BANNER CORP

Previous wording

Banner is a bank holding company incorporated in the State of Washington, which wholly owns one subsidiary bank, Banner Bank. The Bank is a Washington-chartered commercial bank that conducts business from its main office in Walla Walla, Washington, and as of June 30, 2025, it had 135 branch offices and 13 loan production offices located in Washington, Oregon, California, Idaho and Utah. Banner is subject to regulation by the Federal Reserve. The Bank is subject to regulation by the Washington State Department of Financial Institutions – Division of Banks (the DFI) and the Federal Deposit Insurance Corporation (the FDIC). As of June 30, 2025, we had total consolidated assets of $16.44 billion, total loans of $11.69 billion, total deposits of $13.53 billion and total shareholders’ equity of $1.87 billion.

Current wording

Banner is a bank holding company incorporated in the State of Washington, which wholly owns its subsidiary bank, Banner Bank. The Bank is a Washington-chartered commercial bank that conducts business from its main office in Walla Walla, Washington, and as of September 30, 2025, it had 135 branch offices and 14 loan production offices located in Washington, Oregon, California, Idaho, Utah and Nevada. Banner is subject to regulation by the Federal Reserve. The Bank is subject to regulation by the Washington State Department of Financial Institutions – Division of Banks (the DFI) and the Federal Deposit Insurance Corporation (the FDIC). As of September 30, 2025, we had total consolidated assets of $16.56 billion, total loans of $11.70 billion, total deposits of $14.02 billion and total shareholders’ equity of $1.91 billion.

Previous wording

The Bank is a regional bank that offers a wide variety of commercial banking services and financial products to individuals, businesses and public sector entities in its primary market areas. The Bank’s primary business is that of traditional banking institutions, accepting deposits and originating loans in locations surrounding our offices in Washington, Oregon, California, Idaho and Utah. The Bank is also an active participant in secondary loan markets, engaging in mortgage banking operations through the origination and sale of one- to four-family residential loans. Lending activities include commercial business and commercial real estate loans, agriculture business loans, construction and land development loans, one- to four-family and multifamily residential loans, SBA loans and consumer loans.

Current wording

The Bank is a regional bank that offers a wide variety of commercial banking services and financial products to individuals, businesses and public sector entities in its primary market areas. The Bank’s primary business is that of traditional banking institutions, accepting deposits and originating loans in locations surrounding our offices. The Bank is also an active participant in secondary loan markets, engaging in mortgage banking operations through the origination and sale of one- to four-family residential loans. Lending activities include commercial business and commercial real estate loans, agriculture business loans, construction and land development loans, one- to four-family and multifamily residential loans, SBA loans and consumer loans.

Previous wording

•Mortgage banking operations revenue was $3.2 million for the second quarter of 2025, compared to $3.1 million in the preceding quarter.

Current wording

•Mortgage banking operations revenue was $3.3 million for the third quarter of 2025, compared to $3.2 million in the preceding quarter.

Previous wording

•Return on average assets was 1.13%, compared to 1.15% in the preceding quarter.

Current wording

•Return on average assets was 1.30%, compared to 1.13% in the preceding quarter.

Previous wording

•Net loans receivable increased 2% to $11.53 billion at June 30, 2025, compared to $11.28 billion at March 31, 2025.

Current wording

•Net loans receivable were $11.54 billion at September 30, 2025, compared to $11.53 billion at June 30, 2025.

Previous wording

•Total deposits decreased to $13.53 billion at June 30, 2025, compared to $13.59 billion at March 31, 2025.

Current wording

•Total deposits increased to $14.02 billion at September 30, 2025, compared to $13.53 billion at June 30, 2025.

Previous wording

•Non-performing assets were $49.8 million, or 0.30% of total assets, at June 30, 2025, compared to $42.7 million, or 0.26% of total assets at March 31, 2025.

Current wording

•Non-performing assets were $45.3 million, or 0.27% of total assets, at September 30, 2025, compared to $49.8 million, or 0.30% of total assets at June 30, 2025.

Previous wording

•The allowance for credit losses - loans was $160.5 million, or 1.37% of total loans receivable, as of June 30, 2025, compared to $157.3 million, or 1.38% of total loans receivable, at March 31, 2025.

Current wording

•The allowance for credit losses - loans was $159.7 million, or 1.36% of total loans receivable, as of September 30, 2025, compared to $160.5 million, or 1.37% of total loans receivable, at June 30, 2025.

