BANNER CORP
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
BANR$70.09-0.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0000946673-26-000127
Executive OverviewComparison of Financial ConditionComparison of Results of OperationsAsset QualityLiquidity and Capital ResourcesCapital RequirementsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0000946673-26-000172
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsExecutive OverviewComparison of Financial ConditionComparison of Results of OperationsAsset QualityLiquidity and Capital ResourcesCapital RequirementsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 117 current paragraphs.
37 unchanged; 59 reworded; 17 added; 10 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 20 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
•Revenue was $172.0 million for the second quarter of 2026, compared to $169.3 million in the preceding quarter.
Current report
•Net interest income was $153.7 million in the second quarter of 2026, compared to $150.2 million in the preceding quarter.
Current report
On April 30, 2026, Banner entered into a definitive merger agreement to acquire Pacific Financial Corporation (“Pacific Financial”), the holding company for Bank of the Pacific, in an all-stock transaction. Under the terms of the agreement, at the effective time of the merger, shareholders of Pacific Financial will receive 0.2633 shares of Banner common stock for each Pacific Financial common share they own. The transaction is expected to close in the third quarter of 2026 and is subject to closing conditions, including Pacific Financial shareholder and regulatory approvals. There can be no assurance that all closing conditions will be satisfied or that the transaction will be completed on the anticipated timetable, or at all.
Current report
General: Total assets increased $239.1 million to $16.59 billion at June 30, 2026, from $16.35 billion at December 31, 2025, primarily due to growth in loans receivable, partially offset by a decrease in securities.
Current report
Interest income for the six months ended June 30, 2026 was $400.5 million, compared to $394.1 million for the same period in the prior year, an increase of $6.4 million, primarily reflecting growth in average loan balances.
Current report
Deposit interest expense for the six months ended June 30, 2026 decreased $6.8 million to $91.2 million, compared to $98.1 million for the same period in the prior year. Average deposit balances increased to $13.75 billion for the six months ended June 30, 2026, from $13.43 billion for the same period a year earlier, while the average rate paid on deposits decreased to 1.34% for the six months ended June 30, 2026 from 1.47% for the same period in the prior year. The average cost of interest-bearing deposits decreased by 22 basis points to 1.99% for the six months ended June 30, 2026, compared to 2.21% in the same period a year earlier. The decrease in the average cost of interest-bearing deposits primarily reflected lower rates paid across all categories of interest-bearing deposits, as well as a reduction in the total average balance of higher- rate certificates of deposit.
Current report
Interest expense on total borrowings for the six months ended June 30, 2026 decreased to $5.4 million from $10.6 million for the same period a year earlier due to a decrease in both the average balance of and rate paid on total borrowings, reflecting the pay-off of Banner’s subordinated debt in June 2025. Average total borrowings were $278.1 million for the six months ended June 30, 2026, compared to $484.3 million for the same period a year earlier. The decrease was primarily due to a $111.6 million decrease in the average balance of FHLB advances and an $80.1 million decrease in the average balance of Junior subordinated debentures and subordinated notes, due to the pay-off of higher-rate subordinated debt during 2025. The average rate paid on total borrowings for the six months ended June 30, 2026 decreased to 3.89% from 4.41% for the same period a year earlier.
Current report
Non-interest income decreased $939,000 to $18.2 million for the quarter ended June 30, 2026, compared to $19.2 million for the quarter ended March 31, 2026. The decrease primarily reflected a $1.8 million unfavorable shift in fair value adjustments on financial instruments carried at fair value, which shifted from a net gain of $1.7 million in the quarter ended March 31, 2026, to a net loss of $157,000 in the quarter ended June 30, 2026. In addition, the current quarter included a slight gain on the sale of securities, compared to net losses of $1.2 million in the preceding quarter, partially offsetting the unfavorable change in fair value adjustments. Excluding changes in fair value adjustments and gains and losses on the sale of securities, recurring non-interest income remained relatively stable compared to the preceding quarter.
Current report
The increase in non-interest expense from the previous quarter reflected a $1.7 million increase in salary and employee benefits, a $2.0 million increase in information and computer data services, a $1.1 million increase in professional and legal expenses, and a $1.3 million increase in advertising and marketing expense. In addition, the current quarter included $238,000 of merger related expenses. These increases were partially offset by a $1.4 million increase in capitalized loan origination costs, reflecting increased loan origination activity, primarily in the construction, land and land development, and one- to four-family residential loan categories. The increase in non-interest expense for the six months ended June 30, 2026, compared to the same period a year earlier, primarily reflected increases in salary and employee benefits, information and computer data services expense, and advertising and marketing expense, partially offset by a lower occupancy and equipment expense and higher capitalized loan origination costs.
Current report
Occupancy and equipment expenses decreased for the six months ended June 30, 2026, compared to the same period last year, primarily due to lower rent expense resulting from strategic space reductions, as well as lower software amortization.
Current report
Information and computer data services increased for the quarter ended June 30, 2026, compared to the quarter ended March 31, 2026, and increased for the six months ended June 30, 2026, compared to the same period last year, primarily due to an increase in computer software-related expenses, including $924,000 of expense related to the discontinuation of the use of our previous commercial loan origination software.
