What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-23 compared with 2023-02-21 · 317 added, 331 removed, 2011 unchanged (24% of the section changed)

3 unchanged sentences

Also, because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Additionally, in designing disclosure controls and procedures, our Management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As a result of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

8 unchanged sentences

ITEM 9B – Other Information

(b) During the year ended December 31, 2023, there were no Rule 10b5‑1 trading arrangements (as defined in Item 408(a) of Regulation S-K) or non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K) adopted or terminated by any director or officer (as defined in Rule 16a‑1(f) under the Exchange Act) of the Company.

ITEM 9C-Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

1 unchanged sentence

ITEM 10 – Directors, Executive Officers and Corporate Governance

The information required by this item contained under the section captioned “Proposal 1– Election of Directors,” “Meetings and Committees of the Board of Directors” and “Shareholder Proposals” in the Proxy Statement for the Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year, is incorporated herein by reference.

Information regarding the executive officers of the Registrant is provided herein in Part I, Item 1 hereof.

The information regarding our Audit Committee and Financial Expert included under the sections captioned “Meetings and Committees of the Board of Directors” and “Audit Committee Matters” in the Proxy Statement for the Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year, is incorporated herein by reference.

The information required by this item is incorporated herein by reference to the sections captioned “Proposal 1– Election of Directors,” “Meetings and Committees of the Board of Directors” and “Shareholder Proposals” in the Company’s 2024 Proxy Statement for the Annual Meeting of Shareholders (the Proxy Statement), which will be filed with the SEC no later than 120 days after the end of our fiscal year.

Information regarding the executive officers of the Registrant is incorporated herein by reference to the section captioned “Information about our Executive Officers” in Part I, Item 1 hereof.

The information regarding our Audit Committee and Financial Expert is incorporated herein by reference to the sections captioned “Meetings and Committees of the Board of Directors” and “Audit Committee Matters” in the Proxy Statement.

There have been no material changes to the procedures by which stockholders may recommend nominees to our board of directors since last disclosed to stockholders.

1 unchanged sentence

The Board of Directors has adopted a Code of Ethics and Business Conduct for our directors, officers (including its senior financial officers) and employees.

The Code of Ethics and Business Conduct was most recently approved by the Board of Directors on July 28, 2021;

and the Code of Ethics and Business Conduct is reviewed by the Board on an annual basis.

The Code of Ethics and Business Conduct requires our officers, directors, and employees to maintain the highest standards of professional conduct.

A copy of the Code of Ethics and Business Conduct in substantially its current form was filed as an exhibit with Form 8-K on August 11, 2021 and is available without charge, upon request to Investor Relations, Banner Corporation, P.O.

The Code of Ethics and Business Conduct was most recently approved by the Board of Directors on July 25, 2023 and the Code of Ethics and Business Conduct is reviewed by the Board on an annual basis.

A copy of the Code of Ethics and Business Conduct in substantially its current form was filed as an exhibit with Form 8-K on September 18, 2023 and is available without charge, upon request to Investor Relations, Banner Corporation, P.O.

Box 907, Walla Walla, WA 99362.

The Code is also available on the Company’s website at www.bannerbank.com .

The Code of Ethics is also available on the Company’s website at www.bannerbank.com .

We subscribe to the Ethicspoint reporting system and encourage employees, clients and vendors to call the Ethicspoint hotline at 1-866-ETHICSP (384-4277) or visit its website at www.Ethicspoint.com to report any concerns regarding financial statement disclosures, accounting, internal controls, or auditing matters.

2 unchanged sentences

ITEM 11 – Executive Compensation

Information required by this item regarding management compensation and employment contracts, director compensation, and compensation committee interlocks and insider participation is incorporated by reference to the sections captioned “Executive Compensation,” “Directors’ Compensation,” and “Compensation Discussion and Analysis - Compensation and Human Capital Committee Interlocks and Insider Participation,” respectively, in the Proxy Statement for the Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year.

ITEM 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a) Security Ownership of Certain Beneficial Owners and Management

Information required by this item is incorporated herein by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in the proxy statement for the Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission no later than 120 days after the end of our fiscal year.

Information required by this item is incorporated herein by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

(b) Security Ownership of Management

Information required by this item is incorporated herein by reference to the section captioned “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement.

9 unchanged sentences

(1) Represents shares that are issuable pursuant to awards of restricted stock units for which there is no applicable exercise price.

(2) All of the securities remaining available for future issuance under the equity compensation plans approved by security holders are available for issuance as stock awards.

(2) All the securities remaining available for future issuance under the equity compensation plans approved by security holders are available for issuance as stock awards.

ITEM 13 – Certain Relationships and Related Transactions, and Director Independence

The information required by this item contained under the sections captioned “Related Party Transactions” and “Director Independence” in the Proxy Statement for the Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year, is incorporated herein by reference.

ITEM 14 – Principal Accounting Fees and Services

The information required by this item contained under the section captioned “Proposal 4– Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement for the Annual Meeting of Shareholders, which will be filed with the SEC no later than 120 days after the end of our fiscal year, is incorporated herein by reference.

The information required by this item is incorporated herein by reference to the sections captioned “Related Party Transactions” and “Director Independence” in the Proxy Statement.

ITEM 14 – Principal Accountant Fees and Services

The information required by this item is incorporated herein by reference to the section captioned “Proposal 4– Ratification of Selection of Independent Registered Public Accounting Firm” in the Proxy Statement.

ITEM 15 – Exhibits and Financial Statement Schedules

12 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Grescovich /s/ Peter J.

Grescovich Peter J.

Grescovich /s/ Robert G.

Grescovich Robert G.

President and Chief Executive Officer;

63 unchanged sentences

Grescovich, Chief Executive Officer

Conner, Chief Financial Officer

Butterfield, Chief Financial Officer

Management Report on Internal Control over Financial Reporting

16 unchanged sentences

Banner Corporation and Subsidiaries

Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Banner Corporation and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of Banner Corporation and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

21 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

As described in Notes 1 and 4 to the consolidated financial statements, the balance of the Company’s consolidated allowance for credit losses – loans was $149.6 million at December 31, 2023.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans held for investments to present the net carrying value at the amount expected to be collected on such financial assets.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of loans held for investment to present the net carrying value at the amount expected to be collected on such financial assets.

The measurement of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts.

The allowance for credit losses – loans is maintained at a level sufficient to provide for expected credit losses over the life of the loan based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio.

Management considers qualitative and environmental factors for each loan category to adjust for differences between the historical periods used to calculate historical loss rates and expected conditions over the remaining lives of the loans in the portfolio.

These factors include, among others, changes in the size and composition of the loan portfolio, differences in underwriting standards, delinquency rates, actual loss experience and current economic conditions.

Management uses economic indicators to adjust the historical loss rates so that they better reflect management’s expectations of future conditions over the remaining lives of the loans in the portfolio based on reasonable and supportable forecasts.

These economic indicators are selected based on correlation to the Company’s historical credit loss experience and are evaluated for each loan category.

Management also considers qualitative and environmental factors for each loan category to adjust for differences between the historical periods used to calculate historical loss rates and expected conditions over the remaining lives of the loans in the portfolio.

We identified the estimation and application of forecasted economic conditions used in the allowance for credit losses – loans as a critical audit matter.

The economic forecast component of the allowance for credit losses – loans is used to compare the conditions that existed during the historical period to current conditions and future expectations, and to make adjustments to the historical data accordingly.

Auditing the estimation of forecasted economic conditions and the method by which management applied these forecasts to the allowance for credit losses – loans involved especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

• Testing the design, implementation, and operating effectiveness of controls relating to management’s calculation of the allowance for credit losses – loans, including controls over the selection and implementation of the forecasted economic conditions used.

• Obtaining management’s analysis and supporting documentation related to the forecasted economic conditions, and testing whether the forecasts used in the calculation of the allowance for credit losses are reasonable and supportable based on the analysis provided by management.

• Testing the appropriateness of the methodology and assumptions used in the calculation of the allowance for credit losses, testing completeness and accuracy of the data used in the calculation, testing application of the forecasted economic conditions determined by management and used in the calculation, and recalculating the impact of the forecast on the allowance for credit losses – loans balance.

We identified the estimation of qualitative and environmental factors used in the allowance for credit losses – loans as a critical audit matter.

2 unchanged sentences

The primary procedures we performed to address this critical audit matter included:

• Testing the design, implementation, and operating effectiveness of controls relating to management’s calculation of the allowance for credit losses, including controls over the determination of the qualitative and environmental factors used.

• Testing the design, implementation, and operating effectiveness of controls relating to management’s calculation of the allowance for credit losses, including controls over the identification and assessment of the qualitative and environmental factors used.

• Obtaining management’s analysis and supporting documentation related to the qualitative and environmental factors, and testing whether the environmental and qualitative factors used in the calculation of the allowance for credit losses – loans are supported by the analysis provided by management.

• Testing the appropriateness of the methodology and assumptions used in the calculation of the allowance for credit losses, testing completeness and accuracy of the data used in the calculation, testing application of the environmental and qualitative factors determined by management and used in the calculation, and recalculating the allowance for credit losses balance.

We identified management’s risk ratings of loans which are used in the allowance for credit losses – loans as a critical audit matter.

The Company uses internally determined risk ratings as credit indicators to classify loans into pools and to estimate expected loss rates for each of the loan pools.

Those loan pools are then included in the calculation of the allowance for credit losses – loans.

Auditing management’s judgments regarding risk ratings of loans involved especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

• Testing the design, implementation, and operating effectiveness of controls over the accuracy of risk ratings of loans.

• Testing a risk-based, targeted selection of loans to gain substantive evidence that the Company is appropriately rating these loans in accordance with its policies, and that the risk ratings for the loans are reasonable.

• Testing the completeness and accuracy of the loan data used in the allowance for credit losses calculation, including application of the loan risk ratings determined by management and used in the calculation, and recalculating the allowance for credit losses – loans balance.

• Testing the appropriateness of the methodology and assumptions used in the calculation of the allowance for credit losses, testing completeness and accuracy of the data used in the calculation, testing estimation and application of the environmental and qualitative factors determined by management and used in the calculation, and recalculating the allowance for credit losses balance.

