8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 19, 2023

Banner Corporation

(Exact name of registrant as specified in its charter)

Washington	000-26584	91-1691604
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

10 S. First Avenue, Walla Walla, Washington 99362

(Address of principal executive offices) (Zip Code)

Registrant's telephone number (including area code) (509) 527-3636

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 2.02 Results of Operations and Financial Condition.*

On January 19, 2023, Banner Corporation issued its earnings release for the quarter ended December 31, 2022. A copy of the earnings release is furnished herewith as Exhibit 99.1, which is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.*

Banner Corporation updated its investor materials. A copy of the updated investor materials is furnished herewith as Exhibit 99.2.

Item 9.01 Financial Statements and Exhibits.*

(d)    Exhibits

99.1    Press Release of Banner Corporation dated January 19, 2023.

99.2    Banner Corporation Investor Materials

104     Cover Page Interactive Data File (embedded within the Inline XBRL document)

*    The information furnished under Item 2.02, Item 7.01 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of Banner Corporation under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.

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, hereunto duly authorized.

	BANNER CORPORATION
Date: January 19, 2023	By: /s/ Peter J. Conner
	Peter J. Conner
	Executive Vice President, Treasurer and Chief Financial Officer

EX-99.1

Exhibit 99.1

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

Banner Corporation Reports Net Income of $54.4 Million, or $1.58 Per Diluted Share, for Fourth Quarter 2022;

Earns $195.4 Million in Net Income, or $5.67 Per Diluted Share, for 2022;

Declares Increased Quarterly Cash Dividend of $0.48 Per Share

Walla Walla, WA - January 19, 2023 - Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $54.4 million, or $1.58 per diluted share, for the fourth quarter of 2022, an 11% increase compared to $49.1 million, or $1.43 per diluted share, for the preceding quarter and a 9% increase compared to $49.9 million, or $1.44 per diluted share, for the fourth quarter of 2021. Banner’s fourth quarter 2022 results include $6.7 million of provision for credit losses, compared to $6.1 million of provision for credit losses in the preceding quarter and $5.2 million in recapture of provision for credit losses in the fourth quarter of 2021. In addition, the current quarter included an accrual of $3.5 million of legal expense in relation to a potential settlement of a pending litigation matter. For the year ended December 31, 2022, net income decreased 3% to $195.4 million, or $5.67 per diluted share, compared to net income of $201.0 million, or $5.76 per diluted share for the prior year. Full year 2022 results include $10.4 million in provision for credit losses, compared to $33.4 million in recapture of provision for credit losses in 2021. In addition, Banner recognized a $7.8 million gain related to the branch sale completed during the second quarter of 2022.

Banner announced that its Board of Directors increased its regular quarterly cash dividend by 9% to $0.48 per share. The dividend will be payable February 13, 2023, to common shareholders of record on February 02, 2023.

“Banner’s 2022 operating results reflect the continued successful execution of our super community bank strategy, and the benefits of implementing Banner Forward initiatives,” said Mark Grescovich, President and CEO. “Our performance for the fourth quarter of 2022 benefited from solid loan growth and higher yields on interest-earning assets that led to net interest margin expansion. Our continued focus on fostering new client relationships contributed to our 13% growth in loans, excluding PPP loans, compared to 2021. Our asset sensitive balance sheet contributed to the expansion of our net interest margin. As we continue to grow, we remain true to our values and guiding principle: Do the right thing for our clients, communities, employees, and shareholders through all economic cycles.”

“During the fourth quarter of 2022, we published our inaugural Environmental, Social and Governance Highlights Report,” said Grescovich. “This report identifies ongoing practices and recent accomplishments in the areas of environmental risk and impact management, social responsibility (including diversity, equity and inclusion) and governance. While we’ve been engaged in ESG activities and practices for a very long time, creating this report makes it easier to share more examples and greater detail with interested stakeholders in a single, dedicated document.” The report can be found on our website, bannerbank.com/esg.

“Banner Forward, our bank-wide initiative to enhance revenue growth and reduce operating expense, is having a meaningful impact on earnings,” said Grescovich. “Beginning during the third quarter of 2021, Banner Forward is focused on accelerating growth in commercial banking, deepening relationships with retail clients, and advancing technology strategies to enhance our digital service channels, while streamlining underwriting and back office processes. The implementation of the revenue initiatives benefited the second half of 2022 and are expected to continue ramping up in 2023. The efficiency-related initiatives associated with Banner Forward have largely been completed. During the fourth quarter of 2022, we incurred expenses of $838,000 related to Banner Forward.”

At December 31, 2022, Banner Corporation had $15.83 billion in assets, $10.01 billion in net loans and $13.62 billion in deposits. Banner operates 137 full service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 2

Fourth Quarter 2022 Highlights

•Revenues increased 6% to $172.1 million, compared to $162.0 million in the preceding quarter, and increased 18% compared to $146.0 million in the fourth quarter a year ago.

•Net interest income increased 9% to $159.1 million in the fourth quarter of 2022, compared to $146.4 million in the preceding quarter and increased 31%, compared to $121.5 million in the fourth quarter a year ago.

•Net interest margin, on a tax equivalent basis, was 4.23%, compared to 3.85% in the preceding quarter and 3.17% in the fourth quarter a year ago.

•Mortgage banking revenues increased to $2.3 million, compared to $105,000 in the preceding quarter, and decreased 59% compared to $5.6 million in the fourth quarter a year ago.

•Return on average assets was 1.34%, compared to 1.18% in both the preceding quarter and fourth quarter a year ago.

•Net loans receivable increased 3% to $10.01 billion at December 31, 2022, compared to $9.69 billion at September 30, 2022, and increased 12% compared to $8.95 billion at December 31, 2021.

•Non-performing assets increased to $23.4 million, or 0.15% of total assets, at December 31, 2022, compared to $15.6 million, or 0.10% of total assets at September 30, 2022, and decreased slightly compared to $23.7 million, or 0.14% of total assets, at December 31, 2021.

•The allowance for credit losses - loans was $141.5 million, or 1.39% of total loans receivable, as of December 31, 2022, compared to $135.9 million, or 1.38% of total loans receivable as of September 30, 2022 and $132.1 million, or 1.45% of total loans receivable as of December 31, 2021.

•Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) decreased to $12.90 billion at December 31, 2022, compared to $13.51 billion at September 30, 2022, and $13.49 billion a year ago. Core deposits represented 95% of total deposits at December 31, 2022.

•Dividends paid to shareholders were $0.44 per share in the quarter ended December 31, 2022.

•Common shareholders’ equity per share increased 3% to $42.59 at December 31, 2022, compared to $41.20 at the preceding quarter end, and decreased 14% from $49.35 a year ago.

•Tangible common shareholders’ equity per share* increased 5% to $31.41 at December 31, 2022, compared to $29.97 at the preceding quarter end, and decreased 17% from $38.02 a year ago.

*Non-GAAP (Generally Accepted Accounting Principles) measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

Income Statement Review

Net interest income was $159.1 million in the fourth quarter of 2022, compared to $146.4 million in the preceding quarter and $121.5 million in the fourth quarter a year ago. Banner’s net interest margin on a tax equivalent basis was 4.23% for the fourth quarter of 2022, a 38 basis-point increase compared to 3.85% in the preceding quarter and a 106 basis-point increase compared to 3.17% in the fourth quarter a year ago. “Rising market interest rates during the quarter produced higher yields on loans and investment securities which improved our net interest margin. Our net interest margin was also enhanced by increases in average loan balances during the quarter,” said Grescovich.

