EX-99.1 2 banr-03312023xex991earning.htm EX-99.1 Document

Exhibit 99.1

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

Banner Corporation Reports Net Income of $55.6 Million, or $1.61 Per Diluted Share, for First Quarter 2023;
Declares Quarterly Cash Dividend of $0.48 Per Share

Walla Walla, WA - April 19, 2023 - Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $55.6 million, or $1.61 per diluted share, for the first quarter of 2023, a 2% increase compared to $54.4 million, or $1.58 per diluted share, for the preceding quarter and a 26% increase compared to $44.0 million, or $1.27 per diluted share, for the first quarter of 2022. Banner’s first quarter 2023 results include $524,000 in recapture of provision for credit losses, compared to $6.7 million of provision for credit losses in the preceding quarter and $7.0 million in recapture of provision for credit losses in the first quarter of 2022.
Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share. The dividend will be payable May 12, 2023, to common shareholders of record on May 2, 2023.
“While the pace of change continues to accelerate in markets we serve, and throughout the global economy, our business model, which emphasizes moderate risk and strong relationship banking continues to generate strong financial results,” said Mark Grescovich, President and CEO. “Banner’s first quarter 2023 operating results reflect the continued successful execution of our super community bank strategy. Our performance for the first quarter of 2023 benefited from higher yields on interest-earning assets and an improved mix of earnings assets that led to net interest margin expansion. Further, the continued focus on growing client relationships is serving us well, with core deposits representing 93% of total deposits at quarter end. Banner’s overarching goals continue to be to do the right thing for our clients, communities, colleagues and shareholders; and to provide a consistent and reliable source of commerce and capital through all economic cycles.”
At March 31, 2023, Banner Corporation had $15.53 billion in assets, $10.02 billion in net loans and $13.15 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.
First Quarter 2023 Highlights
Revenues decreased 6% to $162.6 million, compared to $172.1 million in the preceding quarter, and increased 18% compared to $138.1 million in the first quarter a year ago.
Net interest income decreased 4% to $153.3 million in the first quarter of 2023, compared to $159.1 million in the preceding quarter and increased 29% compared to $118.7 million in the first quarter a year ago.
Net interest margin, on a tax equivalent basis, was 4.30%, compared to 4.23% in the preceding quarter and 3.18% in the first quarter a year ago.
Mortgage banking revenues increased 16% to $2.7 million, compared to $2.3 million in the preceding quarter, and decreased 39% compared to $4.4 million in the first quarter a year ago.
Return on average assets was 1.44%, compared to 1.34% in the preceding quarter and 1.06% in the first quarter a year ago.
Net loans receivable increased to $10.02 billion at March 31, 2023, compared to $10.01 billion at December 31, 2022, and increased 11% compared to $9.02 billion at March 31, 2022.
Non-performing assets increased to $27.1 million, or 0.17% of total assets, at March 31, 2023, compared to $23.4 million, or 0.15% of total assets at December 31, 2022, and $19.1 million, or 0.11% of total assets, at March 31, 2022.
The allowance for credit losses - loans was $141.5 million, or 1.39% of total loans receivable, as of March 31, 2023, compared to $141.5 million, or 1.39% of total loans receivable as of December 31, 2022 and $125.5 million, or 1.37% of total loans receivable as of March 31, 2022.
Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) decreased to $12.20 billion at March 31, 2023, compared to $12.90 billion at December 31, 2022, and to $13.72 billion a year ago. Core deposits represented 93% of total deposits at March 31, 2023.
Banner Bank’s uninsured deposits were 33% of total deposits at March 31, 2023, compared to 35% at December 31, 2022.
Banner Bank’s uninsured deposits excluding collateralized public deposits and affiliate deposits were 31% at March 31, 2023, compared to 33% at December 31, 2022.
Available borrowing capacity was $4.25 billion at March 31, 2023, compared to $4.31 billion at December 31, 2022.
On balance sheet liquidity was $3.40 billion at March 31, 2023, compared to $3.77 billion at December 31, 2022.



BANR - First Quarter 2023 Results
April 19, 2023
Page 2
Dividends paid to shareholders were $0.48 per share in the quarter ended March 31, 2023, up from $0.44 per share in the quarter ended December 31, 2022.
Common shareholders’ equity per share increased 5% to $44.64 at March 31, 2023, compared to $42.59 at the preceding quarter end, and decreased 2% from $45.49 a year ago.
Tangible common shareholders’ equity per share* increased 7% to $33.52 at March 31, 2023, compared to $31.41 at the preceding quarter end, and decreased 2% from $34.25 a year ago.