/s/ Moss Adams LLP

4 unchanged sentences

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except shares)

(in thousands, except shares and per share amounts)

December 31, 2023 and 2022

5 unchanged sentences

Securities—trading — 28,694

Securities—available-for-sale, amortized cost $ 3,218,777 and $ 3,653,160 , respectively

Securities—available-for-sale;

amortized cost $ 2,729,980 and $ 3,218,777 , respectively

2,373,783 2,789,031

11 unchanged sentences

Accrued interest receivable 63,100 57,284

Real estate owned (REO), held for sale, net 340 852

Property and equipment, net 132,231 138,754

29 unchanged sentences

Common stock (non-voting) and paid in capital - $ 0.01 par value per share, 5,000,000 shares authorized;

no shares issued and outstanding at December 31, 2022;

no shares issued and outstanding at December 31, 2021

no shares issued and outstanding at December 31, 2023 and December 31, 2022

Retained earnings 642,175 525,242

1 unchanged sentence

Liability for common stock issued to stock related compensation plans 6,563 6,905

Accumulated other comprehensive (loss) income ( 362,769 ) 184

Accumulated other comprehensive loss ( 289,135 ) ( 362,769 )

Total shareholders’ equity 1,652,691 1,456,432

Total liabilities and shareholders’ equity $ 15,670,391 $ 15,833,431

See notes to consolidated financial statements

See Notes to the Consolidated Financial Statements

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except for per share amounts)

(in thousands except for shares and per share amounts)

For the Years Ended December 31, 2023, 2022 and 2021

58 unchanged sentences

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

2 unchanged sentences

NET INCOME $ 183,624 $ 195,378 $ 201,048

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF INCOME TAXES:

Unrealized holding (loss) gain on securities—available-for-sale arising during the period ( 418,827 ) ( 80,073 ) 45,247

Income tax benefit (expense) related to securities—available-for-sale unrealized holding losses 100,518 19,217 ( 10,860 )

OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAXES:

Unrealized holding gain (loss) on securities—available-for-sale arising during the period 54,307 ( 418,827 ) ( 80,073 )

Income tax (expense) benefit related to securities—available-for-sale unrealized holding losses ( 13,034 ) 100,518 19,217

Reclassification for net loss (gain) on securities—available-for-sale realized in earnings 19,242 3,248 ( 498 )

Income tax (benefit) expense related to securities—available-for-sale realized gains ( 780 ) 120 109

Income tax (benefit) expense related to securities—available-for-sale realized in earnings ( 4,618 ) ( 780 ) 120

Unrealized loss on securities transferred from available-for-sale to held-to-maturity — ( 34,596 ) —

2 unchanged sentences

Income tax benefit related to amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity ( 561 ) ( 630 ) —

Net unrealized loss on interest rate swaps used in cash flow hedges ( 25,223 ) ( 1,261 ) —

Income tax benefit related to interest rate swaps used in cash flow hedges 6,054 302 —

Net unrealized gain (loss) on interest rate swaps used in cash flow hedges 12,557 ( 25,223 ) ( 1,261 )

Income tax (expense) benefit related to interest rate swaps used in cash flow hedges ( 3,014 ) 6,054 302

Changes in fair value of junior subordinated debentures related to instrument specific credit risk 8,444 ( 5,560 ) ( 10,419 )

Income tax benefit (expense) related to junior subordinated debentures 1,334 2,501 ( 559 )

Income tax (expense) benefit related to junior subordinated debentures ( 2,027 ) 1,334 2,501

Reclassification of fair value of junior subordinated debentures redeemed — 765 1,613

Income tax expense related to junior subordinated debentures redeemed — ( 184 ) ( 387 )

Other comprehensive (loss) income ( 362,953 ) ( 68,885 ) 35,813

COMPREHENSIVE (LOSS) INCOME $ ( 167,575 ) $ 132,163 $ 151,741

Other comprehensive income (loss) 73,634 ( 362,953 ) ( 68,885 )

COMPREHENSIVE INCOME (LOSS) $ 257,258 $ ( 167,575 ) $ 132,163

See Notes to the Consolidated Financial Statements

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except shares)

(in thousands, except shares and per share amounts)

For the Years Ended December 31, 2023, 2022 and 2021

2 unchanged sentences

Balance, January 1, 2021 35,159,200 $ 1,349,879 $ 247,316 $ 69,069 $ 1,666,264

New credit standard (ASC 326) - impact in year of adoption, net of tax ( 11,215 ) ( 11,215 )

Net income 201,048 201,048

19 unchanged sentences

Net income 183,624 183,624

Other comprehensive loss, net of income tax ( 362,953 ) ( 362,953 )

Other comprehensive income, net of income tax 73,634 73,634

Accrual of dividends on common stock ($ 1.92 /share-cumulative)

( 66,691 ) ( 66,691 )

Repurchase of common stock

( 200,000 ) ( 10,960 ) ( 10,960 )

Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered

16 unchanged sentences

Net change in valuation of financial instruments carried at fair value 4,218 ( 807 ) ( 4,616 )

Reinvested dividends – equity securities — — ( 353 )

Gain on sale of branches, including related deposits — ( 7,804 ) —

Decrease (increase) in deferred taxes 7,624 16,357 ( 13,963 )

Increase (decrease) in current taxes payable 8,250 ( 3,643 ) ( 2,193 )

Decrease in deferred taxes 1,514 7,624 16,357

(Decrease) increase in current taxes payable ( 3,170 ) 8,250 ( 3,643 )

Stock-based compensation 9,169 8,870 9,258

1 unchanged sentence

Gain on sale of loans, excluding capitalized servicing rights ( 6,151 ) ( 4,556 ) ( 26,140 )

Loss (gain) on disposal of real estate held for sale and property and equipment, net 102 ( 2,305 ) 859

(Gain) loss on disposal of real estate held for sale and property and equipment, net ( 352 ) 102 ( 2,305 )

Provision (recapture) for credit losses 10,789 10,364 ( 33,388 )

Provision for losses on real estate held for sale — — 45

Loss on extinguishment of debt — 765 2,284

21 unchanged sentences

Purchase of FHLB stock ( 165,425 ) ( 15,080 ) —

Proceeds from maturity of securities purchased under agreements to resell 300,000 — —

Purchase of securities purchased under agreements to resell — — ( 300,000 )

1 unchanged sentence

Other 1,693 3,459 2,355

Net cash used by investing activities ( 1,444,557 ) ( 1,015,426 ) ( 1,454,624 )

Net cash provided from (used by) investing activities 191,929 ( 1,444,557 ) ( 1,015,426 )

(Continued on next page)

7 unchanged sentences

Repayment of long term FHLB borrowing — ( 50,000 ) ( 100,000 )

Advances (repayments) of overnight and short-term FHLB borrowings, net 50,000 — ( 300,000 )

Advances of overnight and short-term FHLB borrowings, net 273,000 50,000 —

(Decrease) increase in other borrowings, net ( 49,923 ) ( 31,690 ) 79,704

Net proceeds from issuance of subordinated notes — — 98,027

Repayment of junior subordinated debentures — ( 50,518 ) ( 8,248 )

Proceeds from redemption of trust securities related to junior subordinated debentures 1,518 248 —

Proceeds from redemption of trust preferred securities related to junior subordinated debentures — 1,518 248

Cash dividends paid ( 66,765 ) ( 61,078 ) ( 57,621 )

Cash paid for repurchase of common stock — ( 10,960 ) ( 56,528 )

Taxes paid related to net share settlement for equity awards ( 3,332 ) ( 3,228 ) ( 1,453 )

Taxes paid related to net share settlement of equity awards ( 3,476 ) ( 3,332 ) ( 3,228 )

Net cash (used by) provided from financing activities ( 437,726 ) ( 684,732 ) 1,613,965

10 unchanged sentences

Loans, held for sale, transferred to portfolio 27,929 35,466 —

Securities, held-for-trading, transferred to available-for-sale 25,298 — —

Securities, available-for-sale, transferred to held-to-maturity — 462,159 —

9 unchanged sentences

The Company is primarily engaged in the business of planning, directing and coordinating the business activities of its wholly-owned subsidiary, Banner Bank (the Bank).

The Bank is a Washington-chartered commercial bank that conducts business from its headquarters in Walla Walla, Washington and, as of December 31, 2022, its 137 branch offices located in Washington, Oregon, California and Idaho.

The Bank is a Washington-chartered commercial bank that conducts business from its headquarters in Walla Walla, Washington and its 135 branch offices located in Washington, Oregon, California and Idaho.

The Bank also has 13 loan production offices located in Washington, Oregon, California, Idaho and Utah.

20 unchanged sentences

Use of Estimates:

In the opinion of management, the accompanying Consolidated Statements of Financial Condition and related Consolidated Statements of Operations, Comprehensive Income, Changes in Shareholders’ Equity and Cash Flows reflect all adjustments (which include reclassification and normal recurring adjustments) that are necessary for a fair presentation in conformity with GAAP.

In the opinion of Management, the accompanying Consolidated Statements of Financial Condition and related Consolidated Statements of Operations, Comprehensive Income (Loss), Changes in Shareholders’ Equity and Cash Flows reflect all adjustments (which include reclassification and normal recurring adjustments) that are necessary for a fair presentation in conformity with GAAP.

The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect amounts reported in the financial statements.

3 unchanged sentences

Management believes that the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate based on the factual circumstances at the time.

However, given the sensitivity of the Consolidated Financial Statements to these critical accounting estimates, the use of other judgments, estimates and assumptions could result in material differences in the Company’s results of operations or financial condition.

However, given the sensitivity of the Consolidated Financial Statements to these critical accounting estimates, the use of judgments, estimates and assumptions could result in material differences in the Company’s results of operations or financial condition.

Further, subsequent changes in economic or market conditions could have a material impact on these estimates and the Company’s financial condition and operating results in future periods.

15 unchanged sentences

These securities are either explicitly or implicitly guaranteed by the U.S.

government, are highly rated by major rating agencies and have a long history of no credit losses.

government and have a long history of no credit losses.

The Company’s held-to-maturity portfolio also contains municipal bonds that are typically rated by major rating agencies as Aa or better.

1 unchanged sentence

The Company uses industry historical credit loss information adjusted for current conditions to establish the allowance for credit losses on the municipal bond portfolio.

Less than 2% of the Company’s held-to-maturity portfolio are community development bonds;

approximately half represent pools of one- to four-family loans while the other half are not collateralized.

The expected credit losses on these bonds is similar to Banner’s commercial business loan portfolio.

8 unchanged sentences

The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to AOCI.

Changes in the allowance for credit losses are recorded as provision for (or recapture of) credit losses.

Changes in the allowance for credit losses are recorded as provision (recapture) for credit losses.

Losses are charged against the allowance when management believes the non-collectability of an available-for-sale or held-to-maturity security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

9 unchanged sentences

Loans Receivable :

The Bank originates residential one- to four-family and multifamily mortgage loans for both portfolio investment and sale in the secondary market.

The Bank also originates construction and land development, commercial real estate, commercial business, agricultural and consumer loans for portfolio investment.

The Bank originates residential one- to four-family mortgage loans for both portfolio investment and sale in the secondary market.

The Bank also originates construction and land development, multifamily mortgage, commercial real estate, commercial business, agricultural and consumer loans for portfolio investment.