Previous wording

•Common shareholders’ equity per share increased 1% to $53.95 at June 30, 2025, compared to $53.16 at March 31, 2025.

Current wording

•Common shareholders’ equity per share increased 3% to $55.71 at September 30, 2025, compared to $53.95 at June 30, 2025.

Previous wording

•Tangible common shareholders’ equity per share* increased 2% to $43.09 at June 30, 2025, compared to $42.27 at March 31, 2025.

Current wording

•Tangible common shareholders’ equity per share* increased 4% to $44.79 at September 30, 2025, compared to $43.09 at June 30, 2025.

Previous wording

Our critical accounting estimates are described in detail in the Critical Accounting Estimates section of our 2024 Form 10-K. The condensed consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes that the allowance for credit losses and fair value measurements require significant judgements and assumptions which are susceptible to significant changes based on the current environment. There have been no significant changes in our application of critical accounting estimates since December 31, 2024.

Current wording

Our critical accounting estimates are described in detail in the Critical Accounting Estimates section of our 2024 Form 10-K. The condensed consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements. As this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes that the allowance for credit losses and fair value measurements require significant judgments and assumptions which are susceptible to significant changes based on the current environment. There have been no significant changes in our application of critical accounting estimates since December 31, 2024.

Previous wording

General: Total assets increased $237.1 million to $16.44 billion at June 30, 2025, from $16.20 billion at December 31, 2024. The increase compared to year end was primarily due to loan growth, partially offset by a decrease in securities and interest-bearing deposits.

Current wording

General: Total assets increased $363.0 million to $16.56 billion at September 30, 2025, from $16.20 billion at December 31, 2024. The increase compared to year end was primarily due to loan growth and an increase in cash, specifically our interest-bearing deposits in other banks, partially offset by a decrease in securities.

Previous wording

Loans and lending: Loans are our most significant and generally highest yielding earning assets. We attempt to maintain a total loans to total deposits ratio at a level designed to enhance our revenues, while adhering to sound underwriting practices and appropriate diversification guidelines in order to maintain a moderate risk profile. Our loan to deposit ratio at June 30, 2025 was 87%. We offer a wide range of loan products to meet the demands of our clients. Our lending activities are primarily directed toward the origination of real estate and commercial loans. Total loans receivable (gross loans less deferred fees and discounts and excluding loans held for sale) increased $335.7 million at June 30, 2025, compared to December 31, 2024, reflecting increases across all loan categories except multifamily real estate loans and other consumer loans.

Current wording

Loans and lending: Loans are our most significant and generally highest yielding earning assets. We attempt to maintain a total loans to total deposits ratio at a level designed to enhance our revenues, while adhering to sound underwriting practices and appropriate diversification guidelines in order to maintain a moderate risk profile. Our loan to deposit ratio at September 30, 2025 was 84%. We offer a wide range of loan products to meet the demands of our clients. Our lending activities are primarily directed toward the origination of real estate and commercial loans. Total loans receivable (gross loans less deferred fees and discounts and excluding loans held for sale) increased $347.9 million at September 30, 2025, compared to December 31, 2024, reflecting increases across all loan categories except small balance CRE, multifamily real estate loans, commercial business loans, one- to four-family residential loans and other consumer loans.

Previous wording

Commercial real estate loans totaled $3.97 billion, or 34% of our loan portfolio, and multifamily real estate loans totaled $860.7 million, or 7% of our loan portfolio, at June 30, 2025. Commercial real estate loans increased by $108.8 million during the first six months of 2025, primarily due to new production and transfers to the permanent loan portfolio upon completion of the construction phase, partially offset by payoffs and paydowns, while multifamily real estate loans decreased by $33.7 million, primarily due to payoffs and paydowns exceeding new production.

Current wording

Commercial real estate loans totaled $4.00 billion, or 34% of our loan portfolio, and multifamily real estate loans totaled $860.7 million, or 7% of our loan portfolio, at September 30, 2025. Commercial real estate loans increased by $132.2 million during the first nine months of 2025, primarily due to new production and transfers to the permanent loan portfolio upon completion of the construction phase, partially offset by payoffs and paydowns, while multifamily real estate loans decreased by $33.8 million, primarily due to payoffs and paydowns exceeding new production.

