; the most common combination includes interest rate, payment amount and maturity date.

As of September 30, 2021 and December 31, 2020, the Company had TDRs of $5.6 million and $7.9 million, respectively, and no commitments to advance additional funds related to TDRs.

There were no new TDRs that occurred during the nine months ended September 30, 2021. The following table presents new TDRs that occurred during the three and nine months ended September 30, 2020 (dollars in thousands):

	Three Months Ended September 30, 2020					Nine months ended September 30, 2020
	Number of Contracts	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment		Number of Contracts	Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment
Recorded Investment
Commercial business:
Commercial business	—	—		—		2	4,796		4,796
Total	—	$	—	$	—	2	$	4,796	$	4,796

There were no TDRs which incurred a payment default within twelve months of the restructure date during the three and nine-month periods ended September 30, 2021 and 2020. A default on a TDR results in either a transfer to nonaccrual status or a partial charge-off, or both.

Credit Quality Indicators:  To appropriately and effectively manage the ongoing credit quality of the Company’s loan portfolio, management has implemented a risk-rating or loan grading system for its loans.  The system is a tool to evaluate portfolio asset quality throughout each applicable loan’s life as an asset of the Company.  Generally, loans are risk rated on an aggregate borrower/relationship basis with individual loans sharing similar ratings.  There are some instances when specific situations relating to individual loans will provide the basis for different risk ratings within the aggregate relationship.  Loans are graded on a scale of 1 to 9.  A description of the general characteristics of these categories is shown below:

Overall Risk Rating Definitions:  Risk-ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan or lease.  Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan or lease to exhibit characteristics of more than one risk-rating category.  Consideration for the final rating is centered in the borrower’s ability to repay, in a timely fashion, both principal and interest.  The Company’s risk-rating and loan grading policies are reviewed and approved annually. There were no material changes in the risk-rating or loan grading system for the periods presented.

Risk Ratings 1-5: Pass

Credits with risk ratings of 1 to 5 meet the definition of a pass risk rating. The strength of credits vary within the pass risk ratings, ranging from a risk rated 1 being an exceptional credit to a risk rated 5 being an acceptable credit that requires a more than normal level of supervision.

Risk Rating 6: Special Mention

A credit with potential weaknesses that deserves management’s close attention is risk rated a 6.  If left uncorrected, these potential weaknesses will result in deterioration in the capacity to repay debt.  A key distinction between Special Mention and Substandard is that in a Special Mention credit, there are identified weaknesses that pose potential risk(s) to the repayment sources, versus well defined weaknesses that pose risk(s) to the repayment sources.  Assets in this category are expected to be in this category no more than 9-12 months as the potential weaknesses in the credit are resolved.

Risk Rating 7: Substandard

A credit with well-defined weaknesses that jeopardize the ability to repay in full is risk rated a 7.  These credits are inadequately protected by either the sound net worth and payment capacity of the borrower or the value of pledged collateral.  These are credits with a distinct possibility of loss.  Loans headed for foreclosure and/or legal action due to deterioration are rated 7 or worse.

Risk Rating 8: Doubtful

A credit with an extremely high probability of loss is risk rated 8.  These credits have all the same critical weaknesses that are found in a substandard loan; however, the weaknesses are elevated to the point that based upon current information, collection or liquidation in full is improbable.  While some loss on doubtful credits is expected, pending events may make the amount and timing of any loss indeterminable.  In these situations taking the loss is inappropriate until the outcome of the pending event is clear.

Risk Rating 9: Loss

A credit that is considered to be currently uncollectible or of such little value that it is no longer a viable bank asset is risk rated 9.  Losses should be taken in the accounting period in which the credit is determined to be uncollectible.  Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	202,187	$	227,782	$	154,951	$	126,339	$	92,197	$	232,653	$	11,457	$	1,047,566
Special Mention	12,309		—		2,201		—		2,147		3,384		—		20,041
Substandard	1,968		—		13,770		—		3,058		35,872		—		54,668
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	216,464	$	227,782	$	170,922	$	126,339	$	97,402	$	271,909	$	11,457	$	1,122,275
Commercial real estate - investment properties
Risk Rating
Pass	$	286,605	$	227,093	$	266,240	$	246,056	$	227,915	$	612,438	$	19,726	$	1,886,073
Special Mention	—		—		—		4,167		—		—		—		4,167
Substandard	2,162		9,651		5,292		17,197		10,368		45,374		—		90,044
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	288,767	$	236,744	$	271,532	$	267,420	$	238,283	$	657,812	$	19,726	$	1,980,284
Multifamily real estate
Risk Rating
Pass	$	134,404	$	79,418	$	71,346	$	37,285	$	92,151	$	109,993	$	2,517	$	527,114
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		2,312		1,420		—		—		1,914		—		5,646
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	134,404	$	81,730	$	72,766	$	37,285	$	92,151	$	111,907	$	2,517	$	532,760

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial construction
Risk Rating
Pass	$	48,100	$	52,593	$	24,682	$	31,084	$	—	$	521	$	—	$	156,980
Special Mention	—		—		—		—		—		—		—		—
Substandard	4,272		—		4,035		4,820		—		98		—		13,225
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	52,372	$	52,593	$	28,717	$	35,904	$	—	$	619	$	—	$	170,205
Multifamily construction
Risk Rating
Pass	$	59,818	$	112,147	$	86,493	$	14,840	$	—	$	—	$	—	$	273,298
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		4,886		—		—		—		—		—		4,886
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	59,818	$	117,033	$	86,493	$	14,840	$	—	$	—	$	—	$	278,184
One- to four- family construction
Risk Rating
Pass	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Land and land development
Risk Rating
Pass	$	149,447	$	112,761	$	18,967	$	9,189	$	4,218	$	8,174	$	2,118	$	304,874
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,874		14		267		—		—		135		—		3,290
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	152,321	$	112,775	$	19,234	$	9,189	$	4,218	$	8,309	$	2,118	$	308,164
Commercial business
Risk Rating
Pass	$	348,123	$	274,487	$	197,462	$	127,281	$	48,760	$	83,084	$	231,186	$	1,310,383
Special Mention	68		86		271		—		690		11		10,667		11,793
Substandard	2,277		2,422		1,090		10,019		3,318		892		4,513		24,531
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	350,468	$	276,995	$	198,823	$	137,300	$	52,768	$	83,987	$	246,366	$	1,346,707
Agricultural business including secured by farmland
Risk Rating
Pass	$	26,643	$	27,645	$	51,961	$	28,073	$	15,698	$	37,116	$	93,390	$	280,526
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		446		2,206		510		144		1,891		1,746		6,943
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	26,643	$	28,091	$	54,167	$	28,583	$	15,842	$	39,007	$	95,136	$	287,469

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	243,100	$	156,838	$	156,817	$	122,484	$	92,312	$	212,792	$	3,379	$	987,722
Special Mention	—		4,560		—		2,251		—		1,869		149		8,829
Substandard	7,923		26,914		3,040		2,516		11,731		27,792		—		79,916
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	251,023	$	188,312	$	159,857	$	127,251	$	104,043	$	242,453	$	3,528	$	1,076,467
Commercial real estate - investment properties
Risk Rating
Pass	$	237,553	$	262,543	$	299,452	$	218,018	$	278,348	$	502,914	$	20,062	$	1,818,890
Special Mention	—		2,712		—		—		2,730		1,856		—		7,298
Substandard	19,812		11,418		20,352		36,310		23,027		18,577		—		129,496
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	257,365	$	276,673	$	319,804	$	254,328	$	304,105	$	523,347	$	20,062	$	1,955,684
Multifamily real estate
Risk Rating
Pass	$	78,632	$	69,825	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	424,483
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,312		1,428		—		—		—		—		—		3,740
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	80,944	$	71,253	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	428,223

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial construction
Risk Rating
Pass	$	83,506	$	67,152	$	41,299	$	6,038	$	2,158	$	1,129	$	—	$	201,282
Special Mention	—		5,963		—		—		—		—		—		5,963
Substandard	12,913		3,808		4,873		—		98		—		—		21,692
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	96,419	$	76,923	$	46,172	$	6,038	$	2,256	$	1,129	$	—	$	228,937
Multifamily construction
Risk Rating
Pass	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
One- to four- family construction
Risk Rating
Pass	$	461,294	$	35,910	$	—	$	—	$	—	$	—	$	7,581	$	504,785
Special Mention	1,563		—		—		—		—		—		630		2,193
Substandard	501		331		—		—		—		—		—		832
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	463,358	$	36,241	$	—	$	—	$	—	$	—	$	8,211	$	507,810

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Land and land development
Risk Rating
Pass	$	156,450	$	37,397	$	16,560	$	6,801	$	6,264	$	4,840	$	17,020	$	245,332
Special Mention	—		—		—		—		—		—		—		—
Substandard	14		30		3,047		190		—		302		—		3,583
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	156,464	$	37,427	$	19,607	$	6,991	$	6,264	$	5,142	$	17,020	$	248,915
Commercial business
Risk Rating
Pass	$	1,243,276	$	230,845	$	203,051	$	65,524	$	38,757	$	66,206	$	264,741	$	2,112,400
Special Mention	103		412		—		829		—		115		9,507		10,966
Substandard	6,624		14,413		18,569		5,224		1,320		453		8,492		55,095
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	1,250,003	$	245,670	$	221,620	$	71,577	$	40,077	$	66,774	$	282,740	$	2,178,461
Agricultural business including secured by farmland
Risk Rating
Pass	$	32,032	$	62,058	$	31,381	$	22,635	$	22,394	$	24,950	$	91,660	$	287,110
Special Mention	—		—		—		810		—		537		—		1,347
Substandard	1,542		2,652		1,076		163		675		3,049		2,335		11,492
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	33,574	$	64,710	$	32,457	$	23,608	$	23,069	$	28,536	$	93,995	$	299,949

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Small balance CRE
Past Due Category
Current	$	48,385	$	80,778	$	74,482	$	85,597	$	73,371	$	238,549	$	544	$	601,706
30-59 Days Past Due	—		—		—		—		—		2		—		2
60-89 Days Past Due	43		—		—		—		—		—		—		43
90 Days + Past Due	—		—		—		—		—		—		—		—
Total small balance CRE	$	48,428	$	80,778	$	74,482	$	85,597	$	73,371	$	238,551	$	544	$	601,751
Small business scored
Past Due Category
Current	$	176,262	$	134,418	$	119,587	$	92,657	$	63,168	$	79,568	$	108,154	$	773,814
30-59 Days Past Due	—		132		10		128		14		50		172		506
60-89 Days Past Due	—		—		—		142		26		—		160		328
90 Days + Past Due	—		8		139		120		335		243		61		906
Total small business scored	$	176,262	$	134,558	$	119,736	$	93,047	$	63,543	$	79,861	$	108,547	$	775,554
One- to four- family residential
Past Due Category
Current	$	157,577	$	109,535	$	65,469	$	58,832	$	64,017	$	223,601	$	1,751	$	680,782
30-59 Days Past Due	—		—		—		—		—		107		—		107
60-89 Days Past Due	—		—		—		—		—		109		—		109
90 Days + Past Due	—		276		—		169		—		925		—		1,370
Total One- to four- family residential	$	157,577	$	109,811	$	65,469	$	59,001	$	64,017	$	224,742	$	1,751	$	682,368

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	7,044	$	1,125	$	1,711	$	1,772	$	2,089	$	3,007	$	444,348	$	461,096
30-59 Days Past Due	—		65		110		—		100		385		180		840
60-89 Days Past Due	—		—		—		—		71		91		2		164
90 Days + Past Due	—		—		197		193		108		31		190		719
Total Consumer—home equity revolving lines of credit	$	7,044	$	1,190	$	2,018	$	1,965	$	2,368	$	3,514	$	444,720	$	462,819
Consumer-other
Past Due Category
Current	$	13,921	$	15,239	$	9,426	$	9,524	$	6,917	$	18,640	$	24,394	$	98,061
30-59 Days Past Due	5		118		17		79		20		26		49		314
60-89 Days Past Due	1		—		—		3		7		6		17		34
90 Days + Past Due	—		4		—		—		—		—		—		4
Total Consumer-other	$	13,927	$	15,361	$	9,443	$	9,606	$	6,944	$	18,672	$	24,460	$	98,413

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Small balance CRE
Past Due Category
Current	$	56,544	$	80,090	$	84,749	$	77,637	$	68,791	$	202,653	$	2,550	$	573,014
30-59 Days Past Due	—		—		—		—		—		—		—		—
60-89 Days Past Due	—		—		—		45		—		—		—		45
90 Days + Past Due	—		—		—		567		—		223		—		790
Total small balance CRE	$	56,544	$	80,090	$	84,749	$	78,249	$	68,791	$	202,876	$	2,550	$	573,849
Small business scored
Past Due Category
Current	$	157,161	$	145,037	$	126,578	$	89,734	$	47,909	$	63,347	$	109,287	$	739,053
30-59 Days Past Due	129		62		310		723		4		1		230		1,459
60-89 Days Past Due	98		147		3		140		—		352		151		891
90 Days + Past Due	73		228		800		484		169		248		46		2,048
Total small business scored	$	157,461	$	145,474	$	127,691	$	91,081	$	48,082	$	63,948	$	109,714	$	743,451
One- to four- family residential
Past Due Category
Current	$	105,411	$	90,425	$	92,232	$	101,491	$	60,738	$	254,850	$	3,164	$	708,311
30-59 Days Past Due	1,051		—		1,302		829		—		1,438		—		4,620
60-89 Days Past Due	—		—		19		—		—		936		—		955
90 Days + Past Due	—		114		1,185		456		169		2,129		—		4,053
Total One- to four- family residential	$	106,462	$	90,539	$	94,738	$	102,776	$	60,907	$	259,353	$	3,164	$	717,939

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	10,522	$	2,617	$	2,553	$	3,359	$	1,372	$	2,154	$	466,490	$	489,067
30-59 Days Past Due	—		—		—		—		—		50		409		459
60-89 Days Past Due	—		202		—		—		—		237		—		439
90 Days + Past Due	—		312		198		564		286		255		232		1,847
Total Consumer—home equity revolving lines of credit	$	10,522	$	3,131	$	2,751	$	3,923	$	1,658	$	2,696	$	467,131	$	491,812
Consumer-other
Past Due Category
Current	$	21,811	$	13,377	$	13,936	$	11,433	$	8,575	$	18,802	$	25,460	$	113,394
30-59 Days Past Due	48		35		15		22		46		26		44		236
60-89 Days Past Due	242		—		—		33		21		14		18		328
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Consumer-other	$	22,101	$	13,412	$	13,951	$	11,488	$	8,642	$	18,842	$	25,522	$	113,958

The following tables provide the amortized cost basis of collateral-dependent loans as of September 30, 2021 and December 31, 2020 (in thousands). Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.

	September 30, 2021
	Real Estate		Accounts Receivable		Equipment		Total
Commercial real estate:
Owner-occupied	$	3,949	$	—	$	—	$	3,949
Investment properties	7,468		—		—		7,468
Small balance CRE	2,452		—		—		2,452
Commercial business
Commercial business	107		659		56		822
Small business scored	41		—		44		85
Agricultural business, including secured by farmland	427		—		594		1,021
Total	$	14,444	$	659	$	694	$	15,797

	December 31, 2020
	Real Estate		Accounts Receivable		Equipment		Total
Commercial real estate:
Owner-occupied	$	7,506	$	—	$	—	$	7,506
Investment properties	8,979		—		—		8,979
Small balance CRE	567		—		—		567
Land and land development	302		—		—		302
Commercial business
Commercial business	557		—		—		557
Small business scored	44		—		47		91
Agricultural business, including secured by farmland	427		—		984		1,411
One- to four-family residential	196		—		—		196
Total	$	18,578	$	—	$	1,031	$	19,609

The following tables provide additional detail on the age analysis of the Company’s past due loans as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	—	$	495	$	495	$	1,121,780	$	1,122,275	$	3,952	$	4,535	$	—
Investment properties	—		—		5,185		5,185		1,975,099		1,980,284		7,468		7,620		3,955
Small balance CRE	2		43		—		45		601,706		601,751		2,440		2,776		—
Multifamily real estate	—		342		—		342		532,418		532,760		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		170,107		170,205		—		98		—
Multifamily construction	4,886		—		—		4,886		273,298		278,184		—		—		—
One- to four-family construction	—		—		—		—		571,431		571,431		—		—		—
Land and land development	—		—		14		14		308,150		308,164		—		256		—
Commercial business
Commercial business	117		167		847		1,131		1,345,576		1,346,707		820		1,326		—
Small business scored	506		328		906		1,740		773,814		775,554		83		1,374		61
Agricultural business, including secured by farmland	—		—		1,022		1,022		286,447		287,469		1,021		1,022		—
One- to four-family residential	107		109		1,370		1,586		680,782		682,368		—		3,182		772
Consumer:
Consumer—home equity revolving lines of credit	840		164		719		1,723		461,096		462,819		—		1,831		30
Consumer—other	314		34		4		352		98,061		98,413		—		19		4
Total	$	6,772	$	1,187	$	10,660	$	18,619	$	9,199,765	$	9,218,384	$	15,784	$	24,039	$	4,822

	December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	182	$	1,447	$	1,629	$	1,074,838	$	1,076,467	$	7,509	$	8,429	$	—
Investment properties	—		—		7,981		7,981		1,947,703		1,955,684		8,979		8,979		—
Small balance CRE	—		45		790		835		573,014		573,849		567		791		—
Multifamily real estate	—		—		—		—		428,223		428,223		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		228,839		228,937		—		98		—
Multifamily construction	—		—		—		—		305,527		305,527		—		—		—
One- to four-family construction	356		—		331		687		507,123		507,810		—		331		—
Land and land development	—		—		317		317		248,598		248,915		302		507		—
Commercial business
Commercial business	3,247		31		2,088		5,366		2,173,095		2,178,461		555		1,988		889
Small business scored	1,459		891		2,048		4,398		739,053		743,451		91		3,419		136
Agricultural business, including secured by farmland	298		37		1,548		1,883		298,066		299,949		1,412		1,743		—
One-to four-family residential	4,620		955		4,053		9,628		708,311		717,939		171		3,556		1,899
Consumer:
Consumer secured by one- to four-family	459		439		1,847		2,745		489,067		491,812		—		2,697		130
Consumer—other	236		328		—		564		113,394		113,958		—		22		—
Total	$	10,675	$	2,908	$	22,548	$	36,131	$	9,834,851	$	9,870,982	$	19,586	$	32,560	$	3,054

(1)     The Company did not recognize any interest income on non-accrual loans during the three or nine months ended September 30, 2021 or the year ended December 31, 2020.

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	60,349	$	5,807	$	30,899	$	30,830	$	3,256	$	9,800	$	7,068	$	—	$	148,009
(Recapture)/provision for credit losses	(4,057)		850		(1,557)		(3,825)		83		(359)		15		—		(8,850)
Recoveries	923		—		—		230		17		19		227		—		1,416
Charge-offs	—		—		—		(362)		(179)		—		(119)		—		(660)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915
	For the Nine Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	57,791	$	3,893	$	41,295	$	35,007	$	4,914	$	9,913	$	14,466	$	—	$	167,279
Provision/(recapture) for credit losses	2,096		2,764		(12,053)		(8,390)		(1,581)		(605)		(7,216)		—		(24,985)
Recoveries	1,094		—		100		1,530		25		152		620		—		3,521
Charge-offs	(3,766)		—		—		(1,274)		(181)		—		(679)		—		(5,900)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915

The changes in the allowance for credit losses - loans during the three and nine months ended September 30, 2021 were primarily the result of the $8.9 million recapture of provision for credit losses - loans recorded during the current quarter and the $25.0 million recapture of provision recorded during the nine months ended September 30, 2021. The change in allowance for credit losses - loans during the nine months ended September 30, 2021 was also impacted by net charge offs of $2.4 million recognized during the period. The recapture of provision for credit losses - loans for the current quarter and the nine months ended September 30, 2021 primarily reflects improvement in the forecasted economic indicators used to calculate the allowance for credit losses - loans and a decrease in adversely classified loans.

	For the Three Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	53,166	$	3,504	$	36,916	$	33,870	$	4,517	$	12,746	$	11,633	$	—	$	156,352
Provision/(recapture) for credit losses	6,895		(248)		2,561		2,550		1,026		100		757		—		13,641
Recoveries	23		—		—		246		—		94		82		—		445
Charge-offs	(379)		—		—		(1,297)		(492)		(72)		(233)		—		(2,473)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965
	For the Nine Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	30,591	$	4,754	$	22,994	$	23,370	$	4,120	$	4,136	$	8,202	$	2,392	$	100,559
Impact of Adopting ASC 326	(2,864)		(2,204)		2,515		3,010		(351)		7,125		2,973		(2,392)		7,812
Provision/(recapture) for loan losses	32,213		772		13,963		14,402		64		1,470		1,994		—		64,878
Recoveries	244		—		105		821		1,772		273		238		—		3,453
Charge-offs	(479)		(66)		(100)		(6,234)		(554)		(136)		(1,168)		—		(8,737)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965

XML

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

Goodwill and Other Intangible Assets:  At September 30, 2021, intangible assets are comprised of goodwill and CDI acquired in business combinations. Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment. Banner has identified one reporting unit for purposes of evaluating goodwill for impairment. The Company completed an assessment of qualitative factors as of December 31, 2020 and as a result of the economic impact of the COVID-19 pandemic concluded further analysis was required. The Company completed a quantitative goodwill impairment test and concluded the fair value of Banner Bank, the reporting unit, exceeded the carrying value of the reporting unit including goodwill and therefore no impairment existed as of December 31, 2020.