Loans receivable not designated as held for sale are recorded at amortized cost, net of the allowance for credit losses.

3 unchanged sentences

Loans Held for Sale:

Residential one- to four-family and multifamily mortgage loans originated with the intent to be sold in the secondary market are considered held for sale.

Residential one- to four-family loans originated with the intent to be sold in the secondary market are considered held for sale.

Residential one- to four-family loans under best effort delivery commitments are carried at the lower of aggregate cost or estimated market value.

Residential one- to four-family loans expected to be delivered under mandatory commitments are carried at fair value in order to match changes in the value of the loans with the value of the related economic hedges on the loans.

Residential one- to four-family loans expected to be delivered under mandatory commitments are carried at fair value to match changes in the value of the loans with the value of the related economic hedges on the loans.

Fair values for residential mortgage loans held for sale are determined by comparing actual loan rates to current secondary market prices for similar loans.

The multifamily held for sale loans originated prior to April 1, 2020 were carried at fair value in order to match changes in the value of the loans with the value of the related economic hedges on the loans.

Fair values for multifamily loans held for sale are calculated based on discounted cash flows using a discount rate that is a combination of market spreads for similar loan types added to selected index rates.

The multifamily held for sale loans originated subsequent to March 31, 2020 are carried at the lower of cost or market.

Net unrealized losses on loans held for sale that are carried at lower of cost or market are recognized through the valuation allowance as charges to income.

1 unchanged sentence

Gains and losses on sales of loans held for sale are determined using the aggregate method and are recorded in the mortgage banking operations component of non-interest income.

For the years ended December 31, 2022 and 2021, we recorded net gains on loans sold of $ 7.8 million and $ 34.5 million, respectively.

Loans Acquired in Business Combinations :

8 unchanged sentences

The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan.

Subsequent changes to the allowance for credit losses are recorded through a provision for credit losses.

Subsequent changes to the allowance for credit losses are recorded through a provision (recapture) for credit losses.

For purchased non-credit-deteriorated loans, the difference between the fair value and unpaid principal balance of the loan at the acquisition date is amortized or accreted to interest income over the life of the loan.

1 unchanged sentence

As a result, an allowance for credit losses is determined at the acquisition date using the same methodology as other loans held for investment and is recognized as a provision for credit losses.

Any subsequent deterioration (improvement) in credit quality is recognized by recording (recapturing) a provision for credit losses.

Any subsequent deterioration (improvement) in credit quality is recognized by recording a provision (recapture) for credit losses.

Income Recognition on Nonaccrual Loans and Securities :

6 unchanged sentences

While less common, similar interest reversal and nonaccrual treatment is applied to investment securities if their ultimate collectability becomes questionable.

Loans modified due to the COVID-19 pandemic are considered current if they are less than 30 days past due on the contractual payments at the time the loan modification program was put in place and therefore continue to accrue interest unless the interest is being waived.

Provision and Allowance for Credit Losses - Loans :

39 unchanged sentences

Factors involved in determining whether a loan should be individually evaluated include, but are not limited to, the financial condition of the borrower and the value of the underlying collateral.

Expected credit losses for loans evaluated individually are measured based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or when the Bank determines that foreclosure is probable, the expected credit loss is measured based on the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable.

Expected credit losses for loans evaluated individually are primarily measured based on the fair market value of the collateral as of the reporting date, less estimated selling costs, as applicable.

Under certain circumstances, the Bank may use observable market value of collateral or the present value of the expected future cash flows discounted at the loan’s original effective interest rate.

As a practical expedient, the Bank measures the expected credit loss for a loan using the fair value of the collateral, if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Bank’s assessment as of the reporting date.

2 unchanged sentences

Subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate.

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

Some of the Bank’s loans are reported as troubled debt restructures (TDRs).

Loans are reported as TDRs when the Bank grants a concession to a borrower experiencing financial difficulties that it would not otherwise consider.

Examples of such concessions include forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk.

The allowance for credit losses on a TDR is determined using the same method as all other loans held for investment, except when the value of the concession cannot be measured using a method other than the discounted cash flow method.

When the value of a concession is measured using the discounted cash flow method the allowance for credit losses is determined by discounting the expected future cash flows at the original interest rate of the loan.

Troubled Loan Modifications:

Some of the Bank’s loans are reported as troubled loan modification.

Loans are reported as troubled loan modifications when the Bank grants a concession to a borrower experiencing financial difficulties that it would not otherwise consider.

Examples of such concessions include providing principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or any combination of these.

Loan Origination and Commitment Fees:

37 unchanged sentences

Many of our leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule which are factored into our determination of lease payments when appropriate.

Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term.

Substantially, all the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term.

The ROU asset and lease liability terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

12 unchanged sentences

Other intangible assets consist primarily of core deposit intangibles (CDI) which are amounts recorded in business combinations or deposit purchase transactions related to the value of transaction-related deposits and the value of the client relationships associated with the deposits.

CDI is being amortized on an accelerated basis over a weighted average estimated useful life of eight years to ten years .

CDI is being amortized on an accelerated basis over a weighted average estimated useful life of eight to 10 years.

These assets are reviewed at least annually for events or circumstances that could impact their recoverability.

32 unchanged sentences

Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are received on the Company’s variable-rate assets.

The Bank is a party to $ 400.0 million in notional amounts of these types of interest rate swaps at December 31, 2022.

The related cash flows are recognized as cash flows from operating activities on the Consolidated Statement of Cash Flows.

In addition, the Bank uses an interest rate swap program for commercial loan clients that provides the client with a variable-rate loan and enters into an interest rate swap allowing them to effectively fix their loan interest rates.

These client swaps are matched with third party swaps with qualified broker/dealer or banks to offset the risk.

At December 31, 2022, the Bank had $ 440.7 million in notional amounts of these client interest rate swaps outstanding, with an equal amount of offsetting third party swaps also in place.

The fair value adjustments for these swaps are reflected in other assets or other liabilities as appropriate.

10 unchanged sentences

Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee has the right to pledge or exchange the transferred assets beyond a trivial benefit, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Advertising Expenses:

Advertising costs are expensed as incurred.

Costs related to production of advertising are considered incurred when the advertising is first used.

Income Taxes:

8 unchanged sentences

Stock-Based Compensation:

The Company maintains a number of stock-based incentive plans, which are discussed in more detail in Note 13, Stock-Based Compensation Plans.

Under these plans, the Company compensates employees and directors with time-based restricted stock and restricted stock unit grants.

Under the Company’s stock-based incentive plans, the Company compensates employees and directors with time-based restricted stock and restricted stock unit grants.

Some restricted stock awards include performance-based and market-based goals that impact the number of shares that ultimately vest based on the level of goal achievement.

The Company measures the cost of employee or director services received in exchange for an award of equity instruments based on the fair value of the award, which is the intrinsic value on the grant date.

This cost is recognized as expense in the Consolidated Statements of Operations ratably over the vesting period of the award.

This cost is recognized as expense in the Consolidated Statements of Operations ratably over the vesting period of the award with forfeitures of nonvested awards recognized as they occur.

Any tax benefit or deficiency is recorded as income tax benefit or expense in the period the shares vest.

3 unchanged sentences

Earnings per common share is computed under the two-class method.

Pursuant to the two-class method, non-vested stock-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS.

The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.

7 unchanged sentences

The Company is managed by legal entity and not by lines of business.

The Bank is a community oriented commercial bank chartered in the State of Washington.

The Bank is a community oriented commercial bank chartered in Washington state.

The Bank’s primary business is that of a traditional banking institution, gathering deposits and originating loans for portfolio in its respective primary market areas.

3 unchanged sentences

In addition to interest income on loans and investment securities, the Bank receives other income from deposit service charges, loan servicing fees and from the sale of loans and investments.

The performance of the Bank is reviewed by the Company’s executive management and Board of Directors on a monthly basis.

All of the executive officers of the Company are members of the Bank’s management team.

The performance of the Bank is reviewed monthly by the Company’s executive management and Board of Directors.

All the executive officers of the Company are members of the Bank’s management team.

The Company has determined that its current business and operations consist of a single business segment and a single reporting unit.

4 unchanged sentences

ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

Income Taxes (Topic 740)

In December 2023, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2023-09, I ncome Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the Update are intended to provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The ASU requires disclosure in the rate reconciliation of specific categories as well as provide additional information for reconciling items that meet a quantitative threshold.

Those amendments require disclosure of the following information about income taxes paid on an annual basis:

• Income taxes paid (net of refunds received), disaggregated by federal and state taxes and by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than five percent of total income taxes paid (net of refunds received).

• Income tax expense (or benefit) from continuing operations disaggregated by federal and state jurisdictions.

The ASU is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments should be applied on a prospective basis.

The Company is evaluating the adoption of this ASU, as it will require additional disclosures in the notes to our Consolidated Financial Statements.

Segment Reporting (Topic 280)

In November 2023, the FASB issued guidance within ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This ASU requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU and all existing disclosures in Topic 280.

The Company has determined that its current business and operations consist of a single business segment and a single reporting unit.

The amendments in this Update are intended to improve segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The key amendments included in this Update:

• Require disclosure on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and are included within each reported measure of segment profit and loss.

• Require disclosure on an annual and interim basis, an amount for other segment items (defined in the ASU) and a description of its composition.

• Clarify that if the CODM uses more than one measure of the segment’s profit or loss in assessing performance, one or more of those additional measures may be reported.

• Require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing performance.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The amendments should be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact on the Company’s Consolidated Financial Statements as the Company has a single reportable segment.

Financial Instruments – Credit Losses (Topic 326)

On January 1, 2023, the Company adopted FASB ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

The ASU eliminated the troubled debt restructuring recognition and measurement guidance and, instead, requires that a creditor evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The ASU also introduced new disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

In addition, the ASU requires vintage disclosures to include current-period gross write-offs by year of origination for financing receivables.

The Company applied the ASU prospectively and new disclosures have been added when applicable.

Reference Rate Reform (Topic 848)

In March 2020, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , in response to the scheduled discontinuation of LIBOR on December 31, 2021.

The amendments in this ASU provide optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.

Since the issuance of this guidance, the publication cessation of U.S.

dollar LIBOR has been extended to June 30, 2023.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of Sunset Date of Topic 848 .

This ASU defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

This deferral of the sunset date is in response to the extension of the publication cessation date to June 30, 2023 noted above which was beyond the current sunset date of December 31, 2022.

The amendments in this ASU are effective upon the issuance date of December 2022.

The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance:

In 2020, 2021 and 2022, the FASB issued guidance in response to the scheduled discontinuation of LIBOR.

within ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting , ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of Sunset Date of Topic 848, ASU 2021-01, Reference Rate Reform (Topic 848):

The amendments in these ASUs provided optional guidance designed to provide relief from the accounting analysis and impacts that may otherwise be required for modifications to agreements (e.g., loans, debt securities, derivatives, borrowings) necessitated by reference rate reform.

