What changed in this filing

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Item 1. Financial Statements

2025-05-06 compared with 2024-11-05 · 239 added, 332 removed, 1084 unchanged (35% of the section changed)

3 unchanged sentences

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

September 30, 2024 and December 31, 2023

ASSETS September 30, 2024 December 31, 2023

March 31, 2025 and December 31, 2024

ASSETS March 31, 2025 December 31, 2024

Cash and due from banks $ 213,574 $ 203,402

38 unchanged sentences

Preferred stock - $ 0.01 par value per share, 500,000 shares authorized;

no shares outstanding at September 30, 2024 and December 31, 2023

no shares outstanding at March 31, 2025 and December 31, 2024

Common stock and paid in capital - $ 0.01 par value per share, 50,000,000 shares authorized;

34,456,688 shares issued and outstanding at September 30, 2024;

34,489,972 shares issued and outstanding at March 31, 2025;

34,459,832 shares issued and outstanding at December 31, 2024

1 unchanged sentence

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

no shares issued and outstanding at September 30, 2024;

no shares issued and outstanding at March 31, 2025;

no shares issued and outstanding at December 31, 2024

9 unchanged sentences

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

For the Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

INTEREST INCOME:

51 unchanged sentences

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands)

For the Three and Nine Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

For the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

NET INCOME $ 45,135 $ 37,559

4 unchanged sentences

Income tax benefit related to securities—available-for-sale realized in earnings — ( 1,177 )

Reclassification of (recapture of) provision for credit losses on securities—available-for-sale realized in earnings — ( 1,250 ) — 750

Income tax benefit (expense) related to the reclassification of (recapture) provision for credit losses on securities—available-for-sale realized in earnings — 300 — ( 180 )

Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity 549 527

3 unchanged sentences

Changes in fair value of junior subordinated debentures related to instrument specific credit risk ( 234 ) ( 173 )

Income tax expense related to junior subordinated debentures ( 137 ) ( 229 ) ( 37 ) ( 2,058 )

Income tax benefit related to junior subordinated debentures 56 42

Other comprehensive income (loss) 29,348 ( 10,347 )

COMPREHENSIVE INCOME (LOSS) $ 117,159 $ ( 7,613 ) $ 186,099 $ 110,854

COMPREHENSIVE INCOME $ 74,483 $ 27,212

See Selected Notes to the Consolidated Financial Statements

2 unchanged sentences

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

For the Nine Months Ended September 30, 2024 and the Year Ended December 31, 2023

For the Three Months Ended March 31, 2025 and the Year Ended December 31, 2024

Common Stock and Paid in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders’ Equity

2 unchanged sentences

Net income 37,559 37,559

Other comprehensive income, net of income tax 37,133 37,133

Other comprehensive loss, net of income tax ( 10,347 ) ( 10,347 )

Accrual of dividends on common stock ($ 0.48 /share)

4 unchanged sentences

Net income 39,795 39,795

Other comprehensive loss, net of income tax ( 13,812 ) ( 13,812 )

Other comprehensive income, net of income tax 1,933 1,933

Accrual of dividends on common stock ($ 0.48 /share)

4 unchanged sentences

Net income 45,153 45,153

Other comprehensive loss, net of income tax ( 53,467 ) ( 53,467 )

Accrual of dividends on common stock ($ 0.48 /share)

( 16,666 ) ( 16,666 )

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

1,322 2,373 2,373

Balance, September 30, 2023 34,345,949 1,297,307 616,215 ( 392,915 ) 1,520,607

Net income 42,624 42,624

Other comprehensive income, net of income tax 72,006 72,006

3 unchanged sentences

936 2,556 2,556

Balance, December 31, 2023 34,348,369 $ 1,299,651 $ 642,175 $ ( 289,135 ) $ 1,652,691

Balance, January 1, 2024 34,348,369 $ 1,299,651 $ 642,175 $ ( 289,135 ) $ 1,652,691

Balance, September 30, 2024 34,456,688 1,304,792 714,472 ( 225,543 ) 1,793,721

Net income 46,391 46,391

4 unchanged sentences

3,144 2,717 2,717

Balance, March 31, 2024 34,395,221 1,300,969 663,021 ( 299,482 ) 1,664,508

Balance, December 31, 2024 34,459,832 1,307,509 744,091 ( 277,274 ) 1,774,326

Net income 45,135 45,135

3 unchanged sentences

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

Balance, June 30, 2024 34,455,752 $ 1,302,236 $ 686,079 $ ( 297,549 ) $ 1,690,766

Net income 45,153 45,153

Other comprehensive income, net of income tax 72,006 72,006

Accrual of dividends on common stock ($ 0.48 /share)

30,140 1,458 1,458

Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered 936 2,556 2,556

Balance, September 30, 2024 34,456,688 $ 1,304,792 $ 714,472 $ ( 225,543 ) $ 1,793,721

Balance, March 31, 2025 34,489,972 $ 1,308,967 $ 772,412 $ ( 247,926 ) $ 1,833,453

See Selected Notes to the Consolidated Financial Statements

2 unchanged sentences

(Unaudited) (In thousands)

For the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30,

For the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

OPERATING ACTIVITIES:

8 unchanged sentences

Decrease in deferred taxes 229 61

Increase (decrease) in current taxes payable/receivable, net 4,967 ( 3,370 )

Increase in current taxes payable/receivable, net 6,955 6,273

Stock-based compensation 2,230 2,225

21 unchanged sentences

Purchase of FHLB stock ( 56,891 ) ( 35,460 )

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

Investment in bank-owned life insurance ( 41 ) ( 66 )

Other 874 ( 35 )

4 unchanged sentences

(Unaudited) (In thousands)

For the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30,

For the Three Months Ended March 31, 2025 and 2024

Three Months Ended March 31,

FINANCING ACTIVITIES:

Increase (decrease) in deposits, net $ 508,651 $ ( 445,507 )

(Repayment) advances of overnight and short term FHLB advances, net ( 93,000 ) 90,000

Increase in deposits, net $ 78,867 $ 129,274

Repayment of overnight and short term FHLB advances, net ( 122,000 ) ( 271,000 )

Decrease in other borrowings, net 5,331 464

1 unchanged sentence

Taxes paid related to net share settlement of equity awards ( 772 ) ( 907 )

Net cash provided from (used by) financing activities 335,045 ( 453,567 )

Net cash used by financing activities ( 55,357 ) ( 158,861 )

NET CHANGE IN CASH AND CASH EQUIVALENTS ( 59,913 ) ( 45,188 )

1 unchanged sentence

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 441,945 $ 209,276

Nine Months Ended September 30,

Three Months Ended March 31,

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid in cash $ 51,240 $ 53,278

Tax paid 13,376 29,931

NON-CASH INVESTING AND FINANCING TRANSACTIONS:

9 unchanged sentences

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC).