*Non-GAAP (Generally Accepted Accounting Principles) measure; See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Income Statement Review
Net interest income was $153.3 million in the first quarter of 2023, compared to $159.1 million in the preceding quarter and $118.7 million in the first quarter a year ago. Banner’s net interest margin on a tax equivalent basis was 4.30% for the first quarter of 2023, a seven basis-point increase compared to 4.23% in the preceding quarter and a 112 basis-point increase compared to 3.18% in the first quarter a year ago. “Rising market interest rates during the quarter resulted in yields on loans and investment securities increasing at a faster pace than our funding costs which improved our net interest margin,” said Grescovich.
Average yields on interest-earning assets increased 28 basis points to 4.68% for the first quarter of 2023, compared to 4.40% for the preceding quarter and increased 139 basis points compared to 3.29% in the first 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 475 basis points, including 50 basis points during the first quarter of 2023, to a range of 4.75% to 5.00%. 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 24 basis points to 5.38% compared to 5.14% in the preceding quarter and increased 88 basis points compared to 4.50% in the first 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 0.28% in the first quarter of 2023, which was an 18 basis-point increase compared to the preceding quarter and a 22 basis-point increase compared to the first quarter a year ago. The increase in the costs of deposits was due to elevated competition for deposits, an increase in the mix of higher cost CDs and the lag effect of prior market rate increases on current period deposit costs. The total cost of funding liabilities was 0.40% during the first quarter of 2023, a 22 basis-point increase compared to 0.18% in the preceding quarter and a 28 basis-point increase compared to 0.12% first quarter a year ago.
Banner recorded a $524,000 recapture of provision for credit losses in the current quarter (comprised of a $774,000 provision for credit losses - loans, a $1.3 million recapture of provision for credit losses - unfunded loan commitments and a $20,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $6.7 million provision for credit losses in the prior 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) and a $7.0 million recapture of provision for credit losses in the first quarter a year ago (comprised of a $7.4 million recapture of provision for credit losses - loans, a $428,000 provision for credit losses - unfunded loan commitments and a $13,000 recapture of provision for credit losses - held-to-maturity debt securities). The recapture of provision for credit losses for the current quarter primarily reflects a decrease in unfunded construction loan commitments, which was partially offset by higher net loan charge-offs during the current quarter. The provision for credit losses for the preceding quarter primarily reflects loan growth and, to a lesser extent, a deterioration in forecasted economic indicators utilized to estimate credit losses.
Total non-interest income was $9.3 million in the first quarter of 2023, compared to $13.1 million in the preceding quarter and $19.4 million in the first quarter a year ago. The decrease in non-interest income during the current quarter, compared to the prior quarter was primarily due to a $7.3 million net loss on the sale of securities recorded during the current quarter, compared to a $3.7 million net loss on the sale of securities in the preceding quarter. The decrease in non-interest income during the current quarter, compared to the prior year quarter was primarily due to a $1.7 million decrease in mortgage banking revenues and the previously mentioned net loss recognized on the sale of securities during the current quarter. Deposit fees and other service charges were $10.6 million in the first quarter of 2023, compared to $10.8 million in the preceding quarter and $11.2 million in the first quarter a year ago.
Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, were $2.7 million in the first quarter of 2023, compared to $2.3 million in the preceding quarter and $4.4 million in the first quarter a year ago. The increase from the preceding quarter primarily reflects an increase in the volume of one-to four family loans sold. The decrease from the first quarter of 2022 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 compared to the prior year quarter primarily reflects reduced refinancing activity, as well as decreased purchase activity as interest rates increased. Home purchase activity accounted for 88% of one- to four-family mortgage loan originations in the first quarter of 2023, compared to 90% in the preceding quarter and was 54% in the first quarter of 2022. Mortgage banking revenue included a $295,000 lower of cost or market upward adjustment on multifamily held for sale loans for the current quarter due to decreases in market interest rates during the first quarter as well as $87,000 of gain recognized on the sale of multifamily loans. This compares to a $723,000 lower of cost or market upward adjustment recorded during the preceding 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. There were no multifamily loans sold during the preceding quarter. During the first quarter of 2022, a $603,000 lower of cost or market downward adjustment was recorded due to increases in market rates, partially offset by $340,000 of gain recognized on the sale of multifamily loans.


BANR - First Quarter 2023 Results
April 19, 2023
Page 3
First quarter 2023 non-interest income also included a $552,000 net loss 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 $7.3 million net loss on the sale of securities. In the preceding quarter, results included a $157,000 net gain for fair value adjustments and a $3.7 million net loss on the sale of securities. In the first quarter a year ago, results included a $49,000 net gain for fair value adjustments and a $435,000 net gain on the sale of securities.
Total revenue decreased 6% to $162.6 million for the first quarter of 2023, compared to $172.1 million in the preceding quarter, and increased 18% compared to $138.1 million in the first quarter of 2022. Adjusted revenue* (the total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $170.4 million in the first quarter of 2023, compared to $175.7 million in the preceding quarter and $137.6 million in the first quarter a year ago.
Total non-interest expense was $94.6 million in the first quarter of 2023, compared to $99.0 million in the preceding quarter and $91.2 million in the first quarter of 2022. The decrease in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $1.5 million decrease in occupancy and equipment expenses, primarily reflecting increased building rent expense due to lease buyouts as well as weather related increases in building maintenance expense during the prior quarter and a $4.2 million decrease in professional and legal expenses, primarily due to a $3.5 million accrual recorded during the prior quarter in relation to a potential settlement of a pending litigation matter, partially offset by a $1.4 million decrease in capitalized loan origination costs, primarily due to decreased loan production and a $1.1 million increase in salary and employee benefits 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 and a decrease in capitalized loan origination costs, partially offset by a decrease in occupancy and equipment expenses and a $793,000 loss on extinguishment of debt as a result of the redemption of $50.5 million of junior subordinated debentures during the first quarter of 2022. Banner’s efficiency ratio was 58.20% for the first quarter, compared to 57.52% in the preceding quarter and 66.04% in the same quarter a year ago. Banner’s adjusted efficiency ratio* was 54.23% for the first quarter, compared to 54.43% in the preceding quarter and 62.09% in the year ago quarter.
*Non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.
Federal and state income tax expense totaled $12.9 million for the first quarter of 2023 resulting in an effective tax rate of 18.9%, reflecting the benefits from tax exempt income. 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.