Average yields on interest-earning assets increased 43 basis points to 4.40% for the fourth quarter of 2022, compared to 3.97% for the preceding quarter and increased 111 basis points compared to 3.29% in the fourth quarter a year ago. Since March 2022, in response to inflation, the Federal Open Market Committee (“FOMC”) of the Federal Reserve System has increased the target range for the federal funds rate by 425 basis points, including 125 basis points during the fourth quarter of 2022, to a range of 4.25% to 4.50%. The increase in average yields on interest-earning assets during the current quarter reflects the benefit of variable rate interest-earning assets repricing higher, as well as new loans being originated at higher interest rates. Average loan yields increased 32 basis points to 5.14% compared to 4.82% in the preceding quarter and increased 57 basis points compared to 4.57% in the fourth quarter a year ago. The increase in average loan yields during the current quarter compared to the preceding and prior year quarters was primarily the result of rising interest rates. The year-over-year increase in average loan yields was partially offset by a decline in the recognition of deferred loan fee income due to loan repayments from U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loan forgiveness compared to the prior year quarter. Total deposit costs were 0.10% in the fourth quarter of 2022, which was a three basis-point increase compared to both the preceding quarter and fourth quarter a year ago. The total cost of funding liabilities was 0.18% during the fourth quarter of 2022, a five basis-point increase compared to 0.13% in both the preceding quarter and fourth quarter a year ago.

Banner recorded a $6.7 million provision for credit losses in the current quarter (comprised of a $6.0 million provision for credit losses - loans, a $680,000 provision for credit losses - unfunded loan commitments and a $19,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $6.1 million provision for credit losses in the prior quarter (comprised of a $6.3 million provision for credit losses - loans, a $205,000 recapture of provision for credit losses - unfunded loan commitments and a $55,000 recapture of provision for credit losses - held-to-maturity debt securities) and a $5.2 million recapture of provision for credit losses in the fourth quarter a year ago (comprised of an $8.1 million recapture of provision for credit losses - loans, a $2.3 million provision for credit losses - unfunded loan commitments and a $579,000 provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current and preceding quarter primarily reflects loan growth and, to a lesser extent, a deterioration in forecasted economic indicators utilized to estimate credit losses.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 3

Total non-interest income was $13.1 million in the fourth quarter of 2022, compared to $15.6 million in the preceding quarter and $24.5 million in the fourth quarter a year ago. The decrease in non-interest income during the current quarter, compared to the prior quarter was primarily due to a $628,000 decrease in deposit fees and other service charges and a $3.7 million net loss on the sale of securities recorded during the current quarter, partially offset by a $2.2 million increase in mortgage banking revenues. The decrease in non-interest income during the current quarter, compared to the prior year quarter was primarily due to a $3.3 million decrease in mortgage banking revenues, a $3.3 million decrease in miscellaneous non-interest income primarily due to a valuation adjustment recognized on the SBA servicing asset and higher gains related to SBA loans sold during the fourth quarter a year ago, and the previously mentioned net loss recognized on the sale of securities during the current quarter, partially offset by a $917,000 increase in bank-owned life insurance income. Deposit fees and other service charges were $10.8 million in the fourth quarter of 2022, compared to $11.4 million in the preceding quarter and $10.3 million in the fourth quarter a year ago.

Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, were $2.3 million in the fourth quarter, compared to $105,000 in the preceding quarter and $5.6 million in the fourth quarter a year ago. The increase from the preceding quarter primarily reflects a negative fair value adjustment recognized in the previous quarter on multifamily held for sale loans. The decrease from the fourth quarter of 2021 primarily reflects a reduction in the volume and a decrease in the gain on sale margin for one- to four-family loans sold. The reduction in the volume of one-to four family loans sold primarily reflects reduced refinancing activity, as well as decreased purchase activity as interest rates increased during the current year. Home purchase activity accounted for 90% of one- to four-family mortgage loan originations in the fourth quarter of 2022, compared to 88% in the preceding quarter and was 64% in the fourth quarter of 2021. Mortgage banking revenue included a $723,000 lower of cost or market upward adjustment for the current quarter due to the transfer of multifamily held for sale loans to held for investment portfolio loans, partially offset by a negative fair value adjustment on multifamily held for sale loans. This compares to a $2.2 million lower of cost or market downward adjustment recorded during the preceding quarter on multifamily held for sale loans due to increases in market interest rates this year.

Fourth quarter 2022 non-interest income also included a $157,000 net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading and limited partnership investments, and a $3.7 million net loss on the sale of securities. In the preceding quarter, results included a $532,000 net gain for fair value adjustments and a $6,000 net gain on the sale of securities. In the fourth quarter a year ago, results included a $2.7 million net gain for fair value adjustments and a $136,000 net loss on the sale of securities.

Total revenue increased 6% to $172.1 million for the fourth quarter of 2022, compared to $162.0 million in the preceding quarter, and increased 18% compared to $146.0 million in the fourth quarter of 2021. Adjusted revenue* (the total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities, the net change in valuation of financial instruments, and the gain on sale of branches) was $175.7 million in the fourth quarter of 2022, compared to $161.5 million in the preceding quarter and $143.4 million in the fourth quarter a year ago. For the year ended December 31, 2022, total revenue was $628.4 million compared to $593.3 million during 2021, with adjusted revenue* totaling $623.1 million for the year ended December 31, 2022, compared to $588.2 million in 2021.

Total non-interest expense was $99.0 million in the fourth quarter of 2022, compared to $95.0 million in the preceding quarter and $91.8 million in the fourth quarter of 2021. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $1.1 million decrease in capitalized loan origination costs, primarily due to decreases in production for construction and land loans, a $1.5 million increase in occupancy and equipment expenses, primarily reflecting increased building rent expense due to lease buyouts during the quarter as well as weather related increases in building maintenance expense, and a $3.7 million increase in professional and legal expenses, primarily due to a $3.5 million accrual during the current quarter in relation to a potential settlement of a pending litigation matter, partially offset by a $1.3 million decrease in salary and employee benefits expense, primarily due to a decrease in commission expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects an increase in salary and employee benefits expense, a decrease in capitalized loan origination costs and an increase in professional and legal expenses, partially offset by a $2.3 million loss on extinguishment of debt as a result of the redemption of $8.2 million of junior subordinated debentures during fourth quarter of 2021. For the year ended December 31, 2022, total non-interest expense was $377.3 million, compared to $380.1 million in the prior year. Banner’s efficiency ratio was 57.52% for the fourth quarter, compared to 58.65% in the preceding quarter and 62.88% in same quarter a year ago. Banner’s adjusted efficiency ratio* was 54.43% for the fourth quarter, compared to 57.04% in the preceding quarter and 59.71% in the year ago quarter.

Federal and state income tax expense totaled $12.0 million for the fourth quarter of 2022 resulting in an effective tax rate of 18.1%, reflecting the benefits from tax exempt income as well as some adjustments related to filing its annual tax returns. Banner’s statutory income tax rate is 23.5%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

* Non-GAAP measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

Balance Sheet Review

Total assets decreased 3% to $15.83 billion at December 31, 2022, compared to $16.36 billion at September 30, 2022, and decreased 6% when compared to $16.80 billion at December 31, 2021. The total of securities and interest-bearing deposits held at other banks was $4.28 billion at December 31, 2022, compared to $5.01 billion at September 30, 2022 and $6.26 billion at December 31, 2021. The decreases compared to the prior quarter and the prior year quarter were primarily due to a decrease in interest-bearing deposits. The average effective duration of Banner's securities portfolio was approximately 6.5 years at December 31, 2022, compared to 4.6 years at December 31, 2021.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 4