CDI represents the value of transaction-related deposits and the value of the client relationships associated with the deposits. The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value. 

The following table summarizes the changes in the Company’s goodwill and other intangibles for the nine months ended September 30, 2021 and the year ended December 31, 2020 (in thousands):

	Goodwill		CDI		Total
Balance, December 31, 2019	$	373,121	$	29,158	$	402,279
Amortization	—		(7,732)		(7,732)
Balance, December 31, 2020	373,121		21,426		394,547
Amortization	—		(4,997)		(4,997)
Balance, September 30, 2021	$	373,121	$	16,429	$	389,550

The following table presents the estimated amortization expense with respect to CDI as of September 30, 2021 for the periods indicated (in thousands):

	Estimated Amortization
Remainder of 2021	$	1,574
2022	5,317
2023	3,814
2024	2,659
2025	1,575
Thereafter	1,490
	$	16,429

Mortgage Servicing Rights:  Mortgage servicing rights are reported in other assets. Mortgage servicing rights are initially recorded at fair value and are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.  Mortgage servicing rights are subsequently evaluated for impairment based upon the fair value of the rights compared to the amortized cost (remaining unamortized initial fair value).  If the fair value is less than the amortized cost, a valuation allowance is created through an impairment charge, which is recognized in servicing fee income within mortgage banking operations on the Consolidated Statement of Operations.  However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.  During the three and nine months ended September 30, 2021 and 2020, the Company did not record any impairment charges or recoveries against mortgage servicing rights. The unpaid principal balance for loans which mortgage servicing rights have been recorded totaled $2.68 billion and $2.64 billion at September 30, 2021 and December 31, 2020, respectively.  Custodial accounts maintained in connection with this servicing totaled $3.1 million and $3.8 million at September 30, 2021 and December 31, 2020, respectively.

An analysis of our mortgage servicing rights for the three and nine months ended September 30, 2021 and 2020 is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	15,612	$	14,424	$	15,223	$	14,148
Additions—amounts capitalized	1,621		2,426		5,418		6,030
Additions—through purchase	53		40		121		141
Amortization (1)	(1,533)		(2,075)		(5,009)		(5,504)
Balance, end of the period (2)	$	15,753	$	14,815	$	15,753	$	14,815

(1)    Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

(2)    There was no valuation allowance as of both September 30, 2021 and 2020.

XML

REAL ESTATE OWNED, NET

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

REAL ESTATE OWNED, NET

REAL ESTATE OWNED, NET

The following table presents the changes in REO for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	763	$	2,400	$	816	$	814
Additions from loan foreclosures	89		—		512		1,588
Proceeds from dispositions of REO	—		(707)		(783)		(805)
Gain on sale of REO	—		120		307		216
Valuation adjustments in the period	—		(18)		—		(18)
Balance, end of the period	$	852	$	1,795	$	852	$	1,795

REO properties are recorded at the estimated fair value of the property, less expected selling costs, establishing a new cost basis.  Subsequently, REO properties are carried at the lower of the new cost basis or updated fair market values, based on updated appraisals of the underlying properties, as received.  Valuation allowances on the carrying value of REO may be recognized based on updated appraisals or on management’s authorization to reduce the selling price of a property. The Company had no foreclosed one- to four-family residential real estate properties held as REO at both September 30, 2021 and December 31, 2020. The Company had $609,000 of one- to four-family residential loans in the process of foreclosure at both September 30, 2021 and December 31, 2020

XML

DEPOSITS

9 Months Ended

Sep. 30, 2021

Banking and Thrift, Other Disclosures [Abstract]

DEPOSITS

DEPOSITS

Deposits consisted of the following at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Non-interest-bearing accounts	$	6,400,864	$	5,492,924
Interest-bearing checking	1,799,657		1,569,435
Regular savings accounts	2,773,995		2,398,482
Money market accounts	2,339,107		2,191,135
Total interest-bearing transaction and saving accounts	6,912,759		6,159,052
Certificates of deposit:
Certificates of deposit less than or equal to $250,000	663,592		718,256
Certificates of deposit greater than $250,000	187,462		197,064
Total certificates of deposit(1)	851,054		915,320
Total deposits	$	14,164,677	$	12,567,296
Included in total deposits:
Public fund transaction and savings accounts	$	354,821	$	302,875
Public fund interest-bearing certificates	40,851		59,127
Total public deposits	$	395,672	$	362,002

(1)     Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

At September 30, 2021 and December 31, 2020, the Company had certificates of deposit of $191.5 million and $203.6 million, respectively, that were equal to or greater than $250,000.

Scheduled maturities and weighted average interest rates of certificates of deposit at September 30, 2021 are as follows (dollars in thousands):

	September 30, 2021
	Amount		Weighted Average Rate
Maturing in one year or less	$	644,909	0.49	%
Maturing after one year through two years	130,384		0.80
Maturing after two years through three years	52,948		0.78
Maturing after three years through four years	11,044		1.27
Maturing after four years through five years	10,261		0.42
Maturing after five years	1,508		0.88
Total certificates of deposit	$	851,054	0.57	%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE ACCOUNTING AND MEASUREMENT

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, whether or not measured at fair value in the Consolidated Statements of Financial Condition (dollars in thousands):

		September 30, 2021				December 31, 2020
	Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Assets:
Cash and cash equivalents	1	$	2,200,582	$	2,200,582	$	1,234,183	$	1,234,183
Securities—trading	3	26,875		26,875		24,980		24,980
Securities—available-for-sale	2	3,446,575		3,446,575		2,322,593		2,322,593
Securities—held-to-maturity	2	445,499		463,913		410,038		436,882
Securities—held-to-maturity	3	2,313		2,089		11,769		11,799
Securities purchased under agreements to resell	2	300,000		300,000		—		—
Loans held for sale	2	63,678		64,245		243,795		245,667
Loans receivable	3	9,218,384		9,271,840		9,870,982		9,810,293
FHLB stock	3	12,000		12,000		16,358		16,358
Bank-owned life insurance	1	192,950		192,950		191,830		191,830
Mortgage servicing rights	3	15,753		22,814		15,223		18,084
Derivatives:
Interest rate swaps	2	25,627		25,627		39,066		39,066
Interest rate lock and forward sales commitments	2,3	2,309		2,309		5,641		5,641
Liabilities:
Demand, interest checking and money market accounts	2	10,539,628		10,539,628		9,253,494		9,253,494
Regular savings	2	2,773,995		2,773,995		2,398,482		2,398,482
Certificates of deposit	2	851,054		851,780		915,320		919,920
FHLB advances	2	50,000		50,629		150,000		152,779
Other borrowings	2	247,358		247,358		184,785		184,785
Subordinated notes, net	2	98,472		105,875		98,201		98,201
Junior subordinated debentures	3	124,853		124,853		116,974		116,974
Derivatives:
Interest rate swaps	2	15,550		15,550		22,336		22,336
Interest rate lock and forward sales commitments	2	136		136		1,755		1,755

The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). GAAP establishes a consistent framework for measuring fair value and disclosure requirements about fair value measurements. Among other things, the accounting standard requires the reporting entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect market data obtained from independent

sources, while unobservable inputs reflect the Company’s estimates for market assumptions. These two types of inputs create the following fair value hierarchy:

•Level 1 – Quoted prices in active markets for identical instruments. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

•Level 2 – Observable inputs other than Level 1 including quoted prices in active markets for similar instruments, quoted prices in less active markets for identical or similar instruments, or other observable inputs that can be corroborated by observable market data.

•Level 3 – Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs from non-binding single dealer quotes not corroborated by observable market data. In developing Level 3 measurements, management incorporates whatever market data might be available and uses discounted cash flow models where appropriate. These calculations include projections of future cash flows, including appropriate default and loss assumptions, and market-based discount rates

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period.

Items Measured at Fair Value on a Recurring Basis:

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	26,875	$	26,875
Securities—available-for-sale
U.S. Government and agency obligations	—		181,052		—		181,052
Municipal bonds	—		310,391		—		310,391
Corporate bonds	—		164,244		—		164,244
Mortgage-backed or related securities	—		2,584,264		—		2,584,264
Asset-backed securities	—		206,624		—		206,624
	—		3,446,575		—		3,446,575
Loans held for sale	—		41,480		—		41,480
Derivatives
Interest rate swaps	—		25,627		—		25,627
Interest rate lock and forward sales commitments	—		914		1,395		2,309
	$	—	$	3,514,596	$	28,270	$	3,542,866
Liabilities:
Junior subordinated debentures	$	—	$	—	$	124,853	$	124,853
Derivatives
Interest rate swaps	—		15,550		—		15,550
Interest rate lock and forward sales commitments	—		136		—		136
	$	—	$	15,686	$	124,853	$	140,539

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	24,980	$	24,980
Securities—available-for-sale
U.S. Government and agency obligations	—		141,735		—		141,735
Municipal bonds	—		303,518		—		303,518
Corporate bonds	—		221,769		—		221,769
Mortgage-backed securities	—		1,646,152		—		1,646,152
Asset-backed securities	—		9,419		—		9,419
	—		2,322,593		—		2,322,593
Loans held for sale	—		133,554		—		133,554
Derivatives
Interest rate swaps	—		39,066		—		39,066
Interest rate lock and forward sales commitments	—		420		5,221		5,641
	$	—	$	2,495,633	$	30,201	$	2,525,834
Liabilities:
Junior subordinated debentures, net of unamortized deferred issuance costs	$	—	$	—	$	116,974	$	116,974
Derivatives
Interest rate swaps	—		22,336		—		22,336
Interest rate lock and forward sales commitments	—		1,755		—		1,755
	$	—	$	24,091	$	116,974	$	141,065

The following methods were used to estimate the fair value of each class of financial instruments above:

Securities:  The estimated fair values of investment securities and mortgaged-backed securities are priced using current active market quotes, if available, which are considered Level 1 measurements.  For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value.  These measurements are considered Level 2.  Due to the continued limited activity in the trust preferred markets that have limited the observability of market spreads for some of the Company’s TPS securities, management has classified these securities as a Level 3 fair value measure. Management periodically reviews the pricing information received from third-party pricing services and tests those prices against other sources to validate the reported fair values.

Loans Held for Sale: Fair values for residential mortgage loans held for sale are determined by comparing actual loan rates to current secondary market prices for similar loans. Fair values for multifamily loans held for sale are calculated based on discounted cash flows using as a discount rate a combination of market spreads for similar loan types added to selected index rates.

Mortgage Servicing Rights: Fair values are estimated based on an independent dealer analysis of discounted cash flows.  The evaluation utilizes assumptions market participants would use in determining fair value including prepayment speeds, delinquency and foreclosure rates, the discount rate, servicing costs, and the timing of cash flows.  The mortgage servicing portfolio is stratified by loan type and fair value estimates are adjusted up or down based on the serviced loan interest rates versus current rates on new loan originations since the most recent independent analysis.

Junior Subordinated Debentures:  The fair value of junior subordinated debentures is estimated using an income approach technique. The significant inputs included in the estimation of fair value are the credit risk adjusted spread and three month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability. The Company utilizes an external valuation firm to validate the reasonableness of the credit risk adjusted spread used to determine the fair value. The junior subordinated debentures are carried at fair value which represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to inactivity in the trust preferred markets that have limited the observability of market spreads, management has classified this as a Level 3 fair value measure.

Derivatives: Derivatives include interest rate swap agreements, interest rate lock commitments to originate loans held for sale and forward sales contracts to sell loans and securities related to mortgage banking activities. Fair values for these instruments, which generally change as a result of changes in the level of market interest rates, are estimated based on dealer quotes and secondary market sources.

Off-Balance Sheet Items: Off-balance sheet financial instruments include unfunded commitments to extend credit, including standby letters of credit, and commitments to purchase investment securities. The fair value of these instruments is not considered to be material.

Limitations: The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2021 and December 31, 2020.  The factors used in the fair values estimates are subject to change subsequent to the dates the fair value estimates are completed, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3):

The following table provides a description of the valuation technique, unobservable inputs, and qualitative information about the unobservable inputs for certain of the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at September 30, 2021 and December 31, 2020:

			Weighted Average Rate / Range
Financial Instruments	Valuation Techniques	Unobservable Inputs	September 30, 2021		December 31, 2020
Corporate bonds (TPS securities)	Discounted cash flows	Discount rate	3.63	%	4.24	%
Junior subordinated debentures	Discounted cash flows	Discount rate	3.63	%	4.24	%
Loans individually evaluated	Collateral valuations	Discount to appraised value	8.5% to 20.0%		0.0% to 20.0%
REO	Appraisals	Discount to appraised value	60.91	%	51.86	%
Interest rate lock commitments	Pricing model	Pull-through rate	86.43	%	86.35	%

TPS securities: Management believes that the credit risk-adjusted spread used to develop the discount rate utilized in the fair value measurement of TPS securities is indicative of the risk premium a willing market participant would require under current market conditions for instruments with similar contractual rates and terms and conditions and issuers with similar credit risk profiles and with similar expected probability of default. Management attributes the change in fair value of these instruments, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of assets subsequent to their issuance.

Junior subordinated debentures: Similar to the TPS securities discussed above, management believes that the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the risk premium a willing market participant would require under current market conditions for an issuer with Banner’s credit risk profile. Management attributes the change in fair value of the junior subordinated debentures, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of liabilities subsequent to their issuance. Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of September 30, 2021, or the passage of time, will result in negative fair value adjustments. At September 30, 2021, the discount rate utilized was based on a credit spread of 350 basis points and three-month LIBOR of 13 basis points.

Interest rate lock commitments: The fair value of the interest rate lock commitments is based on secondary market sources adjusted for an estimated pull-through rate. The pull-through rate is based on historical loan closing rates for similar interest rate lock commitments. An increase or decrease in the pull-through rate would have a corresponding, positive or negative fair value adjustment.

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2021						September 30, 2021
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	25,097	$	117,520	$	2,574	$	24,980	$	116,974	$	5,221
Total gains or losses recognized
Assets gains (losses)	1,778		—		(1,179)		1,895		—		(3,826)
Liabilities losses	—		7,333		—				7,879		—
Ending balance at September 30, 2021	$	26,875	$	124,853	$	1,395	$	26,875	$	124,853	$	1,395
	Three Months Ended						Nine Months Ended
	September 30, 2020						September 30, 2020
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	23,239	$	109,613	$	5,816	$	25,636	$	119,304	$	791
Total gains or losses recognized
Assets (losses) gains	37		—		2,638		(2,360)		—		7,663
Liabilities gains	—		208		—		—		(9,483)		—
Ending balance at September 30, 2020	$	23,276	$	109,821	$	8,454	$	23,276	$	109,821	$	8,454

Interest income and dividends from the TPS securities are recorded as a component of interest income. Interest expense related to the junior subordinated debentures is measured based on contractual interest rates and reported in interest expense.  The change in fair value of the junior subordinated debentures, which represents changes in instrument specific credit risk, is recorded in other comprehensive income. See Note 13, Derivatives and Hedging, for detail on gains and losses on Level 3 interest rate lock commitments.

Items Measured at Fair Value on a Non-recurring Basis:

The following tables present financial assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,054	$	3,054
REO	—		—		852		852
	December 31, 2020
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,482	$	3,482
REO	—		—		816		816

The following table presents the losses resulting from non-recurring fair value adjustments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Loans individually evaluated	$	—	$	(492)	$	(303)	$	(2,492)
REO	—		—		—		—
Total loss from non-recurring measurements	$	—	$	(492)	$	(303)	$	(2,492)

Loans individually evaluated: Expected credit losses for loans evaluated individually are measured based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or when the Bank determines that foreclosure is probable, the expected credit loss is measured based on the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. As a practical expedient, the Bank measures the expected credit loss for a loan using the fair value of the collateral, if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Bank’s assessment as of the reporting date. In both cases, if the fair value of the collateral is less than the amortized cost basis of the loan, the Bank will recognize an allowance as the difference between the fair value of the collateral, less costs to sell (if applicable) at the reporting date and the amortized cost basis of the loan. If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off by the subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

REO: The Company records REO (acquired through a lending relationship) at fair value on a non-recurring basis. Fair value adjustments on REO are based on updated real estate appraisals which are based on current market conditions. All REO properties are recorded at the lower of the estimated fair value of the real estate, less expected selling costs, or the carrying amount of the defaulted loans. From time to time, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on an observable market price or current appraised value of property. Banner considers any valuation inputs related to REO to be Level 3 inputs. The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

XML

INCOME TAXES AND DEFERRED TAXES

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES AND DEFERRED TAXES

INCOME TAXES AND DEFERRED TAXES

The Company files a consolidated income tax return including all of its wholly-owned subsidiaries on a calendar year basis. Income taxes are accounted for using the asset and liability method. Under this method, a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period of change. A valuation allowance is recognized as a reduction to deferred tax assets when management determines it is more likely than not that deferred tax assets will not be available to offset future income tax liabilities.

Accounting standards for income taxes prescribe a recognition threshold and measurement process for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return, and also provide guidance on the de-recognition of previously recorded benefits and their classification, as well as the proper recording of interest and penalties, accounting in interim periods, disclosures and transition. The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

As of September 30, 2021, the Company has recognized $450,000 of unrecognized tax benefits for uncertain tax positions. The Company does not anticipate that there are additional uncertain tax positions or that any uncertain tax position which has not been recognized would materially affect the effective tax rate if recognized. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in the income tax expense. The Company files consolidated income tax returns in the U.S. federal jurisdiction and in the Oregon, California, Utah, Idaho and Montana state jurisdictions.

Tax credit investments: The Company invests in low income housing tax credit funds that are designed to generate a return primarily through the realization of federal tax credits. The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method and tax credit investment amortization expense is a component of the provision for income taxes.

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Tax credit investments	$	47,783	$	33,528
Unfunded commitments—tax credit investments	22,915		18,306

The following table presents other information related to the Company’s tax credit investments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Tax credits and other tax benefits recognized	$	1,114	$	981	$	3,341	$	2,943
Tax credit amortization expense included in provision for income taxes	915		849		2,745		2,507

XML

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and nine months ended September 30, 2021 and 2020 (in thousands, except shares and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	49,884	$	36,548	$	151,121	$	76,971
Basic weighted average shares outstanding	34,446,510		35,193,109		34,716,914		35,285,567
Dilutive effect of unvested restricted stock	222,982		123,570		295,314		239,204
Diluted weighted shares outstanding	34,669,492		35,316,679		35,012,228		35,524,771
Earnings per common share
Basic	$	1.45	$	1.04	$	4.35	$	2.18
Diluted	$	1.44	$	1.03	$	4.32	$	2.17

XML

STOCK-BASED COMPENSATION PLANS

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION PLANS AND STOCK OPTIONS

STOCK-BASED COMPENSATION PLANS

The Company operates the following stock-based compensation plans as approved by its shareholders:

•2014 Omnibus Incentive Plan (the 2014 Plan).

•2018 Omnibus Incentive Plan (the 2018 Plan).

The purpose of these plans is to promote the success and enhance the value of the Company by providing a means for attracting and retaining highly skilled employees, officers and directors of Banner Corporation and its affiliates and linking their personal interests with those of the Company’s shareholders. Under these plans the Company currently has outstanding restricted stock share grants and restricted stock unit grants.

2014 Omnibus Incentive Plan

The 2014 Plan was approved by shareholders on April 22, 2014. The 2014 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards and other cash awards, and provides for vesting requirements which may include time-based or performance-based conditions. The Company reserved 900,000 shares of its common stock for issuance under the 2014 Plan in connection with the exercise of awards. As of September 30, 2021, 302,167 restricted stock shares and 406,689 restricted stock units have been granted under the 2014 Plan of which 2,152 restricted stock shares and 113,906 restricted stock units are unvested.

2018 Omnibus Incentive Plan

The 2018 Plan was approved by shareholders on April 24, 2018. The 2018 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards and other cash awards, and provides for vesting requirements which may include time-based or performance-based conditions. The Company reserved 900,000 shares of common stock for issuance under the 2018 Plan in connection with the exercise of awards. As of

September 30, 2021, 481,361 restricted stock units have been granted under the 2018 Plan of which 394,416 restricted stock units are unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $2.4 million and $7.0 million for the three and nine month periods ended September 30, 2021 and was $2.5 million and $6.9 million for the three and nine month periods ended September 30, 2020, respectively. Unrecognized compensation expense for these awards as of September 30, 2021 was $13.3 million and will be amortized over the next 31 months.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk — The Company has financial instruments with off-balance-sheet risk generated in the normal course of business to meet the financing needs of our clients.  These financial instruments include commitments to extend credit, commitments related to standby letters of credit, commitments to originate loans, commitments to sell loans, commitments to buy and sell securities.  These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved in on-balance-sheet items recognized in our Consolidated Statements of Financial Condition.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument from commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.  We use the same credit policies in making commitments and conditional obligations as for on-balance-sheet instruments.