Balance Sheet Review
Total assets decreased 2% to $15.53 billion at March 31, 2023, compared to $15.83 billion at December 31, 2022, and decreased 7% from $16.78 billion at March 31, 2022. The total of securities and interest-bearing deposits held at other banks totaled $3.99 billion at March 31, 2023, compared to $4.28 billion at December 31, 2022 and $6.06 billion at March 31, 2022. The decrease compared to the prior quarter was primarily due to the sale of $150.1 million of securities as well as $150.0 million of reverse repurchase agreements maturing during the current quarter, while the decrease compared to the prior year quarter was primarily due to a decrease in interest-bearing deposits held at other banks. The average effective duration of the securities portfolio was approximately 6.6 years at March 31, 2023, compared to 6.2 years at March 31, 2022.
Total loans receivable increased to $10.16 billion at March 31, 2023, compared to $10.15 billion at December 31, 2022, and $9.15 billion at March 31, 2022. One- to four-family residential loans increased 7% to $1.25 billion at March 31, 2023, compared to $1.17 billion at December 31, 2022, and increased 74% compared to $718.4 million a year ago. The increase in one- to four-family residential loans was primarily the result of one- to four-family construction loans converting to one- to four-family portfolio loans upon the completion of the construction phase and new production. Multifamily real estate loans increased 8% to $696.9 million at March 31, 2023, compared to $645.1 million at December 31, 2022, and increased 16% compared to $598.6 million a year ago. The increase in multifamily loans was primarily due to transferring $54.0 million of multifamily held for sale loans to the held for investment loan portfolio during the fourth quarter of 2022 as well as multifamily construction loans converting to multifamily portfolio loans as construction was completed. Commercial business loans totaled $2.23 billion at both March 31, 2023 and December 31, 2022, and increased 14% compared to $1.96 billion a year ago, primarily due to new loan production during 2022. Total construction, land and land development loans decreased to $1.47 billion at March 31, 2023, compared to $1.49 billion at December 31, 2022, as a result of a decrease in one- to four-family construction loans.
Loans held for sale were $49.0 million at March 31, 2023, compared to $56.9 million at December 31, 2022, and $64.2 million at March 31, 2022. One- to four- family residential mortgage loans sold totaled $40.5 million in the current quarter, compared to $39.3 million in the preceding quarter and $210.4 million in the first quarter a year ago, while multifamily loans sold totaled $7.6 million during the first quarter of 2023, compared to none sold in the preceding quarter and $15.8 million sold in the first quarter a year ago.
Total deposits decreased to $13.15 billion at March 31, 2023, compared to $13.62 billion at December 31, 2022, and $14.52 billion a year ago. The decline in deposits was primarily due to interest rate sensitive clients moving a portion of their non-operating deposit balances to higher yielding investments. Non-interest-bearing account balances decreased 7% to $5.76 billion at March 31, 2023, compared to $6.18 billion at December 31, 2022, and 11% compared to $6.49 billion a year ago. Core deposits were 93% of total deposits at March 31, 2023, 95% of total deposits at December 31, 2022 and 94% of total deposits at March 31, 2022. Certificates of deposit increased 31% to $949.9 million at March 31, 2023, compared to $723.5 million at December 31, 2022, and increased 19% compared to $800.4 million a year earlier. The increase in certificates of deposits during the current quarter was principally due to clients seeking higher yields moving funds from core deposit accounts to higher yielding certificates of deposits.


BANR - First Quarter 2023 Results
April 19, 2023
Page 4
Banner Bank’s uninsured deposits were $4.42 billion or 33% of total deposits at March 31, 2023, compared to $4.84 billion or 35% of total deposits at December 31, 2022. The uninsured deposit calculation includes $277.7 million and $304.2 million of collateralized public deposits at March 31, 2023 and December 31, 2022, respectively. Uninsured deposits also include cash held by the holding company of $88.0 million and $77.2 million at March 31, 2023 and December 31, 2022, respectively. Banner Bank’s uninsured deposits, excluding collateralized public deposits and cash held at the holding company, were 31% of deposits at March 31, 2023, compared to 33% of total deposits at December 31, 2022.
Banner had $170.0 million of FHLB borrowings at March 31, 2023, compared to $50.0 million at December 31, 2022 and none a year ago. At March 31, 2023, Banner’s off-balance sheet liquidity included additional borrowing capacity of $2.84 billion at the FHLB and $1.29 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.
At March 31, 2023, total common shareholders’ equity was $1.53 billion, or 9.86% of assets, compared to $1.46 billion or 9.20% of assets at December 31, 2022, and $1.56 billion or 9.32% of assets a year ago. The increase in total common shareholders’ equity at March 31, 2023 compared to December 31, 2022 was primarily due to a $38.9 million increase in retained earnings as a result of $55.6 million in net income, partially offset by the payment of cash dividends during the quarter and a $37.1 million decrease in accumulated other comprehensive loss due to an increase in the fair value of the security portfolio. The decrease in total common shareholders’ equity from March 31, 2022 reflects a $171.5 million increase in accumulated other comprehensive loss, primarily due to a decrease in the fair value of the security portfolio as a result of an increase in interest rates during 2022, 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 $38.9 million increase in retained earnings. At March 31, 2023, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.15 billion, or 7.59% of tangible assets*, compared to $1.07 billion, or 6.95% of tangible assets, at December 31, 2022, and $1.18 billion, or 7.18% 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 March 31, 2023, Banner's estimated common equity Tier 1 capital ratio was 11.80%, its estimated Tier 1 leverage capital to average assets ratio was 9.96%, and its estimated total capital to risk-weighted assets ratio was 14.45%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.
*Non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Credit Quality
The allowance for credit losses - loans was $141.5 million, or 1.39% of total loans receivable and 528% of non-performing loans, at March 31, 2023, compared to $141.5 million, or 1.39% of total loans receivable and 615% of non-performing loans, at December 31, 2022, and $125.5 million, or 1.37% of total loans receivable and 674% of non-performing loans, at March 31, 2022. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $13.4 million at March 31, 2023, compared to $14.7 million at December 31, 2022 and $12.9 million at March 31, 2022. Net loan charge-offs totaled $782,000 in the first quarter of 2023, compared to net loan charge-offs of $496,000 in the preceding quarter and net loan recoveries of $748,000 in the first quarter a year ago. Non-performing loans were $26.8 million at March 31, 2023, compared to $23.0 million at December 31, 2022, and $18.6 million a year ago.
Substandard loans were $148.0 million at March 31, 2023, compared to $137.2 million at December 31, 2022, and $178.4 million a year ago. The increase from the prior quarter related primarily to commercial real estate loan downgrades in the quarter. The decrease from a year ago primarily reflects the payoff of substandard loans as well as risk rating upgrades during 2022.
Total non-performing assets were $27.1 million, or 0.17% of total assets, at March 31, 2023, compared to $23.4 million, or 0.15% of total assets, at December 31, 2022, and $19.1 million, or 0.11% of total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday April 20, 2023, at 8:00 a.m. PDT, to discuss its first quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 703224 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 657206 or at www.bannerbank.com.
About the Company
Banner Corporation is a $15.53 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.