In preparing these financial statements, the Company has evaluated events and transactions subsequent to September 30, 2024, for potential recognition or disclosure.

In preparing these financial statements, the Company has evaluated events and transactions subsequent to March 31, 2025, for potential recognition or disclosure.

In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included.

6 unchanged sentences

ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)

In November 2024, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The amendments in the ASU require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period.

Specifically, they will be required to:

• Disclose the amounts of (a) purchases of inventory;

(b) employee compensation;

(d) intangible asset amortization;

and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

• Include certain amounts that are already required to be disclosed under GAAP in the same disclosure as the other disaggregation requirements.

• Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

• Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied prospectively.

The Company is evaluating this ASU, but does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.

Compensation—Stock Compensation (Topic 718)

In March 2024, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2024-01, Compensation—Stock Compensation (Topic 718):

In March 2024, the FASB issued guidance within ASU 2024-01, Compensation—Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards .

3 unchanged sentences

The amendment in ASC paragraph 718-10-15-3 is solely intended to improve the overall clarity and does not change the guidance.

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

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

If the Company adopts the amendments in an interim period, it should adopt them as of the beginning of the annual period that includes the interim period.

The amendments should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) on a prospective basis.

The Company has evaluated this ASU and does not expect the adoption to have a material impact on the Company’s Consolidated Financial Statements, as the Company does not typically provide these types of awards.

Income Taxes (Topic 740)

In December 2023, the FASB issued guidance within ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in the ASU 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 additional information for reconciling items that meet a quantitative threshold.

The ASU requires 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.

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 ASU are intended to improve segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The key amendments included in this ASU:

• 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.

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at September 30, 2024 and December 31, 2023 are summarized as follows (in thousands):

September 30, 2024

This ASU would have been effective as of January 1, 2025 for the Company, however, as the Company does not currently provide these types of awards, the ASU is not applicable to the Company’s consolidated financial statements.

The amortized cost, gross unrealized gains and losses and estimated fair value of securities at March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):

March 31, 2025

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

6 unchanged sentences

$ 2,426,395 $ 1,968 $ ( 319,418 ) $ 2,108,945

September 30, 2024

March 31, 2025

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

22 unchanged sentences

$ 1,001,861 $ 36 $ ( 176,072 ) $ 825,528 $ ( 297 )

Accrued interest receivable on held-to-maturity debt securities was $ 3.8 million and $ 4.5 million at September 30, 2024 and December 31, 2023, and was $ 10.1 million and $ 10.8 million on available-for-sale debt securities at September 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on held-to-maturity debt securities was $ 3.7 million and $ 4.2 million at March 31, 2025 and December 31, 2024, and was $ 9.2 million and $ 9.0 million on available-for-sale debt securities at March 31, 2025 and December 31, 2024, respectively.

Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

At September 30, 2024 and December 31, 2023, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

September 30, 2024

At March 31, 2025 and December 31, 2024, the gross unrealized losses and the fair value for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position were as follows (in thousands):

March 31, 2025

Less Than 12 Months 12 Months or More Total

27 unchanged sentences

$ 82,787 $ ( 871 ) $ 1,748,465 $ ( 355,971 ) $ 1,831,252 $ ( 356,842 )

At September 30, 2024, there were 194 securities—available-for-sale with unrealized losses, compared to 224 at December 31, 2023.

Management does not believe that any remaining individual unrealized loss as of September 30, 2024 or December 31, 2023 resulted from credit loss.

At March 31, 2025, there were 199 securities—available-for-sale with unrealized losses, compared to 201 at December 31, 2024.

Management does not believe that any remaining individual unrealized loss as of March 31, 2025 or December 31, 2024 resulted from credit loss.

The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

There were no securities—available-for-sale in a nonaccrual status at September 30, 2024 or December 31, 2023.

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

There were no securities—available-for-sale in a nonaccrual status at March 31, 2025 or December 31, 2024.

There were no securities—available-for-sale sold during the three months ended March 31, 2025.

The following table presents, for the three months ended March 31, 2024, the gross gains and losses on sales and partial calls of securities available-for-sale (in thousands):

Three Months Ended March 31, 2024

Available-for-Sale:

2 unchanged sentences

Balance, end of the period $ ( 4,903 )

The following table presents the amortized cost and estimated fair value of securities at September 30, 2024, by contractual maturity and does not reflect any required periodic payments (in thousands).

The following table presents the amortized cost and estimated fair value of securities at March 31, 2025, by contractual maturity and does not reflect any required periodic payments (in thousands).

Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

September 30, 2024

March 31, 2025

Available-for-Sale Held-to-Maturity

5 unchanged sentences

$ 2,426,395 $ 2,108,945 $ 992,088 $ 819,261

The following table presents, as of September 30, 2024, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

September 30, 2024

The following table presents, as of March 31, 2025, investment securities which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

March 31, 2025

Carrying Value Amortized Cost Fair Value

10 unchanged sentences

This municipal debt is predominately essential service or unlimited general obligation backed debt.

The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

7 unchanged sentences

$ 302 $ 438,196 $ 2,658 $ 560,705 $ 1,001,861

We had no allowance for credit losses for securities available-for-sale during three and nine months ended September 30, 2024.

The following tables present the activity in the allowance for credit losses for securities available-for-sale by major type for the three and nine months ended September 30, 2023 (in thousands).

For the Three Months Ended September 30, 2023

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

Allowance for credit losses – securities available-for-sale

Beginning balance $ — $ — $ 2,000 $ — $ 2,000

Recapture of provision for credit losses — — (1,250) — (1,250)

Ending balance $ — $ — $ 750 $ — $ 750

For the Nine Months Ended September 30, 2023

Government and agency obligations Municipal bonds Corporate bonds Mortgage-backed or related securities Total

Allowance for credit losses – securities available-for-sale

Beginning balance $ — $ — $ — $ — $ —

Provision for credit losses — — 750 — 750

Ending balance $ — $ — $ 750 $ — $ 750

LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES - LOANS

The following table presents the loans receivable at September 30, 2024 and December 31, 2023 by class (dollars in thousands).