Previous wording

Our construction, land and land development loans totaled $1.70 billion, or 15% of our loan portfolio, at June 30, 2025, compared to $1.52 billion at December 31, 2024. Multifamily construction loans increased $54.4 million, or 11%, to $568.1 million at June 30, 2025, compared to December 31, 2024. Multifamily construction represented 5% of our total loan portfolio at June 30, 2025. Multifamily construction loans were comprised primarily of affordable housing projects and, to a lesser extent, market rate multifamily projects across our footprint. Commercial construction loans increased $36.9 million, or 30%, to $159.2 million at June 30, 2025, compared to $122.4 million at December 31, 2024, due to advances and new loan production, partially offset by transfers to the permanent loan portfolio upon completion of the construction phase. Land and land development loans increased $47.8 million, or 13%, to $417.5 million at June 30, 2025, compared to December 31, 2024, primarily due to new loan production, partially offset by payoffs and paydowns.

Current wording

Our construction, land and land development loans totaled $1.74 billion, or 15% of our loan portfolio, at September 30, 2025, compared to $1.52 billion at December 31, 2024. Multifamily construction loans increased $72.4 million, or 14%, to $586.1 million at September 30, 2025, compared to December 31, 2024. Multifamily construction represented 5% of our total loan portfolio at September 30, 2025. Multifamily construction loans were comprised primarily of affordable housing projects and, to a lesser extent, market rate multifamily projects across our footprint. Commercial construction loans increased $21.8 million, or 18%, to $144.1 million at September 30, 2025, compared to $122.4 million at December 31, 2024, due to advances and new loan production, partially offset by transfers to the permanent loan portfolio upon completion of the construction phase. Land and land development loans increased $57.7 million, or 16%, to $427.3 million at September 30, 2025, compared to December 31, 2024, primarily due to new loan production, partially offset by payoffs and paydowns.

Previous wording

Our commercial business lending is directed toward meeting the credit and related deposit needs of various small- to medium-sized business and agribusiness borrowers operating in our primary market areas. Our commercial and agricultural business loans were $2.82 billion at June 30, 2025 and $2.76 billion at December 31, 2024. Commercial and agricultural business loans represented 24% of our loan portfolio at June 30, 2025. Our commercial business lending also includes participation in certain syndicated loans, including shared national credits, which totaled $226.8 million, or 2% of our loan portfolio, at June 30, 2025, compared to $227.4 million, or 2% of our loan portfolio, at December 31, 2024.

Current wording

Our commercial business lending is directed toward meeting the credit and related deposit needs of various small- to medium-sized business and agribusiness borrowers operating in our primary market areas. Our commercial business loans were $2.43 billion at September 30, 2025 and $2.42 billion at December 31, 2024. Commercial business loans represented 21% of our loan portfolio at September 30, 2025. Our agricultural business loans were $354.9 million at September 30, 2025 and $340.3 million at December 31, 2024. Agricultural business loans represented 3% of our loan portfolio at September 30, 2025. Our commercial business lending also includes participation in certain syndicated loans, including shared national credits, which totaled $215.1 million, or 2% of our loan portfolio, at September 30, 2025, compared to $227.4 million, or 2% of our loan portfolio, at December 31, 2024.

Previous wording

We are active originators of one- to four-family residential loans in most communities where we have established offices in Washington, Oregon, California, Idaho and Utah. Most of the one- to four-family residential loans we originate in normal market conditions are sold in secondary markets with net gains on sales and loan servicing fees reflected in our revenues from mortgage banking operations. At June 30, 2025, one- to four-family residential loans retained in our portfolio increased $18.9 million, to $1.61 billion, compared to $1.59 billion at December 31, 2024. The increase in one- to four-family residential loans was primarily the result of one- to four-family construction loans converting to permanent one- to four-family residential loans upon completion of construction and new loan originations. One- to four-family residential loans represented 14% of our loan portfolio at June 30, 2025.

Current wording

We are active originators of one- to four-family residential loans in most communities where we have established offices in Washington, Oregon, California, Idaho and Utah. Most of the one- to four-family residential loans we originate in normal market conditions are sold in secondary markets with net gains on sales and loan servicing fees reflected in our revenues from mortgage banking operations. At September 30, 2025, one- to four-family residential loans retained in our portfolio decreased $8.7 million, to $1.58 billion, compared to $1.59 billion at December 31, 2024. The decrease was primarily the result of one- to four-family residential loan payoffs exceeding one- to four-family construction loans converting to permanent one- to four-family residential loans upon completion of construction and new loan originations. One- to four-family residential loans represented 14% of our loan portfolio at September 30, 2025.