BANR - First Quarter 2023 Results
April 19, 2023
Page 5
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 uncertain impacts of quantitative tightening and current and future monetary policies of the Federal Reserve; (3) 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; (4) 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; (5) competitive pressures among depository institutions; (6) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (7) the transition away from the London Interbank Offered Rate (LIBOR) toward new interest rate benchmarks; (8) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (9) fluctuations in real estate values; (10) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (11) the ability to access cost-effective funding; (12) 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; (13) changes in financial markets; (14) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular, including the risk of inflation; (15) the costs, effects and outcomes of litigation; (16) 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; (17) changes in accounting principles, policies or guidelines; (18) future acquisitions by Banner of other depository institutions or lines of business; (19) future goodwill impairment due to changes in Banner’s business or changes in market conditions; (20) the costs associated with Banner Forward; (21) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (22) 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 - First Quarter 2023 Results
April 19, 2023
Page 6
RESULTS OF OPERATIONSQuarters Ended
(in thousands except shares and per share data)Mar 31, 2023Dec 31, 2022Mar 31, 2022
INTEREST INCOME:  
Loans receivable$133,257 $129,450 $100,350 
Mortgage-backed securities18,978 19,099 14,109 
Securities and cash equivalents14,726 17,009 8,432 
Total interest income166,961 165,558 122,891 
INTEREST EXPENSE:  
Deposits9,244 3,623 2,086 
Federal Home Loan Bank (FHLB) advances1,264 198 291 
Other borrowings381 132 84 
Subordinated debt
2,760 2,534 1,776 
Total interest expense13,649 6,487 4,237 
Net interest income153,312 159,071 118,654 
(RECAPTURE) PROVISION FOR CREDIT LOSSES(524)6,704 (6,961)
Net interest income after (recapture) provision for credit losses153,836 152,367 125,615 
NON-INTEREST INCOME:  
Deposit fees and other service charges10,562 10,821 11,189 
Mortgage banking operations2,691 2,311 4,440 
Bank-owned life insurance2,188 2,120 1,631 
Miscellaneous1,640 1,382 1,683 
 17,081 16,634 18,943 
Net (loss) gain on sale of securities(7,252)(3,721)435 
Net change in valuation of financial instruments carried at fair value(552)157 49 
Total non-interest income9,277 13,070 19,427 
NON-INTEREST EXPENSE:  
Salary and employee benefits61,389 60,309 59,486 
Less capitalized loan origination costs(3,431)(4,877)(6,230)
Occupancy and equipment11,970 13,506 13,220 
Information and computer data services7,147 6,535 6,651 
Payment and card processing services4,618 5,109 4,896 
Professional and legal expenses2,121 6,328 2,180 
Advertising and marketing806 1,350 461 
Deposit insurance1,890 1,739 1,524 
State and municipal business and use taxes1,300 1,304 1,162 
Real estate operations, net(277)28 (79)
Amortization of core deposit intangibles1,050 1,215 1,424 
Loss on extinguishment of debt— — 793 
Miscellaneous6,038 6,467 5,707 
Total non-interest expense94,621 99,013 91,195 
Income before provision for income taxes68,492 66,424 53,847 
PROVISION FOR INCOME TAXES12,937 12,044 9,884 
NET INCOME$55,555 $54,380 $43,963 
Earnings per common share:  
Basic$1.62 $1.59 $1.28 
Diluted$1.61 $1.58 $1.27 
Cumulative dividends declared per common share$0.48 $0.44 $0.44 
Weighted average number of common shares outstanding:  
Basic34,239,533 34,226,162 34,300,742 
Diluted34,457,869 34,437,151 34,598,436 
Increase in common shares outstanding114,522 2,259 120,152 