Outstanding commitments for which no asset or liability for the notional amount has been recorded consisted of the following at the dates indicated (in thousands):

	Contract or Notional Amount
	September 30, 2021		December 31, 2020
Commitments to extend credit	$	3,443,004	$	3,207,072
Standby letters of credit and financial guarantees	20,987		18,415
Commitments to originate loans	106,989		101,426
Risk participation agreement	40,325		40,949
Derivatives also included in Note 13:
Commitments to originate loans held for sale	139,578		169,653
Commitments to sell loans secured by one- to four-family residential properties	55,641		79,414
Commitments to sell securities related to mortgage banking activities	142,500		204,000

In addition to the commitments disclosed in the table above, the Company is committed to funding its’ unfunded tax credit investments (see Note 9, Income Taxes). During 2019, the Company entered into an agreement to invest $10 million in a limited partnership. The Company had funded $5.5 million of the commitment, with $4.5 million of the commitment remaining to be funded at September 30, 2021, compared to $2.8 million of the commitment funded, with $7.2 million to be funded at December 31, 2020. During the first quarter of 2021, the Company entered into an agreement to invest $4.5 million in another limited partnership. At September 30, 2021 the Company had funded $555,000 of the commitment, with $3.9 million of the commitment remaining to be funded. During the third quarter of 2021, the Company entered into an agreement to invest $3.0 million in an additional limited partnership. At September 30, 2021 the Company had funded $900,000 of the commitment with $2.1 million of the commitment remaining to be funded.

Commitments to extend credit are agreements to lend to a client, as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of the commitments may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. Each client’s creditworthiness is evaluated on a case-by-case basis.  The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the client. The type of collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties. The Company’s allowance for credit losses - unfunded loan commitments at September 30, 2021 and December 31, 2020 was $10.1 million and $13.3 million, respectively.

Standby letters of credit are conditional commitments issued to guarantee a client’s performance or payment to a third party.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients. Banner Bank has a risk participation agreement under which Banner Bank guarantees the financial performance of a borrower on the participated portion of an interest rate swap on a loan.

Interest rates on residential one- to four-family mortgage loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days. Traditionally, these loan applications with rate lock commitments had the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client. Banner Bank then attempts to deliver these loans before their rate locks expired. This arrangement generally required delivery of the loans prior to the expiration of the rate lock. Delays in funding the loans would require a lock extension. The cost of a lock extension at times was borne by the client and at times by Banner Bank. These lock extension costs have

not had a material impact to the Company’s operations. For mandatory delivery commitments the Company enters into forward commitments at specific prices and settlement dates to deliver either: (1) residential mortgage loans for purchase by secondary market investors (i.e., Freddie Mac or Fannie Mae), or (2) mortgage-backed securities to broker/dealers. The purpose of these forward commitments is to offset the movement in interest rates between the execution of its residential mortgage rate lock commitments with borrowers and the sale of those loans to the secondary market investor. There were no counterparty default losses on forward contracts during the three and nine months ended September 30, 2021 or September 30, 2020. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Company limits its exposure to market risk by monitoring differences between commitments to clients and forward contracts with market investors and securities broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the transaction is completed by either paying or receiving a fee to or from the investor or broker/dealer equal to the increase or decrease in the market value of the forward contract.

In the normal course of business, the Company and/or its subsidiaries have various legal proceedings and other contingent matters outstanding.  These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable.  These claims and counter-claims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest.  Based upon the information known to management at this time, the Company and the Bank are not a party to any legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at September 30, 2021.

In connection with certain asset sales, the Bank typically makes representations and warranties about the underlying assets conforming to specified guidelines.  If the underlying assets do not conform to the specifications, the Bank may have an obligation to repurchase the assets or indemnify the purchaser against any loss.  The Bank believes that the potential for material loss under these arrangements is remote.  Accordingly, the fair value of such obligations is not material.

XML

DERIVATIVES AND HEDGING

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING

DERIVATIVES AND HEDGING

The Company, through its Banner Bank subsidiary, is party to various derivative instruments that are used for asset and liability management and client financing needs. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require no net investment and allow for the net settlement of positions. The notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. The underlying variable represents a specified interest rate, index, or other component. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the market value of the derivative contract. The Company obtains dealer quotations to value its derivative contracts.

The Company’s predominant derivative and hedging activities involve interest rate swaps related to certain term loans and forward sales contracts associated with mortgage banking activities. Generally, these instruments help the Company manage exposure to market risk and meet client financing needs. Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors.

Derivatives Designated in Hedge Relationships

The Company’s fixed-rate loans result in exposure to losses in value or net interest income as interest rates change. The risk management objective for hedging fixed-rate loans is to effectively convert the fixed-rate received to a floating rate. The Company has hedged exposure to changes in the fair value of certain fixed-rate loans through the use of interest rate swaps. For a qualifying fair value hedge, changes in the value of the derivatives are recognized in current period earnings along with the corresponding changes in the fair value of the designated hedged item attributable to the risk being hedged.

Under a prior program, clients received fixed interest rate commercial loans and Banner Bank subsequently hedged that fixed-rate loan by entering into an interest rate swap with a dealer counterparty. Banner Bank receives fixed-rate payments from the clients on the loans and makes similar fixed-rate payments to the dealer counterparty on the swaps in exchange for variable-rate payments based on the one-month LIBOR index. Some of these interest rate swaps are designated as fair value hedges. Through application of the “short cut method of accounting,” there is an assumption that the hedges are effective. Banner Bank discontinued originating interest rate swaps under this program in 2008.

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	63	$	1	$	338	$	9	$	63	$	1	$	338	$	9

(1)    Included in Loans receivable on the Consolidated Statements of Financial Condition.

(2)    Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Derivatives Not Designated in Hedge Relationships

Interest Rate Swaps: Banner Bank uses an interest rate swap program for commercial loan clients that provides the client with a variable-rate loan and enters into an interest rate swap in which the client receives a variable-rate payment in exchange for a fixed-rate payment. The Bank offsets its risk exposure by entering into an offsetting interest rate swap with a dealer counterparty for the same notional amount and length of term as the client interest rate swap providing the dealer counterparty with a fixed-rate payment in exchange for a variable-rate payment. These swaps do not qualify as designated hedges; therefore, each swap is accounted for as a free standing derivative.

Mortgage Banking: The Company sells originated one- to four-family mortgage loans into the secondary mortgage loan markets. During the period of loan origination and prior to the sale of the loans in the secondary market, the Company has exposure to movements in interest rates associated with written interest rate lock commitments with potential borrowers to originate one- to four-family loans that are intended to be sold and for closed one- to four-family mortgage loans held for sale, for which fair value accounting has been elected, that are awaiting sale and delivery into the secondary market. The Company economically hedges the risk of changing interest rates associated with these mortgage loan commitments by entering into forward sales contracts to sell one- to four-family mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates.

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives not designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	481,637	$	25,626	$	451,760	$	39,057	$	481,637	$	15,549	$	451,760	$	22,327
Mortgage loan commitments	109,986		1,395		140,390		5,221		50,496		49		72,511		199
Forward sales contracts	174,141		914		79,414		420		24,000		87		204,000		1,556
	$	765,764	$	27,935	$	671,564	$	44,698	$	556,133	$	15,685	$	728,271	$	24,082

(1)Included in Other assets on the Consolidated Statements of Financial Condition, with the exception of certain interest swaps and mortgage loan commitments (with a fair value of $177,000 at September 30, 2021 and $231,000 at December 31, 2020), which are included in Loans receivable.

(2)Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Gains (losses) recognized in income on derivatives not designated in hedge relationships for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Location on Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Mortgage loan commitments	Mortgage banking operations	$	(1,179)	$	2,639	$	(3,826)	$	7,664
Forward sales contracts	Mortgage banking operations	865		258		2,004		(779)
		$	(314)	$	2,897	$	(1,822)	$	6,885

The Company is exposed to credit-related losses in the event of nonperformance by the counterparty to these agreements. Credit risk of the financial contract is controlled through the credit approval, limits, and monitoring procedures and management does not expect the counterparties to fail their obligations.

In connection with the interest rate swaps between Banner Bank and the dealer counterparties, the agreements contain a provision where if Banner Bank fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and Banner Bank would be required to settle its obligations. Similarly, Banner Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required Banner Bank to maintain a specific capital level. If Banner Bank had breached any of these provisions at September 30, 2021 or December 31, 2020, it could have been required to settle its obligations under the agreements at the termination value. As of September 30, 2021 and December 31, 2020, the termination value of derivatives in a net liability position related to these agreements was $29.2 million and $48.6 million, respectively. The Company generally posts collateral against derivative liabilities in

the form of cash, government agency-issued bonds, mortgage-backed securities, or commercial mortgage-backed securities. Collateral posted against derivative liabilities was $50.8 million and $47.1 million as of September 30, 2021 and December 31, 2020, respectively.

Derivative assets and liabilities are recorded at fair value on the balance sheet. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis and to offset net derivative positions with related collateral where applicable. In addition, some of interest rate swap derivatives between Banner Bank and the dealer counterparties are cleared through central clearing houses. These clearing houses characterize the variation margin payments as settlements of the derivative’s market exposure and not as collateral. The variation margin is treated as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative liability. As of September 30, 2021 and December 31, 2020, the variation margin adjustment was a negative adjustment of $10.3 million and $16.9 million, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
Derivative liabilities
Interest rate swaps	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	December 31, 2020
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
Derivative liabilities
Interest rate swaps	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116
	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

REVENUE FROM CONTRACTS WITH CLIENTS

Disaggregation of Revenue:

Deposit fees and other service charges for the three and nine months ended September 30, 2021 and 2020 are summarized as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Deposit service charges	$	5,128	$	3,904	$	13,735	$	12,269
Debit and credit card interchange fees	6,032		5,207		17,265		14,762
Debit and credit card expense	(2,655)		(2,134)		(7,819)		(6,272)
Merchant services income	4,239		3,584		11,136		9,252
Merchant services expense	(3,439)		(2,839)		(8,964)		(7,378)
Other service charges	1,152		1,020		3,801		3,458
Total deposit fees and other service charges	$	10,457	$	8,742	$	29,154	$	26,091

Deposit fees and other service charges

Deposit fees and other service charges include transaction and non-transaction based deposit fees. Transaction based fees on deposit accounts are charged to deposit clients for specific services provided to the client. These fees include such items as wire fees, official check fees, and overdraft fees. These are contract specific to each individual transaction and do not extend beyond the individual transaction. The performance obligation is completed and the fees are recognized at the time the specific transactional service is provided to the client. Non-transactional deposit fees are typically monthly account maintenance fees charged on deposit accounts. These are day-to-day contracts that can be canceled by either party without notice. The performance obligation is satisfied and the fees are recognized on a monthly basis after the service period is completed.

Debit and credit card interchange income and expenses

Debit and credit card interchange income represent fees earned when a debit or credit card issued by the Bank is used to purchase goods or services at a merchant. The merchant’s bank pays the Bank a default interchange rate set by MasterCard on a transaction by transaction basis. The merchant acquiring bank can stop accepting the Bank’s cards at any time and the Bank can stop further use of cards issued by them at any time. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the Bank’s cardholders’ card. Direct expenses associated with the credit and debit card are recorded as a net reduction against the interchange income.

Merchant services income

Merchant services income represents fees earned by the Bank for card payment services provided to its merchant clients. The Bank has a contract with a third party to provide card payment services to the Bank’s merchants that contract for those services. The third party provider has contracts with the Bank’s merchants to provide the card payment services. The Bank does not have a direct contractual relationship with its merchants for these services. The Bank sets the rates for the services provided by the third party. The third party provider passes the payments made by the Bank’s merchants through to the Bank. The Bank, in turn, pays the third party provider for the services it provides to the Bank’s merchants. These payments to the third party provider are recorded as expenses as a net reduction against fee income. In addition, a portion of the payment received by the Bank represents interchange fees which are passed through to the card issuing bank. Income is primarily earned based on the dollar volume and number of transactions processed. The performance obligation is satisfied and the related fee is earned when each payment is accepted by the processing network.

XML

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting

The accompanying unaudited condensed consolidated financial statements include the accounts of Banner Corporation (the Company or Banner), a bank holding company incorporated in the State of Washington and its wholly-owned subsidiary, Banner Bank (the Bank).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC). In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2021 for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. Certain reclassifications have been made to the 2020 Consolidated Financial Statements and/or schedules to conform to the 2021 presentation. Prior to the first quarter of 2021, the (recapture) provision for credit losses - unfunded loan commitment was recorded as non-interest expense. Beginning in the first quarter of 2021 the (recapture) provision for credit losses - unfunded loan commitment is recorded as a component of the provision for credit losses. These reclassifications may have affected certain ratios for the prior periods. The effect of these reclassifications is considered immaterial. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are significant to an understanding of Banner’s financial statements. These policies relate to (i) the methodology for the recognition of interest income, (ii) determination of the provision and allowance for credit losses, (iii) the valuation of financial assets and liabilities recorded at fair value (iv) the valuation of intangibles, such as goodwill, core deposit intangibles (CDI) and mortgage servicing rights, (v) the valuation of real estate held for sale, (vi) the valuation of assets acquired and liabilities assumed in business combinations and subsequent recognition of related income and expense, and (vii) the valuation or recognition of deferred tax assets and liabilities. These policies and judgments, estimates and assumptions are described in greater detail in subsequent notes to the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC (2020 Form 10-K).  There have been no significant changes in our application of these accounting policies during the first nine months of 2021.

The information included in this Form 10-Q should be read in conjunction with our 2020 Form 10-K.  Interim results are not necessarily indicative of results for a full year or any other interim period.

XML

SECURITIES (Tables)

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of Securities

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2021 and December 31, 2020 are summarized as follows (in thousands):

	September 30, 2021
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	26,875
	$	27,203	$	26,875

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	180,585	$	1,067	$	(600)	$	—	$	181,052
Municipal bonds	296,784		14,395		(788)		—		310,391
Corporate bonds	160,404		3,903		(63)		—		164,244
Mortgage-backed or related securities	2,599,229		25,918		(40,883)		—		2,584,264
Asset-backed securities	206,514		110		—		—		206,624
	$	3,443,516	$	45,393	$	(42,334)	$	—	$	3,446,575

	September 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	317	$	6	$	—	$	323	$	—
Municipal bonds	391,583		18,716		(2,188)		408,111		(63)
Corporate bonds	3,124		—		(2)		3,122		(41)
Mortgage-backed or related securities	52,788		1,668		(10)		54,446		—
	$	447,812	$	20,390	$	(2,200)	$	466,002	$	(104)

	December 31, 2020
	Amortized Cost		Fair Value
Trading:
Corporate bonds	$	27,203	$	24,980
	$	27,203	$	24,980

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	141,668	$	1,002	$	(935)	$	—	$	141,735
Municipal bonds	283,997		19,523		(2)		—		303,518
Corporate bonds	219,086		2,762		(79)		—		221,769
Mortgage-backed or related securities	1,602,033		45,179		(1,060)		—		1,646,152
Asset-backed securities	9,405		77		(63)		—		9,419
	$	2,256,189	$	68,543	$	(2,139)	$	—	$	2,322,593

	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	340	$	7	$	—	$	347	$	—
Municipal bonds	370,998		24,130		(94)		395,034		(59)
Corporate bonds	3,222		—		(12)		3,210		(35)
Mortgage-backed or related securities	47,247		2,843		—		50,090		—
	$	421,807	$	26,980	$	(106)	$	448,681	$	(94)

Schedule of Securities with Continuous Loss Position

At September 30, 2021 and December 31, 2020, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

	September 30, 2021
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	40,115	$	(39)	$	33,447	$	(561)	$	73,562	$	(600)
Municipal bonds	60,522		(788)		—		—		60,522		(788)
Corporate bonds	7,937		(63)		—		—		7,937		(63)
Mortgage-backed or related securities	1,503,114		(39,701)		54,570		(1,182)		1,557,684		(40,883)
	$	1,611,688	$	(40,591)	$	88,017	$	(1,743)	$	1,699,705	$	(42,334)

	December 31, 2020
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	3,126	$	(8)	$	50,603	$	(927)	$	53,729	$	(935)
Municipal bonds	495		(2)		—		—		495		(2)
Corporate bonds	3,586		(79)		—		—		3,586		(79)
Mortgage-backed or related securities	181,871		(1,046)		2,337		(14)		184,208		(1,060)
Asset-backed securities	—		—		5,676		(63)		5,676		(63)
	$	189,078	$	(1,135)	$	58,616	$	(1,004)	$	247,694	$	(2,139)

Schedule of Realized Gain (Loss)

The following table presents gross gains and losses on sales of securities available-for-sale (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Available-for-Sale:
Gross Gains	$	140	$	557	$	766	$	729
Gross Losses	(22)		(432)		(132)		(433)
Balance, end of the period	$	118	$	125	$	634	$	296

Schedule of Securities by Contractual Maturity Date

The amortized cost and estimated fair value of securities at September 30, 2021, by contractual maturity, are shown below (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2021
	Trading				Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing in one year or less	$	—	$	—	$	59,150	$	59,360	$	5,444	$	5,471
Maturing after one year through five years	—		—		173,666		181,152		59,705		62,039
Maturing after five years through ten years	—		—		845,638		847,708		21,961		23,312
Maturing after ten years through twenty years	27,203		26,875		502,832		514,271		164,303		168,315
Maturing after twenty years	—		—		1,862,230		1,844,084		196,399		206,865
	$	27,203	$	26,875	$	3,443,516	$	3,446,575	$	447,812	$	466,002

Schedule of Pledged Securities

The following table presents, as of September 30, 2021, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

	September 30, 2021
	Carrying Value		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	202,085	$	201,456	$	213,687
Interest rate swap counterparties	27,275		26,642		27,402
Repurchase agreements	278,087		285,068		278,087
Other	2,549		2,549		2,597
Total pledged securities	$	509,996	$	515,715	$	521,773

Debt Instrument, Credit Rating

The Company monitors the credit quality of held-to-maturity debt securities through the use of credit rating. Credit ratings are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The balance is local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following table summarizes the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	375,865	$	500	$	—	$	376,365
Not Rated	317		15,718		2,624		52,788		71,447
	$	317	$	391,583	$	3,124	$	52,788	$	447,812

	December 31, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	349,123	$	500	$	—	$	349,623
Not Rated	340		21,875		2,722		47,247		72,184
	$	340	$	370,998	$	3,222	$	47,247	$	421,807

Debt Securities, Held-to-maturity, Allowance for Credit Loss

The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities by major type for the three and nine months ended September 30, 2021 and September 30, 2020 (in thousands):

	For the Three Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	64	$	46	$	—	$	110
Recapture of provision for credit losses	—		(1)		(5)		—		(6)
Ending Balance	$	—	$	63	$	41	$	—	$	104
	For the Nine Months Ended September 30, 2021
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	59	$	35	$	—	$	94
Provision for credit losses	—		4		6		—		10
Ending Balance	$	—	$	63	$	41	$	—	$	104

	For the Three Months Ended September 30, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	61	$	41	$	—	$	102
Impact of adopting ASC 326	—		—		—		—		—
(Recapture)/provision for credit losses	—		(1)		1		—		—
Ending Balance	$	—	$	60	$	42	$	—	$	102
	For the Nine Months Ended September 30, 2020
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
Allowance for credit losses – securities
Beginning Balance	$	—	$	—	$	—	$	—	$	—
Impact of adopting ASC 326	—		28		35		—		63
Provision for credit losses	—		32		7		—		39
Ending Balance	$	—	$	60	$	42	$	—	$	102

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2021

Sep. 30, 2021

Receivables [Abstract]

Schedule of Loans Receivable, Including Loans Held for Sale

at September 30, 2021 and December 31, 2020 by class (dollars in thousands).

	September 30, 2021				December 31, 2020
	Amount		Percent of Total		Amount		Percent of Total
Commercial real estate:
Owner-occupied	$	1,122,275	12.2	%	$	1,076,467	10.9	%
Investment properties	1,980,284		21.5		1,955,684		19.8
Small balance CRE	601,751		6.5		573,849		5.8
Multifamily real estate	532,760		5.8		428,223		4.4
Construction, land and land development:
Commercial construction	170,205		1.8		228,937		2.3
Multifamily construction	278,184		3.0		305,527		3.1
One- to four-family construction	571,431		6.2		507,810		5.1
Land and land development	308,164		3.4		248,915		2.5
Commercial business:
Commercial business (1)	1,346,707		14.6		2,178,461		22.1
Small business scored	775,554		8.4		743,451		7.5
Agricultural business, including secured by farmland (2)	287,469		3.1		299,949		3.0
One- to four-family residential	682,368		7.4		717,939		7.3
Consumer:
Consumer—home equity revolving lines of credit	462,819		5.0		491,812		5.0
Consumer—other	98,413		1.1		113,958		1.2
Total loans	9,218,384		100.0	%	9,870,982		100.0	%
Less allowance for credit losses – loans	(139,915)				(167,279)
Net loans	$	9,078,469			$	9,703,703

(1)    Includes $307.0 million and $1.04 billion of U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) loans as of September 30, 2021 and December 31, 2020, respectively.