September 30, 2024 December 31, 2023

The following table presents the loans receivable at March 31, 2025 and December 31, 2024 by class (dollars in thousands).

March 31, 2025 December 31, 2024

Amount Percent of Total Amount Percent of Total

21 unchanged sentences

Net loans $ 11,281,473 $ 11,199,135

Loan amounts are net of unearned loan fees in excess of unamortized costs of $ 15.0 million as of September 30, 2024, and $ 12.1 million as of December 31, 2023.

Net loans include net discounts on acquired loans of $ 3.8 million and $ 4.6 million as of September 30, 2024 and December 31, 2023, respectively.

Loan amounts are net of unearned loan fees in excess of unamortized costs of $ 15.4 million as of March 31, 2025, and $ 15.5 million as of December 31, 2024.

Net loans include net discounts on acquired loans of $ 3.2 million and $ 3.5 million as of March 31, 2025 and December 31, 2024, respectively.

Net loans does not include accrued interest receivable.

Accrued interest receivable on loans was $ 53.1 million as of September 30, 2024, and $ 47.8 million as of December 31, 2023 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

The Company had pledged $ 8.0 billion and $ 7.6 billion of loans as collateral for FHLB and other borrowings at September 30, 2024 and December 31, 2023, respectively.

Purchased credit-deteriorated and purchased non-credit-deteriorated loans.

Loans purchased or acquired in business combinations are recorded at their fair value at the acquisition date.

Acquired loans are evaluated upon acquisition and classified as either purchased credit-deteriorated (PCD) or purchased non-credit-deteriorated.

There were no PCD loans acquired during the nine months ended September 30, 2024 or September 30, 2023.

Accrued interest receivable on loans was $ 51.0 million as of March 31, 2025, and $ 47.7 million as of December 31, 2024 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

The Company had pledged $ 8.1 billion and $ 7.9 billion of loans as collateral for FHLB and other borrowings at March 31, 2025 and December 31, 2024, respectively.

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 similar 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 tables present the amortized cost basis and financial effect of loans at September 30, 2024 and September 30, 2023, that were both experiencing financial difficulty and modified during the nine months ended September 30, 2024 and September 30, 2023, respectively (in thousands):

September 30, 2024

Payment Delay Total

Commercial business $ 5,322 $ 5,322

Total $ 5,322 $ 5,322

September 30, 2023

Payment Delay Term Extension Total

The following table presents the amortized cost basis and financial effect of loans at March 31, 2025, that were both experiencing financial difficulty and modified during the three months ended March 31, 2025 (in thousands).

There were no loans modified related to borrowers experiencing financial difficulty during the three months ended March 31, 2024.

March 31, 2025

Term Extension Total

One- to four-family construction $ 1,810 $ 1,810

Commercial business 121 — 121

Agricultural business, including secured by farmland

1,580 — 1,580

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

Land and land development 3,280 3,280

Total $ 5,090 $ 5,090

The Company had committed to lend additional amounts totaling $ 195,000 to the borrowers included in the previous table as of September 30, 2023 .

The Company had no commitments to lend additional amounts to the borrowers included in the previous table as of March 31, 2025.

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

There were no loans modified in the previous 12 months that were past due at September 30, 2024.

The follow ing table presents the performance at September 30, 2023 of loans that had been modified in the previous 12 months (in thousands).

September 30, 2023

30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Past Due

The follow ing tables present the performance at March 31, 2025 and 2024 of loans that had been modified in the previous 12 months (in thousands).

March 31, 2025

30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Nonaccrual Total

Commercial business $ — $ — $ — $ 1,183 $ 1,183

Total $ — $ — $ — $ 1,183 $ 1,183

March 31, 2024

30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Nonaccrual Total

Commercial business $ — $ — $ — $ 121 $ 121

Agricultural business, including secured by farmland — — — 1,584 1,584

1 unchanged sentence

Total $ — $ — $ — $ 2,765 $ 2,765

The following tables present the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the nine months ended September 30, 2024 and September 30, 2023:

Nine Months Ended September 30, 2024

Weighted Average Payment Delay Period (in months)

Commercial business 3

Nine Months Ended September 30, 2023

Weighted Average Payment Delay Period (in months) Weighted-Average Term Extension (in months)

One- to four-family construction n/a 11

Commercial business 8 n/a

Agricultural business, including secured by farmland 8 n/a

One- to four-family residential 8 n/a

The following table presents the financial effect of the loan modifications presented above for borrowers experiencing financial difficulty for the three months ended March 31, 2025:

Three Months Ended March 31, 2025

Weighted-Average Term Extension

One- to four-family construction 3

Land and land development 6

Credit Quality Indicators :

35 unchanged sentences

Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of September 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the nine months ended September 30, 2024.

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

The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of March 31, 2025 and December 31, 2024 (in thousands).

In addition, the tables include the gross charge-offs for the three months ended March 31, 2025 and the year ended December 31, 2024.

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

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

September 30, 2024

March 31, 2025

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

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

September 30, 2024

March 31, 2025

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

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

September 30, 2024

March 31, 2025

Term Loans by Year of Origination Revolving Loans Total Loans

34 unchanged sentences

Total Commercial real estate - owner occupied $ 191,347 $ 171,338 $ 142,490 $ 155,122 $ 116,939 $ 191,494 $ 58,696 $ 1,027,426

Current period gross charge-offs $ — $ — $ 351 $ — $ — $ — $ — $ 351

Commercial real estate - investment properties

36 unchanged sentences

Total One- to four- family construction $ 451,895 $ 51,259 $ 10,744 $ — $ — $ — $ 322 $ 514,220

Current period gross charge-offs $ — $ — $ 150 $ — $ — $ — $ — $ 150

December 31, 2024

15 unchanged sentences

Total Commercial business $ 171,924 $ 131,190 $ 187,205 $ 99,355 $ 112,095 $ 195,417 $ 421,147 $ 1,318,333

Current period gross charge-offs $ 2,301 $ 418 $ — $ 689 $ — $ 54 $ 558 $ 4,020

Agricultural business, including secured by farmland

5 unchanged sentences

Total Agricultural business, including secured by farmland $ 24,292 $ 49,208 $ 30,144 $ 23,300 $ 16,113 $ 62,734 $ 134,489 $ 340,280

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of September 30, 2024 and December 31, 2023 (in thousands).