BANR - First Quarter 2023 Results
April 19, 2023
Page 7
FINANCIAL  CONDITION  Percentage Change
(in thousands except shares and per share data)Mar 31, 2023Dec 31, 2022Mar 31, 2022Prior QtrPrior Yr Qtr
ASSETS  
Cash and due from banks$194,629 $198,154 $414,780 (1.8)%(53.1)%
Interest-bearing deposits48,363 44,908 1,573,608 7.7 %(96.9)%
Total cash and cash equivalents
242,992 243,062 1,988,388 — %(87.8)%
Securities - trading28,591 28,694 27,354 (0.4)%4.5 %
Securities - available for sale, amortized cost $3,040,211, $3,218,777 and $3,315,213, respectively
2,653,860 2,789,031 3,147,547 (4.8)%(15.7)%
Securities - held to maturity, fair value $957,062, $942,180 and $968,540, respectively
1,109,595 1,117,588 1,015,522 (0.7)%9.3 %
Total securities
3,792,046 3,935,313 4,190,423 (3.6)%(9.5)%
FHLB stock16,800 12,000 10,000 40.0 %68.0 %
Securities purchased under agreements to resell150,000 300,000 300,000 (50.0)%(50.0)%
Loans held for sale49,016 56,857 64,218 (13.8)%(23.7)%
Loans receivable10,160,684 10,146,724 9,146,629 0.1 %11.1 %
Allowance for credit losses – loans(141,457)(141,465)(125,471)— %12.7 %
Net loans receivable
10,019,227 10,005,259 9,021,158 0.1 %11.1 %
Accrued interest receivable52,094 57,284 41,827 (9.1)%24.5 %
Property and equipment, net136,362 138,754 142,594 (1.7)%(4.4)%
Goodwill373,121 373,121 373,121 — %— %
Other intangibles, net8,390 9,440 13,431 (11.1)%(37.5)%
Bank-owned life insurance299,754 297,565 294,556 0.7 %1.8 %
Operating lease right-of-use assets47,106 49,283 52,792 (4.4)%(10.8)%
Other assets346,695 355,493 283,663 (2.5)%22.2 %
Total assets
$15,533,603 $15,833,431 $16,776,171 (1.9)%(7.4)%
LIABILITIES  
Deposits:  
Non-interest-bearing$5,764,009 $6,176,998 $6,494,852 (6.7)%(11.3)%
Interest-bearing transaction and savings accounts6,440,261 6,719,531 7,228,558 (4.2)%(10.9)%
Interest-bearing certificates949,932 723,530 800,364 31.3 %18.7 %
Total deposits13,154,202 13,620,059 14,523,774 (3.4)%(9.4)%
Advances from FHLB170,000 50,000 — 240.0 %nm
Other borrowings214,564 232,799 266,778 (7.8)%(19.6)%
Subordinated notes, net99,046 98,947 98,658 0.1 %0.4 %
Junior subordinated debentures at fair value74,703 74,857 70,510 (0.2)%5.9 %
Operating lease liabilities52,772 55,205 57,343 (4.4)%(8.0)%
Accrued expenses and other liabilities191,326 200,839 148,689 (4.7)%28.7 %
Deferred compensation45,295 44,293 46,639 2.3 %(2.9)%
Total liabilities14,001,908 14,376,999 15,212,391 (2.6)%(8.0)%
SHAREHOLDERS’ EQUITY  
Common stock1,293,225 1,293,959 1,298,212 (0.1)%(0.4)%
Retained earnings564,106 525,242 419,659 7.4 %34.4 %
Accumulated other comprehensive loss
(325,636)(362,769)(154,091)(10.2)%111.3 %
Total shareholders’ equity1,531,695 1,456,432 1,563,780 5.2 %(2.1)%
Total liabilities and shareholders’ equity$15,533,603 $15,833,431 $16,776,171 (1.9)%(7.4)%
Common Shares Issued:  
Shares outstanding at end of period34,308,540 34,194,018 34,372,784 
Common shareholders’ equity per share (1)
$44.64 $42.59 $45.49 
Common shareholders’ tangible equity per share (1) (2)
$33.52 $31.41 $34.25 
Common shareholders’ tangible equity to tangible assets (2)
7.59 %6.95 %7.18 %
Consolidated Tier 1 leverage capital ratio9.96 %9.45 %8.58 %
(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 and tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.


BANR - First Quarter 2023 Results
April 19, 2023
Page 8
ADDITIONAL FINANCIAL INFORMATION  
(dollars in thousands)  
Percentage Change
LOANSMar 31, 2023Dec 31, 2022Mar 31, 2022Prior QtrPrior Yr Qtr
  
Commercial real estate (CRE):  
Owner-occupied$865,705 $845,320 $872,801 2.4 %(0.8)%
Investment properties1,520,261 1,589,975 1,670,896 (4.4)%(9.0)%
Small balance CRE1,179,749 1,200,251 1,162,164 (1.7)%1.5 %
Multifamily real estate696,864 645,071 598,588 8.0 %16.4 %
Construction, land and land development:
Commercial construction191,051 184,876 179,796 3.3 %6.3 %
Multifamily construction362,425 325,816 274,015 11.2 %32.3 %
One- to four-family construction584,655 647,329 582,800 (9.7)%0.3 %
Land and land development329,438 328,475 317,560 0.3 %3.7 %
Commercial business:
Commercial business1,260,478 1,275,813 1,081,847 (1.2)%16.5 %
SBA PPP5,569 7,594 57,854 (26.7)%(90.4)%
Small business scored960,650 947,092 817,065 1.4 %17.6 %
Agricultural business, including secured by farmland:
Agricultural business, including secured by farmland272,377 294,743 244,580 (7.6)%11.4 %
SBA PPP330 334 708 (1.2)%(53.4)%
One- to four-family residential1,252,104 1,173,112 718,403 6.7 %74.3 %
Consumer:
Consumer—home equity revolving lines of credit564,334 566,291 470,485 (0.3)%19.9 %
Consumer—other114,694 114,632 97,067 0.1 %18.2 %
Total loans receivable$10,160,684 $10,146,724 $9,146,629 0.1 %11.1 %
Loans 30 - 89 days past due and on accrual$14,037 $17,186 $9,611 
Total delinquent loans (including loans on non-accrual), net$37,251 $32,371 $19,231 
Total delinquent loans  /  Total loans receivable0.37 %0.32 %0.21 %

LOANS BY GEOGRAPHIC LOCATIONPercentage Change
Mar 31, 2023Dec 31, 2022Mar 31, 2022Prior QtrPrior Yr Qtr
AmountPercentageAmountAmount
Washington$4,808,821 47.3%$4,777,546 $4,254,748 0.7 %13.0 %
California2,490,666 24.5%2,484,980 2,195,904 0.2 %13.4 %
Oregon1,823,057 17.9%1,826,743 1,629,281 (0.2)%11.9 %
Idaho565,335 5.6%565,586 541,706 — %4.4 %
Utah67,085 0.7%75,967 84,720 (11.7)%(20.8)%
Other405,720 4.0%415,902 440,270 (2.4)%(7.8)%
Total loans receivable$10,160,684 100.0%$10,146,724 $9,146,629 0.1 %11.1 %