Total loans receivable increased to $10.15 billion at December 31, 2022, compared to $9.83 billion at September 30, 2022, and $9.08 billion at December 31, 2021. Excluding SBA PPP loans, total loans receivable increased $325.1 million from the preceding quarter and increased $1.19 billion from the fourth quarter a year ago. SBA PPP loans decreased 41% to $7.9 million at December 31, 2022, compared to $13.4 million at September 30, 2022, and decreased 94% to $133.9 million at December 31, 2021. One- to four-family residential loans increased to $1.17 billion at December 31, 2022, compared to $1.03 billion at September 30, 2022, and $657.5 million a year ago. The increase in one- to four-family residential loans from the preceding quarter was primarily the result of one- to four-family construction loans converting to one- to four-family portfolio loans as construction was completed and new production during the fourth quarter of 2022. Multifamily real estate loans increased 9% to $645.1 million at December 31, 2022, compared to $592.8 million at September 30, 2022, and increased 22% compared to $530.9 million a year ago. The current quarter increase in multifamily loans was due to transferring $54.0 million of multifamily held for sale loans to held for investment portfolio loans. Commercial real estate loans decreased slightly to $3.64 billion at December 31, 2022, compared to $3.66 billion at September 30, 2022 and decreased 4% when compared to $3.79 billion at December 31, 2021. Commercial business loans increased 4% to $2.23 billion at December 31, 2022, compared to $2.15 billion at September 30, 2022, and increased 14% compared to $1.96 billion a year ago. Excluding SBA PPP loans, commercial business loans increased 4% to $2.22 billion at December 31, 2022, compared to $2.14 billion at September 30, 2022, and increased 21% compared to $1.83 billion a year ago. Agricultural business loans decreased to $295.1 million at December 31, 2022, compared to $299.4 million at September 30, 2022, and increased from $280.6 million a year ago. Total construction, land and land development loans were $1.49 billion at December 31, 2022, a 3% increase from $1.44 billion at September 30, 2022, and a 14% increase from $1.31 billion at December 31, 2021, primarily due to an increase in multifamily construction loans. Consumer loans increased to $680.9 million at December 31, 2022, compared to $662.2 million at September 30, 2022, and increased from $555.9 million a year ago. The year-over-year increase in consumer loans was partially due to the purchase of a $25.6 million pool of consumer marine loans during the prior quarter.

Loans held for sale were $56.9 million at December 31, 2022, compared to $84.4 million at September 30, 2022, and $96.5 million at December 31, 2021. The volume of one- to four- family residential mortgage loans sold was $39.3 million in the current quarter, compared to $49.7 million in the preceding quarter and $245.9 million in the fourth quarter a year ago. No multifamily loans were sold during the fourth quarter of 2022, compared to $10.5 million sold in the preceding quarter and none sold in the fourth quarter a year ago.

Total deposits decreased to $13.62 billion at December 31, 2022, compared to $14.23 billion at September 30, 2022, and $14.33 billion a year ago. Non-interest-bearing account balances decreased 5% to $6.18 billion at December 31, 2022, compared to $6.51 billion at September 30, 2022, and 3% compared to $6.39 billion a year ago. Core deposits were 95% of total deposits at both December 31, 2022 and September 30, 2022 and 94% of total deposits at December 31, 2021. Certificates of deposit increased to $723.5 million at December 31, 2022, compared to $721.9 million at September 30, 2022, and decreased 14% compared to $838.6 million a year earlier. Banner had $50.0 million of FHLB borrowings at December 31, 2022, compared to none at September 30, 2022 and $50.0 million a year ago.

At December 31, 2022, total common shareholders’ equity was $1.46 billion, or 9.20% of assets, compared to $1.41 billion or 8.61% of assets at September 30, 2022, and $1.69 billion or 10.06% of assets a year ago. The increase in total common shareholders’ equity at December 31, 2022 compared to September 30, 2022 was primarily due to a $39.1 million increase in retained earnings as a result of $54.4 million in net income, partially offset by the payment of cash dividends during the quarter. The decrease in total common shareholders’ equity from December 31, 2021 reflects a $363.0 million decrease in accumulated other comprehensive income, primarily due to an increase in the unrealized loss on the security portfolio as a result of an increase in interest rates, the repurchase of 200,000 shares of common stock in the second quarter of 2022 at an average cost of $54.80 per share, and the payment of cash dividends, partially offset by a $134.5 million increase in retained earnings. At December 31, 2022, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.07 billion, or 6.95% of tangible assets*, compared to $1.02 billion, or 6.41% of tangible assets, at September 30, 2022, and $1.30 billion, or 7.93% of tangible assets, a year ago.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At December 31, 2022, Banner's estimated common equity Tier 1 capital ratio was 11.44%, its estimated Tier 1 leverage capital to average assets ratio was 9.45%, and its estimated total capital to risk-weighted assets ratio was 14.04%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

* Non-GAAP measure; see the discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

Credit Quality

The allowance for credit losses - loans was $141.5 million, or 1.39% of total loans receivable and 615% of non-performing loans, at December 31, 2022, compared to $135.9 million, or 1.38% of total loans receivable and 895% of non-performing loans, at September 30, 2022, and $132.1 million, or 1.45% of total loans receivable and 578% of non-performing loans, at December 31, 2021. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $14.7 million at December 31, 2022, compared to $14.0 million at September 30, 2022 and $12.4 million at December 31, 2021. Net loan charge-offs totaled $496,000 in the fourth quarter of 2022, compared to net loan recoveries of $869,000 in the preceding quarter and $311,000 in the fourth quarter a year ago. Non-performing loans were $23.0 million at December 31, 2022, compared to $15.2 million at September 30, 2022, and $22.8 million a year ago.

Banner’s total substandard loans were $137.2 million at December 31, 2022, compared to $136.4 million at September 30, 2022, and $198.4 million a year ago. The year over year decrease primarily reflects the payoff of substandard loans as well as risk rating upgrades during the current year.

Banner’s total non-performing assets were $23.4 million, or 0.15% of total assets, at December 31, 2022, compared to $15.6 million, or 0.10% of total assets, at September 30, 2022, and $23.7 million, or 0.14% of total assets, a year ago.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 5

Conference Call

Banner will host a conference call on Friday January 20, 2023, at 8:00 a.m. PST, to discuss its fourth quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (844) 200-6205 using access code 188909 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 733055 or at www.bannerbank.com.

About the Company

Banner Corporation is a $15.83 billion bank holding company operating one commercial bank in four Western states through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Forward-Looking Statements

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

Factors that could cause Banner’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: (1) potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing oil prices and supply chain disruptions, and any governmental or societal responses to the COVID-19 pandemic, including the possibility of new COVID-19 variants; (2) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (3) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner’s activities; (4) competitive pressures among depository institutions; (5) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (6) the transition away from the London Interbank Offered Rate (LIBOR) toward new interest rate benchmarks; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (10) the ability to access cost-effective funding; (11) 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; (12) changes in financial markets; (13) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular, including the risk of inflation; (14) the costs, effects and outcomes of litigation; (15) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (16) changes in accounting principles, policies or guidelines; (17) future acquisitions by Banner of other depository institutions or lines of business; (18) future goodwill impairment due to changes in Banner’s business or changes in market conditions; (19) the costs associated with Banner Forward; (20) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (21) other risks detailed from time to time in Banner’s filings with the Securities and Exchange Commission including Banner’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 6