Previous wording

Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At June 30, 2025, consumer loans, including home equity revolving lines of credit, increased $11.1 million to $732.5 million, compared to $721.4 million at December 31, 2024.

Current wording

Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At September 30, 2025, consumer loans, including home equity revolving lines of credit, increased $18.9 million to $740.3 million, compared to $721.4 million at December 31, 2024.

Previous wording

Loans held for sale increased to $37.7 million at June 30, 2025, compared to $32.0 million at December 31, 2024. The increase was primarily the result of originations of one- to four- family residential mortgage loans held for sale outpacing loan sales during the period. Originations of loans held for sale increased to $171.0 million for the six months ended June 30, 2025, compared to $107.2 million for the same period last year. The volume of one- to four-family residential mortgage loans sold was $212.7 million during the six months ended June 30, 2025, compared to $160.7 million in the same period a year ago, which included a pooled loan sale of $19.8 million of one- to four-family residential mortgage loans.

Current wording

Loans held for sale decreased to $20.3 million at September 30, 2025, compared to $32.0 million at December 31, 2024. The decrease was primarily the result of increased sales of one- to four- family residential mortgage loans held for sale, with loan sales outpacing originations during the period. Originations of loans held for sale increased to $265.0 million for the nine months ended September 30, 2025, compared to $197.7 million for the same period last year. The volume of one- to four-family residential mortgage loans sold was $349.6 million during the nine months ended September 30, 2025, compared to $255.7 million in the same period a year ago.

Previous wording

Investment Securities: Total securities decreased $60.2 million to $3.05 billion at June 30, 2025, from $3.11 billion at December 31, 2024, primarily due to securities paydowns and maturities exceeding purchases during the six months ended June 30, 2025. Purchases during the six months ended June 30, 2025, consisted primarily of state and local government obligations. The average effective duration of the Company’s securities portfolio was 6.6 years at both June 30, 2025 and December 31, 2024. Fair value adjustments for securities designated as available-for-sale increased $48.0 million for the six months ended June 30, 2025. This increase, net of $11.5 million in associated tax expense, was recorded in other comprehensive income and reflected the impact of changes in market interest rates during the six months ended June 30, 2025.

Current wording

Investment Securities: Total securities decreased $115.9 million to $2.99 billion at September 30, 2025, from $3.11 billion at December 31, 2024, primarily due to securities paydowns and maturities exceeding purchases during the nine months ended September 30, 2025. Purchases during the nine months ended September 30, 2025, consisted primarily of state and local government obligations. The average effective duration of the Company’s securities portfolio was 6.4 years at both September 30, 2025 and December 31, 2024. The fair value of securities designated as available-for-sale increased $80.2 million for the nine months ended September 30, 2025. This increase, net of $19.3 million in associated tax expense, was recorded in other comprehensive income and reflected the impact of changes in market interest rates during the nine months ended September 30, 2025.

Previous wording

Deposits: Deposits, client retail repurchase agreements and loan repayments are the major sources of our funds for lending and other investment purposes. We compete with other financial institutions and financial intermediaries in attracting deposits and we generally attract deposits within our primary market areas. Much of the focus of our branch strategy and marketing efforts over the last several years have been directed toward attracting additional deposit client relationships and balances. This effort has been particularly directed towards emphasizing core deposit activity in non-interest-bearing and other transaction and savings accounts. Despite rate sensitive deposits shifting out of non-interest-bearing deposits due to clients seeking higher yields on their deposits, our strategy of focusing on relationship banking remains intact.

Current wording

Deposits: Deposits, client retail repurchase agreements and loan repayments are the major sources of our funds for lending and other investment purposes. We compete with other financial institutions and financial intermediaries in attracting deposits and we generally attract deposits within our primary market areas. Much of the focus of our branch strategy and marketing efforts over the last several years have been directed toward attracting additional deposit client relationships and balances. This effort has been particularly directed towards emphasizing core deposit activity in non-interest-bearing and other transaction and savings accounts.

Previous wording

Total deposits increased $12.9 million at June 30, 2025, compared to December 31, 2024, with core deposits increasing $34.8 million and certificates of deposit decreasing $21.9 million. The increase in core deposits primarily reflects increases in interest-bearing transaction and savings accounts. We had $50.0 million of brokered deposits at June 30, 2025, compared to $50.3 million at December 31, 2024. Core deposits represented 89% of total deposits at both June 30, 2025 and December 31, 2024. Competition for deposits in our market areas remains strong.