BANR - First Quarter 2023 Results
April 19, 2023
Page 9

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)


LOAN ORIGINATIONSQuarters Ended
Mar 31, 2023Dec 31, 2022Mar 31, 2022
Commercial real estate$75,768 $117,787 $87,421 
Multifamily real estate35,520 8,881 21,169 
Construction and land247,842 301,804 545,475 
Commercial business131,826 298,396 272,513 
Agricultural business23,181 24,314 28,676 
One-to four-family residential 34,265 83,491 55,821 
Consumer60,888 102,502 121,959 
Total loan originations (excluding loans held for sale)$609,290 $937,175 $1,133,034 




BANR - First Quarter 2023 Results
April 19, 2023
Page 10
ADDITIONAL FINANCIAL INFORMATION   
(dollars in thousands)   
 
  Quarters Ended
CHANGE IN THEMar 31, 2023Dec 31, 2022Mar 31, 2022
ALLOWANCE FOR CREDIT LOSSES – LOANS   
Balance, beginning of period$141,465 $135,918 $132,099 
Provision (recapture) for credit losses – loans774 6,043 (7,376)
Recoveries of loans previously charged off:
Commercial real estate184 88 87 
Construction and land— — 384 
One- to four-family real estate117 18 40 
Commercial business119 616 149 
Agricultural business, including secured by farmland109 91 118 
Consumer169 153 216 
 698 966 994 
Loans charged off:
Commercial real estate— — (2)
Construction and land— — (5)
One- to four-family real estate(30)— — 
Commercial business(1,158)(1,231)(82)
Consumer(292)(231)(157)
 (1,480)(1,462)(246)
Net (charge-offs) recoveries(782)(496)748 
Balance, end of period$141,457 $141,465 $125,471 
Net (charge-offs) recoveries / Average loans receivable(0.008)%(0.005)%0.008 %
ALLOCATION OF 
ALLOWANCE FOR CREDIT LOSSES – LOANSMar 31, 2023Dec 31, 2022Mar 31, 2022
Specific or allocated credit loss allowance: 
Commercial real estate$42,975 $44,086 $47,264 
Multifamily real estate8,475 7,734 7,183 
Construction and land28,433 29,171 26,679 
One- to four-family real estate15,736 14,729 8,109 
Commercial business33,735 33,299 26,655 
Agricultural business, including secured by farmland3,094 3,475 2,586 
Consumer9,009 8,971 6,995 
Total allowance for credit losses – loans$141,457 $141,465 $125,471 
Allowance for credit losses - loans / Total loans receivable1.39 %1.39 %1.37 %
Allowance for credit losses - loans / Non-performing loans528 %615 %674 %
 
  Quarters Ended
CHANGE IN THEMar 31, 2023Dec 31, 2022Mar 31, 2022
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS   
Balance, beginning of period$14,721 $14,041 $12,432 
(Recapture) provision for credit losses - unfunded loan commitments(1,278)680 428 
Balance, end of period$13,443 $14,721 $12,860 



BANR - First Quarter 2023 Results
April 19, 2023
Page 11
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
 Mar 31, 2023Dec 31, 2022Mar 31, 2022
NON-PERFORMING ASSETS  
Loans on non-accrual status:  
Secured by real estate:  
Commercial$2,815 $3,683 $10,618 
Construction and land172 181 119 
One- to four-family6,789 5,236 2,199 
Commercial business9,365 9,886 1,845 
Agricultural business, including secured by farmland4,074 594 1,021 
Consumer2,247 2,126 2,123 
 25,462 21,706 17,925 
Loans more than 90 days delinquent, still on accrual:  
Secured by real estate:  
One- to four-family445 1,023 210 
Commercial business— — 351 
Consumer865 264 121 
 1,310 1,287 682 
Total non-performing loans26,772 22,993 18,607 
REO340 340 429 
Other repossessed assets17 17 17 
Total non-performing assets$27,129 $23,350 $19,053 
Total non-performing assets to total assets0.17 %0.15 %0.11 %

 Mar 31, 2023Dec 31, 2022Mar 31, 2022
LOANS BY CREDIT RISK RATING  
  
Pass$10,008,385 $10,000,493 $8,961,358 
Special Mention4,251 9,081 6,908 
Substandard148,048 137,150 178,363 
Total$10,160,684 $10,146,724 $9,146,629 




BANR - First Quarter 2023 Results
April 19, 2023
Page 12

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands) 
DEPOSIT COMPOSITIONPercentage Change
Mar 31, 2023Dec 31, 2022Mar 31, 2022Prior QtrPrior Yr Qtr
Non-interest-bearing$5,764,009 $6,176,998 $6,494,852 (6.7)%(11.3)%
Interest-bearing checking1,794,477 1,811,153 1,971,936 (0.9)%(9.0)%
Regular savings accounts2,502,084 2,710,090 2,853,891 (7.7)%(12.3)%
Money market accounts2,143,700 2,198,288 2,402,731 (2.5)%(10.8)%
Total interest-bearing transaction and savings accounts6,440,261 6,719,531 7,228,558 (4.2)%(10.9)%
Total core deposits12,204,270 12,896,529 13,723,410 (5.4)%(11.1)%
Interest-bearing certificates949,932 723,530 800,364 31.3 %18.7 %
Total deposits$13,154,202 $13,620,059 $14,523,774 (3.4)%(9.4)%