(2)    Includes $3.2 million of SBA PPP loans as of September 30, 2021 and none as of December 31, 2020.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $12.2 million as of September 30, 2021 and $25.6 million as of December 31, 2020. Net loans include net discounts on acquired loans of $11.5 million and $16.1 million as of September 30, 2021 and December 31, 2020, respectively.

Schedule of Troubled Debt Restructurings

The following table presents new TDRs that occurred during the three and nine months ended September 30, 2020 (dollars in thousands):

	Three Months Ended September 30, 2020					Nine months ended September 30, 2020
	Number of Contracts	Pre-modification Outstanding Recorded Investment		Post-modification Outstanding Recorded Investment		Number of Contracts	Pre- modification Outstanding Recorded Investment		Post- modification Outstanding Recorded Investment
Recorded Investment
Commercial business:
Commercial business	—	—		—		2	4,796		4,796
Total	—	$	—	$	—	2	$	4,796	$	4,796

Schedule of Risk-Rated Loans and Non-Risk Rated Loans by Grade and Other Characteristics

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	202,187	$	227,782	$	154,951	$	126,339	$	92,197	$	232,653	$	11,457	$	1,047,566
Special Mention	12,309		—		2,201		—		2,147		3,384		—		20,041
Substandard	1,968		—		13,770		—		3,058		35,872		—		54,668
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	216,464	$	227,782	$	170,922	$	126,339	$	97,402	$	271,909	$	11,457	$	1,122,275
Commercial real estate - investment properties
Risk Rating
Pass	$	286,605	$	227,093	$	266,240	$	246,056	$	227,915	$	612,438	$	19,726	$	1,886,073
Special Mention	—		—		—		4,167		—		—		—		4,167
Substandard	2,162		9,651		5,292		17,197		10,368		45,374		—		90,044
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	288,767	$	236,744	$	271,532	$	267,420	$	238,283	$	657,812	$	19,726	$	1,980,284
Multifamily real estate
Risk Rating
Pass	$	134,404	$	79,418	$	71,346	$	37,285	$	92,151	$	109,993	$	2,517	$	527,114
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		2,312		1,420		—		—		1,914		—		5,646
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	134,404	$	81,730	$	72,766	$	37,285	$	92,151	$	111,907	$	2,517	$	532,760

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Commercial construction
Risk Rating
Pass	$	48,100	$	52,593	$	24,682	$	31,084	$	—	$	521	$	—	$	156,980
Special Mention	—		—		—		—		—		—		—		—
Substandard	4,272		—		4,035		4,820		—		98		—		13,225
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	52,372	$	52,593	$	28,717	$	35,904	$	—	$	619	$	—	$	170,205
Multifamily construction
Risk Rating
Pass	$	59,818	$	112,147	$	86,493	$	14,840	$	—	$	—	$	—	$	273,298
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		4,886		—		—		—		—		—		4,886
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	59,818	$	117,033	$	86,493	$	14,840	$	—	$	—	$	—	$	278,184
One- to four- family construction
Risk Rating
Pass	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	466,258	$	103,197	$	331	$	—	$	—	$	85	$	1,560	$	571,431

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Land and land development
Risk Rating
Pass	$	149,447	$	112,761	$	18,967	$	9,189	$	4,218	$	8,174	$	2,118	$	304,874
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,874		14		267		—		—		135		—		3,290
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	152,321	$	112,775	$	19,234	$	9,189	$	4,218	$	8,309	$	2,118	$	308,164
Commercial business
Risk Rating
Pass	$	348,123	$	274,487	$	197,462	$	127,281	$	48,760	$	83,084	$	231,186	$	1,310,383
Special Mention	68		86		271		—		690		11		10,667		11,793
Substandard	2,277		2,422		1,090		10,019		3,318		892		4,513		24,531
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	350,468	$	276,995	$	198,823	$	137,300	$	52,768	$	83,987	$	246,366	$	1,346,707
Agricultural business including secured by farmland
Risk Rating
Pass	$	26,643	$	27,645	$	51,961	$	28,073	$	15,698	$	37,116	$	93,390	$	280,526
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		446		2,206		510		144		1,891		1,746		6,943
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	26,643	$	28,091	$	54,167	$	28,583	$	15,842	$	39,007	$	95,136	$	287,469

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial real estate - owner occupied
Risk Rating
Pass	$	243,100	$	156,838	$	156,817	$	122,484	$	92,312	$	212,792	$	3,379	$	987,722
Special Mention	—		4,560		—		2,251		—		1,869		149		8,829
Substandard	7,923		26,914		3,040		2,516		11,731		27,792		—		79,916
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	251,023	$	188,312	$	159,857	$	127,251	$	104,043	$	242,453	$	3,528	$	1,076,467
Commercial real estate - investment properties
Risk Rating
Pass	$	237,553	$	262,543	$	299,452	$	218,018	$	278,348	$	502,914	$	20,062	$	1,818,890
Special Mention	—		2,712		—		—		2,730		1,856		—		7,298
Substandard	19,812		11,418		20,352		36,310		23,027		18,577		—		129,496
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	257,365	$	276,673	$	319,804	$	254,328	$	304,105	$	523,347	$	20,062	$	1,955,684
Multifamily real estate
Risk Rating
Pass	$	78,632	$	69,825	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	424,483
Special Mention	—		—		—		—		—		—		—		—
Substandard	2,312		1,428		—		—		—		—		—		3,740
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	80,944	$	71,253	$	39,343	$	93,442	$	44,395	$	96,863	$	1,983	$	428,223

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Commercial construction
Risk Rating
Pass	$	83,506	$	67,152	$	41,299	$	6,038	$	2,158	$	1,129	$	—	$	201,282
Special Mention	—		5,963		—		—		—		—		—		5,963
Substandard	12,913		3,808		4,873		—		98		—		—		21,692
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	96,419	$	76,923	$	46,172	$	6,038	$	2,256	$	1,129	$	—	$	228,937
Multifamily construction
Risk Rating
Pass	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	79,710	$	151,141	$	59,744	$	14,932	$	—	$	—	$	—	$	305,527
One- to four- family construction
Risk Rating
Pass	$	461,294	$	35,910	$	—	$	—	$	—	$	—	$	7,581	$	504,785
Special Mention	1,563		—		—		—		—		—		630		2,193
Substandard	501		331		—		—		—		—		—		832
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	463,358	$	36,241	$	—	$	—	$	—	$	—	$	8,211	$	507,810

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Land and land development
Risk Rating
Pass	$	156,450	$	37,397	$	16,560	$	6,801	$	6,264	$	4,840	$	17,020	$	245,332
Special Mention	—		—		—		—		—		—		—		—
Substandard	14		30		3,047		190		—		302		—		3,583
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	156,464	$	37,427	$	19,607	$	6,991	$	6,264	$	5,142	$	17,020	$	248,915
Commercial business
Risk Rating
Pass	$	1,243,276	$	230,845	$	203,051	$	65,524	$	38,757	$	66,206	$	264,741	$	2,112,400
Special Mention	103		412		—		829		—		115		9,507		10,966
Substandard	6,624		14,413		18,569		5,224		1,320		453		8,492		55,095
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	1,250,003	$	245,670	$	221,620	$	71,577	$	40,077	$	66,774	$	282,740	$	2,178,461
Agricultural business including secured by farmland
Risk Rating
Pass	$	32,032	$	62,058	$	31,381	$	22,635	$	22,394	$	24,950	$	91,660	$	287,110
Special Mention	—		—		—		810		—		537		—		1,347
Substandard	1,542		2,652		1,076		163		675		3,049		2,335		11,492
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business including secured by farmland	$	33,574	$	64,710	$	32,457	$	23,608	$	23,069	$	28,536	$	93,995	$	299,949

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Small balance CRE
Past Due Category
Current	$	48,385	$	80,778	$	74,482	$	85,597	$	73,371	$	238,549	$	544	$	601,706
30-59 Days Past Due	—		—		—		—		—		2		—		2
60-89 Days Past Due	43		—		—		—		—		—		—		43
90 Days + Past Due	—		—		—		—		—		—		—		—
Total small balance CRE	$	48,428	$	80,778	$	74,482	$	85,597	$	73,371	$	238,551	$	544	$	601,751
Small business scored
Past Due Category
Current	$	176,262	$	134,418	$	119,587	$	92,657	$	63,168	$	79,568	$	108,154	$	773,814
30-59 Days Past Due	—		132		10		128		14		50		172		506
60-89 Days Past Due	—		—		—		142		26		—		160		328
90 Days + Past Due	—		8		139		120		335		243		61		906
Total small business scored	$	176,262	$	134,558	$	119,736	$	93,047	$	63,543	$	79,861	$	108,547	$	775,554
One- to four- family residential
Past Due Category
Current	$	157,577	$	109,535	$	65,469	$	58,832	$	64,017	$	223,601	$	1,751	$	680,782
30-59 Days Past Due	—		—		—		—		—		107		—		107
60-89 Days Past Due	—		—		—		—		—		109		—		109
90 Days + Past Due	—		276		—		169		—		925		—		1,370
Total One- to four- family residential	$	157,577	$	109,811	$	65,469	$	59,001	$	64,017	$	224,742	$	1,751	$	682,368

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	7,044	$	1,125	$	1,711	$	1,772	$	2,089	$	3,007	$	444,348	$	461,096
30-59 Days Past Due	—		65		110		—		100		385		180		840
60-89 Days Past Due	—		—		—		—		71		91		2		164
90 Days + Past Due	—		—		197		193		108		31		190		719
Total Consumer—home equity revolving lines of credit	$	7,044	$	1,190	$	2,018	$	1,965	$	2,368	$	3,514	$	444,720	$	462,819
Consumer-other
Past Due Category
Current	$	13,921	$	15,239	$	9,426	$	9,524	$	6,917	$	18,640	$	24,394	$	98,061
30-59 Days Past Due	5		118		17		79		20		26		49		314
60-89 Days Past Due	1		—		—		3		7		6		17		34
90 Days + Past Due	—		4		—		—		—		—		—		4
Total Consumer-other	$	13,927	$	15,361	$	9,443	$	9,606	$	6,944	$	18,672	$	24,460	$	98,413

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Small balance CRE
Past Due Category
Current	$	56,544	$	80,090	$	84,749	$	77,637	$	68,791	$	202,653	$	2,550	$	573,014
30-59 Days Past Due	—		—		—		—		—		—		—		—
60-89 Days Past Due	—		—		—		45		—		—		—		45
90 Days + Past Due	—		—		—		567		—		223		—		790
Total small balance CRE	$	56,544	$	80,090	$	84,749	$	78,249	$	68,791	$	202,876	$	2,550	$	573,849
Small business scored
Past Due Category
Current	$	157,161	$	145,037	$	126,578	$	89,734	$	47,909	$	63,347	$	109,287	$	739,053
30-59 Days Past Due	129		62		310		723		4		1		230		1,459
60-89 Days Past Due	98		147		3		140		—		352		151		891
90 Days + Past Due	73		228		800		484		169		248		46		2,048
Total small business scored	$	157,461	$	145,474	$	127,691	$	91,081	$	48,082	$	63,948	$	109,714	$	743,451
One- to four- family residential
Past Due Category
Current	$	105,411	$	90,425	$	92,232	$	101,491	$	60,738	$	254,850	$	3,164	$	708,311
30-59 Days Past Due	1,051		—		1,302		829		—		1,438		—		4,620
60-89 Days Past Due	—		—		19		—		—		936		—		955
90 Days + Past Due	—		114		1,185		456		169		2,129		—		4,053
Total One- to four- family residential	$	106,462	$	90,539	$	94,738	$	102,776	$	60,907	$	259,353	$	3,164	$	717,939

	December 31, 2020
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2020		2019		2018		2017		2016		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	10,522	$	2,617	$	2,553	$	3,359	$	1,372	$	2,154	$	466,490	$	489,067
30-59 Days Past Due	—		—		—		—		—		50		409		459
60-89 Days Past Due	—		202		—		—		—		237		—		439
90 Days + Past Due	—		312		198		564		286		255		232		1,847
Total Consumer—home equity revolving lines of credit	$	10,522	$	3,131	$	2,751	$	3,923	$	1,658	$	2,696	$	467,131	$	491,812
Consumer-other
Past Due Category
Current	$	21,811	$	13,377	$	13,936	$	11,433	$	8,575	$	18,802	$	25,460	$	113,394
30-59 Days Past Due	48		35		15		22		46		26		44		236
60-89 Days Past Due	242		—		—		33		21		14		18		328
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Consumer-other	$	22,101	$	13,412	$	13,951	$	11,488	$	8,642	$	18,842	$	25,522	$	113,958

Loans, Collateral Dependent [Table Text Block]

The following tables provide the amortized cost basis of collateral-dependent loans as of September 30, 2021 and December 31, 2020 (in thousands). Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.

	September 30, 2021
	Real Estate		Accounts Receivable		Equipment		Total
Commercial real estate:
Owner-occupied	$	3,949	$	—	$	—	$	3,949
Investment properties	7,468		—		—		7,468
Small balance CRE	2,452		—		—		2,452
Commercial business
Commercial business	107		659		56		822
Small business scored	41		—		44		85
Agricultural business, including secured by farmland	427		—		594		1,021
Total	$	14,444	$	659	$	694	$	15,797

Schedule of Age Analysis of the Company's Past Due Loans

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2021 and December 31, 2020 (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Small balance CRE
Past Due Category
Current	$	48,385	$	80,778	$	74,482	$	85,597	$	73,371	$	238,549	$	544	$	601,706
30-59 Days Past Due	—		—		—		—		—		2		—		2
60-89 Days Past Due	43		—		—		—		—		—		—		43
90 Days + Past Due	—		—		—		—		—		—		—		—
Total small balance CRE	$	48,428	$	80,778	$	74,482	$	85,597	$	73,371	$	238,551	$	544	$	601,751
Small business scored
Past Due Category
Current	$	176,262	$	134,418	$	119,587	$	92,657	$	63,168	$	79,568	$	108,154	$	773,814
30-59 Days Past Due	—		132		10		128		14		50		172		506
60-89 Days Past Due	—		—		—		142		26		—		160		328
90 Days + Past Due	—		8		139		120		335		243		61		906
Total small business scored	$	176,262	$	134,558	$	119,736	$	93,047	$	63,543	$	79,861	$	108,547	$	775,554
One- to four- family residential
Past Due Category
Current	$	157,577	$	109,535	$	65,469	$	58,832	$	64,017	$	223,601	$	1,751	$	680,782
30-59 Days Past Due	—		—		—		—		—		107		—		107
60-89 Days Past Due	—		—		—		—		—		109		—		109
90 Days + Past Due	—		276		—		169		—		925		—		1,370
Total One- to four- family residential	$	157,577	$	109,811	$	65,469	$	59,001	$	64,017	$	224,742	$	1,751	$	682,368

	September 30, 2021
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2021		2020		2019		2018		2017		Prior
Consumer—home equity revolving lines of credit
Past Due Category
Current	$	7,044	$	1,125	$	1,711	$	1,772	$	2,089	$	3,007	$	444,348	$	461,096
30-59 Days Past Due	—		65		110		—		100		385		180		840
60-89 Days Past Due	—		—		—		—		71		91		2		164
90 Days + Past Due	—		—		197		193		108		31		190		719
Total Consumer—home equity revolving lines of credit	$	7,044	$	1,190	$	2,018	$	1,965	$	2,368	$	3,514	$	444,720	$	462,819
Consumer-other
Past Due Category
Current	$	13,921	$	15,239	$	9,426	$	9,524	$	6,917	$	18,640	$	24,394	$	98,061
30-59 Days Past Due	5		118		17		79		20		26		49		314
60-89 Days Past Due	1		—		—		3		7		6		17		34
90 Days + Past Due	—		4		—		—		—		—		—		4
Total Consumer-other	$	13,927	$	15,361	$	9,443	$	9,606	$	6,944	$	18,672	$	24,460	$	98,413

The following tables provide additional detail on the age analysis of the Company’s past due loans as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	—	$	495	$	495	$	1,121,780	$	1,122,275	$	3,952	$	4,535	$	—
Investment properties	—		—		5,185		5,185		1,975,099		1,980,284		7,468		7,620		3,955
Small balance CRE	2		43		—		45		601,706		601,751		2,440		2,776		—
Multifamily real estate	—		342		—		342		532,418		532,760		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		170,107		170,205		—		98		—
Multifamily construction	4,886		—		—		4,886		273,298		278,184		—		—		—
One- to four-family construction	—		—		—		—		571,431		571,431		—		—		—
Land and land development	—		—		14		14		308,150		308,164		—		256		—
Commercial business
Commercial business	117		167		847		1,131		1,345,576		1,346,707		820		1,326		—
Small business scored	506		328		906		1,740		773,814		775,554		83		1,374		61
Agricultural business, including secured by farmland	—		—		1,022		1,022		286,447		287,469		1,021		1,022		—
One- to four-family residential	107		109		1,370		1,586		680,782		682,368		—		3,182		772
Consumer:
Consumer—home equity revolving lines of credit	840		164		719		1,723		461,096		462,819		—		1,831		30
Consumer—other	314		34		4		352		98,061		98,413		—		19		4
Total	$	6,772	$	1,187	$	10,660	$	18,619	$	9,199,765	$	9,218,384	$	15,784	$	24,039	$	4,822

	December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	182	$	1,447	$	1,629	$	1,074,838	$	1,076,467	$	7,509	$	8,429	$	—
Investment properties	—		—		7,981		7,981		1,947,703		1,955,684		8,979		8,979		—
Small balance CRE	—		45		790		835		573,014		573,849		567		791		—
Multifamily real estate	—		—		—		—		428,223		428,223		—		—		—
Construction, land and land development:
Commercial construction	—		—		98		98		228,839		228,937		—		98		—
Multifamily construction	—		—		—		—		305,527		305,527		—		—		—
One- to four-family construction	356		—		331		687		507,123		507,810		—		331		—
Land and land development	—		—		317		317		248,598		248,915		302		507		—
Commercial business
Commercial business	3,247		31		2,088		5,366		2,173,095		2,178,461		555		1,988		889
Small business scored	1,459		891		2,048		4,398		739,053		743,451		91		3,419		136
Agricultural business, including secured by farmland	298		37		1,548		1,883		298,066		299,949		1,412		1,743		—
One-to four-family residential	4,620		955		4,053		9,628		708,311		717,939		171		3,556		1,899
Consumer:
Consumer secured by one- to four-family	459		439		1,847		2,745		489,067		491,812		—		2,697		130
Consumer—other	236		328		—		564		113,394		113,958		—		22		—
Total	$	10,675	$	2,908	$	22,548	$	36,131	$	9,834,851	$	9,870,982	$	19,586	$	32,560	$	3,054

Allowance for Credit Losses on Financing Receivables

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	For the Three Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	60,349	$	5,807	$	30,899	$	30,830	$	3,256	$	9,800	$	7,068	$	—	$	148,009
(Recapture)/provision for credit losses	(4,057)		850		(1,557)		(3,825)		83		(359)		15		—		(8,850)
Recoveries	923		—		—		230		17		19		227		—		1,416
Charge-offs	—		—		—		(362)		(179)		—		(119)		—		(660)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915
	For the Nine Months Ended September 30, 2021
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	57,791	$	3,893	$	41,295	$	35,007	$	4,914	$	9,913	$	14,466	$	—	$	167,279
Provision/(recapture) for credit losses	2,096		2,764		(12,053)		(8,390)		(1,581)		(605)		(7,216)		—		(24,985)
Recoveries	1,094		—		100		1,530		25		152		620		—		3,521
Charge-offs	(3,766)		—		—		(1,274)		(181)		—		(679)		—		(5,900)
Ending balance	$	57,215	$	6,657	$	29,342	$	26,873	$	3,177	$	9,460	$	7,191	$	—	$	139,915

The changes in the allowance for credit losses - loans during the three and nine months ended September 30, 2021 were primarily the result of the $8.9 million recapture of provision for credit losses - loans recorded during the current quarter and the $25.0 million recapture of provision recorded during the nine months ended September 30, 2021. The change in allowance for credit losses - loans during the nine months ended September 30, 2021 was also impacted by net charge offs of $2.4 million recognized during the period. The recapture of provision for credit losses - loans for the current quarter and the nine months ended September 30, 2021 primarily reflects improvement in the forecasted economic indicators used to calculate the allowance for credit losses - loans and a decrease in adversely classified loans.