The publication cessation of U.S.

dollar LIBOR was on June 30, 2023.

The optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance:

1) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate;

2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under this Topic for modifications not accounted for as separate contracts;

3) modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging- Embedded Derivatives;

and 4) for other Topics or Industry Subtopics in the Codification, the amendments in this ASU also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

This ASU clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The ASU also amends the expedients and exceptions in Topic 848 to capture the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected by the discounting transition.

The amendments in this ASUs are effective upon the issuance date of March 12, 2020, and applies to contract modifications made and new hedging relationships entered into through December 31, 2022.

The Company has elected certain expedients related to individual hedge relationships.

The Company will be able to use other expedients in the Reference Rate Reform guidance to manage through the transition from LIBOR, specifically as they relate to loans, leases and hedging relationships.

2) modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts;

and 4) the amendments in this ASU also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination.

The Company used the expedients in the Reference Rate Reform guidance to manage through the transition from LIBOR, specifically as they relate to loans, leases and hedging relationships.

The adoption of this accounting guidance did not have a material impact on the Company’s Consolidated Financial Statements.

Financial Instruments – Credit Losses (Topic 326)

In March 2022, the FASB issued guidance within ASU 2022-02, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

The amendments in this ASU eliminate the current troubled debt restructuring (TDR) recognition and measurement guidance and, instead, require that a creditor evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan.

The amendments also introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

These amendments require vintage disclosures including current-period gross write-offs by year of origination for financing receivables.

Gross write-off information must be included in the vintage disclosures in accordance with ASC 326-20-50-6, which requires disclosure of the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, as the Company previously adopted the amendments in ASU 2016-13, which is commonly referred to as the current expected credit loss methodology, on January 1, 2020.

These amendments should be applied prospectively, though for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

Fair Value Measurement (Topic 820)

1 unchanged sentence

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The amendments in this ASU affect all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction.

The ASU affects all entities that have investments in equity securities measured at fair value that are subject to a contractual sale restriction.

These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments in this ASU are effective for fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The adoption of this ASU is not expected to have a material impact on the Company’s Consolidated Financial Statements.

1 unchanged sentence

December 31, 2023

Amortized Cost Fair Value

Corporate bonds $ 27,203 $ 28,694

$ 27,203 $ 28,694

December 31, 2022

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Allowance for Credit Losses Fair Value

63 unchanged sentences

There were no securities—trading in a nonaccrual status at December 31, 2023 or December 31, 2022.

Net unrealized holding gains of $ 1.7 million were recognized in 2022 and net unrealized holding gains of $ 2.0 million were recognized 2021.

Net unrealized holding losses of $ 3.4 million were recognized in 2023 and net unrealized holding gains of $ 1.7 million were recognized in 2022.

All securities—trading were transferred to securities—available-for-sale during the fourth quarter of 2023.

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

6 unchanged sentences

There were no securities—available-for-sale in a nonaccrual status at December 31, 2023 and 2022.

The Company sold no held-to-maturity securities and had no partial calls of securities during the year ended December 31, 2022 and sold one held-to-maturity security with a resulting net gain of $ 3,000 and had partial calls of securities that resulted in a net loss of $ 65,000 during the year ended December 31, 2021.

There were no sales of securities—held-to-maturity during the year ended December 31, 2020, although there were partial calls of securities that resulted in a net loss of $ 216,000 for the year ended December 31, 2020.

The Company did not sell any held-to-maturity securities and had no partial calls of securities during the years ended December 31, 2023 and December 31, 2022.

The Company sold one held-to-maturity security with a resulting net gain of $ 3,000 and had partial calls of securities that resulted in a net loss of $ 65,000 for the year ended December 31, 2021.

There were no securities—held-to-maturity in a nonaccrual status at December 31, 2023 and 2022.

During the year ended December 31, 2022, the Company sold no equity securities, compared to a $ 4.8 million equity security with a resulting net gain of $ 46,000 during the year ended December 31, 2021, and two equity securities totaling $ 1.06 billion for the year ended December 31, 2020 with a resulting net loss of $ 177,000 .

During the year ended December 31, 2020, the Company also sold Visa Class B stock with a net gain of $ 519,000 .

The stock was previously carried at a zero-cost basis due to transfer restrictions and uncertainty of litigation.

During the years ended December 31, 2023 and December 31, 2022, the Company sold no equity securities.

During the year ended December 31, 2021, the Company sold a $ 4.8 million equity security with a resulting net gain of $ 46,000 .

The following table presents the amortized cost and estimated fair value of securities at December 31, 2023, by contractual maturity and does not reflect any required periodic payments (in thousands).

1 unchanged sentence

December 31, 2023

Trading Available-for-Sale Held-to-Maturity

Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

Available-for-Sale Held-to-Maturity

Amortized Cost Fair Value Amortized Cost Fair Value

Maturing within one year $ — $ — $ 6,685 $ 6,446

Maturing after one year through five years 162,723 152,661 18,546 18,245

Maturing after five years through ten years — — 526,454 472,026 21,832 20,756

Maturing after ten years 27,203 28,694 2,445,192 2,086,295 1,049,912 876,173

Maturing after five years through 10 years 370,064 327,355 22,220 21,240

Maturing after 10 years 2,197,193 1,893,767 1,011,936 861,583

$ 2,729,980 $ 2,373,783 $ 1,059,387 $ 907,514

4 unchanged sentences

State and local governments public deposits $ 250,855 $ 263,496 $ 230,490

Federal Reserve 115,007 115,007 98,259

Interest rate swap counterparties 971 971 813

24 unchanged sentences

Recapture of provision for credit losses — ( 26 ) ( 45 ) — ( 71 )

Securities charged-off — — — — —

Recoveries — — 24 — 24

4 unchanged sentences

Beginning balance $ — $ 203 $ 230 $ — $ 433

Provision for credit losses — 144 445 — 589

Securities charged-off — — ( 250 ) — ( 250 )

Recapture of provision for credit losses — ( 20 ) ( 63 ) — ( 83 )

Recoveries — — 29 — 29

Ending balance $ — $ 183 $ 196 $ — $ 379

3 unchanged sentences

Beginning balance $ — $ 59 $ 35 $ — $ 94

Impact of adopting ASC 326 — 28 35 — 63

Provision for credit losses — 144 445 — 589

Securities charged-off — — ( 250 ) — ( 250 )

Ending balance $ — $ 203 $ 230 $ — $ 433

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES

During the first quarter of 2022, the Company changed the segmentation of its Small Balance CRE loan category based on the common risk characteristics used to measure the allowance for credit losses - loans.

The presentation of loans receivable at December 31, 2021 has been updated to match the segmentation used in the current period presentation.

The following table presents the loans receivable at December 31, 2023 and 2022 by class (dollars in thousands):

16 unchanged sentences

Agricultural business, including secured by farmland 331,089 3 295,077 3

295,077 2.9 280,578 3.1

One- to four-family residential 1,518,046 14 1,173,112 12

6 unchanged sentences

(1) Includes $ 3.6 million and $ 7.6 million of SBA Paycheck Protection Program (PPP) loans as of December 31, 2023 and December 31, 2022, respectively.

(2) Includes $ 334,000 of SBA PPP loans as of December 31, 2022 and $1.4 million as of December 31, 2021.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $ 12.1 million as of December 31, 2023 and $ 8.1 million as of December 31, 2022.

9 unchanged sentences

There were no PCD loans at December 31, 2023 or 2022.

Troubled Debt Restructurings.

Loans are reported as TDRs when the Bank grants one or more concessions to a borrower experiencing financial difficulties that it would not otherwise consider.

The Company’s TDRs have generally not involved forgiveness of amounts due, but almost always include a modification of multiple factors;

the most common combination includes interest rate, payment amount and maturity date.

As of December 31, 2022 and 2021, the Company had TDRs of $ 4.3 million and $ 5.5 million, respectively.

The Company had no commitments to advance additional funds related to TDRs as of both December 31, 2022 and 2021.

There were no new TDRs that occurred during the years ended December 31, 2022 or December 31, 2021.

There were no TDRs which incurred a payment default within the years ended December 31, 2022 and 2021, for which the payment default occurred within twelve months of the restructure date.

A default on a TDR results in either a transfer to nonaccrual status or a partial charge-off, or both

Troubled Loan Modifications.

Occasionally, the Company offers modifications of loans to borrowers experiencing financial difficulty by providing principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or any combination of these.

When principal forgiveness is provided, the amount of the forgiveness is charged-off against the allowance for credit losses - loans.

Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses - loans is adjusted by the same amount.

The allowance for credit losses on modified loans is measured using the same credit loss estimation methods used to determine the allowance for credit losses for all other loans held for investment.

These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans.

The following table presents the amortized cost basis and financial effect of loans at December 31, 2023, that were both experiencing financial difficulty and modified during the year ended December 31, 2023 (in thousands):

December 31, 2023

Payment Delay Term Extension Total

One- to four-family construction $ — $ 4,911 $ 4,911

Commercial business 121 — 121

Agricultural business, including secured by farmland 1,580 — 1,580

One- to four-family residential 1,060 — 1,060

Total $ 2,761 $ 4,911 $ 7,672

The Company has not committed to lend any additional amounts to borrowers included in the previous table.

The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified in the last 12 months at December 31, 2023 (in thousands):

December 31, 2023

Past Due 60-89 Days

Past Due 90 Days or More

Past Due Total

Commercial business $ — $ — $ 121 $ 121

Agricultural business, including secured by farmland — — 1,580 1,580

One- to four-family residential — — 1,060 1,060

Total $ — $ — $ 2,761 $ 2,761

The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the year ended December 31, 2023:

For the Year Ended December 31, 2023

Weighted Average Payment Delay Period

(in months) Weighted Average Term Extension

One- to four-family construction n/a 14

Commercial business 8 n/a

Agricultural business, including secured by farmland 8 n/a

One- to four-family residential 8 n/a

Credit Quality Indicators :

6 unchanged sentences

Overall Risk Rating Definitions :

Risk-ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan or lease.

Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan or lease to exhibit characteristics of more than one risk-rating category.

Risk ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan.

Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan to exhibit characteristics of more than one risk-rating category.

Consideration for the final rating is centered on the borrower’s ability to repay, in a timely fashion, both principal and interest.

26 unchanged sentences

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of December 31, 2023 and December 31, 2022 (in thousands).

In addition, the tables include the gross charge-offs for the year ended December 31, 2023.

Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination.