GEOGRAPHIC CONCENTRATION OF DEPOSITS
Mar 31, 2023Dec 31, 2022Mar 31, 2022Percentage Change
AmountPercentageAmountAmountPrior QtrPrior Yr Qtr
Washington$7,237,499 55.0 %$7,563,056 $8,067,253 (4.3)%(10.3)%
Oregon2,911,788 22.1 %2,998,572 3,140,393 (2.9)%(7.3)%
California2,309,174 17.6 %2,331,524 2,520,655 (1.0)%(8.4)%
Idaho695,741 5.3 %726,907 795,473 (4.3)%(12.5)%
Total deposits$13,154,202 100.0 %$13,620,059 $14,523,774 (3.4)%(9.4)%

INCLUDED IN TOTAL DEPOSITSMar 31, 2023Dec 31, 2022Mar 31, 2022
Public non-interest-bearing accounts$177,913 $212,533 $189,907 
Public interest-bearing transaction & savings accounts183,924 180,326 165,692 
Public interest-bearing certificates26,857 26,810 37,689 
Total public deposits$388,694 $419,669 $393,288 
Collateralized public deposits$277,725 $304,244 $285,015 
AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT
Number of deposit accounts462,880 $471,140 $502,624 
Average account balance per account$28 $29 $29 






BANR - First Quarter 2023 Results
April 19, 2023
Page 13
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ESTIMATED REGULATORY CAPITAL RATIOS AS OF MARCH 31, 2023ActualMinimum to be categorized as "Adequately Capitalized"Minimum to be
categorized as
"Well Capitalized"
AmountRatioAmountRatioAmountRatio
Banner Corporation-consolidated:    
      Total capital to risk-weighted assets$1,805,467 14.45 %$999,704 8.00 %$1,249,630 10.00 %
      Tier 1 capital to risk-weighted assets1,560,998 12.49 %749,778 6.00 %749,778 6.00 %
      Tier 1 leverage capital to average assets1,560,998 9.96 %626,769 4.00 %n/an/a
      Common equity tier 1 capital to risk-weighted assets1,474,498 11.80 %562,334 4.50 %n/an/a
Banner Bank:    
      Total capital to risk-weighted assets1,712,629 13.71 %999,052 8.00 %1,248,815 10.00 %
      Tier 1 capital to risk-weighted assets1,568,160 12.56 %749,289 6.00 %999,052 8.00 %
      Tier 1 leverage capital to average assets1,568,160 10.01 %626,336 4.00 %782,921 5.00 %
      Common equity tier 1 capital to risk-weighted assets1,568,160 12.56 %561,967 4.50 %811,730 6.50 %

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


BANR - First Quarter 2023 Results
April 19, 2023
Page 14
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREADQuarters Ended
Mar 31, 2023Dec 31, 2022Mar 31, 2022
Average BalanceInterest and Dividends
Yield / Cost(3)
Average BalanceInterest and Dividends
Yield / Cost(3)
Average BalanceInterest and Dividends
Yield / Cost(3)
Interest-earning assets:
Held for sale loans
$52,657 $671 5.17 %$45,654 $527 4.58 %$130,221 $1,115 3.47 %
Mortgage loans
8,267,386 106,900 5.24 %8,175,281 103,478 5.02 %7,347,662 81,032 4.47 %
Commercial/agricultural loans
1,702,553 25,176 6.00 %1,742,517 24,727 5.63 %1,479,216 15,011 4.12 %
SBA PPP loans6,792 50 2.99 %9,347 224 9.51 %88,720 2,784 12.73 %
Consumer and other loans
137,096 2,115 6.26 %140,801 2,125 5.99 %115,881 1,700 5.95 %
Total loans(1)
10,166,484 134,912 5.38 %10,113,600 131,081 5.14 %9,161,700 101,642 4.50 %
Mortgage-backed securities
3,093,860 19,123 2.51 %3,187,557 19,244 2.40 %2,975,263 14,235 1.94 %
Other securities
1,404,355 15,095 4.36 %1,628,553 15,945 3.88 %1,573,834 8,429 2.17 %
Interest-bearing deposits with banks
53,584 608 4.60 %245,538 2,126 3.44 %1,697,545 820 0.20 %
FHLB stock
14,236 90 2.56 %10,773 76 2.80 %11,756 106 3.66 %
Total investment securities4,566,035 34,916 3.10 %5,072,421 37,391 2.92 %6,258,398 23,590 1.53 %
Total interest-earning assets
14,732,519 169,828 4.68 %15,186,021 168,472 4.40 %15,420,098 125,232 3.29 %
Non-interest-earning assets921,217   927,585 1,372,182   
Total assets
$15,653,736   $16,113,606 $16,792,280   
Deposits:      
Interest-bearing checking accounts
$1,779,664 906 0.21 %$1,818,907 566 0.12 %$1,958,824 273 0.06 %
Savings accounts
2,615,173 1,884 0.29 %2,761,323 866 0.12 %2,816,774 354 0.05 %
Money market accounts
2,167,138 3,799 0.71 %2,256,867 1,337 0.24 %2,390,621 506 0.09 %
Certificates of deposit
810,821 2,655 1.33 %709,974 854 0.48 %825,028 953 0.47 %
Total interest-bearing deposits
7,372,796 9,244 0.51 %7,547,071 3,623 0.19 %7,991,247 2,086 0.11 %
Non-interest-bearing deposits
5,960,791 — — %6,402,297 — — %6,421,143 — — %
Total deposits
13,333,587 9,244 0.28 %13,949,368 3,623 0.10 %14,412,390 2,086 0.06 %
Other interest-bearing liabilities:       
FHLB advances
105,984 1,264 4.84 %19,337 198 4.06 %42,222 291 2.80 %
Other borrowings
229,459 381 0.67 %238,217 132 0.22 %266,148 84 0.13 %
Junior subordinated debentures and subordinated notes
189,178 2,760 5.92 %189,178 2,534 5.31 %191,985 1,776 3.75 %
Total borrowings
524,621 4,405 3.41 %446,732 2,864 2.54 %500,355 2,151 1.74 %
Total funding liabilities
13,858,208 13,649 0.40 %14,396,100 6,487 0.18 %14,912,745 4,237 0.12 %
Other non-interest-bearing liabilities(2)
293,205   292,480 225,953   
Total liabilities
14,151,413   14,688,580 15,138,698   
Shareholders’ equity1,502,323   1,425,026 1,653,582   
Total liabilities and shareholders’ equity$15,653,736   $16,113,606 $16,792,280   
Net interest income/rate spread (tax equivalent)$156,179 4.28 %$161,985 4.22 %$120,995 3.17 %
Net interest margin (tax equivalent)4.30 %4.23 %3.18 %
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis(2,867)(2,914)(2,341)
Net interest income and margin, as reported$153,312 4.22 %$159,071 4.16 %$118,654 3.12 %
Additional Key Financial Ratios:
Return on average assets1.44 %1.34 %1.06 %
Return on average equity15.00 %15.14 %10.78 %
Average equity/average assets9.60 %8.84 %9.85 %
Average interest-earning assets/average interest-bearing liabilities186.55 %189.97 %181.59 %
Average interest-earning assets/average funding liabilities106.31 %105.49 %103.40 %
Non-interest income/average assets0.24 %0.32 %0.47 %
Non-interest expense/average assets2.45 %2.44 %2.20 %
Efficiency ratio(4)
58.20 %57.52 %66.04 %
Adjusted efficiency ratio(5)
54.23 %54.43 %62.09 %
(1)Average balances include loans accounted for on a nonaccrual basis and accruing 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 $1.7 million, $1.6 million and $1.3 million for the quarters ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.2 million, $1.3 million and $1.0 million for the quarters ended March 31, 2023, December 31, 2022 and March 31, 2022, 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. Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.