	For the Three Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for credit losses:
Beginning balance	$	53,166	$	3,504	$	36,916	$	33,870	$	4,517	$	12,746	$	11,633	$	—	$	156,352
Provision/(recapture) for credit losses	6,895		(248)		2,561		2,550		1,026		100		757		—		13,641
Recoveries	23		—		—		246		—		94		82		—		445
Charge-offs	(379)		—		—		(1,297)		(492)		(72)		(233)		—		(2,473)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965
	For the Nine Months Ended September 30, 2020
	Commercial  Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	30,591	$	4,754	$	22,994	$	23,370	$	4,120	$	4,136	$	8,202	$	2,392	$	100,559
Impact of Adopting ASC 326	(2,864)		(2,204)		2,515		3,010		(351)		7,125		2,973		(2,392)		7,812
Provision/(recapture) for loan losses	32,213		772		13,963		14,402		64		1,470		1,994		—		64,878
Recoveries	244		—		105		821		1,772		273		238		—		3,453
Charge-offs	(479)		(66)		(100)		(6,234)		(554)		(136)		(1,168)		—		(8,737)
Ending balance	$	59,705	$	3,256	$	39,477	$	35,369	$	5,051	$	12,868	$	12,239	$	—	$	167,965

XML

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS (Tables)

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Goodwill and Intangible Assets

The following table summarizes the changes in the Company’s goodwill and other intangibles for the nine months ended September 30, 2021 and the year ended December 31, 2020 (in thousands):

	Goodwill		CDI		Total
Balance, December 31, 2019	$	373,121	$	29,158	$	402,279
Amortization	—		(7,732)		(7,732)
Balance, December 31, 2020	373,121		21,426		394,547
Amortization	—		(4,997)		(4,997)
Balance, September 30, 2021	$	373,121	$	16,429	$	389,550

Schedule of Estimated Annual Amortization Expense

The following table presents the estimated amortization expense with respect to CDI as of September 30, 2021 for the periods indicated (in thousands):

	Estimated Amortization
Remainder of 2021	$	1,574
2022	5,317
2023	3,814
2024	2,659
2025	1,575
Thereafter	1,490
	$	16,429

Schedule of Servicing Assets at Amortized Value

An analysis of our mortgage servicing rights for the three and nine months ended September 30, 2021 and 2020 is presented below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	15,612	$	14,424	$	15,223	$	14,148
Additions—amounts capitalized	1,621		2,426		5,418		6,030
Additions—through purchase	53		40		121		141
Amortization (1)	(1,533)		(2,075)		(5,009)		(5,504)
Balance, end of the period (2)	$	15,753	$	14,815	$	15,753	$	14,815

(1)    Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

(2)    There was no valuation allowance as of both September 30, 2021 and 2020.

XML

REAL ESTATE OWNED, NET (Tables)

9 Months Ended

Sep. 30, 2021

Real Estate [Abstract]

Schedule of Changes in Real Estate Owned, Net of Valuation Adjustments

The following table presents the changes in REO for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Balance, beginning of the period	$	763	$	2,400	$	816	$	814
Additions from loan foreclosures	89		—		512		1,588
Proceeds from dispositions of REO	—		(707)		(783)		(805)
Gain on sale of REO	—		120		307		216
Valuation adjustments in the period	—		(18)		—		(18)
Balance, end of the period	$	852	$	1,795	$	852	$	1,795

XML

DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2021

Banking and Thrift, Other Disclosures [Abstract]

Schedule of Deposit Liabilities

Deposits consisted of the following at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Non-interest-bearing accounts	$	6,400,864	$	5,492,924
Interest-bearing checking	1,799,657		1,569,435
Regular savings accounts	2,773,995		2,398,482
Money market accounts	2,339,107		2,191,135
Total interest-bearing transaction and saving accounts	6,912,759		6,159,052
Certificates of deposit:
Certificates of deposit less than or equal to $250,000	663,592		718,256
Certificates of deposit greater than $250,000	187,462		197,064
Total certificates of deposit(1)	851,054		915,320
Total deposits	$	14,164,677	$	12,567,296
Included in total deposits:
Public fund transaction and savings accounts	$	354,821	$	302,875
Public fund interest-bearing certificates	40,851		59,127
Total public deposits	$	395,672	$	362,002

(1)     Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

Maturities of Certificates of Deposit

Scheduled maturities and weighted average interest rates of certificates of deposit at September 30, 2021 are as follows (dollars in thousands):

	September 30, 2021
	Amount		Weighted Average Rate
Maturing in one year or less	$	644,909	0.49	%
Maturing after one year through two years	130,384		0.80
Maturing after two years through three years	52,948		0.78
Maturing after three years through four years	11,044		1.27
Maturing after four years through five years	10,261		0.42
Maturing after five years	1,508		0.88
Total certificates of deposit	$	851,054	0.57	%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Instruments, by Balance Sheet Grouping

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2021 and December 31, 2020, whether or not measured at fair value in the Consolidated Statements of Financial Condition (dollars in thousands):

		September 30, 2021				December 31, 2020
	Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Assets:
Cash and cash equivalents	1	$	2,200,582	$	2,200,582	$	1,234,183	$	1,234,183
Securities—trading	3	26,875		26,875		24,980		24,980
Securities—available-for-sale	2	3,446,575		3,446,575		2,322,593		2,322,593
Securities—held-to-maturity	2	445,499		463,913		410,038		436,882
Securities—held-to-maturity	3	2,313		2,089		11,769		11,799
Securities purchased under agreements to resell	2	300,000		300,000		—		—
Loans held for sale	2	63,678		64,245		243,795		245,667
Loans receivable	3	9,218,384		9,271,840		9,870,982		9,810,293
FHLB stock	3	12,000		12,000		16,358		16,358
Bank-owned life insurance	1	192,950		192,950		191,830		191,830
Mortgage servicing rights	3	15,753		22,814		15,223		18,084
Derivatives:
Interest rate swaps	2	25,627		25,627		39,066		39,066
Interest rate lock and forward sales commitments	2,3	2,309		2,309		5,641		5,641
Liabilities:
Demand, interest checking and money market accounts	2	10,539,628		10,539,628		9,253,494		9,253,494
Regular savings	2	2,773,995		2,773,995		2,398,482		2,398,482
Certificates of deposit	2	851,054		851,780		915,320		919,920
FHLB advances	2	50,000		50,629		150,000		152,779
Other borrowings	2	247,358		247,358		184,785		184,785
Subordinated notes, net	2	98,472		105,875		98,201		98,201
Junior subordinated debentures	3	124,853		124,853		116,974		116,974
Derivatives:
Interest rate swaps	2	15,550		15,550		22,336		22,336
Interest rate lock and forward sales commitments	2	136		136		1,755		1,755

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	26,875	$	26,875
Securities—available-for-sale
U.S. Government and agency obligations	—		181,052		—		181,052
Municipal bonds	—		310,391		—		310,391
Corporate bonds	—		164,244		—		164,244
Mortgage-backed or related securities	—		2,584,264		—		2,584,264
Asset-backed securities	—		206,624		—		206,624
	—		3,446,575		—		3,446,575
Loans held for sale	—		41,480		—		41,480
Derivatives
Interest rate swaps	—		25,627		—		25,627
Interest rate lock and forward sales commitments	—		914		1,395		2,309
	$	—	$	3,514,596	$	28,270	$	3,542,866
Liabilities:
Junior subordinated debentures	$	—	$	—	$	124,853	$	124,853
Derivatives
Interest rate swaps	—		15,550		—		15,550
Interest rate lock and forward sales commitments	—		136		—		136
	$	—	$	15,686	$	124,853	$	140,539

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Securities—trading
Corporate bonds (Trust Preferred Securities)	$	—	$	—	$	24,980	$	24,980
Securities—available-for-sale
U.S. Government and agency obligations	—		141,735		—		141,735
Municipal bonds	—		303,518		—		303,518
Corporate bonds	—		221,769		—		221,769
Mortgage-backed securities	—		1,646,152		—		1,646,152
Asset-backed securities	—		9,419		—		9,419
	—		2,322,593		—		2,322,593
Loans held for sale	—		133,554		—		133,554
Derivatives
Interest rate swaps	—		39,066		—		39,066
Interest rate lock and forward sales commitments	—		420		5,221		5,641
	$	—	$	2,495,633	$	30,201	$	2,525,834
Liabilities:
Junior subordinated debentures, net of unamortized deferred issuance costs	$	—	$	—	$	116,974	$	116,974
Derivatives
Interest rate swaps	—		22,336		—		22,336
Interest rate lock and forward sales commitments	—		1,755		—		1,755
	$	—	$	24,091	$	116,974	$	141,065

Schedule of Valuation Technique, Unobservable Input, and Qualitative Information for Unobservable Inputs

The following table provides a description of the valuation technique, unobservable inputs, and qualitative information about the unobservable inputs for certain of the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at September 30, 2021 and December 31, 2020:

			Weighted Average Rate / Range
Financial Instruments	Valuation Techniques	Unobservable Inputs	September 30, 2021		December 31, 2020
Corporate bonds (TPS securities)	Discounted cash flows	Discount rate	3.63	%	4.24	%
Junior subordinated debentures	Discounted cash flows	Discount rate	3.63	%	4.24	%
Loans individually evaluated	Collateral valuations	Discount to appraised value	8.5% to 20.0%		0.0% to 20.0%
REO	Appraisals	Discount to appraised value	60.91	%	51.86	%
Interest rate lock commitments	Pricing model	Pull-through rate	86.43	%	86.35	%

Schedule of Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2021						September 30, 2021
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	25,097	$	117,520	$	2,574	$	24,980	$	116,974	$	5,221
Total gains or losses recognized
Assets gains (losses)	1,778		—		(1,179)		1,895		—		(3,826)
Liabilities losses	—		7,333		—				7,879		—
Ending balance at September 30, 2021	$	26,875	$	124,853	$	1,395	$	26,875	$	124,853	$	1,395
	Three Months Ended						Nine Months Ended
	September 30, 2020						September 30, 2020
	Level 3 Fair Value Inputs						Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock Commitments		TPS Securities		Borrowings— Junior Subordinated Debentures		Interest rate lock and forward sales commitments
Beginning balance	$	23,239	$	109,613	$	5,816	$	25,636	$	119,304	$	791
Total gains or losses recognized
Assets (losses) gains	37		—		2,638		(2,360)		—		7,663
Liabilities gains	—		208		—		—		(9,483)		—
Ending balance at September 30, 2020	$	23,276	$	109,821	$	8,454	$	23,276	$	109,821	$	8,454

Schedule of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following tables present financial assets measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,054	$	3,054
REO	—		—		852		852
	December 31, 2020
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	3,482	$	3,482
REO	—		—		816		816

The following table presents the losses resulting from non-recurring fair value adjustments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Loans individually evaluated	$	—	$	(492)	$	(303)	$	(2,492)
REO	—		—		—		—
Total loss from non-recurring measurements	$	—	$	(492)	$	(303)	$	(2,492)

XML

INCOME TAXES AND DEFERRED TAXES INCOME TAXES AND DEFERRED TAXES (Tables)

9 Months Ended

Sep. 30, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021		December 31, 2020
Tax credit investments	$	47,783	$	33,528
Unfunded commitments—tax credit investments	22,915		18,306

The following table presents other information related to the Company’s tax credit investments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Tax credits and other tax benefits recognized	$	1,114	$	981	$	3,341	$	2,943
Tax credit amortization expense included in provision for income taxes	915		849		2,745		2,507

XML

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS) (Tables)

9 Months Ended

Sep. 30, 2021

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Weighted Shares Outstanding

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and nine months ended September 30, 2021 and 2020 (in thousands, except shares and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	49,884	$	36,548	$	151,121	$	76,971
Basic weighted average shares outstanding	34,446,510		35,193,109		34,716,914		35,285,567
Dilutive effect of unvested restricted stock	222,982		123,570		295,314		239,204
Diluted weighted shares outstanding	34,669,492		35,316,679		35,012,228		35,524,771
Earnings per common share
Basic	$	1.45	$	1.04	$	4.35	$	2.18
Diluted	$	1.44	$	1.03	$	4.32	$	2.17

XML

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Schedule of Financial Instruments With Off-Balance-Sheet Risks

Outstanding commitments for which no asset or liability for the notional amount has been recorded consisted of the following at the dates indicated (in thousands):

	Contract or Notional Amount
	September 30, 2021		December 31, 2020
Commitments to extend credit	$	3,443,004	$	3,207,072
Standby letters of credit and financial guarantees	20,987		18,415
Commitments to originate loans	106,989		101,426
Risk participation agreement	40,325		40,949
Derivatives also included in Note 13:
Commitments to originate loans held for sale	139,578		169,653
Commitments to sell loans secured by one- to four-family residential properties	55,641		79,414
Commitments to sell securities related to mortgage banking activities	142,500		204,000

XML

DERIVATIVES AND HEDGING (Tables)

9 Months Ended

Sep. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivatives Designated in Hedge Relationships

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	63	$	1	$	338	$	9	$	63	$	1	$	338	$	9

(1)    Included in Loans receivable on the Consolidated Statements of Financial Condition.

(2)    Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Schedule of Derivatives Not Designated in Hedge Relationships

As of September 30, 2021 and December 31, 2020, the notional values or contractual amounts and fair values of the Company’s derivatives not designated in hedge relationships were as follows (in thousands):

	Asset Derivatives								Liability Derivatives
	September 30, 2021				December 31, 2020				September 30, 2021				December 31, 2020
	Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (1)		Notional/ Contract Amount		Fair    Value (2)		Notional/ Contract Amount		Fair    Value (2)
Interest rate swaps	$	481,637	$	25,626	$	451,760	$	39,057	$	481,637	$	15,549	$	451,760	$	22,327
Mortgage loan commitments	109,986		1,395		140,390		5,221		50,496		49		72,511		199
Forward sales contracts	174,141		914		79,414		420		24,000		87		204,000		1,556
	$	765,764	$	27,935	$	671,564	$	44,698	$	556,133	$	15,685	$	728,271	$	24,082

(1)Included in Other assets on the Consolidated Statements of Financial Condition, with the exception of certain interest swaps and mortgage loan commitments (with a fair value of $177,000 at September 30, 2021 and $231,000 at December 31, 2020), which are included in Loans receivable.

(2)Included in Accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Gains (losses) recognized in income on derivatives not designated in hedge relationships for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

	Location on Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Mortgage loan commitments	Mortgage banking operations	$	(1,179)	$	2,639	$	(3,826)	$	7,664
Forward sales contracts	Mortgage banking operations	865		258		2,004		(779)
		$	(314)	$	2,897	$	(1,822)	$	6,885

Offsetting Assets and Liabilities

as of September 30, 2021 and December 31, 2020 (in thousands):

	September 30, 2021
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
	$	25,627	$	—	$	25,627	$	—	$	—	$	25,627
Derivative liabilities
Interest rate swaps	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	$	15,550	$	—	$	15,550	$	—	$	(12,446)	$	3,104
	December 31, 2020
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
	$	39,066	$	—	$	39,066	$	—	$	—	$	39,066
Derivative liabilities
Interest rate swaps	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116
	$	22,336	$	—	$	22,336	$	—	$	(22,220)	$	116

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue [Table Text Block]

Deposit fees and other service charges for the three and nine months ended September 30, 2021 and 2020 are summarized as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Deposit service charges	$	5,128	$	3,904	$	13,735	$	12,269
Debit and credit card interchange fees	6,032		5,207		17,265		14,762
Debit and credit card expense	(2,655)		(2,134)		(7,819)		(6,272)
Merchant services income	4,239		3,584		11,136		9,252
Merchant services expense	(3,439)		(2,839)		(8,964)		(7,378)
Other service charges	1,152		1,020		3,801		3,458
Total deposit fees and other service charges	$	10,457	$	8,742	$	29,154	$	26,091

XML

SECURITIES (Schedule of Securities) (Details) - USD ($)	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Schedule of Securities [Line Items]
Debt Securities, Trading, Amortized Cost	$ 27,203,000		$ 27,203,000
Securities—trading	26,875,000		24,980,000
Debt Securities, Available-for-sale, Amortized Cost, Total	3,443,516,000		2,256,189,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	45,393,000		68,543,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	42,334,000		2,139,000
Debt Securities, Available-for-sale	3,446,575,000		2,322,593,000
Held-to-maturity Securities, Amortized Cost	447,812,000		421,807,000
Held-to-maturity Securities, Gross Unrealized Gains	20,390,000		26,980,000
Held-to-maturity Securities, Gross Unrealized Losses	2,200,000		106,000
Securities—held-to-maturity	466,002,000		448,681,000
Debt Securities, Held-to-maturity, Allowance for Credit Loss	104,000		(94,000)
debt securities, held-to-maturity, accrued interest receivable	2,700,000		3,000,000
Debt Securities, Available-for-Sale, Accrued Interest Receivable	9,300,000		6,900,000
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0		0
U.S. Government and agency obligations
Schedule of Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost, Total	180,585,000		141,668,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	1,067,000		1,002,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	600,000		935,000
Debt Securities, Available-for-sale	181,052,000		141,735,000
Held-to-maturity Securities, Amortized Cost	317,000		340,000
Held-to-maturity Securities, Gross Unrealized Gains	6,000		7,000
Held-to-maturity Securities, Gross Unrealized Losses	0		0
Securities—held-to-maturity	323,000		347,000
Debt Securities, Held-to-maturity, Allowance for Credit Loss	0	$ 0	0	$ 0	$ 0	$ 0
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0		0
Municipal bonds
Schedule of Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost, Total	296,784,000		283,997,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	14,395,000		19,523,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	788,000		2,000
Debt Securities, Available-for-sale	310,391,000		303,518,000
Held-to-maturity Securities, Amortized Cost	391,583,000		370,998,000
Held-to-maturity Securities, Gross Unrealized Gains	18,716,000		24,130,000
Held-to-maturity Securities, Gross Unrealized Losses	2,188,000		94,000
Securities—held-to-maturity	408,111,000		395,034,000
Debt Securities, Held-to-maturity, Allowance for Credit Loss	63,000	64,000	59,000	60,000	61,000	0
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0		0
Corporate bonds
Schedule of Securities [Line Items]
Debt Securities, Trading, Amortized Cost	27,203,000		27,203,000
Securities—trading	26,875,000		24,980,000
Debt Securities, Available-for-sale, Amortized Cost, Total	160,404,000		219,086,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	3,903,000		2,762,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	63,000		79,000
Debt Securities, Available-for-sale	164,244,000		221,769,000
Held-to-maturity Securities, Amortized Cost	3,124,000		3,222,000
Held-to-maturity Securities, Gross Unrealized Gains	0		0
Held-to-maturity Securities, Gross Unrealized Losses	2,000		12,000
Securities—held-to-maturity	3,122,000		3,210,000
Debt Securities, Held-to-maturity, Allowance for Credit Loss	41,000	46,000	35,000	42,000	41,000	0
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0		0
Mortgage-backed or related securities
Schedule of Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost, Total	2,599,229,000		1,602,033,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	25,918,000		45,179,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	40,883,000		1,060,000
Debt Securities, Available-for-sale	2,584,264,000		1,646,152,000
Held-to-maturity Securities, Amortized Cost	52,788,000		47,247,000
Held-to-maturity Securities, Gross Unrealized Gains	1,668,000		2,843,000
Held-to-maturity Securities, Gross Unrealized Losses	10,000		0
Securities—held-to-maturity	54,446,000		50,090,000
Debt Securities, Held-to-maturity, Allowance for Credit Loss	0	$ 0	0	$ 0	$ 0	$ 0
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	0		0
Asset-backed securities
Schedule of Securities [Line Items]
Debt Securities, Available-for-sale, Amortized Cost, Total	206,514,000		9,405,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Gain, before Tax	110,000		77,000
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax	0		63,000
Debt Securities, Available-for-sale	206,624,000		9,419,000
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	$ 0		$ 0

XML

SECURITIES (Securities with Continuous Loss Position) (Details) $ in Thousands	Sep. 30, 2021 USD ($) numberOfSecurities	Dec. 31, 2020 USD ($) numberOfSecurities
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	$ 1,611,688	$ 189,078
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	88,017	58,616
Debt Securities, Available-for-sale, Unrealized Loss Position	1,699,705	247,694
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	40,591	1,135
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1,743	1,004
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	$ 42,334	$ 2,139
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions | numberOfSecurities	84	54
U.S. Government and agency obligations
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	$ 40,115	$ 3,126
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	33,447	50,603
Debt Securities, Available-for-sale, Unrealized Loss Position	73,562	53,729
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	39	8
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	561	927
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	600	935
Municipal bonds
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	60,522	495
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	0	0
Debt Securities, Available-for-sale, Unrealized Loss Position	60,522	495
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	788	2
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	788	2
Corporate bonds
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	7,937	3,586
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	0	0
Debt Securities, Available-for-sale, Unrealized Loss Position	7,937	3,586
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	63	79
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	63	79
Mortgage-backed or related securities
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months	1,503,114	181,871
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer	54,570	2,337
Debt Securities, Available-for-sale, Unrealized Loss Position	1,557,684	184,208
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	39,701	1,046
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1,182	14
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss	$ 40,883	1,060
Asset-backed securities
Schedule of Held-to-maturity Securities [Line Items]
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months		0
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer		5,676
Debt Securities, Available-for-sale, Unrealized Loss Position		5,676
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		0
Debt Securities, Available-for-sale, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		63
Debt Securities, Available-for-sale, Unrealized Loss Position, Accumulated Loss		$ 63

XML

SECURITIES (Available-for-Sale Securities, Gross Gains and Losses on Sale) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Gain (Loss) on Securities [Line Items]
Debt Securities, Available-for-sale, Realized Gain	$ 140	$ 557	$ 766	$ 729
Debt Securities, Available-for-sale, Realized Loss	22	432	132	433
Debt Securities, Available-for-sale, Realized Gain (Loss)	$ 118	$ 125	$ 634	$ 296