10 unchanged sentences

Total Commercial real estate - owner occupied $ 170,577 $ 163,939 $ 161,864 $ 144,665 $ 84,423 $ 154,219 $ 36,210 $ 915,897

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Commercial real estate - investment properties

5 unchanged sentences

Total Commercial real estate - investment properties $ 154,128 $ 168,286 $ 281,324 $ 123,315 $ 156,174 $ 608,983 $ 49,134 $ 1,541,344

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Multifamily real estate

5 unchanged sentences

Total Multifamily real estate $ 96,865 $ 177,907 $ 215,220 $ 101,336 $ 46,886 $ 169,733 $ 3,285 $ 811,232

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

December 31, 2023

8 unchanged sentences

Total Commercial construction $ 89,175 $ 62,302 $ 4,814 $ 12,705 $ — $ 1,015 $ — $ 170,011

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Multifamily construction

5 unchanged sentences

Total Multifamily construction $ 176,729 $ 256,661 $ 70,189 $ 414 $ — $ — $ — $ 503,993

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

One- to four- family construction

5 unchanged sentences

Total One- to four- family construction $ 454,533 $ 43,816 $ 27,373 $ — $ 329 $ — $ 381 $ 526,432

Current period gross charge-offs $ 136 $ — $ 933 $ — $ — $ — $ — $ 1,069

December 31, 2023

8 unchanged sentences

Total Land and land development $ 188,134 $ 81,324 $ 34,146 $ 12,338 $ 8,409 $ 10,152 $ 2,136 $ 336,639

Current period gross charge-offs $ — $ — $ — $ — $ — $ 20 $ — $ 20

Commercial business

5 unchanged sentences

Total Commercial business $ 159,948 $ 228,789 $ 124,429 $ 139,273 $ 104,097 $ 128,185 $ 371,013 $ 1,255,734

Current period gross charge-offs $ 22 $ 108 $ 681 $ 5 $ — $ 27 $ 318 $ 1,161

Agricultural business, including secured by farmland

5 unchanged sentences

Total Agricultural business, including secured by farmland $ 53,227 $ 35,520 $ 25,937 $ 17,658 $ 31,704 $ 40,854 $ 126,189 $ 331,089

Current period gross charge-offs $ — $ 430 $ 134 $ — $ — $ — $ — $ 564

December 31, 2022

71 unchanged sentences

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of December 31, 2023 and December 31, 2022 (in thousands).

In addition, the tables include the gross charge-offs for the year ended December 31, 2023.

Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination.

10 unchanged sentences

Total Small balance CRE $ 83,077 $ 194,213 $ 215,550 $ 164,102 $ 121,755 $ 399,425 $ 378 $ 1,178,500

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

Small business scored

5 unchanged sentences

Total Small business scored $ 197,196 $ 277,128 $ 173,482 $ 84,432 $ 62,321 $ 97,206 $ 130,389 $ 1,022,154

Current period gross charge-offs $ 193 $ 421 $ 221 $ 185 $ 286 $ 183 $ — $ 1,489

One- to four- family residential

5 unchanged sentences

Total One- to four- family residential $ 362,703 $ 590,494 $ 265,485 $ 57,527 $ 32,059 $ 209,569 $ 209 $ 1,518,046

Current period gross charge-offs $ — $ — $ — $ 10 $ — $ 32 $ — $ 42

December 31, 2023

8 unchanged sentences

Total Consumer—home equity revolving lines of credit $ 5,003 $ 3,010 $ 1,933 $ 2,309 $ 1,421 $ 6,214 $ 568,813 $ 588,703

Current period gross charge-offs $ — $ — $ 13 $ 73 $ — $ 21 $ ( 3 ) $ 104

Consumer-other

5 unchanged sentences

Total Consumer-other $ 10,773 $ 31,894 $ 10,027 $ 6,936 $ 4,471 $ 18,007 $ 28,573 $ 110,681

Current period gross charge-offs $ — $ 55 $ 79 $ 37 $ 39 $ 159 $ 889 $ 1,258

December 31, 2022

42 unchanged sentences

December 31, 2023

Real Estate Equipment Total

Real Estate Accounts Receivable Equipment Inventory Total

Commercial real estate:

Owner-occupied $ 1,391 $ — $ — $ — $ 1,391

Small balance CRE 755 — — — 755

Commercial business:

One- to four-family construction 8,859 — — — 8,859

Commercial business — 1,059 5,085 812 6,956

Small business scored — 307 307

Agricultural business, including secured by farmland

2,576 — — — 2,576

One- to four-family residential 1,954 — — — 1,954

Consumer—home equity revolving lines of credit

821 — — — 821

Total $ 16,356 $ 1,059 $ 5,085 $ 812 $ 23,312

2 unchanged sentences

Commercial real estate:

Owner-occupied $ 921 $ — $ 921

Investment properties 6,136 — 6,136

Small balance CRE $ 2,953 $ — $ 2,953

Commercial business

Agricultural business, including secured by farmland

427 594 1,021

Commercial business — 4,537 4,537

Small business scored — 307 307

One- to four-family residential 1,622 — 1,622

Total $ 4,575 $ 4,844 $ 9,419

47 unchanged sentences

For the Year Ended December 31, 2023

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Unallocated Total

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

Allowance for credit losses:

4 unchanged sentences

Ending balance $ 44,384 $ 9,326 $ 28,095 $ 35,464 $ 3,865 $ 19,271 $ 9,238 $ 149,643

Net loan recoveries as a percent of average outstanding loans during the period — % — % — % — % — % — % — % n/a 0.01 %

Net loan recoveries (charge-offs) as a percent of average outstanding loans during the period 0.01 % — % ( 0.01 ) % ( 0.01 ) % — % — % ( 0.01 ) % ( 0.03 ) %

For the Year Ended December 31, 2022

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Unallocated Total

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

Allowance for credit losses:

4 unchanged sentences

Ending balance $ 44,086 $ 7,734 $ 29,171 $ 33,299 $ 3,475 $ 14,729 $ 8,971 $ 141,465

Net loan charge-offs as a percent of average outstanding loans during the period ( 0.02 ) % — % — % — % — % — % — % n/a ( 0.02 ) %

Net loan recoveries as a percent of average outstanding loans during the period — % — % — % — % — % — % — % 0.01 %

For the Year Ended December 31, 2021

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Unallocated Total

Commercial Real Estate Multifamily Real Estate Construction and Land Commercial Business Agricultural Business One- to Four-Family Residential Consumer Total

Allowance for credit losses:

Beginning balance $ 57,791 $ 3,893 $ 41,295 $ 35,007 $ 4,914 $ 9,913 $ 14,466 $ 167,279

Impact of Adopting ASC 326 ( 2,864 ) ( 2,204 ) 2,515 3,010 ( 351 ) 7,125 2,973 ( 2,392 ) 7,812

Provision/(recapture) for loan losses 31,643 1,409 15,781 12,615 ( 87 ) ( 1,679 ) 4,603 — 64,285

(Recapture)/provision for loan losses ( 2,758 ) 3,209 ( 14,101 ) ( 8,621 ) ( 1,573 ) ( 1,907 ) ( 7,361 ) ( 33,112 )

Recoveries 1,729 — 100 1,797 30 199 760 4,615

1 unchanged sentence

Ending balance $ 52,995 $ 7,043 $ 27,294 $ 26,421 $ 3,190 $ 8,205 $ 6,951 $ 132,099

Net loan (charge-offs) recoveries as a percent of average outstanding loans during the period ( 0.02 ) % — % — % ( 0.04 ) % 0.01 % — % ( 0.01 ) % n/a ( 0.05 ) %

REAL ESTATE OWNED, HELD FOR SALE, NET

The following table presents the changes in REO, net of valuation allowance, for the years ended December 31, 2022, 2021 and 2020 (in thousands):

Years Ended December 31

2022 2021 2020

Balance, beginning of period $ 852 $ 816 $ 814

Additions from loan foreclosures — 512 1,588

Proceeds from dispositions of REO ( 864 ) ( 783 ) ( 2,360 )

Gain on sale of REO 352 307 819

Valuation adjustments in the period — — ( 45 )

Balance, end of period $ 340 $ 852 $ 816

The Company had no foreclosed residential real estate properties held as REO at both December 31, 2022 and December 31, 2021.

The recorded investment in one- to four-family residential loans in the process of foreclosure was $ 1.1 million and $ 609,000 at December 31, 2022 and December 31, 2021, respectively.

Net loan charge-offs as a percent of average outstanding loans during the period ( 0.02 ) % — % — % — % — % — % — % ( 0.02 ) %

PROPERTY AND EQUIPMENT, NET

24 unchanged sentences

Total public deposits $ 408,663 $ 419,669

Total brokered deposits $ 108,058 $ —

Deposits at December 31, 2023 and 2022 included deposits from the Company’s directors, executive officers and related entities totaling $ 9.2 million and $ 9.7 million, respectively.

9 unchanged sentences

Total certificates of deposit $ 1,477,467 3.55 %

ADVANCES FROM FEDERAL HOME LOAN BANK OF DES MOINES

ADVANCES FROM FEDERAL HOME LOAN BANK

Utilizing a blanket pledge, qualifying loans receivable at December 31, 2023 and 2022, were pledged as security for FHLB borrowings and there were no securities pledged as collateral as of December 31, 2023 or 2022.

At December 31, 2023 and 2022, FHLB advances were scheduled to mature as follows (dollars in thousands):

At or for the Years Ended December 31

Amount Weighted Average Rate Amount Weighted Average Rate

Maturing in one year or less $ 323,000 5.64 % $ 50,000 4.60 %

Maturing after one year through three years — — — —

Maturing after three years through five years — — — —

Maturing after five years — — — —

Total FHLB advances $ 323,000 5.64 % $ 50,000 4.60 %

20 unchanged sentences

A summary of all other borrowings at December 31, 2023 and 2022 by the period remaining to maturity is as follows (dollars in thousands):

At or for the Years Ended December 31

Amount Weighted Average Rate Amount Weighted Average Rate

1 unchanged sentence

Maturing in one year or less $ 182,877 2.48 % $ 232,799 0.35 %

Maturing after one year through two years — — — —

Maturing after two years — — — —

Total year-end outstanding $ 182,877 2.48 % $ 232,799 0.35 %

3 unchanged sentences

At December 31, 2023, the Company had five wholly-owned subsidiary grantor trusts (the Trusts), which had issued $ 86.5 million of Trust Preferred Securities (TPS) to third parties, as well as $ 2.7 million of common capital securities, carried as other assets, which were issued to the Company.

TPS and common capital securities accrue and pay distributions periodically at specified annual rates as provided in the indentures.

TPS and common capital securities accrue and pay distributions periodically at specified annual rates, as provided in the indentures, and based on a spread over SOFR (Secured Overnight Financing Rate).

The Trusts used the proceeds from the offerings to purchase a like amount of junior subordinated debentures (the Debentures) of the Company.