Current report
Professional and legal expense increased for the quarter ended June 30, 2026, compared to the quarter ended March 31, 2026. The increase compared to the preceding quarter primarily reflected increased legal fees.
Current report
Advertising and marketing expenses increased for the quarter ended June 30, 2026, compared to the quarter ended March 31, 2026, and increased for the six months ended June 30, 2026, compared to the same period last year, primarily due to the timing of printed media, radio, television and direct mail marketing campaigns during the current quarter.
Removed paragraphs (10)
Previous report
•Revenue was $169.3 million for the first quarter of 2026, compared to $167.7 million in the preceding quarter.
Previous report
•Net interest income was $150.2 million in the first quarter of 2026, compared to $152.4 million in the preceding quarter.
Previous report
General: Total assets decreased $10.2 million to $16.34 billion at March 31, 2026, from $16.35 billion at December 31, 2025, primarily due to decreases in both loans held for sale and loans receivable and a reduction in FHLB stock resulting from the repayment of FHLB advances, partially offset by growth in interest-bearing deposits held at other banks.
Previous report
Non-interest income increased $3.9 million to $19.2 million for the three months ended March 31, 2026, compared to $15.2 million for the three months ended December 31, 2025. The increase primarily reflected a $3.7 million improvement in the fair value of financial instruments carried at fair value, which shifted from a net loss of $2.0 million in the three months ended December 31, 2025 to a net gain of $1.7 million in the three months ended March 31, 2026. Miscellaneous income also increased $1.4 million, primarily reflecting asset disposition losses recorded in the three months ended December 31, 2025 that did not recur. Deposit fees and other service charges increased $710,000, or 7%, reflecting seasonal patterns and increased account activity. These increases were partially offset by a net loss of $1.2 million on the sale of securities in the three months ended March 31, 2026, compared to no securities sold in the prior quarter.
Previous report
The decrease in non-interest expense for the current quarter reflects decreases in occupancy and equipment expenses, professional and legal expenses, information and computer data services expenses and advertising and marketing expenses, partially offset by an increase in salary and employee benefits. In addition, the current quarter included no building and lease exit costs, compared to $434,000 of such costs in the quarter ended December 31, 2025, which are included in occupancy and equipment expenses above. The increase in non-interest expense for the three months ended March 31, 2026, compared to the same period a year earlier, primarily reflects increases in salary and employee benefits and information and computer data services expenses, partially offset by a decrease in occupancy and equipment expenses.
Previous report
Occupancy and equipment expenses decreased in the current quarter, compared to both the preceding quarter and the same period a year ago, primarily due to lower rent expense as well as reduced building repair and maintenance costs. The decrease from the same period a year ago also reflected lower software amortization.
Previous report
Information and computer data services decreased for the quarter ended March 31, 2026 compared to the quarter ended December 31, 2025, primarily due to decreases in computer software expenses, and increased compared to the quarter ended March 31, 2025, primarily due to an increase in software expenses related to additional software service contracts and the implementation of a new loan and deposit origination system during 2025.
Previous report
Professional and legal expense decreased in the current quarter, compared to both the preceding quarter and the same period a year ago. The decrease compared to the preceding quarter was primarily due to expenses recognized on a pending legal settlement during the prior quarter and lower audit and regulatory exam expenses. The decrease compared to the same period a year ago was primarily due to decreases in consultant and other professional services expenses.
Previous report
Advertising and marketing expenses decreased in the current quarter compared to the quarter ended December 31, 2025, due to decreases in direct mail marketing and community development expenses.
Reworded paragraphs (59)
Previous 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 March 31, 2026, it had 135 branch offices and 15 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 March 31, 2026, we had total consolidated assets of $16.34 billion, total loans of $11.71 billion, total deposits of $13.84 billion and total shareholders’ equity of $1.97 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 June 30, 2026, it had 135 branch offices and 15 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 June 30, 2026, we had total consolidated assets of $16.59 billion, total loans of $11.99 billion, total deposits of $13.79 billion and total shareholders’ equity of $2.0 billion.
Previous wording
•Net interest margin, on a tax equivalent basis, was 4.11% for current quarter, compared to 4.03% in the preceding quarter.
Current wording
•Net interest margin, on a tax equivalent basis, was 4.13% for current quarter, compared to 4.11% in the preceding quarter.
Previous wording
•Mortgage banking operations revenue was $3.2 million for the first quarter of 2026, compared to $3.6 million in the preceding quarter.
Current wording
•Mortgage banking operations revenue was $2.8 million for the second quarter of 2026, compared to $3.2 million in the preceding quarter.
Previous wording
•Return on average assets was 1.37%, compared to 1.24% in the preceding quarter.
Current wording
•Return on average assets was 1.20%, compared to 1.37% in the preceding quarter.
Previous wording
•Net loans receivable were $11.55 billion at March 31, 2026, compared to $11.56 billion at December 31, 2025.
Current wording
•Net loans receivable were $11.83 billion at June 30, 2026, compared to $11.55 billion at March 31, 2026.
Previous wording
•Total deposits increased to $13.84 billion at March 31, 2026, compared to $13.74 billion at December 31, 2025.
Current wording
•Total deposits were $13.79 billion at June 30, 2026, compared to $13.84 billion at March 31, 2026.