XML

SECURITIES (Securities Debt Maturities) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Investments, Debt and Equity Securities [Abstract]
Trading Securities, Amortized Cost, Maturing in one year or less	$ 0
Trading Securities, Amortized Cost, Maturing after one year through five years	0
Trading Securities, Amortized Cost, Maturing after five years through ten years	0
Trading Securities, Amortized Cost, Maturing after ten years through twenty years	27,203
Trading Securities, Amortized Cost, Maturing after twenty years	0
Debt Securities, Trading, Amortized Cost	27,203	$ 27,203
Trading Securities, Fair Value, Maturing in one year or less	0
Trading Securities, Fair Value, Maturing after one year through five years	0
Trading Securities, Fair Value, Maturing after five years through ten years	0
Trading Securities, Fair Value, Maturing after ten years through twenty years	26,875
Trading Securities, Fair Value, Maturing after twenty years	0
Trading Securities, Fair Value	26,875	24,980
Available-for-sale Securities, Amortized Cost, Maturing in one year or less	59,150
Available-for-sale Securities, Amortized Cost, Maturing after one year through five years	173,666
Available-for-sale Securities, Amortized Cost, Maturing after five years through ten years	845,638
Available-for-sale Securities, Amortized Cost, Maturing after ten years through twenty years	502,832
Available-for-sale Securities, Amortized Cost, Maturing after twenty years	1,862,230
Debt Securities, Available-for-sale, Amortized Cost, Total	3,443,516	2,256,189
Available-for-sale Securities, Fair Value, Maturing in one year or less	59,360
Available-for-sale Securities, Fair Value, Maturing after one year through five years	181,152
Available-for-sale Securities, Fair Value, Maturing after five years through ten years	847,708
Available-for-sale Securities, Fair Value, Maturing after ten years through twenty years	514,271
Available-for-sale Securities, Fair Value, Maturing after twenty years	1,844,084
Debt Securities, Available-for-sale	3,446,575	2,322,593
Held-to-maturity Securities, Amortized Cost, Maturing in one year or less	5,444
Held-to-maturity Securities, Amortized Cost, Maturing after one year through five years	59,705
Held-to-maturity Securities, Amortized Cost, Maturing after five years through ten years	21,961
Held-to-maturity Securities, Amortized Cost, Maturing after ten years through twenty years	164,303
Held-to-maturity Securities, Amortized Cost, Maturing after twenty years	196,399
Held-to-maturity Securities, Amortized Cost	447,812	421,807
Held-to-maturity Securities, Fair Value, Maturing in one year or less	5,471
Held-to-maturity Securities, Fair Value, Maturing after one year through five years	62,039
Held-to-maturity Securities, Fair Value, Maturing after five years through ten years	23,312
Held-to-maturity Securities, Fair Value, Maturing after ten years through twenty years	168,315
Held-to-maturity Securities, Fair Value, Maturing after twenty years	206,865
Debt Securities, Held-to-maturity, Fair Value	$ 466,002	$ 448,681

XML

SECURITIES (Securities Pledged) (Details) $ in Thousands	Sep. 30, 2021 USD ($)
Pledged Financial Instruments, Not Separately Reported, Securities [Abstract]
Securities pledged for State and Local Government Public Deposits, Carrying Value	$ 202,085
Securities pledged for Interest Rate Swap Counterparties, Carrying Value	27,275
Securities pledged for Repurchase Agreements, Carrying Value	278,087
Pledged Financial Instruments, Not Separately Reported, Interest-bearing Deposits for Other Debt Facilities	2,549
Total pledged securities, Carrying Value	509,996
Securities pledged for State and Local Government public deposits, Amortized Cost	201,456
Securities pledged for Interest Rate Swap Counterparties, Amortized Cost	26,642
Securities pledged for Repurchase Agreements, Amortized Cost	285,068
Pledged Financial Instruments, Not Separately Reported, Interest-bearing Deposits for Other Debt Facilities, Amortized Cost	2,549
Total pledged securities, Amortized Cost	515,715
Securities pledged for State and Local Government Public Deposits, Fair Value	213,687
Securities pledged for Interest Rate Swap Counterparties, Fair Value	27,402
Securities pledged for Retail Repurchase Agreements, Fair Value	278,087
Pledged Financial Instruments, Not Separately Reported, Interest-bearing Deposits for Other Debt Facilities, Fair Value	2,597
Total pledged securities, Fair Value	$ 521,773

XML

SECURITIES (Textual) (Details)	9 Months Ended
	Sep. 30, 2021 USD ($) numberOfSecurities numberOfSalesOfSecurities	Sep. 30, 2020 USD ($) numberOfSalesOfSecurities numberOfSecurities	Dec. 31, 2020 numberOfSecurities
Investments, Debt and Equity Securities [Abstract]
Trading Securities, Number of Securities on Nonaccrual Status	0		0
Debt Securities, Available-for-sale [Abstract]
Debt Securities, Available-for-sale, Unrealized Loss Position, Number of Positions	84		54
Available-for-sale Securities, Number of Securities in Nonaccrual Status	0		0
Held-to-maturity Securities [Abstract]
Held-to-maturity Securities, Number of Securities Sold | numberOfSalesOfSecurities	1	1
Held-to-maturity Securities, Number of Securities in Nonaccrual Status	0		0
Trading Securities, Number of Securities Sold	0	0
Debt Securities, Trading, Unrealized Gain | $	$ 1,900,000
Debt Securities, Trading, Unrealized Loss | $		$ 2,400,000
Proceeds from Sale of Equity Securities, FV-NI | $	4,800,000
Equity Securities, FV-NI, Realized Gain (Loss) | $	$ 46,000

XML

SECURITIES (Debt Securities, Held-to-Maturity, Credit Rating) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	$ 447,812	$ 421,807
U.S. Government and agency obligations
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	317	340
Municipal bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	391,583	370,998
Corporate bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	3,124	3,222
Mortgage-backed or related securities
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	52,788	47,247
Standard & Poor's, AAA to A Rating
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	376,365	349,623
Standard & Poor's, AAA to A Rating | U.S. Government and agency obligations
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	0	0
Standard & Poor's, AAA to A Rating | Municipal bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	375,865	349,123
Standard & Poor's, AAA to A Rating | Corporate bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	500	500
Standard & Poor's, AAA to A Rating | Mortgage-backed or related securities
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	0	0
Standard & Poor's, Not Rated
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	71,447	72,184
Standard & Poor's, Not Rated | U.S. Government and agency obligations
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	317	340
Standard & Poor's, Not Rated | Municipal bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	15,718	21,875
Standard & Poor's, Not Rated | Corporate bonds
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	2,624	2,722
Standard & Poor's, Not Rated | Mortgage-backed or related securities
Financing Receivable, Credit Quality Indicator [Line Items]
Debt securities, held-to-maturity	$ 52,788	$ 47,247

XML

SECURITIES (Debt Securities, Held-to-Maturity, Allowance for Credit Loss) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance				$ (94)
Debt Securities, Held-to-maturity, Allowance for Credit Loss	$ 104			104
New credit standard (ASC 326) - impact in year of adoption			$ 11,215
Ending Balance	104			104
U.S. Government and agency obligations
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance	0	$ 0	0	0	$ 0
Debt Securities, Held-to-maturity, Allowance for Credit Loss	0	0		0	0
New credit standard (ASC 326) - impact in year of adoption		0			0
Recapture of provision for credit losses	0	0		0	0
Ending Balance	0	0		0	0
Municipal bonds
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance	64	61	0	59	0
Debt Securities, Held-to-maturity, Allowance for Credit Loss	63	60		63	60
New credit standard (ASC 326) - impact in year of adoption		0			28
Recapture of provision for credit losses	(1)	(1)		4	32
Ending Balance	63	60		63	60
Corporate bonds
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance	46	41	0	35	0
Debt Securities, Held-to-maturity, Allowance for Credit Loss	41	42		41	42
New credit standard (ASC 326) - impact in year of adoption		0			35
Recapture of provision for credit losses	(5)	1		6	7
Ending Balance	41	42		41	42
Mortgage-backed or related securities
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance	0	0	0	0	0
Debt Securities, Held-to-maturity, Allowance for Credit Loss	0	0		0	0
New credit standard (ASC 326) - impact in year of adoption		0			0
Recapture of provision for credit losses	0	0		0	0
Ending Balance	0	0		0	0
Held-to-maturity Securities
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward]
Beginning Balance	(110)	102	$ 0	94	0
Debt Securities, Held-to-maturity, Allowance for Credit Loss	104	102		104	102
New credit standard (ASC 326) - impact in year of adoption		0			63
Recapture of provision for credit losses	(6)	0		10	39
Ending Balance	$ 104	$ 102		$ 104	$ 102

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Loans by Type) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 9,218,384		$ 9,870,982
Allowance for credit losses - loans	(139,915)	$ (148,009)	(167,279)	$ (167,965)	$ (156,352)	$ (100,559)
Net loans	$ 9,078,469		9,703,703
Percent of total loans	100.00%
Unearned loan fees in excess of unamortized costs	$ 12,200		25,600
Discount on acquired loans, net	11,500		16,100
Financing Receivable, Accrued Interest, before Allowance for Credit Loss	31,500		36,600
Financing Receivable, Troubled Debt Restructuring	5,600		7,900
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			9,870,982
Allowance for credit losses - loans			(167,279)
Net loans			$ 9,703,703
Percent of total loans			100.00%
Commerical real estate - owner-occupied [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 1,122,275		$ 1,076,467
Percent of total loans	12.20%
Commerical real estate - owner-occupied [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 1,076,467
Percent of total loans			10.90%
Commercial real estate - investment properties
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 1,980,284		$ 1,955,684
Percent of total loans	21.50%
Commercial real estate - investment properties | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 1,955,684
Percent of total loans			19.80%
Small Balance Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 601,751
Percent of total loans	6.50%
Small Balance Commercial Real Estate Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 573,849
Percent of total loans			5.80%
Multifamily Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 532,760		$ 428,223
Allowance for credit losses - loans	$ (6,657)	(5,807)	(3,893)	(3,256)	(3,504)	(4,754)
Percent of total loans	5.80%
Multifamily Real Estate | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 428,223
Percent of total loans			4.40%
Commercial construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 170,205		$ 228,937
Percent of total loans	1.80%
Commercial construction | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 228,937
Percent of total loans			2.30%
Multifamily construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 278,184		$ 305,527
Percent of total loans	3.00%
Multifamily construction | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 305,527
Percent of total loans			3.10%
One- to four- family construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 571,431		$ 507,810
Percent of total loans	6.20%
One- to four- family construction | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 507,810
Percent of total loans			5.10%
Land and Land Development Type [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 308,164
Percent of total loans	3.40%
Land and Land Development Type [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 248,915
Percent of total loans			2.50%
Land and land development - residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 308,164		$ 248,915
Commercial Business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	1,346,707		2,178,461
Allowance for credit losses - loans	$ (26,873)	(30,830)	(35,007)	(35,369)	(33,870)	(23,370)
Percent of total loans	14.60%
Loans And LeasesReceivable Gross Carrying Amount, SBA Paycheck Protection Program	$ 307,000		1,040,000
Commercial Business | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 2,178,461
Percent of total loans			22.10%
Small business scored
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 775,554		$ 743,451
Percent of total loans	8.40%
Small business scored | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 743,451
Percent of total loans			7.50%
Agricultural business, including secured by farmland
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 287,469		$ 299,949
Allowance for credit losses - loans	$ (3,177)	(3,256)	(4,914)	(5,051)	(4,517)	(4,120)
Percent of total loans	3.10%
Loans And LeasesReceivable Gross Carrying Amount, SBA Paycheck Protection Program	$ 3,200		0
Agricultural business, including secured by farmland | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 299,949
Percent of total loans			3.00%
One- to four-family residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	682,368		$ 717,939
Allowance for credit losses - loans	$ (9,460)	$ (9,800)	(9,913)	$ (12,868)	$ (12,746)	$ (4,136)
Percent of total loans	7.40%
One- to four-family residential [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 717,939
Percent of total loans			7.30%
Consumer secured by one- to four-family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 462,819		$ 491,812
Percent of total loans	5.00%
Consumer secured by one- to four-family [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 491,812
Percent of total loans			5.00%
Consumer-other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 98,413		$ 113,958
Percent of total loans	1.10%
Consumer-other | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable			$ 113,958
Percent of total loans			1.20%

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Troubled Debt Restructuring) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($) contract	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($) contract
Financing Receivable, Troubled Debt Restructuring [Line Items]
Commitments to advance funds related to TDRs, maximum additional amounts	$ 0		$ 0
Number of Contracts | contract		0		2
Pre-modification Outstanding Recorded Investment		$ 0		$ 4,796
Post-modification Outstanding Recorded Investment		0		4,796
TDRs Which Incurred a Payment Default	$ 0	$ 0	$ 0	$ 0
Commercial Business
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract		0		2
Pre-modification Outstanding Recorded Investment		$ 0		$ 4,796
Post-modification Outstanding Recorded Investment		$ 0		$ 4,796

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Newly Restructured Loans) (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2020 contract	Sep. 30, 2020 contract	Sep. 30, 2021 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Commitments to advance funds related to TDRs, maximum additional amounts | $			$ 0.0
Number of Contracts | contract	0	2

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Troubled Debt Restructuring Which Incurred Payment Default) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
TDRs Which Incurred a Payment Default	$ 0	$ 0	$ 0	$ 0

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Risk-Rated and Non-Risk Rated Loans by Grade and Other Characteristic) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	$ 9,218,384	$ 9,870,982
Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	216,464	251,023
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	227,782	188,312
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	170,922	159,857
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	126,339	127,251
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	97,402	104,043
Prior	271,909	242,453
Revolving Loans	11,457	3,528
Total Loans	1,122,275	1,076,467
Loans receivable	1,122,275	1,076,467
Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	288,767	257,365
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	236,744	276,673
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	271,532	319,804
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	267,420	254,328
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	238,283	304,105
Prior	657,812	523,347
Revolving Loans	19,726	20,062
Total Loans	1,980,284	1,955,684
Loans receivable	1,980,284	1,955,684
Small balance CRE
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	48,428	56,544
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	80,778	80,090
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	74,482	84,749
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	85,597	78,249
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	73,371	68,791
Prior	238,551	202,876
Revolving Loans	544	2,550
Total Loans	601,751	573,849
Loans receivable	601,751	573,849
Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	134,404	80,944
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	81,730	71,253
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	72,766	39,343
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	37,285	93,442
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	92,151	44,395
Prior	111,907	96,863
Revolving Loans	2,517	1,983
Total Loans	532,760	428,223
Loans receivable	532,760	428,223
Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	52,372	96,419
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	52,593	76,923
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	28,717	46,172
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	35,904	6,038
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	2,256
Prior	619	1,129
Revolving Loans	0	0
Total Loans	170,205	228,937
Loans receivable	170,205	228,937
Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	59,818	79,710
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	117,033	151,141
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	86,493	59,744
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	14,840	14,932
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	278,184	305,527
Loans receivable	278,184	305,527
One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	466,258	463,358
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	103,197	36,241
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	331	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	85	0
Revolving Loans	1,560	8,211
Total Loans	571,431	507,810
Loans receivable	571,431	507,810
Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	308,164	248,915
Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	350,468	1,250,003
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	276,995	245,670
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	198,823	221,620
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	137,300	71,577
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	52,768	40,077
Prior	83,987	66,774
Revolving Loans	246,366	282,740
Total Loans	1,346,707	2,178,461
Loans receivable	1,346,707	2,178,461
Small business scored
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	176,262	157,461
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	134,558	145,474
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	119,736	127,691
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	93,047	91,081
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	63,543	48,082
Prior	79,861	63,948
Revolving Loans	108,547	109,714
Total Loans	775,554	743,451
Loans receivable	775,554	743,451
Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	26,643	33,574
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	28,091	64,710
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	54,167	32,457
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	28,583	23,608
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	15,842	23,069
Prior	39,007	28,536
Revolving Loans	95,136	93,995
Total Loans	287,469	299,949
Loans receivable	287,469	299,949
One- to four- family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	157,577	106,462
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	109,811	90,539
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	65,469	94,738
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	59,001	102,776
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	64,017	60,907
Prior	224,742	259,353
Revolving Loans	1,751	3,164
Total Loans	682,368	717,939
Loans receivable	682,368	717,939
Consumer—home equity revolving lines of credit
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	7,044	10,522
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	1,190	3,131
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	2,018	2,751
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	1,965	3,923
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	2,368	1,658
Prior	3,514	2,696
Revolving Loans	444,720	467,131
Total Loans	462,819	491,812
Consumer secured by one- to four-family
Financing Receivable, Credit Quality Indicator [Line Items]
Loans receivable	462,819	491,812
Consumer-other
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	13,927	22,101
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	15,361	13,412
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	9,443	13,951
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	9,606	11,488
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	6,944	8,642
Prior	18,672	18,842
Revolving Loans	24,460	25,522
Total Loans	98,413	113,958
Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	152,321	156,464
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	112,775	37,427
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	19,234	19,607
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	9,189	6,991
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	4,218	6,264
Prior	8,309	5,142
Revolving Loans	2,118	17,020
Total Loans	308,164	248,915
Pass | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	202,187	243,100
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	227,782	156,838
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	154,951	156,817
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	126,339	122,484
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	92,197	92,312
Prior	232,653	212,792
Revolving Loans	11,457	3,379
Total Loans	1,047,566	987,722
Pass | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	286,605	237,553
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	227,093	262,543
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	266,240	299,452
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	246,056	218,018
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	227,915	278,348
Prior	612,438	502,914
Revolving Loans	19,726	20,062
Total Loans	1,886,073	1,818,890
Pass | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	134,404	78,632
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	79,418	69,825
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	71,346	39,343
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	37,285	93,442
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	92,151	44,395
Prior	109,993	96,863
Revolving Loans	2,517	1,983
Total Loans	527,114	424,483
Pass | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	48,100	83,506
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	52,593	67,152
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	24,682	41,299
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	31,084	6,038
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	2,158
Prior	521	1,129
Revolving Loans	0	0
Total Loans	156,980	201,282
Pass | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	59,818	79,710
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	112,147	151,141
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	86,493	59,744
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	14,840	14,932
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	273,298	305,527
Pass | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	466,258	461,294
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	103,197	35,910
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	331	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	85	0
Revolving Loans	1,560	7,581
Total Loans	571,431	504,785
Pass | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	348,123	1,243,276
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	274,487	230,845
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	197,462	203,051
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	127,281	65,524
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	48,760	38,757
Prior	83,084	66,206
Revolving Loans	231,186	264,741
Total Loans	1,310,383	2,112,400
Pass | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	26,643	32,032
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	27,645	62,058
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	51,961	31,381
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	28,073	22,635
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	15,698	22,394
Prior	37,116	24,950
Revolving Loans	93,390	91,660
Total Loans	280,526	287,110
Pass | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	149,447	156,450
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	112,761	37,397
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	18,967	16,560
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	9,189	6,801
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	4,218	6,264
Prior	8,174	4,840
Revolving Loans	2,118	17,020
Total Loans	304,874	245,332
Special Mention | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	12,309	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	4,560
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	2,201	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	2,251
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	2,147	0
Prior	3,384	1,869
Revolving Loans	0	149
Total Loans	20,041	8,829
Special Mention | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	2,712
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	4,167	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	2,730
Prior	0	1,856
Revolving Loans	0	0
Total Loans	4,167	7,298
Special Mention | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Special Mention | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	5,963
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	5,963
Special Mention | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Special Mention | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	1,563
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	630
Total Loans	0	2,193
Special Mention | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	68	103
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	86	412
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	271	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	829
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	690	0
Prior	11	115
Revolving Loans	10,667	9,507
Total Loans	11,793	10,966
Special Mention | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	810
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	537
Revolving Loans	0	0
Total Loans	0	1,347
Special Mention | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Substandard | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	1,968	7,923
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	26,914
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	13,770	3,040
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	2,516
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	3,058	11,731
Prior	35,872	27,792
Revolving Loans	0	0
Total Loans	54,668	79,916
Substandard | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	2,162	19,812
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	9,651	11,418
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	5,292	20,352
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	17,197	36,310
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	10,368	23,027
Prior	45,374	18,577
Revolving Loans	0	0
Total Loans	90,044	129,496
Substandard | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	2,312
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	2,312	1,428
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	1,420	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	1,914	0
Revolving Loans	0	0
Total Loans	5,646	3,740
Substandard | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	4,272	12,913
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	3,808
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	4,035	4,873
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	4,820	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	98
Prior	98	0
Revolving Loans	0	0
Total Loans	13,225	21,692
Substandard | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	4,886	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	4,886	0
Substandard | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	501
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	331
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	832
Substandard | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	2,277	6,624
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	2,422	14,413
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	1,090	18,569
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	10,019	5,224
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	3,318	1,320
Prior	892	453
Revolving Loans	4,513	8,492
Total Loans	24,531	55,095
Substandard | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	1,542
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	446	2,652
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	2,206	1,076
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	510	163
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	144	675
Prior	1,891	3,049
Revolving Loans	1,746	2,335
Total Loans	6,943	11,492
Substandard | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	2,874	14
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	14	30
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	267	3,047
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	190
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	135	302
Revolving Loans	0	0
Total Loans	3,290	3,583
Doubtful | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Doubtful | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Loss | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	0	0
Current | Small balance CRE
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	48,385	56,544
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	80,778	80,090
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	74,482	84,749
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	85,597	77,637
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	73,371	68,791
Prior	238,549	202,653
Revolving Loans	544	2,550
Total Loans	601,706	573,014
Current | Small business scored
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	176,262	157,161
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	134,418	145,037
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	119,587	126,578
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	92,657	89,734
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	63,168	47,909
Prior	79,568	63,347
Revolving Loans	108,154	109,287
Total Loans	773,814	739,053
Current | One- to four- family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	157,577	105,411
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	109,535	90,425
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	65,469	92,232
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	58,832	101,491
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	64,017	60,738
Prior	223,601	254,850
Revolving Loans	1,751	3,164
Total Loans	680,782	708,311
Current | Consumer—home equity revolving lines of credit
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	7,044	10,522
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	1,125	2,617
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	1,711	2,553
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	1,772	3,359
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	2,089	1,372
Prior	3,007	2,154
Revolving Loans	444,348	466,490
Total Loans	461,096	489,067
Current | Consumer-other
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	13,921	21,811
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	15,239	13,377
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	9,426	13,936
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	9,524	11,433
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	6,917	8,575
Prior	18,640	18,802
Revolving Loans	24,394	25,460
Total Loans	98,061	113,394
30-59 Days Past Due
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	6,772	10,675
30-59 Days Past Due | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
30-59 Days Past Due | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
30-59 Days Past Due | Small balance CRE
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	2	0
Revolving Loans	0	0
Total Loans	2	0
30-59 Days Past Due | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
30-59 Days Past Due | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
30-59 Days Past Due | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	4,886	0
30-59 Days Past Due | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	356
30-59 Days Past Due | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
30-59 Days Past Due | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	117	3,247
30-59 Days Past Due | Small business scored
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	129
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	132	62
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	10	310
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	128	723
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	14	4
Prior	50	1
Revolving Loans	172	230
Total Loans	506	1,459
30-59 Days Past Due | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	298
30-59 Days Past Due | One- to four- family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	1,051
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	1,302
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	829
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	107	1,438
Revolving Loans	0	0
Total Loans	107	4,620
30-59 Days Past Due | Consumer—home equity revolving lines of credit
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	65	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	110	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	100	0
Prior	385	50
Revolving Loans	180	409
Total Loans	840	459
30-59 Days Past Due | Consumer secured by one- to four-family
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	840	459
30-59 Days Past Due | Consumer-other
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	5	48
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	118	35
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	17	15
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	79	22
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	20	46
Prior	26	26
Revolving Loans	49	44
Total Loans	314	236
60-89 Days Past Due
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	1,187	2,908
60-89 Days Past Due | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	182
60-89 Days Past Due | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
60-89 Days Past Due | Small balance CRE
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	43	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	45
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	43	45
60-89 Days Past Due | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	342	0
60-89 Days Past Due | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
60-89 Days Past Due | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
60-89 Days Past Due | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
60-89 Days Past Due | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
60-89 Days Past Due | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	167	31
60-89 Days Past Due | Small business scored
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	98
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	147
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	3
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	142	140
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	26	0
Prior	0	352
Revolving Loans	160	151
Total Loans	328	891
60-89 Days Past Due | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	37
60-89 Days Past Due | One- to four- family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	19
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	109	936
Revolving Loans	0	0
Total Loans	109	955
60-89 Days Past Due | Consumer—home equity revolving lines of credit
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	202
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	71	0
Prior	91	237
Revolving Loans	2	0
Total Loans	164	439
60-89 Days Past Due | Consumer secured by one- to four-family
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	164	439
60-89 Days Past Due | Consumer-other
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	1	242
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	3	33
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	7	21
Prior	6	14
Revolving Loans	17	18
Total Loans	34	328
90 Days Past Due
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	10,660	22,548
90 Days Past Due | Owner-occupied
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	495	1,447
90 Days Past Due | Commercial real estate - investment properties
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	5,185	7,981
90 Days Past Due | Small balance CRE
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	567
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	223
Revolving Loans	0	0
Total Loans	0	790
90 Days Past Due | Multifamily Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
90 Days Past Due | Commercial construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	98	98
90 Days Past Due | Multifamily construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	0
90 Days Past Due | One- to four- family construction
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	0	331
90 Days Past Due | Land and land development
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	14	317
90 Days Past Due | Commercial Business
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	847	2,088
90 Days Past Due | Small business scored
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	73
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	8	228
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	139	800
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	120	484
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	335	169
Prior	243	248
Revolving Loans	61	46
Total Loans	906	2,048
90 Days Past Due | Agricultural business, including secured by farmland
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	1,022	1,548
90 Days Past Due | One- to four- family residential
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	276	114
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	1,185
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	169	456
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	169
Prior	925	2,129
Revolving Loans	0	0
Total Loans	1,370	4,053
90 Days Past Due | Consumer—home equity revolving lines of credit
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	0	312
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	197	198
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	193	564
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	108	286
Prior	31	255
Revolving Loans	190	232
Total Loans	719	1,847
90 Days Past Due | Consumer secured by one- to four-family
Financing Receivable, Credit Quality Indicator [Line Items]
Total Loans	719	1,847
90 Days Past Due | Consumer-other
Financing Receivable, Credit Quality Indicator [Line Items]
Financing Receivable, Year One, Originated, Current Fiscal Year	0	0
Financing Receivable, Year Two, Originated, Fiscal Year before Current Fiscal Year	4	0
Financing Receivable, Year Three, Originated, Two Years before Current Fiscal Year	0	0
Financing Receivable, Year Four, Originated, Three Years before Current Fiscal Year	0	0
Financing Receivable, Year Five, Originated, Four Years before Current Fiscal Year	0	0
Prior	0	0
Revolving Loans	0	0
Total Loans	$ 4	$ 0