In addition, the tables include the gross charge-offs for the nine months ended September 30, 2024.

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

The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of March 31, 2025 and December 31, 2024 (in thousands).

In addition, the tables include the gross charge-offs for the three months ended March 31, 2025 and the year ended December 31, 2024.

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

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.

September 30, 2024

March 31, 2025

Term Loans by Year of Origination Revolving Loans Total Loans

24 unchanged sentences

Current period gross charge-offs $ — $ — $ — $ — $ — $ 13 $ — $ 13

September 30, 2024

March 31, 2025

Term Loans by Year of Origination Revolving Loans Total Loans

33 unchanged sentences

Total Small business scored $ 209,708 $ 173,347 $ 239,277 $ 147,465 $ 69,904 $ 124,027 $ 140,389 $ 1,104,117

Current period gross charge-offs $ 82 $ 122 $ 522 $ 575 $ 47 $ 587 $ — $ 1,935

One- to four- family residential

15 unchanged sentences

Total Consumer—home equity revolving lines of credit $ 4,551 $ 1,841 $ 8,939 $ 2,813 $ 2,433 $ 8,320 $ 596,783 $ 625,680

Current period gross charge-offs $ — $ — $ 58 $ — $ 11 $ 1 $ 110 $ 180

Consumer-other

5 unchanged sentences

Total Consumer-other $ 9,336 $ 6,348 $ 25,453 $ 8,282 $ 5,393 $ 17,463 $ 23,445 $ 95,720

The following tables provide the amortized cost basis of collateral-dependent loans as of September 30, 2024 and December 31, 2023 (in thousands).

Current period gross charge-offs $ 9 $ 50 $ 105 $ 71 $ 37 $ 211 $ 1,247 $ 1,730

The following tables provide the amortized cost basis of collateral-dependent loans as of March 31, 2025 and December 31, 2024 (in thousands).

Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.

September 30, 2024

March 31, 2025

Real Estate Accounts Receivable Equipment Inventory Total

1 unchanged sentence

Owner-occupied $ 2,182 $ — $ — $ — $ 2,182

Small balance CRE 581 — — — 581

Construction, land and land development:

13 unchanged sentences

Owner-occupied $ 2,182 $ — $ — $ — $ 2,182

Small balance CRE 755 — — — 755

One- to four-family construction 1,834 — — — 1,834

Land and land development 1,622 — — — 1,622

Commercial business

Commercial business — 1,789 1,660 427 3,876

Small business scored 623 — — — 623

Agricultural business, including secured by farmland

3 unchanged sentences

Total $ 17,625 $ 1,789 $ 5,107 $ 427 $ 24,948

The following tables provide additional detail on the age analysis of the Company’s past due loans as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables provide additional detail on the age analysis of the Company’s past due loans as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Past Due 60-89 Days

22 unchanged sentences

Total $ 36,774 $ 10,674 $ 24,479 $ 71,927 $ 11,366,869 $ 11,438,796 $ 15,655 $ 38,589 $ 370

(1) The Company did not recognize any interest income on non-accrual loans during the nine months ended September 30, 2024.

(1) The Company did not recognize any interest income on non-accrual loans during the three months ended March 31, 2025.

December 31, 2024

24 unchanged sentences

(1) The Company did not recognize any interest income on non-accrual loans during the year ended December 31, 2024.

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024 and 2023 (in thousands):

For the Three Months Ended September 30, 2024

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

Allowance for credit losses - loans:

Beginning balance $ 39,064 $ 8,253 $ 31,597 $ 38,835 $ 4,045 $ 20,906 $ 10,148 $ 152,848

Provision/(recapture) for credit losses 911 1,980 ( 3,130 ) 745 1,294 ( 457 ) 624 1,967

Recoveries 65 — — 613 1 14 41 734

Charge-offs — — ( 145 ) ( 414 ) — — ( 405 ) ( 964 )

Ending balance $ 40,040 $ 10,233 $ 28,322 $ 39,779 $ 5,340 $ 20,463 $ 10,408 $ 154,585

For the Nine Months Ended September 30, 2024

The following tables provide the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024 (in thousands):

For the Three Months Ended March 31, 2025

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

5 unchanged sentences

Ending balance $ 40,076 $ 10,109 $ 32,042 $ 38,665 $ 5,641 $ 20,752 $ 10,038 $ 157,323

For the Three Months Ended September 30, 2023

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

Allowance for credit losses - loans:

Beginning balance $ 43,636 $ 8,039 $ 29,844 $ 33,880 $ 3,573 $ 16,737 $ 8,971 $ 144,680

Provision/(recapture) for credit losses 210 765 ( 484 ) 398 690 1,129 235 2,943

Recoveries 170 — 29 403 19 59 126 806

Charge-offs — — — ( 616 ) ( 564 ) — ( 289 ) ( 1,469 )

Ending balance $ 44,016 $ 8,804 $ 29,389 $ 34,065 $ 3,718 $ 17,925 $ 9,043 $ 146,960

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

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

7 unchanged sentences

Goodwill and Other Intangible Assets:

At September 30, 2024, intangible assets are comprised of goodwill and core deposit intangibles (CDI) acquired in business combinations.

At March 31, 2025, intangible assets are comprised of goodwill and core deposit intangibles (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.

The Company has identified one reporting unit for the purpose of evaluating goodwill for impairment.

The Company completed an assessment of qualitative factors as of December 31, 2023 and concluded that no further analysis was required as it is more likely than not that the fair value of Banner Bank, the reporting unit, exceeds the carrying value.

The Company completed an assessment of qualitative factors as of December 31, 2024 and concluded that no further analysis was required as it was more likely than not that the fair value of Banner Bank, the reporting unit, exceeded the carrying value.

CDI represents the value of transaction-related deposits and the value of the client relationships associated with the deposits.

The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value.