RESULTS OF OPERATIONS	Quarters Ended						Years Ended
(in thousands except shares and per share data)	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
INTEREST INCOME:
Loans receivable	$	129,450	$	116,610	$	104,929	$	450,916	$	445,731
Mortgage-backed securities	19,099		17,558		13,220		67,585		45,723
Securities and cash equivalents	17,009		16,951		8,397		54,068		29,046
	165,558		151,119		126,546		572,569		520,500
INTEREST EXPENSE:
Deposits	3,623		2,407		2,384		10,124		11,770
Federal Home Loan Bank advances	198		—		348		489		2,592
Other borrowings	132		81		109		377		467
Subordinated debt	2,534		2,188		2,175		8,400		8,780
	6,487		4,676		5,016		19,390		23,609
Net interest income	159,071		146,443		121,530		553,179		496,891
PROVISION (RECAPTURE) FOR CREDIT LOSSES	6,704		6,087		(5,243)		10,364		(33,388)
Net interest income after provision (recapture) for credit losses	152,367		140,356		126,773		542,815		530,279
NON-INTEREST INCOME:
Deposit fees and other service charges	10,821		11,449		10,341		44,459		39,495
Mortgage banking operations	2,311		105		5,643		10,834		33,948
Bank-owned life insurance	2,120		1,804		1,203		7,794		5,000
Miscellaneous	1,382		1,689		4,702		6,805		12,875
	16,634		15,047		21,889		69,892		91,318
Net (loss) gain on sale of securities	(3,721)		6		(136)		(3,248)		482
Net change in valuation of financial instruments carried at fair value	157		532		2,721		807		4,616
Gain on sale of branches, including related deposits	—		—		—		7,804		—
Total non-interest income	13,070		15,585		24,474		75,255		96,416
NON-INTEREST EXPENSE:
Salary and employee benefits	60,309		61,639		57,798		242,266		244,351
Less capitalized loan origination costs	(4,877)		(5,984)		(7,647)		(24,313)		(34,401)
Occupancy and equipment	13,506		12,008		13,885		52,018		52,850
Information and computer data services	6,535		6,803		6,441		25,986		24,356
Payment and card processing services	5,109		5,508		5,062		21,195		20,544
Professional and legal expenses	6,328		2,619		2,251		14,005		22,274
Advertising and marketing	1,350		1,326		2,071		3,959		6,036
Deposit insurance	1,739		1,946		1,340		6,649		5,583
State and municipal business and use taxes	1,304		1,223		976		4,693		4,343
Real estate operations, net	28		68		49		(104)		(22)
Amortization of core deposit intangibles	1,215		1,215		1,574		5,279		6,571
Loss on extinguishment of debt	—		—		2,284		793		2,284
Miscellaneous	6,467		6,663		5,594		24,869		24,236
	99,013		95,034		91,678		377,295		379,005
COVID-19 expenses	—		—		127		—		436
Merger and acquisition-related expenses	—		—		—		—		660
Total non-interest expense	99,013		95,034		91,805		377,295		380,101
Income before provision for income taxes	66,424		60,907		59,442		240,775		246,594
PROVISION FOR INCOME TAXES	12,044		11,837		9,515		45,397		45,546
NET INCOME	$	54,380	$	49,070	$	49,927	$	195,378	$	201,048
Earnings per common share:
Basic	$	1.59	$	1.43	$	1.46	$	5.70	$	5.81
Diluted	$	1.58	$	1.43	$	1.44	$	5.67	$	5.76
Cumulative dividends declared per common share	$	0.44	$	0.44	$	0.41	$	1.76	$	1.64
Weighted average number of common shares outstanding:
Basic	34,226,162		34,224,640		34,292,967		34,264,322		34,610,056
Diluted	34,437,151		34,416,017		34,575,607		34,459,922		34,919,188
Increase (decrease) in common shares outstanding	2,259		429		641		(58,614)		(906,568)

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 7

FINANCIAL  CONDITION										Percentage Change
(in thousands except shares and per share data)	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021			Prior Qtr		Prior Yr Qtr
ASSETS
Cash and due from banks	$	198,154		$	273,052		$	358,461		(27.4)	%	(44.7)	%
Interest-bearing deposits	44,908			548,869			1,775,839			(91.8)	%	(97.5)	%
Total cash and cash equivalents	243,062			821,921			2,134,300			(70.4)	%	(88.6)	%
Securities - trading	28,694			28,383			26,981			1.1	%	6.3	%
Securities - available for sale	2,789,031			2,996,173			3,638,993			(6.9)	%	(23.4)	%
Securities - held to maturity	1,117,588			1,132,852			520,922			(1.3)	%	114.5	%
Total securities	3,935,313			4,157,408			4,186,896			(5.3)	%	(6.0)	%
Federal Home Loan Bank (FHLB) stock	12,000			10,000			12,000			20.0	%	—	%
Securities purchased under agreements to resell	300,000			300,000			300,000			—	%	—	%
Loans held for sale	56,857			84,358			96,487			(32.6)	%	(41.1)	%
Loans receivable	10,146,724			9,827,096			9,084,763			3.3	%	11.7	%
Allowance for credit losses – loans	(141,465)			(135,918)			(132,099)			4.1	%	7.1	%
Net loans receivable	10,005,259			9,691,178			8,952,664			3.2	%	11.8	%
Accrued interest receivable	57,284			50,689			42,916			13.0	%	33.5	%
Real estate owned (REO) held for sale, net	340			340			852			—	%	(60.1)	%
Property and equipment, net	138,754			141,280			148,759			(1.8)	%	(6.7)	%
Goodwill	373,121			373,121			373,121			—	%	—	%
Other intangibles, net	9,440			10,655			14,855			(11.4)	%	(36.5)	%
Bank-owned life insurance	297,565			295,443			244,156			0.7	%	21.9	%
Operating lease right-of-use assets	49,283			51,908			55,257			(5.1)	%	(10.8)	%
Other assets	355,153			372,508			242,609			(4.7)	%	46.4	%
Total assets	$	15,833,431		$	16,360,809		$	16,804,872		(3.2)	%	(5.8)	%
LIABILITIES
Deposits:
Non-interest-bearing	$	6,176,998		$	6,507,523		$	6,385,177		(5.1)	%	(3.3)	%
Interest-bearing transaction and savings accounts	6,719,531			7,004,799			7,103,125			(4.1)	%	(5.4)	%
Interest-bearing certificates	723,530			721,944			838,631			0.2	%	(13.7)	%
Total deposits	13,620,059			14,234,266			14,326,933			(4.3)	%	(4.9)	%
Advances from FHLB	50,000			—			50,000			—	%	—	%
Other borrowings	232,799			234,006			264,490			(0.5)	%	(12.0)	%
Subordinated notes, net	98,947			98,849			98,564			0.1	%	0.4	%
Junior subordinated debentures at fair value	74,857			73,841			119,815			1.4	%	(37.5)	%
Operating lease liabilities	55,205			58,031			59,756			(4.9)	%	(7.6)	%
Accrued expenses and other liabilities	200,839			209,226			148,303			(4.0)	%	35.4	%
Deferred compensation	44,293			43,931			46,684			0.8	%	(5.1)	%
Total liabilities	14,376,999			14,952,150			15,114,545			(3.8)	%	(4.9)	%
SHAREHOLDERS’ EQUITY
Common stock	1,293,959			1,291,741			1,299,381			0.2	%	(0.4)	%
Retained earnings	525,242			486,108			390,762			8.1	%	34.4	%
Accumulated other comprehensive (loss) income	(362,769)			(369,190)			184			(1.7)	%	nm
Total shareholders’ equity	1,456,432			1,408,659			1,690,327			3.4	%	(13.8)	%
Total liabilities and shareholders’ equity	$	15,833,431		$	16,360,809		$	16,804,872		(3.2)	%	(5.8)	%
Common Shares Issued:
Shares outstanding at end of period	34,194,018			34,191,759			34,252,632
Common shareholders’ equity per share (1)	$	42.59		$	41.20		$	49.35
Common shareholders’ tangible equity per share (1) (2)	$	31.41		$	29.97		$	38.02
Common shareholders’ tangible equity to tangible assets (2)	6.95		%	6.41		%	7.93		%
Consolidated Tier 1 leverage capital ratio	9.45		%	9.06		%	8.76		%