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Collateral Secured) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	$ 15,797	$ 19,609
Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	14,444	18,578
Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	659	0
Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	694	1,031
Owner-occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	3,949	7,506
Owner-occupied | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	3,949	7,506
Owner-occupied | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Owner-occupied | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Commercial real estate - investment properties
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	7,468	8,979
Commercial real estate - investment properties | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	7,468	8,979
Commercial real estate - investment properties | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Commercial real estate - investment properties | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Small balance CRE
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	2,452	567
Small balance CRE | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	2,452	567
Small balance CRE | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Small balance CRE | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Land and land development—residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		302
Land and land development—residential | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		302
Land and land development—residential | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		0
Land and land development—residential | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		0
Commercial Business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	822	557
Commercial Business | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	107	557
Commercial Business | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	659	0
Commercial Business | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	56	0
Small business scored
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	85	91
Small business scored | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	41	44
Small business scored | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Small business scored | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	44	47
Agricultural Business
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	1,021	1,411
Agricultural Business | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	427	427
Agricultural Business | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	0	0
Agricultural Business | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost	$ 594	984
One- to Four-Family Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		196
One- to Four-Family Residential | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		196
One- to Four-Family Residential | Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		0
One- to Four-Family Residential | Equipment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Collateral Dependent Loans, Amortized Cost		$ 0

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Age Analysis of Company's Past Due Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Financing Receivable, Past Due [Line Items]
Total loans	$ 9,218,384	$ 9,870,982
Non-accrual with no Allowance	15,784	19,586
Nonaccrual loans	24,039	32,560
Loans 90 days or more past due and still accruing	4,822	3,054
Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Total loans	1,122,275	1,076,467
Non-accrual with no Allowance	3,952	7,509
Nonaccrual loans	4,535	8,429
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	1,122,275	1,076,467
Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Total loans	1,980,284	1,955,684
Non-accrual with no Allowance	7,468	8,979
Nonaccrual loans	7,620	8,979
Loans 90 days or more past due and still accruing	3,955	0
Financing Receivable, before Allowance for Credit Loss	1,980,284	1,955,684
Small balance CRE
Financing Receivable, Past Due [Line Items]
Total loans	601,751	573,849
Non-accrual with no Allowance	2,440	567
Nonaccrual loans	2,776	791
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	601,751	573,849
Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Total loans	532,760	428,223
Non-accrual with no Allowance	0	0
Nonaccrual loans	0	0
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	532,760	428,223
Commercial construction
Financing Receivable, Past Due [Line Items]
Total loans	170,205	228,937
Non-accrual with no Allowance	0	0
Nonaccrual loans	98	98
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	170,205	228,937
Multifamily construction
Financing Receivable, Past Due [Line Items]
Total loans	278,184	305,527
Non-accrual with no Allowance	0	0
Nonaccrual loans	0	0
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	278,184	305,527
One- to four- family construction
Financing Receivable, Past Due [Line Items]
Total loans	571,431	507,810
Non-accrual with no Allowance	0	0
Nonaccrual loans	0	331
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	571,431	507,810
Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Total loans	308,164	248,915
Non-accrual with no Allowance	0	302
Nonaccrual loans	256	507
Loans 90 days or more past due and still accruing	0	0
Commercial Business
Financing Receivable, Past Due [Line Items]
Total loans	1,346,707	2,178,461
Non-accrual with no Allowance	820	555
Nonaccrual loans	1,326	1,988
Loans 90 days or more past due and still accruing	0	889
Financing Receivable, before Allowance for Credit Loss	1,346,707	2,178,461
Small business scored
Financing Receivable, Past Due [Line Items]
Total loans	775,554	743,451
Non-accrual with no Allowance	83	91
Nonaccrual loans	1,374	3,419
Loans 90 days or more past due and still accruing	61	136
Financing Receivable, before Allowance for Credit Loss	775,554	743,451
Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Total loans	287,469	299,949
Non-accrual with no Allowance	1,021	1,412
Nonaccrual loans	1,022	1,743
Loans 90 days or more past due and still accruing	0	0
Financing Receivable, before Allowance for Credit Loss	287,469	299,949
One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Total loans	682,368	717,939
Non-accrual with no Allowance	0	171
Nonaccrual loans	3,182	3,556
Loans 90 days or more past due and still accruing	772	1,899
Financing Receivable, before Allowance for Credit Loss	682,368	717,939
Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Total loans	462,819	491,812
Non-accrual with no Allowance	0	0
Nonaccrual loans	1,831	2,697
Loans 90 days or more past due and still accruing	30	130
Consumer-other
Financing Receivable, Past Due [Line Items]
Total loans	98,413	113,958
Non-accrual with no Allowance	0	0
Nonaccrual loans	19	22
Loans 90 days or more past due and still accruing	4	0
30 to 59 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	6,772	10,675
30 to 59 Days Past Due [Member] | Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
30 to 59 Days Past Due [Member] | Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
30 to 59 Days Past Due [Member] | Small balance CRE
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	2	0
30 to 59 Days Past Due [Member] | Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
30 to 59 Days Past Due [Member] | Commercial construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
30 to 59 Days Past Due [Member] | Multifamily construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,886	0
30 to 59 Days Past Due [Member] | One- to four- family construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	356
30 to 59 Days Past Due [Member] | Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
30 to 59 Days Past Due [Member] | Commercial Business
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	117	3,247
30 to 59 Days Past Due [Member] | Small business scored
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	506	1,459
30 to 59 Days Past Due [Member] | Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	298
30 to 59 Days Past Due [Member] | One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	107	4,620
30 to 59 Days Past Due [Member] | Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	840	459
30 to 59 Days Past Due [Member] | Consumer-other
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	314	236
60 to 89 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,187	2,908
60 to 89 Days Past Due [Member] | Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	182
60 to 89 Days Past Due [Member] | Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
60 to 89 Days Past Due [Member] | Small balance CRE
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	43	45
60 to 89 Days Past Due [Member] | Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	342	0
60 to 89 Days Past Due [Member] | Commercial construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
60 to 89 Days Past Due [Member] | Multifamily construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
60 to 89 Days Past Due [Member] | One- to four- family construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
60 to 89 Days Past Due [Member] | Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
60 to 89 Days Past Due [Member] | Commercial Business
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	167	31
60 to 89 Days Past Due [Member] | Small business scored
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	328	891
60 to 89 Days Past Due [Member] | Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	37
60 to 89 Days Past Due [Member] | One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	109	955
60 to 89 Days Past Due [Member] | Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	164	439
60 to 89 Days Past Due [Member] | Consumer-other
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	34	328
90 Days or More Past Due [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	10,660	22,548
90 Days or More Past Due [Member] | Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	495	1,447
90 Days or More Past Due [Member] | Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	5,185	7,981
90 Days or More Past Due [Member] | Small balance CRE
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	790
90 Days or More Past Due [Member] | Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
90 Days or More Past Due [Member] | Commercial construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	98	98
90 Days or More Past Due [Member] | Multifamily construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	0
90 Days or More Past Due [Member] | One- to four- family construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	331
90 Days or More Past Due [Member] | Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	14	317
90 Days or More Past Due [Member] | Commercial Business
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	847	2,088
90 Days or More Past Due [Member] | Small business scored
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	906	2,048
90 Days or More Past Due [Member] | Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,022	1,548
90 Days or More Past Due [Member] | One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,370	4,053
90 Days or More Past Due [Member] | Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	719	1,847
90 Days or More Past Due [Member] | Consumer-other
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4	0
Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	18,619	36,131
Financial Asset, Past Due | Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	495	1,629
Financial Asset, Past Due | Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	5,185	7,981
Financial Asset, Past Due | Small balance CRE
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	45	835
Financial Asset, Past Due | Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	342	0
Financial Asset, Past Due | Commercial construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	98	98
Financial Asset, Past Due | Multifamily construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	4,886	0
Financial Asset, Past Due | One- to four- family construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	0	687
Financial Asset, Past Due | Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	14	317
Financial Asset, Past Due | Commercial Business
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,131	5,366
Financial Asset, Past Due | Small business scored
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,740	4,398
Financial Asset, Past Due | Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,022	1,883
Financial Asset, Past Due | One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,586	9,628
Financial Asset, Past Due | Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,723	2,745
Financial Asset, Past Due | Consumer-other
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	352	564
Financial Asset, Not Past Due
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	9,199,765	9,834,851
Financial Asset, Not Past Due | Commerical real estate - owner-occupied [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,121,780	1,074,838
Financial Asset, Not Past Due | Commercial real estate - investment properties
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,975,099	1,947,703
Financial Asset, Not Past Due | Small balance CRE
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	601,706	573,014
Financial Asset, Not Past Due | Multifamily Real Estate
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	532,418	428,223
Financial Asset, Not Past Due | Commercial construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	170,107	228,839
Financial Asset, Not Past Due | Multifamily construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	273,298	305,527
Financial Asset, Not Past Due | One- to four- family construction
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	571,431	507,123
Financial Asset, Not Past Due | Land and land development - residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	308,150	248,598
Financial Asset, Not Past Due | Commercial Business
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	1,345,576	2,173,095
Financial Asset, Not Past Due | Small business scored
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	773,814	739,053
Financial Asset, Not Past Due | Agricultural business, including secured by farmland
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	286,447	298,066
Financial Asset, Not Past Due | One- to four-family residential [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	680,782	708,311
Financial Asset, Not Past Due | Consumer secured by one- to four-family [Member]
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	461,096	489,067
Financial Asset, Not Past Due | Consumer-other
Financing Receivable, Past Due [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 98,061	$ 113,394

XML

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES (Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	$ 148,009		$ 156,352	$ 167,279	$ 100,559
(Recapture)/provision for credit losses	(8,850)		13,641	(24,985)	64,878
Recoveries	1,416		445	3,521	3,453
Charge-offs	(660)		(2,473)	(5,900)	(8,737)
Allowance for loan losses, Ending balance	139,915	$ 148,009	167,965	139,915	167,965
Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		7,812
Commercial Real Estate
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	60,349		53,166	57,791	30,591
(Recapture)/provision for credit losses	(4,057)		6,895	2,096	32,213
Recoveries	923		23	1,094	244
Charge-offs	0		(379)	(3,766)	(479)
Allowance for loan losses, Ending balance	57,215	60,349	59,705	57,215	59,705
Commercial Real Estate | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		(2,864)
Multifamily Real Estate
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	5,807		3,504	3,893	4,754
(Recapture)/provision for credit losses	850		(248)	2,764	772
Recoveries	0		0	0	0
Charge-offs	0		0	0	(66)
Allowance for loan losses, Ending balance	6,657	5,807	3,256	6,657	3,256
Multifamily Real Estate | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		(2,204)
Construction and Land
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	30,899		36,916	41,295	22,994
(Recapture)/provision for credit losses	(1,557)		2,561	(12,053)	13,963
Recoveries	0		0	100	105
Charge-offs	0		0	0	(100)
Allowance for loan losses, Ending balance	29,342	30,899	39,477	29,342	39,477
Construction and Land | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		2,515
Commercial Business
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	30,830		33,870	35,007	23,370
(Recapture)/provision for credit losses	(3,825)		2,550	(8,390)	14,402
Recoveries	230		246	1,530	821
Charge-offs	(362)		(1,297)	(1,274)	(6,234)
Allowance for loan losses, Ending balance	26,873	30,830	35,369	26,873	35,369
Commercial Business | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		3,010
Agricultural Business
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	3,256		4,517	4,914	4,120
(Recapture)/provision for credit losses	83		1,026	(1,581)	64
Recoveries	17		0	25	1,772
Charge-offs	(179)		(492)	(181)	(554)
Allowance for loan losses, Ending balance	3,177	3,256	5,051	3,177	5,051
Agricultural Business | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		(351)
One- to Four-Family Residential
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	9,800		12,746	9,913	4,136
(Recapture)/provision for credit losses	(359)		100	(605)	1,470
Recoveries	19		94	152	273
Charge-offs	0		(72)	0	(136)
Allowance for loan losses, Ending balance	9,460	9,800	12,868	9,460	12,868
One- to Four-Family Residential | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		7,125
Consumer
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	7,068		11,633	14,466	8,202
(Recapture)/provision for credit losses	15		757	(7,216)	1,994
Recoveries	227		82	620	238
Charge-offs	(119)		(233)	(679)	(1,168)
Allowance for loan losses, Ending balance	7,191	7,068	12,239	7,191	12,239
Consumer | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		2,973
Unallocated
Financing Receivable, Allowance for Loan Losses [Roll Forward]
Allowance for loan losses, Beginning balance	0		0	0	2,392
(Recapture)/provision for credit losses	0		0	0	0
Recoveries	0		0	0	0
Charge-offs	0		0	0	0
Allowance for loan losses, Ending balance	$ 0	0	$ 0	$ 0	$ 0
Unallocated | Impact of Adopting ASC 326
Financing Receivable, Allowance for Loan Losses [Roll Forward]
(Recapture)/provision for credit losses		$ (2,392)

XML

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS (Finite-Lived Intangible Assets) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Goodwill [Roll Forward]
Goodwill, beginning of period	$ 373,121	$ 373,121
Goodwill, end of period	373,121	373,121
Finite-lived Intangible Assets [Roll Forward]
Goodwill and other intangibles, net, beginning of period	394,547	402,279
Amortization	(4,997)	(7,732)
Goodwill and other intangibles, net, end of period	389,550	394,547
Core Deposit Intangibles [Member]
Finite-lived Intangible Assets [Roll Forward]
Finite lived assets Balance, beginning of period	21,426	29,158
Amortization	(4,997)	(7,732)
Finite lived assets Balance, end of period	$ 16,429	$ 21,426

XML

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS (Estimated Annual Amortization Expense) (Details) - Core Deposit Intangibles [Member] - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Remainder of 2017	$ 1,574
2018	5,317
2019	3,814
2020	2,659
2021	1,575
Thereafter	1,490
Finite lived assets, net	$ 16,429	$ 21,426	$ 29,158

XML

GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS (Mortgage Servicing Rights) (Details) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2021		Sep. 30, 2020		Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Servicing Asset at Amortized Value, Balance [Roll Forward]
Additions—through purchase		$ 53		$ 40		$ 121	$ 141
Servicing Contracts [Member]
Morgage Servicing Rights at Amortized Value [Line Items]
Loans Serviced For Others		2,680,000				2,680,000		$ 2,640,000
Custodial Accounts		3,100				3,100		$ 3,800
Servicing Asset at Amortized Value, Balance [Roll Forward]
Balance, net of valuation allowance, beginning of the period		15,612		14,424		15,223	14,148
Additions—amounts capitalized		1,621		2,426		5,418	6,030
Amortization		(1,533)	[1]	(2,075)	[1]	(5,009)	(5,504)
Balance, net of valuation allowance, end of the period	[2]	15,753		$ 14,815		15,753	$ 14,815
Valuation allowance, end of period		$ 0				$ 0

[1] Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

[2] There was no valuation allowance as of both September 30, 2021 and 2020.