3 unchanged sentences

The Company has the right to redeem the Debentures in whole on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.

During the year ended December 31, 2022, the Company fully redeemed the debentures issued by four of the Trusts, totaling $ 50.5 million, resulting in a loss of $ 793,000 .

The Company redeemed $ 8.0 million in TPS and $ 248,000 in related common capital securities resulting in a loss of $ 2.3 million during the year ended December 31, 2021.

During the year ended December 31, 2023, no debentures were redeemed.

The Company redeemed $ 50.5 million in TPS resulting in a loss of $ 793,000 during the year ended December 31, 2022.

At December 31, 2023, the remaining Trusts comprised $ 86.5 million, or 4.5 % of the Company’s total risk-based capital.

2 unchanged sentences

Current Interest Rate Reset Period Interest Rate Spread (3)

Banner Capital Trust V $ 25,000 $ 774 $ 25,774 2035 6.26 Quarterly Three-month LIBOR + 1.57 %

Banner Capital Trust VI 25,000 774 25,774 2037 6.38 Quarterly Three-month LIBOR + 1.62 %

Banner Capital Trust VII 25,000 774 25,774 2037 5.12 Quarterly Three-month LIBOR + 1.38 %

Greater Sacramento Bancorp Statutory Trust II 4,000 124 4,124 2035 6.45 Quarterly Three-month LIBOR + 1.68 %

Mission Oaks Statutory Trust I 7,500 232 7,732 2036 6.42 Quarterly Three-month LIBOR + 1.65 %

Banner Capital Trust V $ 25,000 $ 774 $ 25,774 2035 7.21 Quarterly Three-month SOFR + 1.83 %

Banner Capital Trust VI 25,000 774 25,774 2037 7.26 Quarterly Three-month SOFR + 1.88 %

Banner Capital Trust VII 25,000 774 25,774 2037 7.04 Quarterly Three-month SOFR + 1.64 %

Greater Sacramento Bancorp Statutory Trust II 4,000 124 4,124 2035 7.33 Quarterly Three-month SOFR + 1.94 %

Mission Oaks Statutory Trust I 7,500 232 7,732 2036 7.30 Quarterly Three-month SOFR + 1.91 %

Total TPS liability at par $ 86,500 $ 2,678 89,178 7.19 %

3 unchanged sentences

(2) The Company has elected to use fair value accounting on its TPS.

(3) The interest rate spread includes a 0.26% upward adjustment for the transition from LIBOR to SOFR.

On June 30, 2020, Banner issued and sold in an underwritten offering $ 100.0 million aggregate principal amount of 5.00 % Fixed-to-Floating Rate Subordinated Notes due 2030 (Notes) at a public offering price equal to 100% of the aggregate principal amount of the Notes, resulting in net proceeds, after underwriting discounts and estimated offering expenses, of approximately $ 98.1 million.

2 unchanged sentences

On or after June 30, 2025, the Company may redeem the Notes, in whole or in part.

During 2023, the Bank purchased a portion of these notes as an available-for-sale investment, which are eliminated upon consolidation.

The Notes are unsecured obligations and are subordinated in right of payment to all existing and future indebtedness, deposits and other liabilities of the Company’s current and future subsidiaries, including the Bank’s deposits as well as the Company’s subsidiaries’ liabilities to general creditors and liabilities arising during the ordinary course of business.

46 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period of enactment.

At December 31, 2022, the Company had federal net operating loss carryforwards of $ 73.7 million.

At December 31, 2023, the Company had federal net operating loss carryforwards of approximately $ 61.7 million.

The Company also has $ 56.8 million of state net operating loss carryforwards, against which the Company has established a $ 184,000 valuation reserve.

1 unchanged sentence

The Company has federal general business credit carryforwards at December 31, 2023 of $ 219,000 , which will expire, if unused, by the end of 2031.

The Company also has federal alternative minimum tax credit carryforwards of $ 1.2 million, which are available to reduce future federal regular income taxes, if any, over an indefinite period.

At December 31, 2021, the Company had federal and state net operating loss carryforwards of approximately $ 96.0 million and $ 72.5 million, respectively, and federal general business credits carryforwards of $ 3.3 million.

The Company also has federal alternative minimum tax credit carryforwards of $ 538,000 , which are available to reduce future federal regular income taxes, if any, over an indefinite period.

At December 31, 2022, the Company had federal and state net operating loss carryforwards of approximately $ 73.7 million and $ 64.6 million, respectively, and federal general business credits carryforwards of $ 219,000 .

At that same date, the Company also had federal alternative minimum tax credit carryforwards of approximately $ 1.2 million.

The Company had $ 100,000 of state credits at both December 31, 2022 and 2021, which are waiting for state funding before they can be utilized.

The Company had $ 100,000 of state credits at December 31, 2022, which were reversed in 2023.

As a consequence of the Company’s 2015 acquisition of Starbuck Bancshares, Inc., the Company experienced a change in control within the meaning of Section 382 of the Code.

4 unchanged sentences

In 2017, the Company established a $ 184,000 valuation reserve against the portion of its various state net operating loss carryforwards and tax credits that it believed it is more likely than not that it would not realize the benefit because the application of the Section 382 limitations at the state level is based on future apportionment rates.

For non-Section 382 limited alternative minimum tax credits, the credits expired in 2019 due to the passage of the CARES Act in 2020.

As a consequence of Banner’s capital raise in June 2010, the Company experienced a change in control within the meaning of Section 382 of the Code.

4 unchanged sentences

As a consequence of the Company’s 2019 acquisition of AltaPacific and AltaPacific Bank, the Company did not experience a change in control within the meaning of Section 382 of the Code.

However, the underlying Section 382 limitations at AltaPacific and AltaPacific Bank’s continue to apply to the Company.

However, the underlying Section 382 limitations at AltaPacific and AltaPacific Bank continue to apply to the Company.

As a result of the Section 382 limitations, the Company is limited to utilizing $ 110,000 of the federal net operating loss carryovers and general business credits acquired from AltaPacific and AltaPacific Bank based on underlying limits carried over.

28 unchanged sentences

Employee Retirement Plans:

Substantially all of the Company’s and the Bank’s employees are eligible to participate in its 401(k)/Profit Sharing Plan, a defined contribution and profit sharing plan sponsored by the Company.

Substantially all Company and Bank employees are eligible to participate in its 401(k)/Profit Sharing Plan, a defined contribution and profit sharing plan sponsored by the Company.

Employees may elect to have a portion of their salary contributed to the plan in conformity with Section 401(k) of the Internal Revenue Code.

At the discretion of the Company’s Board of Directors, the Company may elect to make matching and/or profit-sharing contributions for the employees’ benefit.

For the years ended December 31, 2022, 2021 and 2020 , $ 6.9 million, $ 6.5 million and $ 6.7 million, respectively, was expensed for 401(k) contributions.

During 2022, the Board of Directors elected to make a 4 % of eligible compensation matching contribution.

For the years ended December 31, 2023, 2022 and 2021, $ 6.7 million, $ 6.9 million and $ 6.5 million, respectively, was expensed for the Company’s 401(k) contributions.

During 2023, the Board of Directors elected to make a matching contribution of 4 % of eligible compensation.

Supplemental Retirement and Salary Continuation Plans:

24 unchanged sentences

• 2018 Omnibus Incentive Plan (the 2018 Plan).

• 2023 Omnibus Incentive Plan (the 2023 Plan).

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

10 unchanged sentences

As of December 31, 2023, 730,671 restricted stock units have been granted under the 2018 Plan of which 331,913 restricted stock units are unvested.

The expense associated with all restricted stock and unit grants was $ 8.9 million, $ 9.3 million and $ 9.2 million respectively, for the years ended December 31, 2022, 2021 and 2020.

2023 Omnibus Incentive Plan

The 2023 Plan was approved by shareholders on May 24, 2023.

The 2023 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, other stock-based awards and other cash awards, and provides for vesting requirements which may include time-based or performance-based conditions.

The Company reserved 625,000 shares of common stock for issuance under the 2023 Plan in connection with the exercise of awards.

As of December 31, 2023, no shares had been granted under the 2023 Plan.

The expense associated with all restricted stock and unit grants was $ 9.2 million, $ 8.9 million and $ 9.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Unrecognized compensation expense for these awards as of December 31, 2023 was $ 11.8 million and will be recognized over a weighted average period of 11 months.

5 unchanged sentences

( 232,267 ) 45.37

( 53,195 ) 45.95

Unvested at December 31, 2021 476,222 43.62

2 unchanged sentences

( 193,082 ) 45.30

( 39,987 ) 47.63

Unvested at December 31, 2022 382,727 49.98

2 unchanged sentences

( 217,262 ) 42.87

( 16,158 ) 55.43

Unvested at December 31, 2023

35 unchanged sentences

At December 31, 2023, intangible assets are comprised of goodwill and CDI acquired in business combinations.

Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment.

Goodwill is not amortized but is reviewed at least annually for impairment.

Banner has identified one reporting unit for purposes of evaluating goodwill for impairment.

3 unchanged sentences

The CDI assets shown in the table below represent the value ascribed to the long-term deposit relationships acquired in various bank acquisitions.

These intangible assets are being amortized using an accelerated method over estimated useful lives of eight years to ten years .

The CDI assets are not estimated to have a significant residual value.

The following table summarizes the changes in the Company’s goodwill and other intangibles for the years ended December 31, 2023, 2022 and 2021 (in thousands):

4 unchanged sentences

Amortization — ( 5,279 ) ( 5,279 )

Balance, December 31, 2021 373,121 14,855 387,976

Amortization — ( 5,279 ) ( 5,279 )

Other Changes (1)

1 unchanged sentence

Balance, December 31, 2022 373,121 9,440 382,561

Amortization — ( 3,756 ) ( 3,756 )

Balance, December 31, 2023 $ 373,121 $ 5,684 $ 378,805

(1) Acquired CDI was adjusted for the sale of branches in 2022.

11 unchanged sentences

In 2023, 2022 and 2021, the Company did not record any impairment charges or recoveries against mortgage servicing rights.

Unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.77 billion at both December 31, 2022 and 2021.

Unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.78 billion and $ 2.77 billion at December 31, 2023 and 2022, respectively.

Custodial accounts maintained in connection with this servicing totaled $ 11.6 million and $ 11.2 million at December 31, 2023 and 2022, respectively.