The following table summarizes the changes in the Company’s goodwill and other intangibles for the year ended December 31, 2023 and the nine months ended September 30, 2024 (in thousands):

The following table summarizes the changes in the Company’s goodwill and other intangibles for the year ended December 31, 2024 and the three months ended March 31, 2025 (in thousands):

Goodwill CDI Total

3 unchanged sentences

Amortization — ( 456 ) ( 456 )

Balance, September 30, 2024 $ 373,121 $ 3,647 $ 376,768

The following table presents the estimated amortization expense with respect to CDI as of September 30, 2024, for the periods indicated (in thousands):

Balance, March 31, 2025 $ 373,121 $ 2,602 $ 375,723

The following table presents the estimated amortization expense with respect to CDI as of March 31, 2025, for the periods indicated (in thousands):

Estimated Amortization

Remainder of 2025 $ 1,111

Thereafter 35

Mortgage Servicing Rights:

Mortgage and SBA servicing rights are reported in other assets.

Mortgage and Small Business Administration (SBA) servicing rights are reported in other assets.

SBA servicing rights are initially recorded and carried at fair value.

3 unchanged sentences

However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.

The unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.80 billion and $2.78 billion at September 30, 2024 and December 31, 2023, respectively.

Custodial accounts maintained in connection with this servicing totaled $ 29.5 million and $ 11.6 million at September 30, 2024 and December 31, 2023, respectively.

An analysis of the mortgage and SBA servicing rights for the three and nine months ended September 30, 2024 and 2023 is presented below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $ 2.81 billion and $2.84 billion at March 31, 2025 and December 31, 2024, respectively.

Custodial accounts maintained in connection with this servicing totaled $ 21.7 million and $ 12.2 million at March 31, 2025 and December 31, 2024, respectively.

An analysis of the mortgage and SBA servicing rights for the three months ended March 31, 2025 and 2024 is presented below (in thousands):

Three Months Ended March 31,

Balance, beginning of the period $ 13,487 $ 14,649

4 unchanged sentences

Fair value adjustments (2)

( 21 ) ( 128 ) 50 ( 118 )

Impairment valuation adjustments (3)

( 6 ) — ( 6 ) —

Balance, end of the period $ 13,421 $ 14,293

2 unchanged sentences

These adjustments are estimated based on an independent dealer analysis by discounting estimated net future cash flows from servicing SBA loans.

(3) Impairment valuation adjustments are recorded on mortgage servicing rights when the carrying value exceeded the fair value for a specific tranche within the mortgage servicing rights portfolio .

Deposits consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Deposits consisted of the following at March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Non-interest-bearing accounts $ 4,571,598 $ 4,591,543

13 unchanged sentences

Total brokered certificates of deposit $ 75,321 $ 50,346

Scheduled maturities and weighted average interest rates of certificates of deposit at September 30, 2024 are as follows (dollars in thousands):

September 30, 2024

Scheduled maturities and weighted average interest rates of certificates of deposit at March 31, 2025 are as follows (dollars in thousands):

March 31, 2025

Amount Weighted Average Rate

7 unchanged sentences

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents estimated fair values of the Company’s financial instruments as of September 30, 2024 and December 31, 2023, whether or not recognized or recorded in the Consolidated Statements of Financial Condition (dollars in thousands):

September 30, 2024 December 31, 2023

The following table presents estimated fair values of the Company’s financial instruments as of March 31, 2025 and December 31, 2024, whether or not recognized or recorded in the Consolidated Statements of Financial Condition (dollars in thousands):

March 31, 2025 December 31, 2024

Level Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value

39 unchanged sentences

Items Measured at Fair Value on a Recurring Basis:

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables present financial assets and liabilities measured at fair value on a recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets and liabilities as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Level 1 Level 2 Level 3 Total

42 unchanged sentences

$ — $ 30,190 $ 67,479 $ 97,669

(1) The unpaid principal balance of residential mortgage loans held for sale carried at fair value on a recurring basis was $ 21.3 million and $ 8.8 million at September 30, 2024 and December 31, 2023, respectively.

(1) The unpaid principal balance of residential mortgage loans held for sale carried at fair value on a recurring basis was $ 19.8 million and $ 25.7 million at March 31, 2025 and December 31, 2024, respectively.

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

26 unchanged sentences

The fair value of these instruments is not considered to be material.

The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2024 and December 31, 2023.

The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2025 and December 31, 2024.

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):

The following table provides a description of the valuation technique, unobservable inputs, and quantitative and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at September 30, 2024 and December 31, 2023:

Weighted Average Rate or Range

Financial Instruments Valuation Technique Unobservable Inputs September 30, 2024 December 31, 2023

Financial Instruments Valuation Technique Unobservable Inputs March 31, 2025 December 31, 2024

Corporate bonds (TPS) Discounted cash flows Discount rate 9.55 % 9.57 %

1 unchanged sentence

Loans individually evaluated Collateral valuations Discount to appraised value 0 % to 100 %

8.75 % to 25.00 %

Interest rate lock commitments Pricing model Pull-through rate 91.72 % 92.34 %

6 unchanged sentences

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

Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of September 30, 2024, or the passage of time, will result in negative fair value adjustments.

At September 30, 2024, the discount rate utilized was based on a credit spread of 551 basis points and three-month SOFR of 459 basis points.

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 March 31, 2025, or the passage of time, will result in negative fair value adjustments.

At March 31, 2025, the discount rate utilized was based on a credit spread of 526 basis points and three-month SOFR of 429 basis points.

Interest rate lock commitments:

5 unchanged sentences

An increase in the CPR would result in a negative fair value adjustment, where a decrease in CPR would result in a positive fair value adjustment.

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30, 2024

The following tables provide a reconciliation of the assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31, 2025

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 790 —

Ending balance at September 30, 2024 $ 25,219 $ 66,257 $ 341 $ 13,582 $ 790

Nine Months Ended September 30, 2024

Level 3 Fair Value Inputs

TPS Securities Borrowings—Junior Subordinated Debentures Interest Rate Lock and Forward Sales Commitments Investments in Limited Partnerships SBA Servicing Asset