Current wording

Total deposits increased $501.5 million at September 30, 2025, compared to December 31, 2024, with core deposits increasing $460.8 million and certificates of deposit increasing $40.7 million. The increase in core deposits primarily reflects increases in interest-bearing transaction and savings accounts, primarily from normal seasonal increases from agricultural clients. We had $50.0 million of brokered deposits at September 30, 2025, compared to $50.3 million at December 31, 2024. Core deposits represented 89% of total deposits at both September 30, 2025 and December 31, 2024. Competition for deposits in our market areas remains strong.

Previous wording

Borrowings: We had $565.0 million of FHLB advances at June 30, 2025, compared to $290.0 million at December 31, 2024. The increase was primarily used to fund loan growth. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, decreased $8.1 million to $117.1 million at June 30, 2025, compared to $125.3 million at December 31, 2024. At June 30, 2025, the Company’s off-balance sheet liquidity included additional borrowing capacity of $2.74 billion at the FHLB, $1.62 billion at the Federal Reserve, and $125.0 million in federal funds lines of credit with other financial institutions. Junior subordinated debentures totaled $73.4 million at June 30, 2025, compared to $67.5 million at December 31, 2024. The outstanding balance of the Company’s subordinated notes was fully repaid during the second quarter of 2025. Subordinated notes, net of issuance costs, were $80.3 million at December 31, 2024.

Current wording

Borrowings: We had $100.0 million of FHLB advances at September 30, 2025, compared to $290.0 million at December 31, 2024 as deposits were used as the primary source of funding during the current period. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, decreased $4.7 million to $120.5 million at September 30, 2025, compared to $125.3 million at December 31, 2024. At September 30, 2025, the Company’s off-balance sheet liquidity included additional borrowing capacity of $3.25 billion at the FHLB, $1.63 billion at the Federal Reserve, and $125.0 million in federal funds lines of credit with other financial institutions. Junior subordinated debentures totaled $76.3 million at September 30, 2025, compared to $67.5 million at December 31, 2024. The outstanding balance of the Company’s subordinated notes was fully repaid during the second quarter of 2025. Subordinated notes, net of issuance costs, were $80.3 million at December 31, 2024.

Previous wording

Shareholders’ Equity: Total shareholders’ equity increased $91.3 million to $1.87 billion, or 11.35% of total assets, at June 30, 2025, compared to $1.77 billion, or 10.95% of total assets, at December 31, 2024. The increase was primarily due to a $57.0 million increase in retained earnings resulting from $90.6 million in net income, partially offset by the accrual of $33.6 million in cash dividends during the six months ended June 30, 2025. In addition, accumulated other comprehensive loss decreased by $32.9 million, primarily due to a decrease in unrealized losses on the available for sale securities portfolio. There were no shares of common stock repurchased during the six months ended June 30, 2025.

Current wording

Shareholders’ Equity: Total shareholders’ equity increased $138.6 million to $1.91 billion, or 11.55% of total assets, at September 30, 2025, compared to $1.77 billion, or 10.95% of total assets, at December 31, 2024. The increase was primarily due to a $93.7 million increase in retained earnings resulting from $144.1 million in net income, partially offset by the accrual of $50.4 million in cash dividends and the repurchase of 250,000 shares of Banner common stock in the third quarter of 2025 at an average price of $63.11 per share. In addition, accumulated other comprehensive loss decreased by $56.5 million, primarily due to a decrease in unrealized losses on the available for sale securities portfolio.

Previous wording

Tangible common shareholders’ equity, which excludes goodwill and other intangible assets and is a non-GAAP financial measure, increased $92.2 million to $1.49 billion, or 9.28% of tangible assets, at June 30, 2025, compared to $1.40 billion, or 8.84% of tangible assets at December 31, 2024. A reconciliation of this non-GAAP financial measure to its comparable GAAP financial measure is presented above following “Second Quarter 2025 Financial Highlights.”

Current wording

Tangible common shareholders’ equity, which excludes goodwill and other intangible assets and is a non-GAAP financial measure, increased $139.8 million to $1.54 billion, or 9.50% of tangible assets, at September 30, 2025, compared to $1.40 billion, or 8.84% of tangible assets at December 31, 2024. A reconciliation of this non-GAAP financial measure to its comparable GAAP financial measure is presented above following “Third Quarter 2025 Financial Highlights.”