BANR - First Quarter 2023 Results
April 19, 2023
Page 15
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 and net gain (loss) on the sale of securities from the total of net interest income and total non-interest income) and the adjusted efficiency ratio (which excludes 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 REVENUEQuarters Ended
Mar 31, 2023Dec 31, 2022Mar 31, 2022
Net interest income (GAAP)$153,312 $159,071 $118,654 
Non-interest income (GAAP)9,277 13,070 19,427 
Total revenue (GAAP)162,589 172,141 138,081 
Exclude net loss (gain) on sale of securities7,252 3,721 (435)
Exclude net change in valuation of financial instruments carried at fair value552 (157)(49)
Adjusted revenue (non-GAAP)$170,393 $175,705 $137,597 

ADJUSTED EARNINGSQuarters Ended
Mar 31, 2023Dec 31, 2022Mar 31, 2022
Net income (GAAP)$55,555 $54,380 $43,963 
Exclude net loss (gain) on sale of securities7,252 3,721 (435)
Exclude net change in valuation of financial instruments carried at fair value
552 (157)(49)
Exclude Banner Forward expenses143 838 2,465 
Exclude loss on extinguishment of debt— — 793 
Exclude related net tax (benefit) expense(1,907)(1,057)(666)
Total adjusted earnings (non-GAAP)$61,595 $57,725 $46,071 
Diluted earnings per share (GAAP)$1.61 $1.58 $1.27 
Diluted adjusted earnings per share (non-GAAP)$1.79 $1.68 $1.33 




BANR - First Quarter 2023 Results
April 19, 2023
Page 16
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
ADJUSTED EFFICIENCY RATIOQuarters Ended
Mar 31, 2023Dec 31, 2022Mar 31, 2022
Non-interest expense (GAAP)$94,621 $99,013 $91,195 
Exclude Banner Forward expenses(143)(838)(2,465)
Exclude CDI amortization
(1,050)(1,215)(1,424)
Exclude state/municipal tax expense
(1,300)(1,304)(1,162)
Exclude REO operations
277 (28)79 
Exclude loss on extinguishment of debt— — (793)
Adjusted non-interest expense (non-GAAP)$92,405 $95,628 $85,430 
Net interest income (GAAP)$153,312 $159,071 $118,654 
Non-interest income (GAAP)9,277 13,070 19,427 
Total revenue (GAAP)162,589 172,141 138,081 
Exclude net loss (gain) on sale of securities7,252 3,721 (435)
Exclude net change in valuation of financial instruments carried at fair value552 (157)(49)
Adjusted revenue (non-GAAP)$170,393 $175,705 $137,597 
Efficiency ratio (GAAP)58.20 %57.52 %66.04 %
Adjusted efficiency ratio (non-GAAP)54.23 %54.43 %62.09 %

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETSMar 31, 2023Dec 31, 2022Mar 31, 2022
Shareholders’ equity (GAAP)$1,531,695 $1,456,432 $1,563,780 
Exclude goodwill and other intangible assets, net381,511 382,561 386,552 
Tangible common shareholders’ equity (non-GAAP)$1,150,184 $1,073,871 $1,177,228 
Total assets (GAAP)$15,533,603 $15,833,431 $16,776,171 
Exclude goodwill and other intangible assets, net381,511 382,561 386,552 
Total tangible assets (non-GAAP)$15,152,092 $15,450,870 $16,389,619 
Common shareholders’ equity to total assets (GAAP)9.86 %9.20 %9.32 %
Tangible common shareholders’ equity to tangible assets (non-GAAP)7.59 %6.95 %7.18 %
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
Tangible common shareholders’ equity (non-GAAP)$1,150,184 $1,073,871 $1,177,228 
Common shares outstanding at end of period34,308,540 34,194,018 34,372,784 
Common shareholders’ equity (book value) per share (GAAP)$44.64 $42.59 $45.49 
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)$33.52 $31.41 $34.25