Beginning balance $ 25,304 $ 66,413 $ 251 $ 13,475 $ 740

Net change recognized in earnings 195 — 90 ( 1,137 ) 50

Net change recognized in AOCI (280) ( 156 ) — — —

Purchases, issuances and settlements — — — 1,244 —

Ending balance at September 30, 2024 $ 25,219 $ 66,257 $ 341 $ 13,582 $ 790

Three Months Ended September 30, 2023

Ending balance at March 31, 2025 $ 25,756 $ 67,711 $ 305 $ 15,025 $ 954

Three Months Ended March 31, 2024

Level 3 Fair Value Inputs

4 unchanged sentences

Purchases, issuances and settlements — — — 430 —

Ending balance at September 30, 2023 $ 25,268 $ 66,284 $ 77 $ 12,841 $ 717

Nine Months Ended September 30, 2023

Level 3 Fair Value Inputs

TPS Securities Borrowings—Junior Subordinated Debentures Interest Rate Lock and Forward Sales Commitments Investments in Limited Partnerships SBA Servicing Asset

Beginning balance $ 28,694 $ 74,857 $ 39 $ 12,427 $ 835

Net change recognized in earnings ( 3,426 ) — 38 ( 930 ) ( 118 )

Net change recognized in AOCI — ( 8,573 ) — — —

Purchases, issuances and settlements — — — 1,344 —

Ending balance at September 30, 2023 $ 25,268 $ 66,284 $ 77 $ 12,841 $ 717

Ending balance at March 31, 2024 $ 25,357 $ 66,586 $ 218 $ 12,975 $ 849

Interest income, dividends and amortization related to TPS are recorded as a component of interest income.

4 unchanged sentences

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

The following tables present financial assets and liabilities measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables present financial assets and liabilities measured at fair value on a non-recurring basis and the level within the fair value hierarchy of the fair value measurements for those assets as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Level 1 Level 2 Level 3 Total

5 unchanged sentences

REO — — 2,367 2,367

The following table presents the gains and losses resulting from non-recurring fair value adjustments for the three and nine months ended September 30, 2024 and September 30, 2023 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table presents the gains and losses resulting from non-recurring fair value adjustments for the three months ended March 31, 2025 (in thousands).

There were no gains or losses resulting from non-recurring fair value adjustments for the three months ended March 31, 2024.

Three Months Ended March 31,

Loans individually evaluated $ ( 1,705 )

Loans held for sale — ( 456 ) — ( 919 )

Total loss from non-recurring measurements $ — $ ( 456 ) $ ( 347 ) $ ( 919 )

Loans individually evaluated :

10 unchanged sentences

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

INCOME TAXES AND DEFERRED TAXES

The Company files a consolidated income tax return including all of its wholly-owned subsidiaries on a calendar year basis.

Income taxes are accounted for using the asset and liability method.

Under this method, a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s income tax returns.

The effect on deferred taxes of a change in tax rates is recognized in income in the period of change.

A valuation allowance is recognized as a reduction to deferred tax assets when management determines it is more likely than not that deferred tax assets will not be available to offset future income tax liabilities.

Accounting standards for income taxes prescribe a recognition threshold and measurement process for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return, and also provide guidance on the de-recognition of previously recorded benefits and their classification, as well as the proper recording of interest and penalties, accounting in interim periods, disclosures and transition.

The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate.

This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

As of September 30, 2024, the Company has recognized $ 2.0 million of unrecognized tax benefits for uncertain tax positions.

The Company does not anticipate that there are additional uncertain tax positions or that any uncertain tax position which has not been recognized would materially affect the effective tax rate if recognized.

The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense.

The Company files consolidated income tax returns in the U.S.

federal jurisdiction and in the Oregon, California, Utah, Idaho and Montana state jurisdictions.

INCOME TAXES, DEFERRED TAXES, AND TAX CREDIT INVESTMENTS

As of March 31, 2025, the Company had a net deferred tax asset of $ 139.4 million.

In addition, the Company recognized $ 2.0 million of unrecognized tax benefits related to uncertain tax positions.

The Company recorded income tax expense of $ 10.7 million and $ 8.8 million for the three months ended March 31, 2025 and 2024, respectively, representing effective tax rates of 19.1 % and 19.0 %, respectively.

The effective tax rates differed from the statutory rate principally due to the effects of tax-exempt income, certain tax credits, and tax benefits related to restricted stock vesting.

Tax credit investments:

2 unchanged sentences

The current balance of these tax credit investments is included in other assets, while the unfunded commitments are included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

The following table presents the balances of the Company’s tax credit investments and related unfunded commitments at March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

Tax Credit Investments:

1 unchanged sentence

Unfunded commitments 89,018 94,416

The following table presents other information related to the Company’s tax credit investments for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table presents other information related to the Company’s tax credit investments for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended March 31,

Tax credits and other tax benefits recognized $ 4,245 $ 2,994

1 unchanged sentence

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

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three and nine months ended September 30, 2024 and 2023 (in thousands, except shares and per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The following table reconciles basic to diluted weighted average shares outstanding used to calculate earnings per share data for the three months ended March 31, 2025 and 2024 (in thousands, except shares and per share data):

Three Months Ended March 31,

Net income $ 45,135 $ 37,559

6 unchanged sentences

Anti-dilutive restricted stock excluded from the diluted average outstanding share calculation (1)

860 252,817 3,950 90,990

(1) Anti-dilution occurs when the unrecognized compensation cost per share of restricted stock exceeds the current market price of the Company’s stock.

4 unchanged sentences

The Company reserved 900,000 shares of its common stock for issuance under the 2014 Plan in connection with the exercise of awards.

As of September 30, 2024, 277,304 restricted stock shares and 597,714 restricted stock units have been granted under the 2014 Plan of which no restricted stock shares and 163,270 restricted stock units were unvested.

As of March 31, 2025, 589,417 restricted stock units have been granted under the 2014 Plan of which 150,197 restricted stock units were unvested.

No further awards will be granted under the 2014 Plan.

The Company reserved 900,000 shares of common stock for issuance under the 2018 Plan in connection with the exercise of awards.

As of September 30, 2024, 808,655 restricted stock units have been granted under the 2018 Plan of which 265,316 restricted stock units were unvested.

As of March 31, 2025, 822,942 restricted stock units have been granted under the 2018 Plan of which 237,836 restricted stock units were unvested.

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

As of September 30, 2024, 4,927 restricted stock shares and 9,798 restricted stock units have been granted under the 2023 Plan, all of which were unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $ 2.6 million and $ 7.2 million for the three and six month periods ended September 30, 2024, and was $2.4 million and $ 6.8 million for the three and six month periods ended September 30, 2023, respectively.

Unrecognized compensation expense for these awards as of September 30, 2024, was $ 15.8 million and will be recognized over a weighted average period of 12 months.