Previous wording

Comparison of Results of Operations for the Three Months Ended June 30, 2025 and March 31, 2025, and the Six Months Ended June 30, 2025 and 2024

Current wording

Comparison of Results of Operations for the Three Months Ended September 30, 2025 and June 30, 2025, and the Nine Months Ended September 30, 2025 and 2024

Previous wording

For the quarter ended June 30, 2025, net income was $45.5 million, or $1.31 per diluted share, compared to $45.1 million, or $1.30 per diluted share, for the preceding quarter. For the six months ended June 30, 2025, our net income was $90.6 million, or $2.61 per diluted share, compared to $77.4 million, or $2.24 per diluted share for the same period a year earlier. The increase in net income for the current quarter compared to the preceding quarter was primarily due to an increase in net interest income, partially offset by a decrease in non-interest income as well as increases in non-interest expense and the provision for credit losses. The increase in net income for the six months ended June 30, 2025 compared to the same period a year ago was primarily due to increases in net interest income and non-interest income, partially offset by increases in non-interest expense and the provision for credit losses.

Current wording

For the quarter ended September 30, 2025, net income was $53.5 million, or $1.54 per diluted share, compared to $45.5 million, or $1.31 per diluted share, for the preceding quarter. For the nine months ended September 30, 2025, our net income was $144.1 million, or $4.15 per diluted share, compared to $122.5 million, or $3.54 per diluted share, for the same period a year earlier. The increase in net income for the comparable periods was primarily due to increases in net interest income and non-interest income.

Previous wording

The increase in net interest income compared to the preceding quarter reflects an increase in both the yield and average balance of interest-earning assets, partially offset by an increase in funding costs. The increase in net interest income for the six months ended June 30, 2025 compared to the same period a year ago reflects an increase in both the yield and average balance of interest-earning assets.

Current wording

Net interest income was $150.0 million in the third quarter of 2025, compared to $144.4 million in the preceding quarter, and $435.5 million for the nine months ended September 30, 2025, compared to $401.2 million for the comparable period a year ago. The increases in net interest income for both periods reflect higher yields and an increase in the average balance of interest-earning assets. The increase in net interest income for the nine months ended September 30, 2025 compared to the same period a year ago also reflects a decrease in funding costs.

Previous wording

We recorded a $4.8 million provision for credit losses for the quarter ended June 30, 2025, compared to a $3.1 million provision for credit losses in the preceding quarter. The provision for credit losses recorded in the current quarter primarily reflected loan growth, as well as risk rating migration which increased the overall estimated reserve requirements. We recorded a $7.9 million provision for credit losses for the six months ended June 30, 2025, compared to a $2.9 million provision for credit losses for the same period a year ago.

Current wording

We recorded a $2.7 million provision for credit losses for the quarter ended September 30, 2025, compared to a $4.8 million provision for credit losses in the preceding quarter. The provision for credit losses in the current quarter was driven by changes in both portfolio mix and individually evaluated loans. We recorded a $10.6 million provision for credit losses for the nine months ended September 30, 2025, compared to a $4.6 million provision for credit losses for the same period a year ago.

Previous wording

Total non-interest income decreased for the quarter ended June 30, 2025, compared to the preceding quarter and increased during the six months ended June 30, 2025, compared to the same period a year ago. The decrease in non-interest income during the current quarter compared to the preceding quarter was primarily due to a decrease in miscellaneous income, primarily due to losses incurred on building and lease exits during the current quarter as the Company executed on an initiative to reduce excess facilities. The increase in non-interest income during the six months ended June 30, 2025, compared to the same period last year was primarily due to a decrease in the net loss recognized on the sale of securities and an increase in the fair value adjustments on financial instruments carried at fair value during the current quarter.

Current wording

Total non-interest income increased for the quarter ended September 30, 2025, compared to the preceding quarter, and increased during the nine months ended September 30, 2025, compared to the same period a year ago. The increase from the preceding quarter was primarily due to an increase in miscellaneous income, reflecting gains on the sale of assets during the current quarter, compared to losses on the disposal of assets related to building and lease exits during the prior quarter associated with Banner’s reduction of excess office space. The increase in non-interest income during the nine months ended September 30, 2025, compared to the same period last year, was primarily due to a decrease in the net loss recognized on the sale of securities and positive fair value adjustments on financial instruments carried at fair value during the current period.