Previous wording
•Non-performing assets were $51.7 million, or 0.32% of total assets, at March 31, 2026, compared to $51.2 million, or 0.31% of total assets at December 31, 2025.
Current wording
•Non-performing assets were $60.5 million, or 0.36% of total assets, at June 30, 2026, compared to $51.7 million, or 0.32% of total assets at March 31, 2026.
Previous wording
•The allowance for credit losses - loans was $160.4 million, or 1.37% of total loans receivable, as of March 31, 2026, compared to $160.3 million, or 1.37% of total loans receivable, at December 31, 2025.
Current wording
•The allowance for credit losses - loans was $161.8 million, or 1.35% of total loans receivable, as of June 30, 2026, compared to $160.4 million, or 1.37% of total loans receivable, at March 31, 2026.
Previous wording
•Dividends paid to shareholders were $0.50 per share in the quarter ended March 31, 2026.
Current wording
•Dividends paid to shareholders were $0.52 per share in the quarter ended June 30, 2026.
Previous wording
•Common shareholders’ equity per share increased 2% to $58.06 at March 31, 2026, compared to $57.08 at December 31, 2025.
Current wording
•Common shareholders’ equity per share increased to $58.83 at June 30, 2026, compared to $58.06 at March 31, 2026.
Previous wording
•Tangible common shareholders’ equity per share* increased 2% to $47.00 at March 31, 2026, compared to $46.09 at December 31, 2025.
Current wording
•Tangible common shareholders’ equity per share* increased to $47.82 at June 30, 2026, compared to $47.00 at March 31, 2026.
Previous wording
*Non-GAAP Financial Measures: Management has presented non-GAAP financial measures in this discussion and analysis because it believes these measures provide useful and comparative information to assess trends in our core operations and to facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, we have also presented comparable earnings information using GAAP financial measures. For a reconciliation of these non-GAAP financial measures, see the tables below. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies.
Current wording
Management has presented non-GAAP financial measures in this discussion and analysis because it believes these measures provide useful and comparative information to assess trends in our core operations and to facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, we have also presented comparable earnings information using GAAP financial measures. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies.
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 March 31, 2026 was 85%. 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) decreased $14.1 million at March 31, 2026, compared to December 31, 2025. The net decrease was driven primarily by payoffs and paydowns in multifamily real estate, land and land development, and agricultural business loans, partially offset by new production in commercial real estate and commercial business 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 June 30, 2026 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 $272.7 million at June 30, 2026, compared to December 31, 2025. The increase primarily reflected growth in commercial business loans, commercial real estate loans, and consumer loans, partially offset by declines in construction, land and land development loans, agricultural business loans, and one- to four-family residential loans.
Previous wording
Commercial real estate loans totaled $4.11 billion, or 35% of our loan portfolio, and multifamily real estate loans totaled $798.2 million, or 7% of our loan portfolio, at March 31, 2026. Commercial real estate loans increased by $61.6 million during the first three months of 2026, primarily due to new production and transfers to the permanent loan portfolio upon completion of the construction phase, while multifamily real estate loans decreased by $52.6 million, primarily due to payoffs and paydowns.
Current wording
Commercial real estate loans totaled $4.14 billion, or 34% of our loan portfolio, and multifamily real estate loans totaled $855.9 million, or 7% of our loan portfolio, at June 30, 2026. Commercial real estate loans increased by $88.6 million during the first six months of 2026, primarily due to new production. Multifamily real estate loans increased by $5.1 million, primarily due transfers to the permanent loan portfolio upon completion of the construction phase, partially offset by loan payoffs.
Previous wording
Our construction, land and land development loans totaled $1.70 billion, or 14% of our loan portfolio, at March 31, 2026, compared to $1.71 billion at December 31, 2025. Multifamily construction loans decreased $12.2 million, or 2%, to $502.2 million at March 31, 2026, compared to December 31, 2025. Multifamily construction represented 4% of our total loan portfolio at March 31, 2026. 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 $18.7 million, or 12%, to $174.8 million at March 31, 2026, compared to $156.0 million at December 31, 2025, primarily due to advances, partially offset by transfers to the permanent loan portfolio upon completion of the construction phase. Land and land development loans decreased $32.7 million, or 8%, to $401.0 million at March 31, 2026, compared to December 31, 2025, primarily due to payoffs and paydowns, partially offset by new loan production. Construction loans across our footprint are concentrated primarily in Washington, California and Oregon, with the majority of multifamily construction projects expected to convert to permanent loans within the next 12 to 24 months as construction phases are completed.
Current wording
Our construction, land and land development loans totaled $1.69 billion, or 14% of our loan portfolio, at June 30, 2026, compared to $1.71 billion at December 31, 2025. Multifamily construction loans decreased $11.3 million, or 2%, to $503.1 million at June 30, 2026, compared to December 31, 2025. Multifamily construction represented 4% of our total loan portfolio at June 30, 2026. 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 $25.8 million, or 17%, to $181.8 million at June 30, 2026, compared to $156.0 million at December 31, 2025, primarily due to new production and advances, partially offset by transfers to the permanent loan portfolio upon completion of the construction phase and loan payoffs. Land and land development loans decreased $55.5 million, or 13%, to $378.2 million at June 30, 2026, compared to December 31, 2025, primarily due to payoffs and paydowns, partially offset by new loan originations. Construction loans across our footprint were concentrated primarily in Washington, California and Oregon at June 30, 2026, with the majority of multifamily construction projects expected to convert to permanent loans within the next 12 to 24 months as construction phases are completed.