XML

REAL ESTATE OWNED, NET (REO Rollforward) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Real Estate Owned [Roll Forward]
Balance, beginning of the period	$ 763	$ 2,400	$ 816	$ 814
Additions from loan foreclosures	89	0	512	1,588
Proceeds from Sale of Other Real Estate	0	707	783	805
Gains (Losses) on Sales of Other Real Estate	0	(120)	(307)	(216)
Real Estate Owned, Valuation Allowance, Period Increase (Decrease)	0	(18)	0	(18)
Balance, end of the period	$ 852	$ 1,795	$ 852	$ 1,795

XML

REAL ESTATE OWNED, NET REAL ESTATE OWNED, NET (Textual) (Details) - USD ($)	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Real Estate Owned [Line Items]
Real Estate Owned	$ 852,000	$ 763,000	$ 816,000	$ 1,795,000	$ 2,400,000	$ 814,000
Mortgage Loans in Process of Foreclosure, Amount			609,000
One- to four-family residential [Member]
Real Estate Owned [Line Items]
Real Estate Owned			$ 0

XML

DEPOSITS (Deposit Liabilities) (Details) - USD ($)		Sep. 30, 2021	Dec. 31, 2020
Deposits:
Non-interest-bearing accounts		$ 6,400,864,000	$ 5,492,924,000
Interest-bearing checking		1,799,657,000	1,569,435,000
Regular savings accounts		2,773,995,000	2,398,482,000
Money market accounts		2,339,107,000	2,191,135,000
Total interest-bearing transaction and saving accounts		6,912,759,000	6,159,052,000
Certificates of deposit less than or equal to $250,000		663,592,000	718,256,000
Certificates of deposit greater than $250,000		187,462,000	197,064,000
Total certificates of deposit	[1]	851,054,000	915,320,000
Total deposits		14,164,677,000	12,567,296,000
Included in total deposits:
Public fund transaction and savings accounts		354,821,000	302,875,000
Public fund interest-bearing certificates		40,851,000	59,127,000
Total public deposits		395,672,000	362,002,000
CD acquisition premium		$ 2,000	$ 58,000

[1] Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

XML

DEPOSITS DEPOSITS (Maturities and Weighted Average Interest Rates of Certificates of Deposit) (Details) - USD ($) $ in Thousands		Sep. 30, 2021	Dec. 31, 2020
Maturities of Time Deposits [Abstract]
Maturing in one year or less		$ 644,909
Maturing after one year through two years		130,384
Maturing after two years through three years		52,948
Maturing after three years through four years		11,044
Maturing after four years through five years		10,261
Maturing after five years		1,508
Total certificates of deposit	[1]	$ 851,054	$ 915,320
Weighted Average Rate [Abstract]
Maturing in one year or less		0.49%
Maturing after one year through two years		0.80%
Maturing after two years through three years		0.78%
Maturing after three years through four years		1.27%
Maturing after four years through five years		0.42%
Maturing after five years		0.88%
Total certificates of deposit		0.57%

[1] Certificates of deposit include $2,000 and $58,000 of acquisition discounts at September 30, 2021 and December 31, 2020, respectively.

XML

DEPOSITS DEPOSITS (Textual) (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Banking and Thrift, Other Disclosures [Abstract]
Time Deposits, at or Above FDIC Insurance Limit	$ 191.5	$ 203.6

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Fair Value By Balance Sheet Location) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets:
Securities—trading	$ 26,875	$ 24,980
Debt Securities, Available-for-sale	3,446,575	2,322,593
Securities—held-to-maturity	466,002	448,681
Securities purchased under agreements to resell	300,000	0
Liabilities:
FHLB advances at fair value	50,000	150,000
Subordinated notes, net	98,472	98,201
Carrying Value
Assets:
Cash and cash equivalents	2,200,582	1,234,183
Securities—trading	26,875	24,980
Debt Securities, Available-for-sale	3,446,575	2,322,593
Securities purchased under agreements to resell	300,000	0
Loans receivable held for sale	63,678	243,795
Loans receivable	9,218,384	9,870,982
FHLB stock	12,000	16,358
Bank-owned life insurance	192,950	191,830
Mortgage servicing rights	15,753	15,223
Liabilities:
Demand, interest checking and money market accounts	10,539,628	9,253,494
Regular savings	2,773,995	2,398,482
Certificates of deposit	851,054	915,320
FHLB advances at fair value	50,000	150,000
Other borrowings	247,358	184,785
Subordinated notes, net		98,201
Junior subordinated debentures at fair value	124,853	116,974
Estimated Fair Value
Assets:
Cash and cash equivalents	2,200,582	1,234,183
Securities—trading	26,875	24,980
Debt Securities, Available-for-sale	3,446,575	2,322,593
Securities purchased under agreements to resell	300,000	0
Loans receivable held for sale	64,245	245,667
Loans receivable	9,271,840	9,810,293
FHLB stock	12,000	16,358
Bank-owned life insurance	192,950	191,830
Mortgage servicing rights	22,814	18,084
Liabilities:
Demand, interest checking and money market accounts	10,539,628	9,253,494
Regular savings	2,773,995	2,398,482
Certificates of deposit	851,780	919,920
FHLB advances at fair value	50,629	152,779
Other borrowings	247,358	184,785
Subordinated notes, net	105,875	98,201
Junior subordinated debentures at fair value	124,853	116,974
Interest rate swaps [Member] | Carrying Value
Assets:
Derivatives:	25,627	39,066
Liabilities:
Derivatives:	15,550	22,336
Interest rate swaps [Member] | Estimated Fair Value
Assets:
Derivatives:	25,627	39,066
Liabilities:
Derivatives:	15,550	22,336
Interest Rate Forward Sales Commitments [Member] | Carrying Value
Assets:
Derivatives:	2,309	5,641
Liabilities:
Derivatives:	136	1,755
Interest Rate Forward Sales Commitments [Member] | Estimated Fair Value
Assets:
Derivatives:	2,309	5,641
Liabilities:
Derivatives:	136	1,755
Fair Value, Inputs, Level 2 [Member] | Carrying Value
Assets:
Securities—held-to-maturity	445,499	410,038
Fair Value, Inputs, Level 2 [Member] | Estimated Fair Value
Assets:
Securities—held-to-maturity	463,913	436,882
Fair Value, Inputs, Level 3 [Member] | Carrying Value
Assets:
Securities—held-to-maturity	2,313	11,769
Fair Value, Inputs, Level 3 [Member] | Estimated Fair Value
Assets:
Securities—held-to-maturity	$ 2,089	$ 11,799

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets and Liabilities Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities—trading	$ 26,875		$ 24,980
Debt Securities, Available-for-sale	3,446,575		2,322,593
Advances from FHLB	50,000		150,000
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	3,446,575		2,322,593
Total assets	3,542,866		2,525,834
Junior subordinated debentures net of unamortized deferred issuance costs at fair value	124,853		116,974
Total liabilities	140,539		141,065
Recurring [Member] | Interest rate lock and forward sale commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	2,309		39,066
Derivative liabilities	136		22,336
Recurring [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	25,627		5,641
Derivative liabilities	15,550		1,755
Recurring [Member] | U.S. Government and agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	181,052		141,735
Recurring [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	310,391		303,518
Recurring [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	164,244		221,769
Recurring [Member] | TPS and TRUP CDOs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities—trading	26,875		24,980
Recurring [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	2,584,264		1,646,152
Recurring [Member] | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	206,624		9,419
Recurring [Member] | Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Fair Value Disclosure	41,480		133,554
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Total assets	0		0
Junior subordinated debentures net of unamortized deferred issuance costs at fair value	0		0
Total liabilities	0		0
Recurring [Member] | Level 1 [Member] | Interest rate lock and forward sale commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0
Derivative liabilities	0		0
Recurring [Member] | Level 1 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0		0
Derivative liabilities	0		0
Recurring [Member] | Level 1 [Member] | U.S. Government and agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Level 1 [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Level 1 [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Level 1 [Member] | TPS and TRUP CDOs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities—trading	0		0
Recurring [Member] | Level 1 [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Level 1 [Member] | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Level 1 [Member] | Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Fair Value Disclosure	0		0
Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	3,446,575		2,322,593
Total assets	3,514,596		2,495,633
Junior subordinated debentures net of unamortized deferred issuance costs at fair value	0		0
Total liabilities	15,686		24,091
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest rate lock and forward sale commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	914		39,066
Derivative liabilities	136		22,336
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	25,627		420
Derivative liabilities	15,550		1,755
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | U.S. Government and agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	181,052		141,735
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	310,391		303,518
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	164,244		221,769
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | TPS and TRUP CDOs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities—trading	0		0
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	2,584,264		1,646,152
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	206,624		9,419
Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Fair Value Disclosure	41,480		133,554
Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Total assets	28,270		30,201
Junior subordinated debentures net of unamortized deferred issuance costs at fair value	124,853		116,974
Total liabilities	124,853		116,974
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest rate lock and forward sale commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	1,395		0
Derivative liabilities	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Interest rate swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	$ 2,574	5,221	$ 8,454	$ 5,816	$ 791
Derivative liabilities	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | U.S. Government and agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | TPS and TRUP CDOs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities—trading	26,875		24,980
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt Securities, Available-for-sale	0		0
Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans Held-for-sale, Fair Value Disclosure	$ 0		$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Valuation Technique) (Details) - Fair Value, Inputs, Level 3 [Member]	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Corporate Bonds (TPS securities) [Member] | Weighted Average [Member] | Discounted cash flows [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair Value Input, Discount Rate	3.63%	4.24%
Impaired Loans [Member] | Minimum [Member] | discount to appraised value [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
fair value inputs, discount to appraised value	8.50%	0.00%
Impaired Loans [Member] | Maximum [Member] | discount to appraised value [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
fair value inputs, discount to appraised value	20.00%	20.00%
Real Estate Owned [Member] | Weighted Average [Member] | discount to appraised value [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
fair value inputs, discount to appraised value	60.91%	51.86%
Interest Rate Lock Commitments [Member] | Weighted Average [Member] | Valuation, Pricing Model [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair Value Input, Pull-Through Rate	86.43%
Servicing Contracts [Member] | Weighted Average [Member] | Discounted cash flows [Member]
Fair Value Inputs, Assets and Liabilities, Quantitative Information [Line Items]
Fair Value Input, Pull-Through Rate		86.35%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Unobservable Inputs Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Interest rate swaps [Member] | Recurring [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Derivative assets	$ 25,627		$ 25,627			$ 5,641
Interest rate swaps [Member] | Fair Value, Inputs, Level 3 [Member] | Recurring [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Assets gains (losses), including OTTI	(1,179)	$ 2,638	(3,826)	$ 7,663
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Derivative assets	0	8,454	0	8,454	$ 2,574	$ 5,221	$ 5,816	$ 791
Junior Subordinated Debt [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	117,520	109,613	116,974	119,304
Liabilities (gains) losses	7,333	208	7,879	(9,483)
Ending balance	124,853	109,821	124,853	109,821
TPS Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	25,097	23,239
Assets gains (losses), including OTTI	1,778	37
Ending balance	26,875	23,276	26,875	23,276
TPS and TRUP CDOs [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance			24,980	25,636
Assets gains (losses), including OTTI			1,895	(2,360)
Ending balance	$ 26,875	$ 23,276	$ 26,875	$ 23,276

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Assets Measured on Nonrecurring Basis) (Details) - Nonrecurring [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ (3,054)		$ (3,054)		$ (3,482)
REO	852		852		816
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0		0		0
REO	0		0		0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	0		0		0
REO	0		0		0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	(3,054)		(3,054)		(3,482)
REO	852		852		$ 816
Gains (losses) resulting from nonrecurring fair value adjustments	0	$ (492)	(303)	$ (2,492)
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gains (losses) resulting from nonrecurring fair value adjustments	0	(492)	(303)	(2,492)
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gains (losses) resulting from nonrecurring fair value adjustments	$ 0	$ 0	$ 0	$ 0

XML

INCOME TAXES AND DEFERRED TAXES INCOME TAXES AND DEFERRED TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Tax credit investments	$ 47,783		$ 47,783		$ 33,528
Unfunded commitments—tax credit investments	22,915		22,915		$ 18,306
Tax credits and other tax benefits recognized	1,114	$ 981	3,341	$ 2,943
Tax credit amortization expense included in provision for income taxes	915	$ 849	2,745	$ 2,507
Unrecognized Tax Benefits	$ 450		$ 450

XML

CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended							9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Abstract]
Net income	$ 49,884	$ 54,382	$ 46,855	$ 38,957	$ 36,548	$ 23,541	$ 16,882	$ 151,121	$ 76,971
Basic weighted average shares outstanding	34,446,510				35,193,109			34,716,914	35,285,567
Dilutive effect of unvested restricted stock	222,982				123,570			295,314	239,204
Diluted weighted shares outstanding	34,669,492				35,316,679			35,012,228	35,524,771
Earnings per common share
Basic	$ 1.45				$ 1.04			$ 4.35	$ 2.18
Diluted	$ 1.44				$ 1.03			$ 4.32	$ 2.17

XML

STOCK-BASED COMPENSATION PLANS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		38 Months Ended	86 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2021	Jun. 30, 2021	Apr. 24, 2018	Apr. 22, 2014
Restricted Stock Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Expense	$ 2.4	$ 2.5	$ 7.0	$ 6.9
Compensation Cost Not yet Recognized	$ 13.3		$ 13.3
Compensation Cost Not yet Recognized, Period for Recognition			31 months
2014 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized								900,000
2014 Omnibus Incentive Plan [Member] | Restricted Stock Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted						302,167
Restricted stock grants, shares vested						2,152
2014 Omnibus Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted						406,689
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares						113,906
2018 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares Authorized							900,000
2018 Omnibus Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted					481,361
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	394,416		394,416

XML

COMMITMENTS AND CONTINGENCIES (Commitments Without Recorded Liability) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Reserve for Unfunded Loan Commitments	$ 10,100,000		$ 10,100,000		$ 13,300,000
Mortgage loan applications, day interest rate is locked			45 days
Minimum [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Mortgage loan applications, day interest rate is locked			30 days
Maximum [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Mortgage loan applications, day interest rate is locked			60 days
Commitments to Extend Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	3,443,004,000		$ 3,443,004,000		3,207,072,000
Financial Standby Letter of Credit [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	20,987,000		20,987,000		18,415,000
Loan Origination Commitments [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	106,989,000		106,989,000		101,426,000
Risk Participation Agreement [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	40,325,000		40,325,000		40,949,000
Loans Held for Sale Origination Commitments [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	139,578,000		139,578,000		169,653,000
Commitments to Sell Loans Secured by one to four Residential Properties [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	55,641,000		55,641,000		79,414,000
Counterparty default losses on forward contracts	0	$ 0	0	$ 0
Commitments to Sell Mortgage Backed Securities [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Contract or Notional Amount	142,500,000		142,500,000		204,000,000
Amount funded out of a total commitment to invest [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Other Commitment	5,500,000		5,500,000		2,800,000
Other Commitments [Line Items]
Other Commitment	5,500,000		5,500,000		2,800,000
Other Commitment, 2021 Agreement	555,000		555,000
Other Commitment, 2021 Agreement	555,000		555,000
Amount unfunded out of a total commitment to invest [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Other Commitment	4,500,000		4,500,000		7,200,000
Other Commitments [Line Items]
Other Commitment	4,500,000		4,500,000		$ 7,200,000
Other Commitment, 2021 Agreement	3,900,000		3,900,000
Other Commitment, 2021 Agreement	3,900,000		3,900,000
Commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Other Commitment	4,500,000		4,500,000
Other Commitments [Line Items]
Other Commitment	$ 4,500,000		$ 4,500,000

XML

DERIVATIVES AND HEDGING (Derivatives Designated as Hedging, by Balance Sheet Location) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	$ 25,627	$ 39,066
Liability Derivatives, Fair Value	15,550	22,336
Interest rate swaps [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	25,627	39,066
Liability Derivatives, Fair Value	15,550	22,336
Interest rate swaps [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Notional/Contract Amount	63	338
Liability Derivatives, Notional/Contract Amount	63	338
Interest rate swaps [Member] | Designated as Hedging Instrument [Member] | Loans Receivable [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	1	9
Interest rate swaps [Member] | Designated as Hedging Instrument [Member] | Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	$ 1	$ 9

XML

DERIVATIVES AND HEDGING (Derivatives Not Designated as Hedging, by Balance Sheet Location) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	$ 25,627	$ 39,066
Liability Derivatives, Fair Value	15,550	22,336
Interest rate swaps [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	25,627	39,066
Liability Derivatives, Fair Value	15,550	22,336
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Notional/Contract Amount	765,764	671,564
Liability Derivatives, Notional/Contract Amount	556,133	728,271
Not Designated as Hedging Instrument [Member] | Other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	27,935	44,698
Not Designated as Hedging Instrument [Member] | Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	15,685	24,082
Not Designated as Hedging Instrument [Member] | Interest rate swaps [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Notional/Contract Amount	481,637	451,760
Liability Derivatives, Notional/Contract Amount	481,637	451,760
Not Designated as Hedging Instrument [Member] | Interest rate swaps [Member] | Other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	25,626	39,057
Not Designated as Hedging Instrument [Member] | Interest rate swaps [Member] | Loans Receivable [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	177	231
Not Designated as Hedging Instrument [Member] | Interest rate swaps [Member] | Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	15,549	22,327
Not Designated as Hedging Instrument [Member] | Mortgage loan commitments [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Notional/Contract Amount	109,986	140,390
Liability Derivatives, Notional/Contract Amount	50,496	72,511
Not Designated as Hedging Instrument [Member] | Mortgage loan commitments [Member] | Other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	1,395	5,221
Not Designated as Hedging Instrument [Member] | Mortgage loan commitments [Member] | Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	49	199
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Notional/Contract Amount	174,141	79,414
Liability Derivatives, Notional/Contract Amount	24,000	204,000
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Other assets [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair Value	914	420
Not Designated as Hedging Instrument [Member] | Forward Contracts [Member] | Other liabilities [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives, Fair Value	$ 87	$ 1,556

XML

DERIVATIVES AND HEDGING (Gain (Loss) On Derivatives Not Designated in Hedging Relationship) (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income, net	$ (314)	$ 2,897	$ (1,822)	$ 6,885
Mortgage loan commitments [Member] | Mortgage banking operations [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income, net	(1,179)	2,639	(3,826)	7,664
Forward sales contracts [Member] | Mortgage banking operations [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recognized in income, net	$ 865	$ 258	$ 2,004	$ (779)

XML

DERIVATIVES AND HEDGING (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2021	Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative net liability position	$ 29.2	$ 48.6
Collateral posted	50.8	47.1
Offsetting Assets and Liabilities [Line Items]
Derivative Liabilities, Amounts offset in the Statement of Financial Condition	$ (10.3)
Interest rate swaps [Member]
Offsetting Assets and Liabilities [Line Items]
Derivative Liabilities, Amounts offset in the Statement of Financial Condition		$ (16.9)

XML

DERIVATIVES AND HEDGING (Derivative Offsetting) (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Offsetting Derivative Assets [Abstract]
Derivative Assets, Gross Amounts Recognized	$ 25,627	$ 39,066
Derivative Assets, Amounts offsett in the Statement of Financial Condition	0	0
Derivative Assets, Net Amounts in the Statement of Financial Condition	25,627	39,066
Derivative Assets, Netting Adjustment Per Applicable Master Netting Agreements	0	0
Derivative Assets, Fair Value of Financial Collateral in the Statement of Financial Condiation	0	0
Derivative Assets, Net Amount	25,627	39,066
Offsetting Derivative Liabilities [Abstract]
Derivative Liabilities, Gross Amounts Recognized	15,550	22,336
Derivative Liabilities, Amounts offset in the Statement of Financial Condition	(10,300)
Derivative Liabilities, Net Amounts of the Statement of Financial Condition	15,550	22,336
Derivative Liabilities, Net Adjustment Per Applicable Master Netting Agreements	0	0
Derivative Liabilities, Fair Value of Financial Collateral in the Statement of Financial Condition	(12,446)	(22,220)
Derivative Liabilities, Net Amount	3,104	116
Interest rate swaps [Member]
Offsetting Derivative Assets [Abstract]
Derivative Assets, Gross Amounts Recognized	25,627	39,066
Derivative Assets, Amounts offsett in the Statement of Financial Condition	0	0
Derivative Assets, Net Amounts in the Statement of Financial Condition	25,627	39,066
Derivative Assets, Netting Adjustment Per Applicable Master Netting Agreements	0	0
Derivative Assets, Fair Value of Financial Collateral in the Statement of Financial Condiation	0	0
Derivative Assets, Net Amount	25,627	39,066
Offsetting Derivative Liabilities [Abstract]
Derivative Liabilities, Gross Amounts Recognized	15,550	22,336
Derivative Liabilities, Amounts offset in the Statement of Financial Condition		(16,900)
Derivative Liabilities, Net Amounts of the Statement of Financial Condition	15,550	22,336
Derivative Liabilities, Net Adjustment Per Applicable Master Netting Agreements	0	0
Derivative Liabilities, Fair Value of Financial Collateral in the Statement of Financial Condition	(12,446)	(22,220)
Derivative Liabilities, Net Amount	$ 3,104	$ 116

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Debit and credit card interchange fees	$ 6,032	$ 5,207	$ 17,265	$ 14,762
Debit and credit card expense	2,655	2,134	(7,819)	(6,272)
Merchant services expense	3,439	2,839	(8,964)	(7,378)
Other service charges	1,152	1,020	3,801	3,458
Total deposit fees and other service charges	10,457	8,742	29,154	26,091
Deposit service charges
Disaggregation of Revenue [Line Items]
Deposit service charges	5,128	3,904	13,735	12,269
Merchant services income
Disaggregation of Revenue [Line Items]
Deposit service charges	$ 4,239	$ 3,584	$ 11,136	$ 9,252