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

BANR - Fourth Quarter 2022 Results

January 19, 2023

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ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
										Percentage Change
LOANS (1)	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021			Prior Qtr		Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied	$	845,320		$	862,792		$	831,623		(2.0)	%	1.6	%
Investment properties	1,589,975			1,604,881			1,674,027			(0.9)	%	(5.0)	%
Small balance CRE	1,200,251			1,188,351			1,281,863			1.0	%	(6.4)	%
Multifamily real estate	645,071			592,834			530,885			8.8	%	21.5	%
Construction, land and land development:
Commercial construction	184,876			171,029			167,998			8.1	%	10.0	%
Multifamily construction	325,816			275,488			259,116			18.3	%	25.7	%
One- to four-family construction	647,329			666,350			568,753			(2.9)	%	13.8	%
Land and land development	328,475			329,459			313,454			(0.3)	%	4.8	%
Commercial business:
Commercial business	1,275,813			1,229,490			1,038,206			3.8	%	22.9	%
SBA PPP	7,594			13,060			132,574			(41.9)	%	(94.3)	%
Small business scored	947,092			906,647			792,310			4.5	%	19.5	%
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland	294,743			299,056			279,224			(1.4)	%	5.6	%
SBA PPP	334			344			1,354			(2.9)	%	(75.3)	%
One- to four-family residential	1,173,112			1,025,143			657,474			14.4	%	78.4	%
Consumer:
Consumer—home equity revolving lines of credit	566,291			545,807			458,533			3.8	%	23.5	%
Consumer—other	114,632			116,365			97,369			(1.5)	%	17.7	%
Total loans receivable	$	10,146,724		$	9,827,096		$	9,084,763		3.3	%	11.7	%
Restructured loans performing under their restructured terms	$	4,241		$	4,352		$	5,309
Loans 30 - 89 days past due and on accrual	$	17,186		$	15,208		$	11,558
Total delinquent loans (including loans on non-accrual), net	$	32,371		$	21,728		$	18,688
Total delinquent loans  /  Total loans receivable	0.32		%	0.22		%	0.21		%

(1)December 31, 2021 loan balances were reclassified to match current period presentation.

LOANS BY GEOGRAPHIC LOCATION								Percentage Change
	Dec 31, 2022			Sep 30, 2022		Dec 31, 2021		Prior Qtr		Prior Yr Qtr
	Amount		Percentage	Amount		Amount
Washington	$	4,777,546	47.1%	$	4,648,124	$	4,264,590	2.8	%	12.0	%
California	2,484,980		24.5%	2,323,740		2,138,340		6.9	%	16.2	%
Oregon	1,826,743		18.0%	1,765,254		1,652,364		3.5	%	10.6	%
Idaho	565,586		5.6%	588,498		525,141		(3.9)	%	7.7	%
Utah	75,967		0.7%	95,250		74,913		(20.2)	%	1.4	%
Other	415,902		4.1%	406,230		429,415		2.4	%	(3.1)	%
Total loans receivable	$	10,146,724	100.0%	$	9,827,096	$	9,084,763	3.3	%	11.7	%

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January 19, 2023

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ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

LOAN ORIGINATIONS	Quarters Ended						Years Ended
	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
Commercial real estate	$	117,787	$	92,062	$	196,350	$	418,635	$	565,809
Multifamily real estate	8,881		4,603		25,933		37,612		110,640
Construction and land	301,804		444,365		522,081		1,935,476		1,975,664
Commercial business:
Commercial business	298,396		218,044		203,549		1,034,950		731,315
SBA PPP	—		—		—		—		485,077
Agricultural business	24,314		9,879		13,061		89,655		61,997
One-to four-family residential	83,491		92,701		52,251		358,976		206,662
Consumer	102,502		126,940		101,365		545,254		465,213
Total loan originations (excluding loans held for sale)	$	937,175	$	988,594	$	1,114,590	$	4,420,558	$	4,602,377

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January 19, 2023

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ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
	Quarters Ended									Years Ended
CHANGE IN THE	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021			Dec 31, 2022			Dec 31, 2021
ALLOWANCE FOR CREDIT LOSSES – LOANS
Balance, beginning of period	$	135,918		$	128,702		$	139,915		$	132,099		$	167,279
Provision (recapture) for credit losses – loans	6,043			6,347			(8,127)			8,158			(33,112)
Recoveries of loans previously charged off:
Commercial real estate	88			88			635			392			1,729
Construction and land	—			—			—			384			100
One- to four-family real estate	18			25			47			181			199
Commercial business	616			924			267			1,923			1,797
Agricultural business, including secured by farmland	91			252			5			475			30
Consumer	153			85			140			566			760
	966			1,374			1,094			3,921			4,615
Loans charged off:
Commercial real estate	—			—			(1)			(2)			(3,767)
Multifamily real estate	—			—			(59)			—			(59)
Construction and land	—			(25)			—			(30)			—
Commercial business	(1,231)			(138)			(488)			(1,699)			(1,762)
Agricultural business, including secured by farmland	—			(42)			—			(42)			(181)
Consumer	(231)			(300)			(235)			(940)			(914)
	(1,462)			(505)			(783)			(2,713)			(6,683)
Net (charge-offs) recoveries	(496)			869			311			1,208			(2,068)
Balance, end of period	$	141,465		$	135,918		$	132,099		$	141,465		$	132,099
Net (charge-offs) recoveries / Average loans receivable	(0.005)		%	0.009		%	0.003		%	0.013		%	(0.021)		%

ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES – LOANS	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021
Specific or allocated credit loss allowance:
Commercial real estate	$	44,086		$	44,365		$	52,995
Multifamily real estate	7,734			7,114			7,043
Construction and land	29,171			27,985			27,294
One- to four-family real estate	14,729			12,394			8,205
Commercial business	33,299			31,854			26,421
Agricultural business, including secured by farmland	3,475			3,455			3,190
Consumer	8,971			8,751			6,951
Total allowance for credit losses – loans	$	141,465		$	135,918		$	132,099
Allowance for credit losses - loans / Total loans receivable	1.39		%	1.38		%	1.45		%
Allowance for credit losses - loans / Non-performing loans	615		%	895		%	578		%

	Quarters Ended						Years Ended
CHANGE IN THE	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period	$	14,041	$	14,246	$	10,127	$	12,432	$	13,297
Provision/(recapture) for credit losses - unfunded loan commitments	680		(205)		2,305		2,289		(865)
Balance, end of period	$	14,721	$	14,041	$	12,432	$	14,721	$	12,432

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ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021
NON-PERFORMING ASSETS
Loans on non-accrual status:
Secured by real estate:
Commercial	$	3,683		$	6,997		$	14,159
Construction and land	181			299			479
One- to four-family	5,236			2,381			2,711
Commercial business	9,886			1,462			2,156
Agricultural business, including secured by farmland	594			594			1,022
Consumer	2,126			1,779			1,754
	21,706			13,512			22,281
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
One- to four-family	1,023			1,556			436
Commercial business	—			64			2
Consumer	264			61			117
	1,287			1,681			555
Total non-performing loans	22,993			15,193			22,836
REO	340			340			852
Other repossessed assets	17			17			17
Total non-performing assets	$	23,350		$	15,550		$	23,705
Total non-performing assets to total assets	0.15		%	0.10		%	0.14		%

	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021
LOANS BY CREDIT RISK RATING
Pass	$	10,000,493	$	9,672,473	$	8,874,468
Special Mention	9,081		18,251		11,932
Substandard	137,150		136,372		198,363
Total	$	10,146,724	$	9,827,096	$	9,084,763