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 business loans were $2.43 billion at March 31, 2026 and $2.41 billion at December 31, 2025. Commercial business loans represented 21% of our loan portfolio at March 31, 2026. Our agricultural business loans were $332.4 million at March 31, 2026 and $353.2 million at December 31, 2025. Agricultural business loans represented 3% of our loan portfolio at March 31, 2026. Our commercial business lending also includes participation in certain syndicated loans, including shared national credits, which totaled $168.1 million, or 1% of our loan portfolio, at March 31, 2026, compared to $195.6 million, or 2% of our loan portfolio, at December 31, 2025.
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 $2.58 billion at June 30, 2026 and $2.41 billion at December 31, 2025. Commercial business loans represented 22% of our loan portfolio at June 30, 2026. Our agricultural business loans were $337.5 million at June 30, 2026 and $353.2 million at December 31, 2025. Agricultural business loans represented 3% of our loan portfolio at June 30, 2026. Our commercial business lending also includes participation in certain syndicated loans, including shared national credits, which totaled $222.2 million, or 2% of our loan portfolio, at June 30, 2026, compared to $195.6 million, or 2% of our loan portfolio, at December 31, 2025.
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 March 31, 2026, one- to four-family residential loans retained in our portfolio decreased $10.1 million, to $1.56 billion, compared to $1.57 billion at December 31, 2025. 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 13% of our loan portfolio at March 31, 2026.
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 June 30, 2026, one- to four-family residential loans retained in our portfolio decreased $16.7 million, to $1.56 billion, compared to $1.57 billion at December 31, 2025. The decrease was primarily the result of one- to four-family residential loan payoffs exceeding new loan originations and one- to four-family construction loans converting to permanent one- to four-family residential loans upon completion of construction. One- to four-family residential loans represented 13% of our loan portfolio at June 30, 2026.
Previous wording
Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At March 31, 2026, consumer loans, including home equity revolving lines of credit, increased $5.5 million to $774.0 million, compared to $768.5 million at December 31, 2025.
Current wording
Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At June 30, 2026, consumer loans, including home equity revolving lines of credit, increased $58.5 million to $827.0 million, compared to $768.5 million at December 31, 2025. The increase was primarily due to growth in home equity revolving lines of credit.
Previous wording
Loans held for sale decreased to $33.8 million at March 31, 2026, compared to $42.9 million at December 31, 2025. 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 $91.7 million for the three months ended March 31, 2026, compared to $75.2 million for the same period last year. The volume of one- to four-family residential mortgage loans sold was $132.6 million during the three months ended March 31, 2026, compared to $108.1 million in the same period a year ago.
Current wording
Loans held for sale decreased to $27.2 million at June 30, 2026, compared to $42.9 million at December 31, 2025. 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 $198.4 million for the six months ended June 30, 2026, compared to $171.0 million for the same period last year. The volume of one- to four-family residential mortgage loans sold was $267.1 million during the six months ended June 30, 2026, compared to $212.7 million in the same period a year ago.
Previous wording
Investment Securities: Total securities were $2.98 billion at March 31, 2026, essentially unchanged from December 31, 2025. Available-for-sale securities increased $18.8 million to $2.04 billion at March 31, 2026, compared to $2.02 billion at December 31, 2025, while held-to-maturity securities decreased $17.5 million to $943.7 million, compared to $961.2 million at December 31, 2025, reflecting maturities and paydowns during the period. Purchases during the three months ended March 31, 2026, consisted of agency commercial mortgage‑backed securities, corporate securities and collateralized loan obligations. The average effective duration of the Company’s securities portfolio was 6.1 years at March 31, 2026, compared to 6.6 years at December 31, 2025. The fair value of securities designated as available-for-sale decreased $5.2 million for the three months ended March 31, 2026. This decrease, net of $1.3 million in associated tax benefit, was recorded in other comprehensive income and reflected the impact of changes in market interest rates during the three months ended March 31, 2026.
Current wording
Investment Securities: Total securities were $2.95 billion at June 30, 2026, decreased from $2.98 billion at December 31, 2025. Available-for-sale securities were flat at $2.02 billion at June 30, 2026, compared to December 31, 2025, while held-to-maturity securities decreased $31.9 million to $929.3 million, compared to $961.2 million at December 31, 2025, reflecting maturities and paydowns during the period. Purchases during the six months ended June 30, 2026, consisted of agency commercial mortgage‑backed securities, corporate securities and collateralized loan obligations. The average effective duration of the Company’s securities portfolio was 6.1 years at June 30, 2026, compared to 6.6 years at December 31, 2025. The fair value of securities designated as available-for-sale decreased $3.7 million for the six months ended June 30, 2026. This decrease, net of $900,000 in associated tax benefit, was recorded in other comprehensive income and reflected the impact of changes in market interest rates during the six months ended June 30, 2026.