Previous wording

Total non-interest expense increased slightly for the quarter ended June 30, 2025, compared to the preceding quarter and increased during the six months ended June 30, 2025, compared to the same period a year ago. Non-interest expense for the current quarter reflects increases in salary and employee benefits, information and computer data services, and advertising and marketing expenses, offset by an increase in capitalized loan origination costs. The increase in non-interest expense during the six months ended June 30, 2025, compared to the same period last year primarily reflects increases in salary and employee benefits, information and computer data services, and professional and legal expenses.

Current wording

Total non-interest expense increased slightly for the quarter ended September 30, 2025, compared to the preceding quarter and increased for the nine months ended September 30, 2025, compared to the same period a year ago. Non-interest expense for the current quarter reflects increases in miscellaneous expenses and advertising and marketing expenses, partially offset by a decrease in salary and employee benefits. The increase in non-interest expense during the nine months ended September 30, 2025, compared to the same period last year primarily reflects increases in salary and employee benefits, information and computer data services expenses and professional and legal expenses.

Previous wording

Net Interest Income. Net interest income increased for the quarter ended June 30, 2025, compared to the preceding quarter. The $3.3 million increase was due to a $6.4 million increase in interest income, primarily attributable to a five basis point increase in average loan yields to 6.12% and an increase in average loan balances, partially offset by a $3.1 million increase in interest expense, reflecting a $221.4 million increase in the average balance of FHLB advances, with higher rates than core deposits.

Current wording

Net Interest Income. Net interest income increased for the quarter ended September 30, 2025, compared to the preceding quarter. The $5.6 million increase was due to an increase in interest income, primarily attributable to a five basis point increase in the average loan yield to 6.17% and an increase in average loan balances, while interest expense was essentially flat for the quarter.

Previous wording

Net interest margin on a tax equivalent basis was 3.92% for both the second quarter of 2025 and the preceding quarter. Net interest margin for the current quarter, compared to the preceding quarter, benefited from higher yields on interest earning assets, primarily due to an increase in the average loan yield. Despite higher funding costs, the Company maintained a stable net interest margin of 3.92%, reflecting the benefit of improved asset yields and favorable loan mix.

Current wording

Net interest margin on a tax equivalent basis was 3.98% for the third quarter of 2025, compared to 3.92% for the preceding quarter. Net interest margin for the current quarter, compared to the preceding quarter, benefited from higher yields on interest-earning assets, primarily due to an increase in the average loan yield.

Previous wording

Net interest income increased by $20.0 million, or 8%, to $285.5 million for the six months ended June 30, 2025, compared to $265.5 million for the same period one year earlier, primarily due to an increase in the average yields on interest-earning assets and an increase in the balance of average earning assets. The increase was primarily the result of a $20.3 million increase in interest income, reflecting both adjustable-rate loans repricing higher and new loans being originated at rates higher than the overall loan portfolio and a $583.7 million increase in the average balance of loans. The net interest margin on a tax equivalent basis increased to 3.92% for the six months ended June 30, 2025, compared to 3.72% for the same period in the prior year.

Current wording

Net interest income increased by $34.3 million, or 9%, to $435.5 million for the nine months ended September 30, 2025, compared to $401.2 million for the same period one year earlier. The increase was primarily the result of a $30.3 million increase in interest income, reflecting both adjustable-rate loans repricing higher and new loans being originated at rates higher than the overall loan portfolio, and a $532.7 million increase in the average balance of loans. In addition, funding costs decreased by seven basis points for the nine months ended September 30, 2025 as compared to the same period in the prior year. The net interest margin on a tax equivalent basis increased to 3.94% for the nine months ended September 30, 2025, compared to 3.72% for the same period in the prior year.

Previous wording

Interest Income. Interest income for the quarter ended June 30, 2025 was $200.3 million, compared to $193.9 million for the preceding quarter. The increase was primarily due to higher average loan yields and balances. Average loan yields increased five basis points to 6.12%, while the average loan balance increased $223.2 million. These increases were partially offset by a decline in interest income from investment securities, due to both lower average balances and yields.

Current wording

Interest Income. Interest income for the quarter ended September 30, 2025 was $205.8 million, compared to $200.3 million for the preceding quarter. The increase was primarily due to higher average loan yields and balances, as well as increases in both the average balance and yield on interest-bearing deposits held at other banks. The total average loan yield increased five basis points to 6.17%, while the total average loan balance increased $32.9 million.