22 unchanged sentences

Securities—available-for-sale 2 2,348,479 2,348,479 2,789,031 2,789,031

Securities—available-for-sale 3 25,304 25,304 — —

Securities—held-to-maturity 2 1,052,028 900,522 1,109,319 933,513

35 unchanged sentences

Level 1 Level 2 Level 3 Total

Securities—trading

Corporate bonds (TPS securities) $ — $ — $ 28,694 $ 28,694

Securities—available-for-sale

31 unchanged sentences

— 2,305 — 2,305

Equity securities 553 — — 553

SBA servicing rights — — 835 835

6 unchanged sentences

Interest rate lock and forward sales commitments — 76 42 118

Risk participation agreement — 67 — 67

$ — $ 37,293 $ 74,899 $ 112,192

1 unchanged sentence

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

The estimated fair values of investment securities and mortgaged-backed securities are priced using current active market quotes, if available, which are considered Level 1 measurements.

The estimated fair values of investment securities and mortgage-backed securities are priced using current active market quotes, if available, which are considered Level 1 measurements.

For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value.

6 unchanged sentences

Equity securities are invested in a publicly traded stock.

The fair value of these securities are based on daily quoted market prices.

The fair value of these securities is based on daily quoted market prices.

SBA Servicing Rights:

4 unchanged sentences

The fair value of junior subordinated debentures is estimated using an income approach technique.

The significant inputs included in the estimation of fair value are the credit risk adjusted spread and three month LIBOR.

The significant inputs included in the estimation of fair value are the credit risk adjusted spread and three month SOFR.

The credit risk adjusted spread represents the nonperformance risk of the liability.

9 unchanged sentences

The fair value estimates presented herein are based on pertinent information available to Management as of December 31, 2023 and 2022.

The factors used in the fair value estimates are subject to change subsequent to the dates the fair value estimates are completed, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

The factors used in the fair value estimates are subject to change subsequent to the dates the fair value estimates are completed;

therefore, current estimates of fair value may differ significantly from the amounts presented herein.

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

1 unchanged sentence

Financial Instruments Valuation Technique Unobservable Inputs Weighted Average Rate Weighted Average Rate

Corporate bonds (TPS securities) Discounted cash flows Discount rate 8.27 % 3.71 %

Corporate bonds (TPS) Discounted cash flows Discount rate 10.84 % 8.27 %

Junior subordinated debentures Discounted cash flows Discount rate 10.84 % 8.27 %

Loans individually evaluated Collateral valuations Discount to appraised value n/a 8.5 % to 20.0 %

Loans individually evaluated Collateral valuations Discount to appraised value 8.75% to 25% n/a

REO Appraisals Discount to appraised value 59.71 % 68.35 %

Interest rate lock commitments Pricing model Pull-through rate 88.24 % 78.65 %

Investments in limited partnerships Net Asset Value Infrequent transactions n/a n/a

SBA servicing rights Discounted cash flows Constant prepayment rate 16.92 % 14.10 %

TPS Securities :

Management believes that the credit risk-adjusted spread used to develop the discount rate utilized in the fair value measurement of TPS securities is indicative of the risk premium a willing market participant would require under current market conditions for instruments with similar contractual rates and terms and conditions and issuers with similar credit risk profiles and with similar expected probability of default.

Management believes that the credit risk-adjusted spread used to develop the discount rate utilized in the fair value measurement of TPS is indicative of the risk premium a willing market participant would require under current market conditions for instruments with similar contractual rates and terms and conditions and issuers with similar credit risk profiles and with similar expected probability of default.

Management attributes the change in fair value of these instruments, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of assets subsequent to their issuance.

Junior subordinated debentures :

Similar to the TPS securities discussed above, management believes that the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the risk premium a willing market participant would require under current market conditions for an issuer with Banner’s credit risk profile.

Similar to the TPS discussed above, Management believes the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the risk premium a willing market participant would require under current market conditions for an issuer with Banner’s credit risk profile.

Management attributes the change in fair value of the junior subordinated debentures, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of liabilities subsequent to their issuance.

Future contractions in the risk-adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of December 31, 2023, or the passage of time, will result in negative fair value adjustments.

At December 31, 2022, the discount rate utilized was based on a credit spread of 350 basis points and three month LIBOR of 477 basis points.

At December 31, 2023, the discount rate utilized was based on a credit spread of 551 basis points and three month SOFR of 533 basis points.

Interest rate lock commitments:

17 unchanged sentences

Purchases, issuances and settlements — — — 1,767 —

Redemptions — ( 50,518 ) — — —

Balance, December 31, 2023 $ 25,304 $ 66,413 $ 251 $ 13,475 $ 740

Interest income and dividends from the TPS securities are recorded as a component of interest income.

Interest income and dividends from TPS are recorded as a component of interest income.

Interest expense related to the junior subordinated debentures is measured based on contractual interest rates and reported in interest expense.

1 unchanged sentence

The change in fair value of the investment in limited partnerships and the SBA servicing asset are recorded as a component of non-interest income.

The change in fair value of the interest rate lock and forward sales commitments are included in mortgage banking operations in non-interest income.

The change in fair value of the TPS was recorded as a component of non-interest income when it was held for trading.

After the transfer of the TPS to available-for-sale in late 2023, the change in fair value is recorded in other comprehensive income.

Items Measured at Fair Value on a Non-recurring Basis

4 unchanged sentences

REO — — 526 526

Loans held for sale — 49,474 — 49,474

December 31, 2022

2 unchanged sentences

REO — — 340 340

The following table presents the losses resulting from non-recurring fair value adjustments for the years ended December 31, 2022 , 2021 and 2020 (in thousands):

Loans held for sale — 49,474 — 49,474

The following table presents the gains and losses resulting from non-recurring fair value adjustments for the years ended December 31, 2023, 2022 and 2021 (in thousands):

For the years ended December 31,

1 unchanged sentence

Loans individually evaluated $ ( 933 ) $ ( 626 ) $ ( 303 )

REO — — ( 45 )

Loans held for sale 2,538 ( 2,538 ) —

3 unchanged sentences

In both cases, if the fair value of the collateral is less than the amortized cost basis of the loan, the Bank will recognize an allowance as the difference between the fair value of the collateral, less costs to sell (if applicable) at the reporting date and the amortized cost basis of the loan.

If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off by the subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off.

The Company records REO (acquired through a lending relationship) at fair value on a non-recurring basis.

3 unchanged sentences

Banner considers any valuation inputs related to REO to be Level 3 inputs.

The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed to operations.

The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed.

Loans held for sale :

The multifamily held for sale loans are carried at the lower of cost or market value.

Lower of cost or market adjustments for multifamily loans held for sale are calculated based on discounted cash flows using a discount rate that is a combination of market spreads for similar loan types added to selected index rates.

If the fair value of the multifamily held for sale loans is lower than the amortized cost basis of the loans, a net unrealized loss is recognized through the valuation allowance by charges to income.

Multifamily loans held for sale were carried at the lower of cost or market value prior to their transfer to loans held in portfolio in the fourth quarter of 2023.

Lower of cost or market adjustments for multifamily loans held for sale were calculated based on discounted cash flows using a discount rate that was a combination of market spreads for similar loan types added to selected index rates.

If the fair value of the multifamily loans held for sale was lower than the amortized cost basis of the loans, a net unrealized loss was recognized through the valuation allowance as a charge against income.

At December 31, 2023, we had no multifamily loans held for sale.

BANNER CORPORATION (PARENT COMPANY ONLY)

32 unchanged sentences

Equity in undistributed income of subsidiaries ( 92,018 ) ( 104,391 ) ( 112,814 )

(Decrease) increase in deferred taxes ( 43 ) ( 571 ) 1,438

Decrease in deferred taxes ( 52 ) ( 43 ) ( 571 )

Net change in valuation of financial instruments carried at fair value 253 ( 56 ) 55

8 unchanged sentences

Reduction in investment in subsidiaries — ( 3,072 ) —

Net cash used by investing activities ( 4,621 ) ( 228 ) ( 38 )

Net cash provided (used) by investing activities 488 ( 4,621 ) ( 228 )

FINANCING ACTIVITIES:

Net proceeds from issuance of subordinated notes — — 98,027

Repayment of junior subordinated debentures — ( 50,518 ) ( 8,248 )

7 unchanged sentences

CASH, END OF PERIOD $ 108,513 $ 77,457 $ 106,329

STOCK REPURCHASES

On March 27, 2019 the Company announced that its Board of Directors had authorized the repurchase up to 5 % of the Company’s common stock, or 1,757,637 of the Company’s outstanding shares.

Under the authorization, shares could be repurchased by the Company in open market purchases.

There were 624,780 shares repurchased in the first quarter of 2020 under the 2019 authorization at an average price of $ 50.84 per share.

This authorization expired in March 2020.

On December 21, 2020, the Company announced that its Board of Directors had authorized the repurchase up to 1,757,781 shares, or approximately 5 % of the Company’s outstanding common stock.

Under the authorization, shares could be repurchased by the Company in open market purchases.

During 2020, no shares were repurchased under the 2020 authorization.

In addition to the shares repurchased under the 2019 authorization, there were 41,507 shares surrendered during 2020 by employees to satisfy tax withholding obligations upon vesting of restricted stock.

There were 1,050,000 shares repurchased during 2021, under the 2020 authorization at an average price of $ 53.84 per share.

This authorization expired in December 2021.

On December 22, 2021, the Company announced that its Board of Directors had authorized the repurchase of up to 1,712,510 shares, or approximately 5 %, of the Company’s outstanding common stock.

Under the authorization, shares could be repurchased by the Company in open market purchases.

The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

During the year ended December 31, 2021, no shares were repurchased under the 2021 authorization.

There were 59,730 shares surrendered during 2021 by employees to satisfy tax withholding obligations upon vesting of restricted stock and settlement of restricted stock units.

There were 200,000 shares repurchased during 2022, under the 2021 authorization at an average price of $ 54.77 per share, leaving 1,512,510 available for future repurchase.

In addition to the shares repurchased under the 2021 authorization, there were 55,228 shares surrendered during 2022 by employees to satisfy tax withholding obligations upon vesting of restricted stock.

This authorization expired in December 2022.

CALCULATION OF EARNINGS PER COMMON SHARE

9 unchanged sentences

Diluted $ 5.33 $ 5.67 $ 5.76

There were 21,865 anti-dilutive weighted shares outstanding as of December 31, 2023 and none as of December 31, 2022.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument from commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.

We use the same credit policies in making commitments and conditional obligations as for on-balance sheet instruments.

We use the same credit policies in making commitments and conditional obligations as on-balance sheet instruments.

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

11 unchanged sentences

The Company has also entered into agreements to invest in several limited partnerships.

As of December 31, 2022 and December 31, 2021, the funded balances and remaining outstanding commitments of these investments were as follows (in thousands):

As of December 31, 2023 and December 31, 2022, the funded balances and remaining outstanding commitments of these limited partnership investments were as follows (in thousands):

December 31, 2023 December 31, 2022

14 unchanged sentences

Traditionally, these loan applications with rate lock commitments had the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client.