	Quarters Ended						Years Ended
REAL ESTATE OWNED	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
Balance, beginning of period	$	340	$	340	$	852	$	852	$	816
Additions from loan foreclosures	—		—		—		—		512
Proceeds from dispositions of REO	—		—		—		(864)		(783)
Gain on sale of REO	—		—		—		352		307
Balance, end of period	$	340	$	340	$	852	$	340	$	852

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ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION							Percentage Change
	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Prior Qtr		Prior Yr Qtr
Non-interest-bearing	$	6,176,998	$	6,507,523	$	6,385,177	(5.1)	%	(3.3)	%
Interest-bearing checking	1,811,153		1,856,244		1,947,414		(2.4)	%	(7.0)	%
Regular savings accounts	2,710,090		2,824,711		2,784,716		(4.1)	%	(2.7)	%
Money market accounts	2,198,288		2,323,844		2,370,995		(5.4)	%	(7.3)	%
Total interest-bearing transaction and savings accounts	6,719,531		7,004,799		7,103,125		(4.1)	%	(5.4)	%
Total core deposits	12,896,529		13,512,322		13,488,302		(4.6)	%	(4.4)	%
Interest-bearing certificates	723,530		721,944		838,631		0.2	%	(13.7)	%
Total deposits	$	13,620,059	$	14,234,266	$	14,326,933	(4.3)	%	(4.9)	%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
	Dec 31, 2022				Sep 30, 2022		Dec 31, 2021		Percentage Change
	Amount		Percentage		Amount		Amount		Prior Qtr		Prior Yr Qtr
Washington	$	7,563,056	55.6	%	$	7,845,755	$	7,952,376	(3.6)	%	(4.9)	%
Oregon	2,998,572		22.0	%	3,148,520		3,067,054		(4.8)	%	(2.2)	%
California	2,331,524		17.1	%	2,493,977		2,524,296		(6.5)	%	(7.6)	%
Idaho	726,907		5.3	%	746,014		783,207		(2.6)	%	(7.2)	%
Total deposits	$	13,620,059	100.0	%	$	14,234,266	$	14,326,933	(4.3)	%	(4.9)	%

INCLUDED IN TOTAL DEPOSITS	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021
Public non-interest-bearing accounts	$	212,533	$	192,742	$	193,917
Public interest-bearing transaction & savings accounts	180,326		172,567		159,957
Public interest-bearing certificates	26,810		33,787		39,961
Total public deposits	$	419,669	$	399,096	$	393,835

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ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2022	Actual				Minimum to be categorized as "Adequately Capitalized"				Minimum to be categorized as "Well Capitalized"
	Amount		Ratio		Amount		Ratio		Amount		Ratio
Banner Corporation-consolidated:
Total capital to risk-weighted assets	$	1,769,064	14.04	%	$	1,008,232	8.00	%	$	1,260,290	10.00	%
Tier 1 capital to risk-weighted assets	1,528,694		12.13	%	756,174		6.00	%	756,174		6.00	%
Tier 1 leverage capital to average assets	1,528,694		9.45	%	647,345		4.00	%	n/a		n/a
Common equity tier 1 capital to risk-weighted assets	1,442,194		11.44	%	567,130		4.50	%	n/a		n/a
Banner Bank:
Total capital to risk-weighted assets	1,684,766		13.38	%	1,007,325		8.00	%	1,259,156		10.00	%
Tier 1 capital to risk-weighted assets	1,544,396		12.27	%	755,494		6.00	%	1,007,325		8.00	%
Tier 1 leverage capital to average assets	1,544,396		9.55	%	646,935		4.00	%	808,668		5.00	%
Common equity tier 1 capital to risk-weighted assets	1,544,396		12.27	%	566,620		4.50	%	818,452		6.50	%

These regulatory capital ratios are estimates, pending completion and filing of Banner's regulatory reports.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 14

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD	Quarters Ended
	Dec 31, 2022						Sep 30, 2022						Dec 31, 2021
	Average Balance		Interest and Dividends		Yield / Cost(3)		Average Balance		Interest and Dividends		Yield / Cost(3)		Average Balance		Interest and Dividends		Yield / Cost(3)
Interest-earning assets:
Held for sale loans	$	45,654	$	527	4.58	%	$	68,608	$	676	3.91	%	$	73,101	$	601	3.26	%
Mortgage loans	8,175,281		103,478		5.02	%	7,841,018		94,581		4.79	%	7,362,363		83,059		4.48	%
Commercial/agricultural loans	1,742,517		24,727		5.63	%	1,670,595		20,418		4.85	%	1,460,486		14,966		4.07	%
SBA PPP loans	9,347		224		9.51	%	21,943		613		11.08	%	209,776		5,845		11.05	%
Consumer and other loans	140,801		2,125		5.99	%	120,583		1,824		6.00	%	119,658		1,749		5.80	%
Total loans(1)	10,113,600		131,081		5.14	%	9,722,747		118,112		4.82	%	9,225,384		106,220		4.57	%
Mortgage-backed securities	3,187,557		19,244		2.40	%	3,183,837		17,704		2.21	%	2,838,759		13,344		1.86	%
Other securities	1,628,553		15,945		3.88	%	1,671,305		13,578		3.22	%	1,550,383		8,466		2.17	%
Interest-bearing deposits with banks	245,538		2,126		3.44	%	778,196		4,406		2.25	%	1,901,165		731		0.15	%
FHLB stock	10,773		76		2.80	%	10,000		75		2.98	%	12,000		135		4.46	%
Total investment securities	5,072,421		37,391		2.92	%	5,643,338		35,763		2.51	%	6,302,307		22,676		1.43	%
Total interest-earning assets	15,186,021		168,472		4.40	%	15,366,085		153,875		3.97	%	15,527,691		128,896		3.29	%
Non-interest-earning assets	927,585						1,100,313						1,306,437
Total assets	$	16,113,606					$	16,466,398					$	16,834,128
Deposits:
Interest-bearing checking accounts	$	1,818,907	566		0.12	%	$	1,862,887	429		0.09	%	$	1,875,097	289		0.06	%
Savings accounts	2,761,323		866		0.12	%	2,822,153		481		0.07	%	2,773,597		400		0.06	%
Money market accounts	2,256,867		1,337		0.24	%	2,378,851		769		0.13	%	2,367,861		559		0.09	%
Certificates of deposit	709,974		854		0.48	%	740,014		728		0.39	%	840,920		1,136		0.54	%
Total interest-bearing deposits	7,547,071		3,623		0.19	%	7,803,905		2,407		0.12	%	7,857,475		2,384		0.12	%
Non-interest-bearing deposits	6,402,297		—		—	%	6,458,749		—		—	%	6,523,149		—		—	%
Total deposits	13,949,368		3,623		0.10	%	14,262,654		2,407		0.07	%	14,380,624		2,384		0.07	%
Other interest-bearing liabilities:
FHLB advances	19,337		198		4.06	%	—		—		—	%	50,000		348		2.76	%
Other borrowings	238,217		132		0.22	%	242,658		81		0.13	%	266,559		109		0.16	%
Junior subordinated debentures and subordinated notes	189,178		2,534		5.31	%	189,178		2,188		4.59	%	246,510		2,175		3.50	%
Total borrowings	446,732		2,864		2.54	%	431,836		2,269		2.08	%	563,069		2,632		1.85	%
Total funding liabilities	14,396,100		6,487		0.18	%	14,694,490		4,676		0.13	%	14,943,693		5,016		0.13	%
Other non-interest-bearing liabilities(2)	292,480						257,058						216,940
Total liabilities	14,688,580						14,951,548						15,160,633
Shareholders’ equity	1,425,026						1,514,850						1,673,495
Total liabilities and shareholders’ equity	$	16,113,606					$	16,466,398					$	16,834,128
Net interest income/rate spread (tax equivalent)			$	161,985	4.22	%			$	149,199	3.84	%			$	123,880	3.16	%
Net interest margin (tax equivalent)					4.23	%					3.85	%					3.17	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis			(2,914)						(2,756)						(2,350)
Net interest income and margin, as reported			$	159,071	4.16	%			$	146,443	3.78	%			$	121,530	3.11	%
Additional Key Financial Ratios:
Return on average assets					1.34	%					1.18	%					1.18	%
Return on average equity					15.14	%					12.85	%					11.84	%
Average equity/average assets					8.84	%					9.20	%					9.94	%
Average interest-earning assets/average interest-bearing liabilities					189.97	%					186.58	%					184.40	%
Average interest-earning assets/average funding liabilities					105.49	%					104.57	%					103.91	%
Non-interest income/average assets					0.32	%					0.38	%					0.58	%
Non-interest expense/average assets					2.44	%					2.29	%					2.16	%
Efficiency ratio(4)					57.52	%					58.65	%					62.88	%
Adjusted efficiency ratio(5)					54.43	%					57.04	%					59.71	%

(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 $1.6 million, $1.5 million and $1.3 million for the quarters ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.3 million for both the quarters ended December 31, 2022 and September 30, 2022 and $1.1 million for the quarter ended December 31, 2021.

(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 discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 15

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREAD	Years Ended
	Dec 31, 2022						Dec 31, 2021
	Average Balance		Interest and Dividends		Yield/Cost(3)		Average Balance		Interest and Dividends		Yield/Cost(3)
Interest-earning assets:
Held for sale loans	$	82,030	$	2,973	3.62	%	$	94,252	$	3,066	3.25	%
Mortgage loans	7,731,195		364,499		4.71	%	7,225,860		328,115		4.54	%
Commercial/agricultural loans	1,617,191		77,309		4.78	%	1,498,808		62,479		4.17	%
SBA PPP loans	41,167		4,677		11.36	%	770,041		49,854		6.47	%
Consumer and other loans	123,667		7,332		5.93	%	122,520		7,298		5.96	%
Total loans(1)	9,595,250		456,790		4.76	%	9,711,481		450,812		4.64	%
Mortgage-backed securities	3,130,124		68,148		2.18	%	2,451,110		46,199		1.88	%
Other securities	1,625,250		48,278		2.97	%	1,336,974		30,114		2.25	%
Equity securities	—		—		—	%	429		—		—	%
Interest-bearing deposits with banks	969,952		9,633		0.99	%	1,392,619		1,955		0.14	%
FHLB stock	10,628		357		3.36	%	13,966		592		4.24	%
Total investment securities	5,735,954		126,416		2.20	%	5,195,098		78,860		1.52	%
Total interest-earning assets	15,331,204		583,206		3.80	%	14,906,579		529,672		3.55	%
Non-interest-earning assets	1,169,271						1,268,348
Total assets	$	16,500,475					$	16,174,927
Deposits:
Interest-bearing checking accounts	$	1,890,917	1,557		0.08	%	$	1,755,293	1,188		0.07	%
Savings accounts	2,810,264		2,053		0.07	%	2,652,018		1,833		0.07	%
Money market accounts	2,364,122		3,143		0.13	%	2,305,814		2,670		0.12	%
Certificates of deposit	764,255		3,371		0.44	%	876,509		6,079		0.69	%
Total interest-bearing deposits	7,829,558		10,124		0.13	%	7,589,634		11,770		0.16	%
Non-interest-bearing deposits	6,434,670		—		—	%	6,132,875		—		—	%
Total deposits	14,264,228		10,124		0.07	%	13,722,509		11,770		0.09	%
Other interest-bearing liabilities:
FHLB advances	15,285		489		3.20	%	97,945		2,592		2.65	%
Other borrowings	249,681		377		0.15	%	240,817		467		0.19	%
Junior subordinated debentures and subordinated notes	189,870		8,400		4.42	%	247,583		8,780		3.55	%
Total borrowings	454,836		9,266		2.04	%	586,345		11,839		2.02	%
Total funding liabilities	14,719,064		19,390		0.13	%	14,308,854		23,609		0.16	%
Other non-interest-bearing liabilities(2)	253,983						206,774
Total liabilities	14,973,047						14,515,628
Shareholders’ equity	1,527,428						1,659,299
Total liabilities and shareholders’ equity	$	16,500,475					$	16,174,927
Net interest income/rate spread (tax equivalent)			$	563,816	3.67	%			$	506,063	3.39	%
Net interest margin (tax equivalent)					3.68	%					3.39	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis			(10,637)						(9,172)
Net interest income and margin, as reported			$	553,179	3.61	%			$	496,891	3.33	%
Additional Key Financial Ratios:
Return on average assets					1.18	%					1.24	%
Return on average equity					12.79	%					12.12	%
Average equity/average assets					9.26	%					10.26	%
Average interest-earning assets/average interest-bearing liabilities					185.06	%					182.32	%
Average interest-earning assets/average funding liabilities					104.16	%					104.18	%
Non-interest income/average assets					0.46	%					0.60	%
Non-interest expense/average assets					2.29	%					2.35	%
Efficiency ratio(4)					60.04	%					64.06	%
Adjusted efficiency ratio(5)					57.99	%					60.22	%

(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 $5.9 million and $5.1 million for the years ended December 31, 2022 and December 31, 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $4.8 million and $4.1 million for the years ended December 31, 2022 and December 31, 2021, 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 discussion and reconciliation of Non-GAAP Financial Measures beginning on page 16.

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 16

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
* Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Tangible common shareholders’ equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments, net gain (loss) on the sale of securities and gain on sale of branches from the total of net interest income and total non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of core deposit intangibles, real estate owned operations, loss on extinguishment of debt and state/municipal taxes from non-interest expense divided by adjusted revenue) represent non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and 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, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
ADJUSTED REVENUE	Quarters Ended						Years Ended
	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
Net interest income (GAAP)	$	159,071	$	146,443	$	121,530	$	553,179	$	496,891
Non-interest income (GAAP)	13,070		15,585		24,474		75,255		96,416
Total revenue (GAAP)	172,141		162,028		146,004		628,434		593,307
Exclude net loss (gain) on sale of securities	3,721		(6)		136		3,248		(482)
Exclude net change in valuation of financial instruments carried at fair value	(157)		(532)		(2,721)		(807)		(4,616)
Exclude gain on sale of branches	—		—		—		(7,804)		—
Adjusted revenue (non-GAAP)	$	175,705	$	161,490	$	143,419	$	623,071	$	588,209

ADJUSTED EARNINGS	Quarters Ended						Years Ended
	Dec 31, 2022		Sep 30, 2022		Dec 31, 2021		Dec 31, 2022		Dec 31, 2021
Net income (GAAP)	$	54,380	$	49,070	$	49,927	$	195,378	$	201,048
Exclude net loss (gain) on sale of securities	3,721		(6)		136		3,248		(482)
Exclude net change in valuation of financial instruments carried at fair value	(157)		(532)		(2,721)		(807)		(4,616)
Exclude merger and acquisition-related expenses	—		—		—		—		660
Exclude COVID-19 expenses	—		—		127		—		436
Exclude gain on sale of branches	—		—		—		(7,804)		—
Exclude Banner Forward expenses	838		411		1,157		5,293		11,604
Exclude loss on extinguishment of debt	—		—		2,284		793		2,284
Exclude related net tax (benefit) expense	(1,057)		31		(236)		(174)		(2,373)
Total adjusted earnings (non-GAAP)	$	57,725	$	48,974	$	50,674	$	195,927	$	208,561
Diluted earnings per share (GAAP)	$	1.58	$	1.43	$	1.44	$	5.67	$	5.76
Diluted adjusted earnings per share (non-GAAP)	$	1.68	$	1.42	$	1.47	$	5.69	$	5.97