As of March 31, 2025, 4,927 restricted stock shares and 9,798 restricted stock units have been granted under the 2023 Plan, all of which were unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $ 2.2 million for both the three months ended March 31, 2025 and 2024.

Unrecognized compensation expense for these awards as of March 31, 2025, was $ 10.7 million and will be recognized over a weighted average period of 11 months.

COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance-Sheet Risk — The Company has financial instruments with off-balance-sheet risk generated in the normal course of business to meet the financing needs of our clients.

Financial Instruments with Off-Balance Sheet Risk - The Company has financial instruments with off-balance-sheet risk generated in the normal course of business to meet the financing needs of its clients.

These financial instruments include commitments to extend credit, commitments related to standby letters of credit, commitments to originate loans, commitments to sell loans, and commitments to buy or sell securities.

1 unchanged sentence

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 apply the same credit policies to these commitments and conditional obligations as we do to our on-balance sheet financial instruments.

Outstanding commitments consisted of the following at the dates indicated (in thousands):

Contract or Notional Amount

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Commitments to extend credit $ 3,786,586 $ 3,857,782

Standby letters of credit and financial guarantees 20,973 28,287

Commitments to originate loans 26,904 27,487

Risk participation agreements 43,396 43,913

Derivatives also included in Note 12:

Commitments to originate loans held for sale 42,213 35,512

2 unchanged sentences

In addition to the commitments disclosed in the table above, the Company is also committed to funding the unfunded portion of its tax credit investments, as well as the remaining unfunded portion of its investments in limited partnerships.

As of September 30, 2024 and December 31, 2023, the remaining outstanding commitments related to the unfunded tax credit investments and limited partnership investments were as follows (in thousands):

As of March 31, 2025 and December 31, 2024, the remaining outstanding commitments related to the unfunded tax credit investments and limited partnership investments were as follows (in thousands):

Unfunded commitment balance for:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Tax credit investments $ 89,018 $ 94,416

7 unchanged sentences

Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties.

The Company’s allowance for credit losses - unfunded loan commitments at September 30, 2024 and December 31, 2023 was $ 13.8 million and $ 14.5 million, respectively.

The Company’s allowance for credit losses - unfunded loan commitments at March 31, 2025 and December 31, 2024 was $ 12.2 million and $ 13.6 million, respectively.

Standby letters of credit are conditional commitments issued to guarantee a client’s performance or payment to a third party.

1 unchanged sentence

Under a risk participation agreement, the Bank guarantees the financial performance of a borrower on the participated portion of an interest rate swap on a loan.

Interest rates on residential one- to four-family mortgage loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days.

Interest rates on one- to four-family residential loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days.

Traditionally, these loan applications with rate lock commitments have 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.

7 unchanged sentences

The purpose of these forward commitments is to offset the movement in interest rates between the execution of its residential mortgage rate lock commitments with borrowers and the sale of those loans to the secondary market investor.

There were no counterparty default losses on forward contracts during the three and nine months ended September 30, 2024 or September 30, 2023.

There were no counterparty default losses on forward contracts during the three months ended March 31, 2025 or March 31, 2024.

Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates.

1 unchanged sentence

In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the transaction is completed by either paying or receiving a fee to or from the investor or broker/dealer equal to the increase or decrease in the market value of the forward contract.

Changes in the value of rate lock commitments are recorded as assets and liabilities.

In the normal course of business, the Company and/or its subsidiaries have various legal proceedings and other contingent matters outstanding.

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

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

Based upon the information known to management, there were no legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at September 30, 2024.

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.

In connection with certain asset sales, the Bank typically makes representations and warranties about the underlying assets conforming to specified guidelines.

3 unchanged sentences

DERIVATIVES AND HEDGING

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

The Company 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.

2 unchanged sentences

The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the market value of the derivative contract.

The Company’s derivative and hedging activities involve interest rate swaps related to certain term loans and forward sales contracts associated with mortgage banking activities.

The Company’s predominant derivative and hedging activities involve interest rate swaps related to certain term loans and forward sales contracts associated with mortgage banking activities.

Generally, these instruments help the Company manage exposure to market risk and meet client financing needs.

Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors.

As of September 30, 2024 and December 31, 2023, the notional values or contractual amounts and fair values of the Company’s derivatives were as follows (in thousands):

As of March 31, 2025 and December 31, 2024, the notional values or contractual amounts and fair values of the Company’s derivatives were as follows (in thousands):

Asset Derivatives Liability Derivatives

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

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 $ 3,392 $ 400,000 $ 15,141

Interest rate swaps not designated in hedge relationships $ 386,724 $ 21,484 $ 416,711 $ 29,058 $ 386,724 $ 21,531 $ 416,711 $ 29,126

Interest rate swaps $ 386,502 $ 24,371 $ 386,995 $ 30,134 $ 386,502 $ 24,393 $ 386,995 $ 30,184

Master netting agreements ( 12,595 ) ( 15,627 ) — —

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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:

The Company’s floating rate loans result in exposure to losses in value or net interest income as interest rates change.

The risk management objectives in using interest rate derivatives are to reduce volatility in net interest income and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

During the fourth quarter of 2021, the Company entered into interest rate swaps designated as cash flow hedges to hedge the variable cash flows associated with existing floating rate loans.

These hedge contracts involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making floating-rate payments over the life of the agreements without exchange of the underlying notional amount.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income in the same period during which the hedged transaction affects earnings.

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 12 months, the Company estimates that an additional $ 2.3 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 three and nine months ended September 30, 2024 and 2023 (in thousands):

For the Three Months Ended September 30, 2024

Amount of Gain or (Loss) Recognized in AOCI on Derivative Amount of Gain or (Loss) Recognized in AOCI Included Component Amount of Gain or (Loss) Recognized in AOCI Excluded Component Location of Gain or (Loss) Recognized from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component

Interest rate swaps $ 163 $ 163 $ — Interest Income $ ( 4,585 ) $ ( 4,585 ) $ —

For the Nine Months Ended September 30, 2024

Interest rate swaps $ ( 2,110 ) $ ( 2,110 ) $ — Interest Income $ ( 13,743 ) $ ( 13,743 ) $ —

For the Three Months Ended September 30, 2023

Interest rate swaps $ ( 1,455 ) $ ( 1,455 ) $ — Interest Income $ ( 4,546 ) $ ( 4,546 ) $ —

For the Nine Months Ended September 30, 2023

Interest rate swaps $ ( 5,845 ) $ ( 5,845 ) $ — Interest Income $ ( 12,317 ) $ ( 12,317 ) $ —

At September 30, 2024 and December 31, 2023, we recorded total net unrealized losses on cash flow hedges in AOCI of $ 1.7 million and $ 10.6 million, respectively.