Previous wording

Loan yields increased five basis points to 6.12% for the quarter ended June 30, 2025, from 6.07% in the preceding quarter, due to new loans being originated at higher interest rates and adjustable rate loans repricing higher. The average balance of loans receivable for the quarter ended June 30, 2025 increased compared to the preceding quarter, primarily reflecting increases in the average balances of mortgage loans, specifically commercial real estate and construction loans.

Current wording

Loan yields increased five basis points to 6.17% for the quarter ended September 30, 2025, from 6.12% in the preceding quarter, due to new loans being originated at higher interest rates and adjustable rate loans repricing higher. The increase in average loan balances primarily reflected growth in real estate secured loans, particularly commercial real estate and construction loans, which together contributed the largest share of the quarterly increase in interest income.

Previous wording

The average balance of total investment securities decreased to $3.49 billion for the quarter ended June 30, 2025 (excluding the effect of fair value adjustments), compared to $3.52 billion for the preceding quarter. The average yield on the combined portfolio decreased to 2.98% for the quarter ended June 30, 2025, from 3.02% for the preceding quarter.

Current wording

The total investment securities average balance increased to $3.61 billion for the quarter ended September 30, 2025 (excluding the effect of fair value adjustments), compared to $3.49 billion for the preceding quarter. The average yield on the combined portfolio increased to 3.06% for the quarter ended September 30, 2025, from 2.98% for the preceding quarter. Interest income on interest-bearing deposits with banks also increased, reflecting both a higher average balance and an increase in yield to 4.16%, compared to 3.06% in the prior quarter.

Previous wording

Interest income for the six months ended June 30, 2025 was $394.1 million, compared to $373.8 million for the same period in the prior year, an increase of $20.3 million. This increase reflects both an 18 basis point increase in the average yield on interest-earning assets, to 5.38%, primarily due to adjustable-rate loans repricing higher and new loans being originated at rates higher than the overall loan portfolio, and a $346.2 million increase in the average balance of those assets. Loan growth was the primary contributor, with average balances up $583.7 million, from the prior year.

Current wording

Interest income for the nine months ended September 30, 2025 was $600.0 million, compared to $569.7 million for the same period in the prior year, an increase of $30.3 million. This increase primarily reflected a 16 basis point increase in the average yield on interest-earning assets, to 5.40%, along with higher average balances. Loan growth was the primary contributor, with the average loan balances increasing $532.7 million compared to the prior year, supported by growth in the commercial real estate and residential mortgage portfolios.

Previous wording

Interest Expense. Interest expense for the quarter ended June 30, 2025 increased $3.1 million, or 6%, to $55.9 million compared to $52.8 million for the preceding quarter. The increase was largely driven by a $184.1 million increase in average funding liabilities, primarily due to a $221.4 million increase in FHLB advances. The average cost of funding liabilities also rose five basis points, to 1.60% for the quarter ended June 30, 2025.

Current wording

Interest Expense. Interest expense was relatively flat for the quarter ended September 30, 2025 as compared to the preceding quarter. Average funding liabilities increased by $124.8 million, primarily due to a $370.2 million increase in average deposit balances, partially offset by a $163.3 million decrease in average balance of FHLB advances. The average cost of funding liabilities decreased three basis points, to 1.57% for the quarter ended September 30, 2025.

Previous wording

Interest expense for the six months ended June 30, 2025 was $108.6 million, compared to $108.3 million for the same period in the prior year. The increase in interest expense occurred as a result of a $243.5 million, or 2%, increase in average funding liabilities, which was mostly offset by a two basis-point decrease in the average cost of funds to 1.57% for the six months ended June 30, 2025, compared to 1.59% for the same period in the prior year. The increase in the average balance of funding liabilities reflects increases in interest-bearing transaction and savings accounts, partially offset by decreases in non-interest-bearing deposits, money market accounts, FHLB advances and other borrowings.

Current wording

Interest expense for the nine months ended September 30, 2025 was $164.5 million, compared to $168.5 million for the same period in the prior year. The decrease resulted from a seven basis-point decrease in the average cost of funds to 1.57% from 1.64%, partially offset by a $268.0 million, or 2%, increase in average funding liabilities. The increase in the average balance of funding liabilities reflects increases in interest-bearing transaction and savings accounts, partially offset by decreases in non-interest-bearing deposits, money market accounts, and total borrowings.