Previous wording
Total deposits increased $97.2 million at March 31, 2026, compared to December 31, 2025, with core deposits increasing $164.7 million, partially offset by certificates of deposit decreasing $67.5 million. The increase in core deposits primarily reflects increases in non-interest-bearing deposits and interest-bearing transaction and savings accounts. We had no brokered deposits at March 31, 2026, compared to $50.0 million at December 31, 2025. Core deposits represented 89% of total deposits at both March 31, 2026 and December 31, 2025. Competition for deposits in our market areas remains strong.
Current wording
Total deposits increased $46.4 million at June 30, 2026, compared to December 31, 2025, with core deposits increasing $105.7 million, partially offset by certificates of deposit decreasing $59.3 million. The increase in core deposits primarily reflects increases in non-interest-bearing deposits and interest-bearing transaction and savings accounts. We had no brokered deposits at June 30, 2026, compared to $50.0 million at December 31, 2025. Core deposits represented 89% of total deposits at both June 30, 2026 and December 31, 2025. Competition for deposits in our market areas remains strong.
Previous wording
Borrowings: We had no FHLB advances at March 31, 2026, compared to $150.0 million at December 31, 2025, as the increase in core deposits was used to pay off FHLB advances during the current quarter. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, increased $8.0 million to $115.7 million at March 31, 2026, compared to $107.7 million at December 31, 2025. At March 31, 2026, the Company’s off-balance sheet liquidity included additional borrowing capacity of $3.76 billion at the FHLB, $1.74 billion at the Federal Reserve, and $125.0 million in federal funds lines of credit with other financial institutions. Junior subordinated debentures totaled $79.5 million at March 31, 2026, compared to $79.2 million at December 31, 2025.
Current wording
Borrowings: We had $320.0 million FHLB advances at June 30, 2026, compared to $150.0 million at December 31, 2025, as FHLB advances were temporarily used to fund the second quarter loan growth. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, increased $6.8 million to $114.5 million at June 30, 2026, compared to $107.7 million at December 31, 2025. At June 30, 2026, the Company’s off-balance sheet liquidity included additional borrowing capacity of $3.45 billion at the FHLB, $1.64 billion at the Federal Reserve, and $125.0 million in federal funds lines of credit with other financial institutions. Junior subordinated debentures totaled $79.7 million at June 30, 2026, compared to $79.2 million at December 31, 2025.
Previous wording
Shareholders’ Equity: Total shareholders’ equity increased $20.3 million to $1.97 billion, or 12.03% of total assets, at March 31, 2026, compared to $1.95 billion, or 11.90% of total assets, at December 31, 2025. The increase was primarily due to a $37.4 million increase in retained earnings resulting from $54.7 million in net income, partially offset by the accrual of $17.3 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 $64.56 per share. In addition, accumulated other comprehensive loss increased by $2.9 million, primarily due to an increase in unrealized losses on the available for sale securities portfolio.
Current wording
Shareholders’ Equity: Total shareholders’ equity increased $53.0 million to $2.00 billion, or 12.05% of total assets, at June 30, 2026, compared to $1.95 billion, or 11.90% of total assets, at December 31, 2025. The increase was primarily due to a $68.4 million increase in retained earnings resulting from $103.6 million in net income, partially offset by the accrual of $35.2 million in cash dividends and the repurchase of 250,000 shares of Banner common stock in the first quarter of 2026 at an average price of $64.56 per share. In addition, accumulated other comprehensive loss increased by $1.5 million, primarily due to an increase 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 $20.6 million to $1.59 billion, or 9.97% of tangible assets, at March 31, 2026, compared to $1.57 billion, or 9.84% of tangible assets at December 31, 2025. A reconciliation of this non-GAAP financial measure to its comparable GAAP financial measure is presented above following “First Quarter 2026 Financial Highlights.”
Current wording
Tangible common shareholders’ equity, which excludes goodwill and other intangible assets and is a non-GAAP financial measure, increased $53.5 million to $1.63 billion, or 10.02% of tangible assets, at June 30, 2026, compared to $1.57 billion, or 9.84% of tangible assets at December 31, 2025. A reconciliation of this non-GAAP financial measure to its comparable GAAP financial measure is presented above under the heading “Reconciliation of Non-GAAP Financial Measures.”
Previous wording
Comparison of Results of Operations for the Three Months Ended March 31, 2026 and December 31, 2025, and the Three Months Ended March 31, 2026 and 2025
Current wording
Comparison of Results of Operations for the Three Months Ended June 30, 2026 and March 31, 2026, and the Six Months Ended June 30, 2026 and 2025
Previous wording
For the quarter ended March 31, 2026, net income was $54.7 million, or $1.60 per diluted share, compared to $51.2 million, or $1.49 per diluted share, for the preceding quarter and $45.1 million, or $1.30 per diluted share, for the three months ended March 31, 2025. The increase in net income compared to the preceding quarter was primarily due to an increase in non-interest income, a decrease in non-interest expense and a recapture of provision for credit losses, partially offset by a decrease in net interest income. When compared to the same period a year ago, the increase in net income was primarily attributable to higher net interest income and the recapture of provision for credit losses, partially offset by increased non-interest expense.