Interest Rate Swaps:

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 in which the client receives a variable-rate payment in exchange for a fixed-rate payment.

The Bank offers an interest rate swap program for commercial loan clients that provides the client with a variable-rate loan and enters into an interest rate swap in which the client receives a variable-rate payment in exchange for a fixed-rate payment.

The Bank offsets its risk exposure by entering into an offsetting interest rate swap with a dealer counterparty for the same notional amount and length of term as the client interest rate swap providing the dealer counterparty with a fixed-rate payment in exchange for a variable-rate payment.

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Mortgage Loan Commitments:

The Company sells originated one- to four-family mortgage loans into the secondary mortgage loan markets.

During the period of loan origination and prior to the sale of the loans into the secondary market, the Company has exposure to movements in interest rates associated with written interest rate lock commitments with potential borrowers to originate one- to four-family loans that are intended to be sold and for closed one- to four-family mortgage loans held for sale for which fair value accounting has been elected, that are awaiting sale and delivery into the secondary market.

The Company economically hedges the risk of changing interest rates associated with these mortgage loan commitments by entering into forward sales contracts to sell one- to four-family mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates.

Gains (losses) recognized in income within mortgage banking operations on non-designated hedging instruments for the three and nine months ended September 30, 2024 and 2023, were as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

The Company sells originated one- to four-family residential loans into the secondary mortgage loan markets.

During the period of loan origination and prior to the sale of the loans in the secondary market, the Company has exposure to movements in interest rates associated with written interest rate lock commitments with potential borrowers to originate one- to four-family residential loans that are intended to be sold and for closed one- to four-family residential loans held for sale for which fair value accounting has been elected, that are awaiting sale and delivery into the secondary market.

The Company economically hedges the risk of changing interest rates associated with these one- to four-family residential loan commitments by entering into forward sales contracts to sell these loans or mortgage-backed securities to broker/dealers at specific prices and dates.

Gains (losses) recognized in income within mortgage banking operations on non-designated hedging instruments for the three months ended March 31, 2025 and 2024, were as follows (in thousands):

Three Months Ended March 31,

Mortgage loan commitments $ 281 $ 33

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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 September 30, 2024 or December 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.

As of September 30, 2024 and December 31, 2023, the Company had no obligations to dealer counterparties related to these agreements.

If the Bank had breached any of these provisions at March 31, 2025 or December 31, 2024, it could have been required to settle its obligations under the agreements at the termination value.

As of March 31, 2025 and December 31, 2024, 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.

Collateral posted against derivative liabilities was $ 14.3 million and $ 15.0 million as of September 30, 2024 and December 31, 2023, respectively.

The collateral posted included restricted cash of $ 13.4 million and $ 14.0 million as of September 30, 2024 and December 31, 2023, respectively.

Collateral posted against derivative liabilities was $ 17.8 million and $ 19.9 million as of March 31, 2025 and December 31, 2024, respectively.

The collateral posted included restricted cash of $ 16.9 million and $ 18.9 million as of March 31, 2025 and December 31, 2024, respectively.

Derivative assets and liabilities are recorded at fair value on the balance sheet.

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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.

The variation margin adjustment was a positive adjustment of $ 7.6 million and a negative adjustment of $ 529,000 as of September 30, 2024 and December 31, 2023, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

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

The variation margin adjustment was a positive adjustment of $ 12.6 million and a positive adjustment of $ 15.6 million as of March 31, 2025 and December 31, 2024, respectively.

The following tables present additional information related to the Company’s derivative contracts, by type of financial instrument, as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Gross Amounts of Financial Instruments Not Offset in the Consolidated Statement of Financial Condition

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$ 30,184 $ — $ 30,184 $ — $ ( 18,228 ) $ 11,956

SEGMENT DISCLOSURES

The Company is managed by legal entity, rather than by lines of business, and its activities are considered a single operating segment for financial reporting purposes.

The Bank is engaged in the single line of business of community banking, which involves gathering deposits and originating loans in its primary market areas.

The Bank manages its operations, allocates resources, and monitors and reports its financials as a single operating segment.

The Company’s performance is assessed based on net income that is reported on our Consolidated Statements of Operations with consolidated net income being the primary measure to evaluate resource allocations.

In addition to our consolidated financial statements, the operating and financial condition data below is used to monitor budget versus actual results and assess performance:

OPERATING DATA:

Quarters Ended

(In thousands) Mar 31, 2025 Dec 31, 2024 Mar 31, 2024

Interest income $ 193,868 $ 196,436 $ 184,688

Interest expense 52,785 55,900 51,729

Net interest income 141,083 140,536 132,959

Provision for credit losses 3,139 3,000 520

Non-interest income 19,108 20,035 11,591

Non-interest expense 101,259 99,478 97,641

Net income $ 45,135 $ 46,391 $ 37,559

FINANCIAL CONDITION DATA:

Quarters Ended

(In thousands) Mar 31, 2025 Dec 31, 2024 Mar 31, 2024

Cash and securities (1)

$ 3,542,686 $ 3,607,933 $ 3,492,527

Loans receivable, net 11,281,473 11,199,135 10,717,956

Total assets 16,170,812 16,200,037 15,518,279

Core deposits 12,089,215 12,014,726 11,672,891

Total deposits 13,593,265 13,514,398 13,158,771

KEY FINANCIAL RATIOS:

Quarters Ended

Mar 31, 2025 Dec 31, 2024 Mar 31, 2024

Performance Ratios:

Return on average assets (2)

1.15 % 1.15 % 0.97 %

Net interest margin (tax equivalent) (3)

3.92 3.82 3.74

Non-interest expense to average assets 2.57 2.48 2.52

Efficiency ratio (4)

63.21 61.95 67.55

(1) Includes available-for-sale and held-to-maturity securities.

(2) Net income divided by average assets.

(3) Net interest income as a percent of average interest-earning assets on a tax equivalent basis.

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

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-Q

Item 1. Financial Statements