BANR - Fourth Quarter 2022 Results

January 19, 2023

Page 17

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIO	Quarters Ended									Years Ended
	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021			Dec 31, 2022			Dec 31, 2021
Non-interest expense (GAAP)	$	99,013		$	95,034		$	91,805		$	377,295		$	380,101
Exclude merger and acquisition-related expenses	—			—			—			—			(660)
Exclude COVID-19 expenses	—			—			(127)			—			(436)
Exclude Banner Forward expenses	(838)			(411)			(1,157)			(5,293)			(11,604)
Exclude CDI amortization	(1,215)			(1,215)			(1,574)			(5,279)			(6,571)
Exclude state/municipal tax expense	(1,304)			(1,223)			(976)			(4,693)			(4,343)
Exclude REO operations	(28)			(68)			(49)			104			22
Exclude loss on extinguishment of debt	—			—			(2,284)			(793)			(2,284)
Adjusted non-interest expense (non-GAAP)	$	95,628		$	92,117		$	85,638		$	361,341		$	354,225
Net interest income (GAAP)	$	159,071		$	146,443		$	121,530		$	553,179		$	496,891
Non-interest income (GAAP)	13,070			15,585			24,474			75,255			96,416
Total revenue (GAAP)	172,141			162,028			146,004			628,434			593,307
Exclude net loss (gain) on sale of securities	3,721			(6)			136			3,248			(482)
Exclude net change in valuation of financial instruments carried at fair value	(157)			(532)			(2,721)			(807)			(4,616)
Exclude gain on sale of branches	—			—			—			(7,804)			—
Adjusted revenue (non-GAAP)	$	175,705		$	161,490		$	143,419		$	623,071		$	588,209
Efficiency ratio (GAAP)	57.52		%	58.65		%	62.88		%	60.04		%	64.06		%
Adjusted efficiency ratio (non-GAAP)	54.43		%	57.04		%	59.71		%	57.99		%	60.22		%

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS	Dec 31, 2022			Sep 30, 2022			Dec 31, 2021
Shareholders’ equity (GAAP)	$	1,456,432		$	1,408,659		$	1,690,327
Exclude goodwill and other intangible assets, net	382,561			383,776			387,976
Tangible common shareholders’ equity (non-GAAP)	$	1,073,871		$	1,024,883		$	1,302,351
Total assets (GAAP)	$	15,833,431		$	16,360,809		$	16,804,872
Exclude goodwill and other intangible assets, net	382,561			383,776			387,976
Total tangible assets (non-GAAP)	$	15,450,870		$	15,977,033		$	16,416,896
Common shareholders’ equity to total assets (GAAP)	9.20		%	8.61		%	10.06		%
Tangible common shareholders’ equity to tangible assets (non-GAAP)	6.95		%	6.41		%	7.93		%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Tangible common shareholders’ equity (non-GAAP)	$	1,073,871		$	1,024,883		$	1,302,351
Common shares outstanding at end of period	34,194,018			34,191,759			34,252,632
Common shareholders’ equity (book value) per share (GAAP)	$	42.59		$	41.20		$	49.35
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)	$	31.41		$	29.97		$	38.02

EX-99.2

• • • • • • • • • •

ACL - Loans 135.9 4.5 1.0 (0.5) 6.0 141.5 ACL - Unfunded Commitments 14.0 0.3 0.4 0.0 0.7 14.7 ACL - HTM Securities 0.4 (0.0) (0.0) 0.0 (0.0) 0.4 Total ACL 150.4 4.8 1.4 (0.5) 6.7 156.6 $150.4 $156.6

PRE-TAX PRE-PROVISION EARNINGS Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Dec 31, 2022 Dec 31, 2021 Income before provision for income taxes (GAAP) 66,424$ 60,907$ 59,442$ 240,775$ 246,594$ (Recapture)/Provision for credit losses 6,704 6,087 (5,243) 10,364 (33,388) Pretax pre provision earnings (non-GAAP) 73,128 66,994 54,199 251,139 213,206 Exclude net (gain) loss on sale of securities 3,721 (6) 136 3,248 (482) Exclude net change in valuation of financial instruments carried at fair value (157) (532) (2,721) (807) (4,616) Exclude merger and acquisition-related costs - - - - 660 Exclude COVID-19 expenses - - 127 - 436 Exclude gain on sale of branches - - - (7,804) - Exclude Banner Forward expenses 838 411 1,157 5,293 11,604 Exclude loss on extinguishment of debt - - 2,284 793 2,284 Adjusted pretax pre provision earnings (non-GAAP) 77,530$ 66,867$ 55,182$ 251,862$ 223,092$ Quarters Ended Years Ended

12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 REVENUE FROM CORE OPERATIONS Net interest income before provision for loan losses 159,071$ 146,443$ 129,011$ 118,654$ 121,530$ 130,146$ 127,554$ 117,661$ 121,437$ Total non-interest income 13,070 15,585 27,173 19,427 24,474 25,334 22,336 24,272 23,509 Total GAAP revenue 172,141 162,028 156,184 138,081 146,004 155,480 149,890 141,933 144,946 Exclude net (gain) loss on sale of securities 3,721 (6) (32) (435) 136 (56) (77) (485) (197) Exclude change in valuation of financial instruments carried at fair value (157) (532) (69) (49) (2,721) (1,778) (58) (59) (1,704) Exclude gain on sale of branches - - (7,804) - - - - - - Adjusted revenue (non-GAAP) 175,705 161,490 148,279 137,597 143,419 153,646 149,755 141,389 143,045 Exclude income from mortgage banking operations (2,311) (105) (3,978) (4,440) (5,643) (9,613) (7,345) (11,347) (10,586) Exclude interest income from PPP loans (224) (613) (1,056) (2,784) (5,845) (15,421) (17,796) (10,792) (10,002) Adjusted revenue from core operations (non-GAAP) 173,170$ 160,772$ 143,245$ 130,373$ 131,931$ 128,612$ 124,614$ 119,250$ 122,457$ Non-interest expense (GAAP) 99,013$ 95,034$ 92,053$ 91,195$ 91,805$ 102,145$ 92,624$ 93,527$ 95,556$ Exclude acquisition related costs - - - - - (10) (79) (571) (579) Exclude COVID-19 expenses - - - - (127) (44) (117) (148) (333) Exclude Banner forward expenses (838) (411) (1,579) (2,465) (1,157) (7,592) (1,905) (950) - Exclude CDI amortization (1,215) (1,215) (1,425) (1,424) (1,574) (1,575) (1,711) (1,711) (1,865) Exclude state/municipal tax expense (1,304) (1,223) (1,004) (1,162) (976) (1,219) (1,083) (1,065) (1,071) Exclude REO gain (loss) (28) (68) 121 79 (49) (53) (118) 242 283 Exclude loss on extinguishment of debt - - - (793) (2,284) - - - Adjusted non-interest expense (non-GAAP) 95,628 92,117 88,166 85,430 85,638 91,652 87,611 89,324 91,991 Exclude legal contingency accrual (3,500) - - - - (4,000) - - (2,500) Core non-interest expense (non-GAAP) 92,128$ 92,117$ 88,166$ 85,430$ 85,638$ 87,652$ 87,611$ 89,324$ 89,491$ Quarters Ended

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Cover	Jan. 19, 2023
Document Information [Line Items]
Document Type	8-K
Document Period End Date	Jan. 19, 2023
Entity Registrant Name	Banner Corporation
Entity Incorporation, State or Country Code	WA
Entity File Number	000-26584
Entity Tax Identification Number	91-1691604
Entity Address, Address Line One	10 S. 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
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	BANR
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000946673
Amendment Flag	false