Current wording
For the quarter ended June 30, 2026, net income was $48.9 million, or $1.43 per diluted share, compared to $54.7 million, or $1.60 per diluted share, for the preceding quarter. For the six months ended June 30, 2026, our net income was $103.6 million, or $3.03 per diluted share, compared to $90.6 million, or $2.61 per diluted share for the same period a year earlier. The decrease in net income compared to the preceding quarter was primarily due to an increase in the provision for credit losses and higher non-interest expense, partially offset by an increase in net interest income. The increase in net income for the six months ended June 30, 2026, compared to the same period a year ago was primarily due to higher net interest income and a lower provision for credit losses, partially offset by higher non-interest expense.
Previous wording
Net interest income was $150.2 million in the first quarter of 2026, compared to $152.4 million in the preceding quarter, and $141.1 million for the comparable period a year ago. The decrease in net interest income compared to the prior quarter primarily reflects two fewer calendar days in the current quarter as well as a decrease in the average balance of interest-earning assets. This was partially offset by a reduction in overall funding costs and an improvement in net interest margin. The increase in net interest income for the three months ended March 31, 2026 compared to the same period a year ago primarily reflects a decrease in overall funding costs and an increase in the average balance of interest-earning assets.
Current wording
Net interest income was $153.7 million in the second quarter of 2026, compared to $150.2 million in the preceding quarter, and $303.9 million for the six months ended June 30, 2026, compared to $285.5 million for the comparable period a year ago. The increase in net interest income compared to the prior quarter primarily reflected one additional calendar day in the current quarter, net interest margin expansion and growth in average interest-earning assets, partially offset by higher funding costs associated with increased FHLB borrowings. The increase in net interest income for the six months ended June 30, 2026, compared to the same period a year ago primarily reflected lower funding costs and an increase in the average balance of interest-earning assets.
Previous wording
We recorded a $796,000 recapture of provision for credit losses for the quarter ended March 31, 2026, compared to a $2.4 million provision for credit losses in the preceding quarter and a $3.1 million provision for credit losses for the same period a year ago. The recapture of provision for credit losses in the current quarter was primarily driven by a reduction in unused commitments, mainly within the construction portfolio, reducing the reserve for unfunded commitments. This was partially offset by a provision for credit losses – loans to capture the impact of risk rating migration, changes in portfolio mix and adjustments to qualitative factor assessments to reflect modestly elevated economic uncertainty.
Current wording
We recorded a $3.8 million provision for credit losses for the quarter ended June 30, 2026, compared to a $796,000 recapture of provision for credit losses in the preceding quarter. The provision for credit losses recorded in the second quarter of 2026 primarily reflected loan growth, partially offset by improvements in credit quality and changes in portfolio mix. We recorded a $3.0 million provision for credit losses for the six months ended June 30, 2026 and a $7.9 million provision for credit losses for the same period a year ago.
Previous wording
Total non-interest income increased for the quarter ended March 31, 2026, compared to the preceding quarter, and increased slightly compared to the same period a year ago. The increase from the preceding quarter was primarily due to an increase in miscellaneous income, primarily due to losses incurred on the disposition of assets recognized during the prior quarter. In addition, fair value adjustments on financial instruments carried at fair value improved during the quarter, partially offset by a net loss recognized on the sale of securities during the current quarter. The increase in non-interest income during the three months ended March 31, 2026, compared to the same period last year, was primarily attributable to the increase in fair value adjustments on financial instruments carried at fair value, partially offset by the net loss recognized on the sale of securities during the current quarter.
Current wording
Total non-interest income decreased in the quarter ended June 30, 2026, compared to the preceding quarter and increased during the six months ended June 30, 2026, compared to the same period a year ago. The decrease in non-interest income from the previous quarter was driven primarily by an unfavorable shift in fair value adjustments on financial instruments. In addition, net losses on the sale of securities were recognized in the preceding quarter. The increase in non-interest income during the six months ended June 30, 2026, compared to the same period last year, primarily reflected higher deposit fees and other service charges and favorable fair value adjustments on financial instruments carried at fair value, partially offset by a net loss recognized on the sale of securities during the current period.
Previous wording
Total non-interest expense decreased for the quarter ended March 31, 2026, compared to the preceding quarter, and increased compared to the same period a year ago. The decrease from the previous quarter reflected a decrease in occupancy and equipment costs, primarily due to lower rent expense as well as lower building repair and maintenance expenses, a decrease in professional and legal expenses, primarily due to expenses recognized on a pending legal settlement during the prior quarter, and a decrease in advertising and marketing expense, primarily due to decreases in direct mail marketing and community development expenses. This was partially offset by an increase in salary and employee benefits, resulting from increased medical premiums and payroll tax expenses. The increase in non-interest expense during the three months ended March 31, 2026, compared to the same period last year primarily reflects increases in salary and employee benefits, partially offset by a decrease in occupancy and equipment costs.
Current wording
Total non-interest expense increased in the quarter ended June 30, 2026, compared to the preceding quarter and increased during the six months ended June 30, 2026, compared to the same period a year ago. The increase from the previous quarter reflected an increase in salary and employee benefits, primarily reflecting increased loan commissions and normal salary and wage increases, an increase in information and computer data services, primarily due to increased computer software expenses, an increase in professional and legal expenses, primarily reflecting increased legal fees, and an increase in advertising and marketing expense, primarily reflecting the timing of direct mail marketing, printed media, and radio and television expenses. These increases were partially offset by higher capitalized loan origination costs associated with increased loan origination activity, primarily in the construction, land and land development, and one- to four-family residential loan categories. The increase in non-interest expense during the six months ended June 30, 2026, compared to the same period last year primarily reflects increases in salary and employee benefits and information and computer data services, partially offset by an increase in capitalized loan origination costs.
Previous wording
(4)Represents non-GAAP financial measures. See non-GAAP financial measure reconciliations presented above following First Quarter 2026 Highlights.
Current wording
(1) Represents non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measure” above.
Previous wording
Net Interest Income. Net interest income decreased $2.3 million during the quarter ended March 31, 2026, compared to the preceding quarter, due to a decrease in interest income, primarily attributable to two fewer calendar days in the current quarter, and a slight decrease in average earning assets. This was partially offset by an improvement in net interest margin.
Current wording
Net Interest Income. Net interest income increased $3.6 million during the quarter ended June 30, 2026, compared to the preceding quarter, due to an increase in interest income, primarily attributable to one additional calendar day in the current quarter, net interest margin expansion and growth in average interest-earning assets, partially offset by higher interest expense associated with increased FHLB borrowings.
Previous wording
Net interest margin on a tax equivalent basis was 4.11% for the first quarter of 2026, compared to 4.03% for the preceding quarter and 3.92% for the same period in the prior year. The net interest margin for the current quarter benefited from lower funding costs when compared to both the preceding quarter and the same period in the prior year.
Current wording
Net interest margin on a tax equivalent basis was 4.13% for the second quarter of 2026, compared to 4.11% for the preceding quarter. The net interest margin for the current quarter benefited from loan growth, a slight increase in loan yields, and lower deposit costs, partially offset by the increased use of FHLB advances.
Previous wording
Net interest income increased by $9.1 million, or 6% for the three months ended March 31, 2026, compared to the same period one year earlier. The increase was primarily the result of a $4.0 million increase in interest income, primarily reflecting an increase in the average balance of loans, as well as a $5.1 million decrease in interest expense reflecting a 17 basis-point reduction in the average cost of funding liabilities to 1.38% from 1.55%.
Current wording
Net interest income increased by $18.4 million, or 6% for the six months ended June 30, 2026, compared to the same period one year earlier. The increase was primarily the result of a $6.4 million increase in interest income, primarily reflecting an increase in the average balance of loans, as well as a $12.1 million decrease in interest expense reflecting an 18 basis-point reduction in the average cost of funding liabilities to 1.39% from 1.57%. The net interest margin on a tax equivalent basis increased to 4.12% for the six months ended June 30, 2026, compared to 3.92% for the same period in the prior year.
Previous wording
Interest Income. Interest income for the quarter ended March 31, 2026 was $197.8 million, compared to $205.0 million for the preceding quarter and $193.9 million for the same period in the prior year. The decrease for the current quarter, compared to the preceding quarter, was primarily attributable to two fewer calendar days in the current quarter and a decrease in average loan yields and balances.
Current wording
Interest Income. Interest income for the quarter ended June 30, 2026 was $202.7 million, compared to $197.8 million for the preceding quarter. The increase for the current quarter, compared to the preceding quarter reflects growth in average loan balances and a slight increase in average loan yields.
Previous wording
The total average loan yield decreased three basis points to 6.07% for the quarter ended March 31, 2026, from 6.10% in the preceding quarter and was consistent compared to 6.07% in the same period in the prior year. The decrease in average loan balances for the current quarter, compared to the preceding quarter, primarily reflected a decrease in commercial and agricultural business loans.
Current wording
The total average loan yield increased two basis points to 6.09% for the quarter ended June 30, 2026, from 6.07% in the preceding quarter. The increase in average loan balances for the current quarter, compared to the preceding quarter, primarily reflected growth in real estate secured loans and commercial and agricultural business loans.
Previous wording
The total investment securities average balance decreased for the quarter ended March 31, 2026 (excluding the effect of fair value adjustments), compared to the preceding quarter and the same period in the prior year, reflecting paydowns and maturities that were not fully replaced by new purchases during the period. The average yield on the combined portfolio decreased to 3.01% for the quarter ended March 31, 2026, from 3.03% for the preceding quarter and 3.02% for the same period in the prior year. Interest income on interest-bearing deposits with banks decreased for the current quarter, compared to the preceding quarter, reflecting decreases in both the average balance and yield of interest-bearing deposits, and increased compared to the same period a year ago, reflecting increases in both the average balance and yield of interest-bearing deposits. The average yield on interest-bearing deposits with banks decreased to 3.34%, compared to 3.77% in the prior quarter, and increased compared to 2.99% in the same period in the prior year.
Current wording
The total investment securities average balance decreased for the quarter ended June 30, 2026, compared to the preceding quarter, reflecting paydowns and maturities that were not fully replaced by new purchases during the period. The average yield on the combined portfolio increased to 3.03% for the quarter ended June 30, 2026, from 3.01% for the preceding quarter. Interest income on interest-bearing deposits with banks decreased for the current quarter, compared to the preceding quarter, reflecting decreases in both the average balance and yield of interest-bearing deposits. The average yield on interest-bearing deposits with banks decreased to 3.16%, compared to 3.34% in the prior quarter.
Previous wording
Interest Expense. Interest expense decreased for the quarter ended March 31, 2026 as compared to the preceding quarter. Average funding liabilities decreased by $202.5 million, primarily due to a $201.8 million decrease in average deposit balances. The average cost of funding liabilities decreased nine basis points, to 1.38% for the quarter ended March 31, 2026. Interest expense for the three months ended March 31, 2026 was $47.6 million, compared to $52.8 million for the same period in the prior year. The decrease resulted from a 17 basis-point decrease in the average cost of funds to 1.38% from 1.55%.
Current wording
Interest Expense. Interest expense increased for the quarter ended June 30, 2026, compared to the preceding quarter. Average funding liabilities increased by $122.0 million, primarily due to a $141.1 million increase in the average balance of FHLB advances, partially offset by a $23.6 million decrease in average deposit balances. The average cost of funding liabilities increased one basis point, to 1.39% for the quarter ended June 30, 2026. Interest expense for the six months ended June 30, 2026 was $96.6 million, compared to $108.6 million for the same period in the prior year. The decrease primarily resulted from an 18 basis-point decrease in the average cost of funds to 1.39% from 1.57%.
Previous wording
Deposit interest expense for the quarter ended March 31, 2026 decreased 10% to $45.7 million, compared to $50.5 million for the preceding quarter and $48.7 million for the same period in the prior year. The decrease compared to the prior quarter was primarily due to decreases in both the average balance and the average rate paid on interest-bearing deposits. The decrease compared to the prior year period was primarily due to a decrease in the average rate paid on interest-bearing deposits, partially offset by an increase in the average balance of interest-bearing deposits. The average rate paid on total deposits, including non-interest-bearing deposits, was 1.35% for the quarter ended March 31, 2026, compared to 1.43% for the preceding quarter and 1.47% for the same period a year earlier. The average rate paid on interest-bearing deposits decreased to 1.99% for the quarter ended March 31, 2026, compared to 2.14% in the preceding quarter and 2.22% in the same period a year earlier. The decrease in the average rate paid on interest-bearing deposits, compared to both the preceding quarter and the same period a year ago, is attributable to lower rates paid across all categories of interest-bearing deposits. The decrease in the average rate paid on interest-bearing deposits compared to the preceding quarter was also impacted by shifts in the deposit mix, primarily reflecting continued migration from higher-rate certificates of deposit into savings and checking accounts. Total average deposit balances, including non-interest-bearing deposits, decreased to $13.76 billion for the quarter ended March 31, 2026, compared to $13.97 billion for the preceding quarter and increased compared to $13.45 billion for the same period a year earlier.
Current wording
Deposit interest expense for the quarter ended June 30, 2026 decreased slightly to $45.6 million, compared to $45.7 million for the preceding quarter. The average rate paid on total deposits, including non-interest-bearing deposits, was 1.33% for the quarter ended June 30, 2026, compared to 1.35% for the preceding quarter. The average rate paid on interest-bearing deposits decreased to 1.98% for the quarter ended June 30, 2026, compared to 1.99% in the preceding quarter. The decrease in the average rate paid on interest-bearing deposits, compared to the preceding quarter is attributable to lower rates paid on certificates of deposit and money market accounts. The decrease in the average rate paid on interest-bearing deposits compared to the preceding quarter was also impacted by shifts in the deposit mix, primarily reflecting continued migration from higher-rate certificates of deposit into lower-cost deposit accounts. Total average deposit balances, including non-interest-bearing deposits, decreased to $13.74 billion for the quarter ended June 30, 2026, compared to $13.76 billion for the preceding quarter.
Previous wording
Interest expense on total borrowings was $2.0 million for both the quarter ended March 31, 2026 and the preceding quarter and was $4.0 million for the same period a year earlier, due to decreases in both the average balance and rate paid on total borrowings, primarily reflecting the repayment of $150.0 million in FHLB advances and the maturity of higher-rate subordinated debt during 2025. The average rate paid on total borrowings for the quarter ended March 31, 2026, decreased to 3.90%, from 3.93% for the preceding quarter, and decreased from 4.32% for the same period a year earlier.
Current wording
Interest expense on total borrowings for the quarter ended June 30, 2026 increased to $3.4 million from $2.0 million for the preceding quarter, due to an increase in the average balance on total borrowings, primarily reflecting a $141.1 million increase in the average balance of FHLB advances. Average total borrowings were $350.5 million for the quarter ended June 30, 2026, compared to $204.8 million for the preceding quarter. The average rate paid on total borrowings for the quarter ended June 30, 2026, decreased to 3.88%, from 3.90% for the preceding quarter.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
(1)Average balances include loans accounted for on a nonaccrual basis and accruing loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
Current report — wording carried from elsewhere
(2)Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
Current report — wording carried from elsewhere
(3)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $4.5 million and $4.6 million for the six months ended June 30, 2026 and 2025, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.2 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•Repurchased 250,000 shares of Banner common stock during the first quarter of 2026 at an average price of $64.56 per share.