The Bank then attempts to deliver these loans before their rate locks expired.

The Bank then attempts to deliver these loans before their rate locks expire.

This arrangement generally required delivery of the loans prior to the expiration of the rate lock.

12 unchanged sentences

These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable.

These claims and counter-claims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest.

These claims and counterclaims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest.

Based upon the information known to Management at this time, the Company has accrued $ 14.8 million related to outstanding legal proceedings.

5 unchanged sentences

DERIVATIVES AND HEDGING

The Company, through its Banner Bank subsidiary, is party to various derivative instruments that are used for asset and liability management and client financing needs.

Banner is party to various derivative instruments that are used for asset and liability management and client financing needs.

Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require no net investment and allow for the net settlement of positions.

8 unchanged sentences

December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Notional/ Contract Amount Fair Value (1)

Notional/ Contract Amount Fair Value (2)

Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value Notional/ Contract Amount Fair Value

Hedged interest rate swaps $ — $ — $ — $ — $ 400,000 $ 15,141 $ 400,000 $ 26,485

1 unchanged sentence

Master netting agreements ( 13,929 ) ( 17,780 ) ( 13,929 ) ( 17,780 )

Cash settlements — ( 8,705 )

Cash offset/(settlement) — — ( 529 ) ( 8,705 )

Net interest rate swaps 15,129 19,339 29,809 37,150

3 unchanged sentences

Total $ 442,739 $ 15,404 $ 474,502 $ 19,481 $ 479,975 $ 30,036 $ 503,381 $ 37,335

(1) Included in Other assets on the Consolidated Statements of Financial Condition.

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

Derivatives Designated in Hedge Relationships

The Company’s asset derivatives are included in other assets, while the liability derivatives are included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

Interest Rate Swaps used in Cash Flow Hedges:

6 unchanged sentences

Amounts reported in AOCI related to derivatives will be reclassified to interest income as interest payments are made on the Company’s variable-rate assets.

During the next twelve months, the Company estimates that an additional $ 15.7 million will be reclassified as a decrease to interest income.

The following table presents the effect of cash flow hedge accounting on AOCI for the years ended December 31, 2022 and December 31, 2021 (in thousands):

During the next 12 months, the Company estimates that an additional $ 13.9 million will be reclassified as a decrease to interest income.

The following table presents the effect of cash flow hedge accounting on AOCI for the years ended December 31, 2023 and 2022 (in thousands):

For the Year Ended December 31, 2023

4 unchanged sentences

Interest rate swaps $ ( 28,418 ) $ ( 28,418 ) $ — Interest Income $ ( 3,195 ) $ ( 3,195 ) $ —

At December 31, 2022 and December 31, 2021, we had recorded total net unrealized losses on cash flow hedges in AOCI, net of taxes of $ 20.1 million and $ 958,000 , respectively.

Derivatives Not Designated in Hedge Relationships

At December 31, 2023 and December 31, 2022, we recorded total net unrealized losses on cash flow hedges in AOCI of $ 10.6 million and $ 20.1 million, respectively.

Interest Rate Swaps:

18 unchanged sentences

Credit risk of the financial contract is controlled through the credit approval, limits, and monitoring procedures and Management does not expect the counterparties to fail their obligations.

In connection with the interest rate swaps between the Bank and the dealer counterparties, the agreements contain a provision where if the Bank fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations.

In connection with the interest rate swaps between the Bank and the dealer counterparties, the agreements contain a provision where if the Bank fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations.

Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required the Bank to maintain a specific capital level.

If the Bank had breached any of these provisions at December 31, 2023 or December 31, 2022, it could have been required to settle its obligations under the agreements at the termination value.

As of December 31, 2022, the Company had no obligations to dealer counterparties related to these agreements.

As of December 31, 2021, the termination value of derivatives in a net liability position related to these agreements was $ 24.9 million.

As of December 31, 2023 and December 31, 2022, the Company had no obligations to dealer counterparties related to these agreements.

The Company generally posts collateral against derivative liabilities in the form of cash, government agency-issued bonds, mortgage-backed securities, or commercial mortgage-backed securities.

3 unchanged sentences

Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis and to offset net derivative positions with related collateral where applicable.

In addition, some of interest rate swap derivatives between the Bank and the dealer counterparties are cleared through central clearing houses.

In addition, some interest rate swap derivatives between the Company and the dealer counterparties are cleared through central clearing houses.

These clearing houses characterize the variation margin payments as settlements of the derivative’s market exposure and not as collateral.

The variation margin is treated as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative liability.

As of December 31, 2022 and December 31, 2021, the variation margin adjustment was a negative adjustment of $ 8.7 million and $ 10.7 million, respectively.

As of December 31, 2023 and December 31, 2022, the variation margin adjustment was a negative adjustment of $ 529,000 and $ 8.7 million, respectively.

The following presents additional information related to the Company’s interest rate swaps, both designated and non-designated as hedged, as of December 31, 2023 and December 31, 2022 (in thousands):

53 unchanged sentences

These payments to the third party provider are recorded as expenses as a net reduction against fee income.

In addition, a portion of the payment received by the Bank represents interchange fees which are passed through to the card issuing bank.

In addition, a portion of the payment received by the Bank represents interchange fees passed through to the card issuing bank.

Income is primarily earned based on the dollar volume and number of transactions processed.

3 unchanged sentences

Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term.

The table below presents the lease right-of-use assets and lease liabilities recorded on the balance sheet at December 31, 2022 and December 31, 2021 (dollars in thousands):

The table below presents the lease ROU assets and lease liabilities recorded on the balance sheet at December 31, 2023 and December 31, 2022 (dollars in thousands):

December 31, 2023 December 31, 2022

Operating right-of-use lease assets $ 49,283 $ 55,257

Operating lease ROU assets $ 43,731 $ 49,283

Operating lease liabilities $ 48,659 $ 55,205

14 unchanged sentences

Operating cash flows paid for operating lease amounts included in the measurement of lease liabilities were $ 14.8 million for the year ended December 31, 2023 and $ 15.4 million for the year ended December 31, 2022.

The Company recorded $ 9.3 million of right-of-use lease assets in exchange for operating lease liabilities for the year ended December 31, 2022 and $ 16.7 million for the year ended December 31, 2021.

The Company recorded $ 6.8 million of lease ROU assets in exchange for operating lease liabilities for the year ended December 31, 2023 and $ 9.3 million for the year ended December 31, 2022.

The table below reconciles the undiscounted cash flows for each of the first five years beginning with 2023 and the total of the remaining years to the operating lease liabilities recorded on the Consolidated Statements of Financial Position (in thousands):

5 unchanged sentences

Lease obligations

As of December 31, 2022, the Company had no undiscounted lease payments under an operating lease that had not yet commenced, compared to $ 353,000 undiscounted lease payments under an operating lease that had not yet commenced at December 31, 2021.

As of December 31, 2023 and 2022, the Company had no undiscounted lease payments under an operating lease that had not yet commenced.

BANNER CORPORATION

4 unchanged sentences

4.3 Issuance of base indenture, first supplemental indenture and subordinated note [incorporated by reference to the exhibits filed with Form 8-K on June 30, 2020 (File No.

000-26584)] .

10{a}* Amended and Restated Employment Agreement, with Mark J.

11 unchanged sentences

10{e}* Entry into an Indemnification Agreement with each of the Registrant’s Directors [incorporated by reference to exhibits filed with the Form 8-K on January 29, 2010 (File No.

10{f} Amended and Restated Executive Severance and Change in Control Plan and Summary Plan Description (Amended and Restated effective as of October 1, 2021) [incorporated by reference to exhibit 10{j} included in the Form 10-Q dated September 30, 2021 (File No.

10{g} 2014 Omnibus Incentive Plan [incorporated by reference as Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 24, 2014 (File No.

10{f}* 2014 Omnibus Incentive Plan [incorporated by reference as Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 24, 2014 (File No.

000-26584)] and amendments [incorporated by reference to the Form 8-K filed on March 25, 2015 (File No.

10{h} Forms of Equity-Based Award Agreements:

10{g}* Forms of Equity-Based Award Agreements:

Incentive Stock Option Award Agreement, Non-Qualified Stock Option Award Agreement, Restricted Stock Award Agreement, Restricted Stock Unit Award Agreement, Stock Appreciation Right Award Agreement, and Performance Unit Award Agreement [incorporated by reference to Exhibits 10.2 - 10.7 included in the Registration Statement on Form S-8 dated May 9, 2014 (File No.

333-195835)].

10{i} 2018 Omnibus Incentive Plan [incorporated by reference as Appendix D to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 23, 2018 (File No.

10{j} Forms of Equity-Based Award Agreements:

Incentive Stock Option Award Agreement, Non-Qualified Stock Option Award Agreement under the Banner Corporation 2018 Omnibus Incentive Plan;

Director Restricted Stock Award Agreement;

Director Restricted Stock Unit Award Agreement;

Employee Time-based Restricted Stock Unit Award Agreement;

Employee performance-based Restricted Stock Unit Award Agreement;

Stock Appreciation Right Award Agreement;

and Performance Unit Award Agreement [incorporated by reference to Exhibits 10.2 - 10.9 included in the Registration Statement on Form S-8 dated May 4, 2018 (File No.

14 Code of Ethics [Registrant elects to satisfy Regulation S-K §229.406(c) by posting its Code of Ethics on its website at www.bannerbank.com in the section titled Corporate Overview:

Governance Document

10{h}* 2018 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.1 included in the Registration Statement on Form S-8 dated May 4, 2018 (File No.

333-224693)].

10{i}* Amended and Restated Executive Severance and Change in Control Plan and Summary Plan Description (Amended and Restated effective as of July 1, 2023) [incorporated by reference to exhibit 10{j} included in the Form 10-Q dated June 30, 2023 (File No.

10{j}* 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.1 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No.

333-274273)].

10{k}* Form of Director Restricted Stock Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.2 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No.

333-274273)].

10{l}* Form of Director Restricted Stock Unit Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.3 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No.

333-274273)].

10{m}* Form of Employee Restricted Stock Unit Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.4 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No.

333-274273)].

10{n}* Form of Executive Restricted Stock Unit Performance Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.5 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No.

333-274273)].

10{o}* 2020 Banner Corporation Amended and Restated Deferred Compensation Plan .

14 Code of Ethics [Registrant elects to satisfy Regulation S-K §229.406(c) by posting its Code of Ethics on its website at https://investor.bannerbank.com/ in the section titled Corporate Overview:

Governance Documents].

21 Subsidiaries of the Registrant.

3 unchanged sentences

32 Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

97 Policy Relating to Recovery of Erroneously Awarded Compensation.

101.INS Inline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the XBRL document.

5 unchanged sentences

104 The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in Inline XBRL (included in Exhibit 101).

* Compensatory plan or arrangement.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures