banr-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ to ______________

Commission File Number 000-26584

BANNER CORPORATION

(Exact name of registrant as specified in its charter)


Washington			91-1691604
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

10 South First Avenue, Walla Walla, Washington 99362

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (509) 527-3636

Securities registered pursuant to Section 12(b) of the Act


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	BANR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

☐

☒

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of class:

As of April 30, 2025

Common Stock, $.01 par value per share

34,580,030 shares

BANNER CORPORATION AND SUBSIDIARIES

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PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements (unaudited). The Unaudited Condensed Consolidated Financial Statements of Banner Corporation and Subsidiaries filed as a part of the report are as follows:

Consolidated Statements of Financial Condition			5

Consolidated Statements of Operations			6

Consolidated Statements of Comprehensive Income			7

Consolidated Statements of Changes in Shareholders’ Equity			8

Consolidated Statements of Cash Flows			9

Selected Notes to the Consolidated Financial Statements			11

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview			45

Comparison of Financial Condition			48

Comparison of Results of Operations			51

Asset Quality			57

Liquidity and Capital Resources			58

Capital Requirements			60

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Market Risk and Asset/Liability Management			60

Sensitivity Analysis			61

Item 4 – Controls and Procedures			64

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings			65

Item 1A – Risk Factors			65

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			66

Item 3 – Defaults upon Senior Securities			66

Item 4 – Mine Safety Disclosures			66

Item 5 – Other Information			66

Item 6 – Exhibits			67

SIGNATURES			69

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All references to “Banner” refer to Banner Corporation and those to the “Bank” refer to its wholly-owned subsidiary, Banner Bank. As used throughout this report, the terms “we,” “our,” “us,” or the “Company” refer to Banner Corporation and its consolidated subsidiaries, unless the context otherwise requires.

Special Note Regarding Forward-Looking Statements

Certain matters in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items, including statements about our financial condition, liquidity and results of operations. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to:

•Adverse economic conditions in our market areas or other areas where we have lending relationships, due to factors such as employment levels, labor shortages, inflation, a recession, or slowed economic growth.

•Changes in the interest rate environment, including past increases or decreases in the Board of Governors of the Federal Reserve System’s (Federal Reserve) benchmark rate, which could adversely affect our revenues, expenses, asset values, debt obligations, and liquidity.

•Impact of inflation and the Federal Reserve’s monetary policies.

•Effects of any federal government shutdown.

•Credit risks from lending activities, including changes in loan delinquencies, write-offs, and the allowance for credit loss, and our ability to manage loan delinquency rates.

•Competitive pressures in the financial services industry, including repricing and competitors’ pricing initiatives on loan and deposit products.

•Changes in consumer spending and borrowing habits.

•Interest rate movements and the relative differences between short and long-term interest rates, loan and deposit rates, net interest margin, and funding sources.

•Impact of bank failures or adverse developments at other banks and related negative press on investor, depositor and borrower sentiment.

•Fluctuations in demand for loans, unsold homes, land, and real estate values.

•Expectations regarding key growth initiatives and strategic priorities.

•Ability to adapt to technological changes both internally and to meet client needs.

•Ability to access cost-effective funding and to control operating costs and expenses.

•Use of estimates in determining fair value of certain assets and liabilities, which may prove incorrect and significantly change valuations.

•Staffing fluctuations in response to product demand or corporate strategies, and potential associated charges.

•Disruptions, security breaches, or other adverse events, failures, or attacks on information technology systems or critical third-party vendors.

•Secondary market conditions for loans and ability to sell loans in the secondary market.

•Costs, effects, and outcomes of litigation.

•Legislative or regulatory changes, including changes in policies, principles, or interpretations of regulatory capital or other rules.

•Results of safety and soundness and compliance examinations by regulatory authorities, which may require restitution, increased reserves for credit losses, write-downs of assets, or changes in regulatory capital position, affecting liquidity and earnings.

•Availability of resources to address changes in laws, rules, or regulations, or to respond to regulatory actions.

•Quality and composition of our securities portfolio and impact of adverse changes in the securities markets.

•The potential for new or increased tariffs, trade restrictions, or geopolitical tensions that could affect economic activity or specific industry sectors.

•Inability of key third-party providers to perform their obligations.

•Changes in accounting principles, policies, or guidelines, including additional guidance on and interpretation of accounting issues.

•Environmental, social, and governance goals and targets.

•Effects of climate change, severe weather, natural disasters, pandemics, public health crises, acts of war or terrorism, civil unrest and other external events on our business.

•Other economic, competitive, governmental, regulatory, and technological factors affecting operations, pricing, products, and services.

•Future acquisitions of other depository institutions or lines of business, and associated risks of goodwill impairment due to changes in our business or market conditions.

•Other risks detailed in our Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”), or in our reports filed with or furnished to the U.S. Securities and Exchange Commission (SEC), including this Form 10-Q.

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Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We do not undertake and specifically disclaim any obligation to update any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements.

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PART I. FINANCIAL INFORMATION

ITEM 1 - Financial Statements (unaudited)

BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

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

March 31, 2025 and December 31, 2024


ASSETS	March 31, 2025		December 31, 2024
Cash and due from banks	$	213,574	$	203,402
Interest-bearing deposits	228,371		298,456
Total cash and cash equivalents	441,945		501,858

Securities—available-for-sale, amortized cost $2,426,395 and $2,460,262, respectively	2,108,945		2,104,511
Securities—held-to-maturity, net of allowance for credit losses of $292 and $297, respectively	991,796		1,001,564
Total securities	3,100,741		3,106,075

Federal Home Loan Bank (FHLB) stock	17,286		22,451

Loans held for sale (includes $20,403 and $26,185, at fair value, respectively)	24,536		32,021
Loans receivable	11,438,796		11,354,656
Allowance for credit losses – loans	(157,323)		(155,521)
Net loans receivable	11,281,473		11,199,135
Accrued interest receivable	63,987		60,885
Property and equipment, net	119,649		124,589
Goodwill	373,121		373,121
Other intangibles, net	2,602		3,058
Bank-owned life insurance (BOLI)	313,942		312,549
Deferred tax assets, net	139,361		148,858
Operating lease right-of-use assets	37,134		39,998
Other assets	255,035		275,439
Total assets	$	16,170,812	$	16,200,037
LIABILITIES
Deposits:
Non-interest-bearing	$	4,571,598	$	4,591,543
Interest-bearing transaction and savings accounts	7,517,617		7,423,183
Interest-bearing certificates	1,504,050		1,499,672
Total deposits	13,593,265		13,514,398
Advances from FHLB	168,000		290,000
Other borrowings	130,588		125,257
Subordinated notes, net	80,389		80,278
Junior subordinated debentures at fair value (issued in connection with Trust Preferred Securities)	67,711		67,477
Operating lease liabilities	40,466		43,472
Accrued expenses and other liabilities	210,771		258,070
Deferred compensation	46,169		46,759
Total liabilities	14,337,359		14,425,711
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS’ EQUITY
Preferred stock - $0.01 par value per share, 500,000 shares authorized; no shares outstanding at March 31, 2025 and December 31, 2024	—		—
Common stock and paid in capital - $0.01 par value per share, 50,000,000 shares authorized; 34,489,972 shares issued and outstanding at March 31, 2025; 34,459,832 shares issued and outstanding at December 31, 2024	1,308,967		1,307,509
Common stock (non-voting) and paid in capital - $0.01 par value per share, 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2025; no shares issued and outstanding at December 31, 2024	—		—
Retained earnings	772,412		744,091
Carrying value of shares held in trust for stock-based compensation plans	(6,216)		(6,194)
Liability for common stock issued to stock related compensation plans	6,216		6,194
Accumulated other comprehensive loss	(247,926)		(277,274)

Total shareholders’ equity	1,833,453		1,774,326
Total liabilities and shareholders’ equity	$	16,170,812	$	16,200,037

See Selected Notes to the Consolidated Financial Statements

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BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

For the Three Months Ended March 31, 2025 and 2024


	Three Months Ended March 31,
	2025		2024
INTEREST INCOME:
Loans receivable	$	168,677	$	156,475
Mortgage-backed securities	15,744		16,934
Securities and cash equivalents	9,447		11,279
Total interest income	193,868		184,688
INTEREST EXPENSE:
Deposits	48,737		44,613
FHLB advances	860		2,972
Other borrowings	694		1,175
Subordinated debt	2,494		2,969
Total interest expense	52,785		51,729
Net interest income	141,083		132,959
PROVISION FOR CREDIT LOSSES	3,139		520
Net interest income after provision for credit losses	137,944		132,439
NON-INTEREST INCOME:
Deposit fees and other service charges	10,769		11,022
Mortgage banking operations	3,103		2,335
BOLI	2,575		2,237
Miscellaneous	2,346		1,892
	18,793		17,486
Net loss on sale of securities	—		(4,903)

Net change in valuation of financial instruments carried at fair value	315		(992)


Total non-interest income	19,108		11,591
NON-INTEREST EXPENSE:
Salary and employee benefits	64,857		62,369
Less capitalized loan origination costs	(3,330)		(3,676)
Occupancy and equipment	12,097		12,462
Information and computer data services	7,628		7,320
Payment and card processing services	5,750		5,710
Professional and legal expenses	2,430		1,530
Advertising and marketing	590		1,079
Deposit insurance	2,797		2,809
State and municipal business and use taxes	1,454		1,304
Real estate operations, net	(61)		(220)
Amortization of core deposit intangibles	456		723

Miscellaneous	6,591		6,231



Total non-interest expense	101,259		97,641
Income before provision for income taxes	55,793		46,389
PROVISION FOR INCOME TAXES	10,658		8,830
NET INCOME	$	45,135	$	37,559





Earnings per common share:
Basic	$	1.31	$	1.09
Diluted	$	1.30	$	1.09
Cumulative dividends declared per common share	$	0.48	$	0.48
Weighted average number of common shares outstanding:
Basic	34,509,815		34,391,564
Diluted	34,778,687		34,521,105

See Selected Notes to the Consolidated Financial Statements

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BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited) (In thousands)

For the Three Months Ended March 31, 2025 and 2024


	Three Months Ended March 31,
	2025		2024
NET INCOME	$	45,135	$	37,559
OTHER COMPREHENSIVE INCOME (LOSS), NET OF INCOME TAXES:
Unrealized holding gain (loss) on securities—available-for-sale arising during the period	38,301		(21,753)
Income tax (expense) benefit related to securities—available-for-sale unrealized holding losses	(9,192)		5,221
Reclassification for net loss on securities—available-for-sale realized in earnings	—		4,903
Income tax benefit related to securities—available-for-sale realized in earnings	—		(1,177)




Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity	549		527
Income tax expense related to amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity	(132)		(126)
Net unrealized gain on interest rate swaps used in cash flow hedges	—		2,880
Income tax expense related to interest rate swaps used in cash flow hedges	—		(691)
Changes in fair value of junior subordinated debentures related to instrument specific credit risk	(234)		(173)
Income tax benefit related to junior subordinated debentures	56		42


Other comprehensive income (loss)	29,348		(10,347)
COMPREHENSIVE INCOME	$	74,483	$	27,212

See Selected Notes to the Consolidated Financial Statements

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BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

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

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


	Common Stock and Paid in Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Shareholders’ Equity
	Shares	Amount
Balance, January 1, 2024	34,348,369	$	1,299,651	$	642,175	$	(289,135)	$	1,652,691

Net income				37,559				37,559
Other comprehensive loss, net of income tax						(10,347)		(10,347)
Accrual of dividends on common stock ($0.48/share)				(16,713)				(16,713)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	46,852	1,318						1,318

Balance, March 31, 2024	34,395,221	1,300,969		663,021		(299,482)		1,664,508
Net income				39,795				39,795
Other comprehensive income, net of income tax						1,933		1,933
Accrual of dividends on common stock ($0.48/share)				(16,737)				(16,737)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	60,531	1,267						1,267

Balance, June 30, 2024	34,455,752	1,302,236		686,079		(297,549)		1,690,766
Net income				45,153				45,153
Other comprehensive income, net of income tax						72,006		72,006
Accrual of dividends on common stock ($0.48/share)				(16,760)				(16,760)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	936	2,556						2,556

Balance, September 30, 2024	34,456,688	1,304,792		714,472		(225,543)		1,793,721
Net income				46,391				46,391
Other comprehensive loss, net of income tax						(51,731)		(51,731)
Accrual of dividends on common stock ($0.48/share)				(16,772)				(16,772)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	3,144	2,717						2,717


Balance, December 31, 2024	34,459,832	1,307,509		744,091		(277,274)		1,774,326
Net income				45,135				45,135
Other comprehensive income, net of income tax						29,348		29,348
Accrual of dividends on common stock ($0.48/share)				(16,814)				(16,814)
Amortization of stock-based compensation related to restricted stock grants, net of shares surrendered	30,140	1,458						1,458


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

See Selected Notes to the Consolidated Financial Statements

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BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (In thousands)

For the Three Months Ended March 31, 2025 and 2024


	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES:
Net income	$	45,135	$	37,559
Adjustments to reconcile net income to net cash provided from operating activities:
Depreciation	4,304		4,569
Deferred income and expense, net of amortization	(2,377)		(1,594)
Capitalized loan servicing rights, net of amortization	68		391
Amortization of core deposit intangibles	456		723
Loss on sale of securities, net	—		4,903
Net change in valuation of financial instruments carried at fair value	(315)		992





Decrease in deferred taxes	229		61
Increase in current taxes payable/receivable, net	6,955		6,273
Stock-based compensation	2,230		2,225
Net change in cash surrender value of BOLI	(2,268)		(2,234)
Gain on sale of loans, excluding capitalized servicing rights	(1,452)		(1,013)
Gain on disposal of real estate held for sale and property and equipment, net	(140)		(261)
Provision for credit losses	3,139		520


Origination of loans held for sale	(75,240)		(48,424)
Proceeds from sales of loans held for sale	109,737		66,932
Net change in:
Other assets	8,819		1,771
Other liabilities	(42,042)		(21,927)
Net cash provided from operating activities	57,238		51,466
INVESTING ACTIVITIES:
Purchases of securities—available-for-sale	(9,844)		(10,477)
Principal repayments and maturities of securities—available-for-sale	43,137		42,740
Proceeds from sales of securities—available-for-sale	—		70,777

Principal repayments and maturities of securities—held-to-maturity	9,779		20,724


Loan originations, net of repayments	(110,973)		(72,019)
Purchases of loans and participating interest in loans	(10,780)		(4,666)
Proceeds from sales of other loans	10,947		4,522


Purchases of property and equipment	(1,661)		(2,227)
Proceeds from sale of real estate held for sale and sale of other property	1,563		581
Proceeds from FHLB stock repurchase program	62,055		47,747
Purchase of FHLB stock	(56,891)		(35,460)



Other	874		(35)
Net cash (used by) provided from investing activities	(61,794)		62,207

Continued on next page

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BANNER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited) (In thousands)

For the Three Months Ended March 31, 2025 and 2024


	Three Months Ended March 31,
	2025		2024
FINANCING ACTIVITIES:
Increase in deposits, net	$	78,867	$	129,274


Repayment of overnight and short term FHLB advances, net	(122,000)		(271,000)
Decrease in other borrowings, net	5,331		464



Cash dividends paid	(16,783)		(16,692)

Taxes paid related to net share settlement of equity awards	(772)		(907)
Net cash used by financing activities	(55,357)		(158,861)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(59,913)		(45,188)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	501,858		254,464
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	441,945	$	209,276


	Three Months Ended March 31,
	2025		2024
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid in cash	$	51,240	$	53,278
Tax paid	—		5
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Transfer of loans to real estate owned and other repossessed assets	1,278		242
Dividends accrued but not paid until after period end	1,365		1,106
Loans, held-for-sale, transferred from portfolio	(25,560)		(15,682)

See Selected Notes to the Consolidated Financial Statements

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BANNER CORPORATION AND SUBSIDIARIES

SELECTED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1: BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements include the accounts of Banner Corporation (the Company or Banner), a bank holding company incorporated in the State of Washington and its wholly-owned subsidiary, Banner Bank (the Bank).

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission (SEC). In preparing these financial statements, the Company has evaluated events and transactions subsequent to March 31, 2025, for potential recognition or disclosure. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC and the accounting standards for interim financial statements. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company’s accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments.

The information included in this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Interim results are not necessarily indicative of results for a full year or any other interim period.

Note 2: ACCOUNTING STANDARDS RECENTLY ISSUED OR ADOPTED

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

In November 2024, the Financial Accounting Standards Board (FASB) issued guidance within Accounting Standards Update (ASU) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in the ASU require public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Specifically, they will be required to:

•Disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities (or other amounts of depletion expense) included in each relevant expense caption.

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

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

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

This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied prospectively. The Company is evaluating this ASU, but does not expect the adoption of this ASU to have a material impact on the Company’s consolidated financial statements.

Compensation—Stock Compensation (Topic 718)

In March 2024, the FASB issued guidance within ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. The amendments in the ASU apply to companies that provide employees and non-employees with profits interest and similar awards to align compensation with the company’s operating performance and provide those holders with the opportunity to participate in future profits and/or equity appreciation of the company. The purpose of the ASU is to clarify the application of the scope guidance in Accounting Standards Codification (ASC) paragraph 718-10-15-3 in determining if a profit interest award should be accounted for in accordance with Topic 718: Compensation—Stock Compensation. The amendment in ASC paragraph 718-10-15-3 is solely intended to improve the overall clarity and does not change the guidance. This ASU would have been effective as of January 1, 2025 for the Company, however, as the Company does not currently provide these types of awards, the ASU is not applicable to the Company’s consolidated financial statements.

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Note 3: SECURITIES

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


	March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	7,965	$	—	$	(409)	$	7,556
Municipal bonds	157,399		255		(31,138)		126,516
Corporate bonds	131,408		97		(5,431)		126,074
Mortgage-backed or related securities	1,966,137		1,440		(282,391)		1,685,186
Asset-backed securities	163,486		176		(49)		163,613

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


	March 31, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	301	$	1	$	(3)	$	299	$	—
Municipal bonds	437,344		1		(70,729)		366,474		(142)
Corporate bonds	2,629		—		(5)		2,474		(150)
Mortgage-backed or related securities	551,814		—		(101,800)		450,014		—
	$	992,088	$	2	$	(172,537)	$	819,261	$	(292)


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-Sale:
U.S. Government and agency obligations	$	8,492	$	—	$	(559)	$	7,933
Municipal bonds	153,982		453		(30,453)		123,982
Corporate bonds	131,379		100		(6,489)		124,990
Mortgage-backed or related securities	1,995,805		383		(319,340)		1,676,848
Asset-backed securities	170,604		155		(1)		170,758

	$	2,460,262	$	1,091	$	(356,842)	$	2,104,511


	December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses
Held-to-Maturity:
U.S. Government and agency obligations	$	302	$	—	$	(4)	$	298	$	—
Municipal bonds	438,196		36		(62,809)		375,280		(143)
Corporate bonds	2,658		—		(6)		2,498		(154)
Mortgage-backed or related securities	560,705		—		(113,253)		447,452		—
	$	1,001,861	$	36	$	(176,072)	$	825,528	$	(297)

Accrued interest receivable on held-to-maturity debt securities was $3.7 million and $4.2 million at March 31, 2025 and December 31, 2024, and was $9.2 million and $9.0 million on available-for-sale debt securities at March 31, 2025 and December 31, 2024, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Statements of Financial Condition and is excluded from the calculation of the allowance for credit losses.

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


	March 31, 2025
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	—	$	—	$	7,556	$	(409)	$	7,556	$	(409)
Municipal bonds	25,747		(590)		90,702		(30,548)		116,449		(31,138)
Corporate bonds	—		—		100,318		(5,431)		100,318		(5,431)
Mortgage-backed or related securities	1,834		(1)		1,555,146		(282,390)		1,556,980		(282,391)
Asset-backed securities	19,451		(49)		—		—		19,451		(49)

	$	47,032	$	(640)	$	1,753,722	$	(318,778)	$	1,800,754	$	(319,418)


	December 31, 2024
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale:
U.S. Government and agency obligations	$	—	$	—	$	7,933	$	(559)	$	7,933	$	(559)
Municipal bonds	15,497		(287)		91,156		(30,166)		106,653		(30,453)
Corporate bonds	2,541		(59)		96,763		(6,430)		99,304		(6,489)
Mortgage-backed or related securities	44,749		(524)		1,552,613		(318,816)		1,597,362		(319,340)
Asset-backed securities	20,000		(1)		—		—		20,000		(1)

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

At March 31, 2025, there were 199 securities—available-for-sale with unrealized losses, compared to 201 at December 31, 2024. Management does not believe that any remaining individual unrealized loss as of March 31, 2025 or December 31, 2024 resulted from credit loss. The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase. There were no securities—available-for-sale in a nonaccrual status at March 31, 2025 or December 31, 2024.

There were no securities—available-for-sale sold during the three months ended March 31, 2025. The following table presents, for the three months ended March 31, 2024, the gross gains and losses on sales and partial calls of securities available-for-sale (in thousands):


	Three Months Ended March 31, 2024

Available-for-Sale:
Gross Gains	$	36
Gross Losses	(4,939)
Balance, end of the period	$	(4,903)

The following table presents the amortized cost and estimated fair value of securities at March 31, 2025, by contractual maturity and does not reflect any required periodic payments (in thousands). Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.


		March 31, 2025
	Available-for-Sale			Held-to-Maturity
		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturing within one year		$	31,383	$	31,084	$	3,647	$	3,496
Maturing after one year through five years		126,763		121,054		19,240		18,864
Maturing after five years through ten years		420,099		390,844		31,580		29,101
Maturing after ten years		1,848,150		1,565,963		937,621		767,800



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

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


	March 31, 2025
	Carrying Value		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	280,879	$	295,488	$	246,021

Interest rate swap counterparties	956		956		796
Repurchase transaction accounts	212,989		212,989		172,216
Other	2,462		2,462		2,157
Total pledged securities	$	497,286	$	511,895	$	421,190

The Company monitors the credit quality of held-to-maturity debt securities through the use of credit ratings which are reviewed and updated quarterly. The Company’s non-rated held-to-maturity debt securities are primarily United States government sponsored enterprise debentures carrying minimal to no credit risk. The non-rated corporate bonds primarily consist of Community Reinvestment Act related bonds secured by loan instruments from low to moderate income borrowers. The remaining non-rated held-to-maturity debt securities balance is comprised of local municipal debt from within the Company’s geographic footprint and is monitored through quarterly or annual financial review. This municipal debt is predominately essential service or unlimited general obligation backed debt. The following tables summarize the amortized cost of held-to-maturity debt securities by credit rating at March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	429,493	$	500	$	16,156	$	446,149

Not Rated	301		7,851		2,129		535,658		545,939


	$	301	$	437,344	$	2,629	$	551,814	$	992,088


	December 31, 2024
	U.S. Government and agency obligations		Municipal bonds		Corporate bonds		Mortgage-backed or related securities		Total
AAA/AA/A	$	—	$	430,158	$	500	$	16,218	$	446,876

Not Rated	302		8,038		2,158		544,487		554,985
	$	302	$	438,196	$	2,658	$	560,705	$	1,001,861

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Note 4: LOANS RECEIVABLE AND THE ALLOWANCE FOR CREDIT LOSSES - LOANS

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


	March 31, 2025				December 31, 2024
	Amount		Percent of Total		Amount		Percent of Total
Commercial real estate:
Owner-occupied	$	1,020,829	9	%	$	1,027,426	9	%
Investment properties	1,598,387		14		1,623,672		14
Small balance CRE	1,217,458		10		1,213,792		11
Multifamily real estate	877,716		8		894,425		8
Construction, land and land development:
Commercial construction	146,467		1		122,362		1
Multifamily construction	618,942		6		513,706		5
One- to four-family construction	504,265		5		514,220		5
Land and land development	396,009		3		369,663		3
Commercial business:
Commercial business	1,283,754		11		1,318,333		11
Small business scored	1,122,550		10		1,104,117		10
Agricultural business, including secured by farmland	334,899		3		340,280		3
One- to four-family residential	1,600,283		14		1,591,260		14
Consumer:
Consumer—home equity revolving lines of credit	620,483		5		625,680		5
Consumer—other	96,754		1		95,720		1
Total loans	11,438,796		100	%	11,354,656		100	%
Less allowance for credit losses – loans	(157,323)				(155,521)
Net loans	$	11,281,473			$	11,199,135

Loan amounts are net of unearned loan fees in excess of unamortized costs of $15.4 million as of March 31, 2025, and $15.5 million as of December 31, 2024. Net loans include net discounts on acquired loans of $3.2 million and $3.5 million as of March 31, 2025 and December 31, 2024, respectively. Net loans does not include accrued interest receivable. Accrued interest receivable on loans was $51.0 million as of March 31, 2025, and $47.7 million as of December 31, 2024 and was reported in accrued interest receivable on the Consolidated Statements of Financial Condition.

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

Troubled Loan Modifications. Occasionally, the Company offers modifications of loans to borrowers experiencing financial difficulty by providing principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or any combination of these. The following table presents the amortized cost basis and financial effect of loans at March 31, 2025, that were both experiencing financial difficulty and modified during the three months ended March 31, 2025 (in thousands). There were no loans modified related to borrowers experiencing financial difficulty during the three months ended March 31, 2024.


	March 31, 2025
		Term Extension		Total








One- to four-family construction		$	1,810	$	1,810
Land and land development		3,280		3,280








Total		$	5,090	$	5,090

The Company had no commitments to lend additional amounts to the borrowers included in the previous table as of March 31, 2025. The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

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



	March 31, 2025
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total











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






Total	$	—	$	—	$	—	$	1,183	$	1,183



	March 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Total











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

Agricultural business, including secured by farmland	—		—		—		1,584		1,584
One- to four-family residential	—		—		—		1,060		1,060



Total	$	—	$	—	$	—	$	2,765	$	2,765

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

Three Months Ended March 31, 2025

Weighted-Average Term Extension
(in months)

One- to four-family construction

Land and land development

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Credit Quality Indicators: To appropriately and effectively manage the ongoing credit quality of the Company’s loan portfolio, management has implemented a risk-rating or loan grading system for its loans. The system is a tool to evaluate portfolio asset quality throughout each applicable loan’s life as an asset of the Company. Generally, loans are risk rated on an aggregate borrower/relationship basis with individual loans sharing similar ratings. There are some instances when specific situations relating to individual loans will provide the basis for different risk ratings within the aggregate relationship. Loans are graded on a scale of 1 to 9. A description of the general characteristics of these categories is shown below.

Overall Risk Rating Definitions: Risk-ratings contain both qualitative and quantitative measurements and take into account the financial strength of a borrower and the structure of the loan. Consequently, the definitions are to be applied in the context of each lending transaction and judgment must also be used to determine the appropriate risk rating, as it is not unusual for a loan to exhibit characteristics of more than one risk-rating category. Consideration for the final rating is centered in the borrower’s ability to repay, in a timely fashion, both principal and interest. The Company’s risk-rating and loan grading policies are reviewed and approved annually. There were no material changes in the risk-rating or loan grading system for the periods presented.

Risk Ratings 1-5: Pass

Credits with risk ratings of 1 to 5 meet the definition of a pass risk rating. The strength of credits vary within the pass risk ratings, ranging from a risk rated 1 being an exceptional credit to a risk rated 5 being an acceptable credit that requires a more than normal level of supervision.

Risk Rating 6: Special Mention

A credit with potential weaknesses that deserves management’s close attention is risk rated a 6. If left uncorrected, these potential weaknesses will result in deterioration in the capacity to repay debt. A key distinction between Special Mention and Substandard is that in a Special Mention credit, there are identified weaknesses that pose potential risk(s) to the repayment sources, versus well defined weaknesses that pose risk(s) to the repayment sources. Assets in this category are expected to be in this category no more than 9-12 months as the potential weaknesses in the credit are resolved.

Risk Rating 7: Substandard

A credit with well-defined weaknesses that jeopardize the ability to repay in full is risk rated a 7. These credits are inadequately protected by either the sound net worth and payment capacity of the borrower or the value of pledged collateral. These are credits with a distinct possibility of loss. Loans headed for foreclosure and/or legal action due to deterioration are rated 7 or worse.

Risk Rating 8: Doubtful

A credit with an extremely high probability of loss is risk rated 8. These credits have all the same critical weaknesses that are found in a substandard loan; however, the weaknesses are elevated to the point that based upon current information, collection or liquidation in full is improbable. While some loss on doubtful credits is expected, pending events may make the amount and timing of any loss indeterminable. In these situations, taking the loss is inappropriate until the outcome of the pending event is clear.

Risk Rating 9: Loss

A credit that is considered to be currently uncollectible or of such little value that it is no longer a viable bank asset is risk rated 9. Losses should be taken in the accounting period in which the credit is determined to be uncollectible. Taking a loss does not mean that a credit has absolutely no recovery or salvage value but, rather, it is not practical or desirable to defer writing off the credit, even though partial recovery may occur in the future.

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The following tables present the Company’s portfolio of risk-rated loans by class and by grade as of March 31, 2025 and December 31, 2024 (in thousands). In addition, the tables include the gross charge-offs for the three months ended March 31, 2025 and the year ended December 31, 2024. Revolving loans that are converted to term loans are treated as new originations in the tables below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.


	March 31, 2025
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2025		2024		2023		2022		2021		Prior

Commercial real estate - owner occupied
Risk Rating
Pass	$	13,741	$	196,384	$	169,403	$	109,756	$	151,232	$	262,732	$	56,680	$	959,928
Special Mention	—		—		—		5,821		—		2,282		1,571		9,674
Substandard	—		—		291		22,074		2,182		26,680		—		51,227
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	13,741	$	196,384	$	169,694	$	137,651	$	153,414	$	291,694	$	58,251	$	1,020,829

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

Commercial real estate - investment properties
Risk Rating
Pass	$	23,303	$	117,643	$	139,088	$	204,528	$	266,065	$	777,028	$	56,172	$	1,583,827
Special Mention	—		—		—		—		—		—		1,616		1,616
Substandard	—		—		—		5,634		—		7,310		—		12,944
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	23,303	$	117,643	$	139,088	$	210,162	$	266,065	$	784,338	$	57,788	$	1,598,387

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

Multifamily real estate
Risk Rating
Pass	$	93,247	$	78,885	$	81,626	$	181,006	$	180,026	$	256,371	$	2,057	$	873,218
Special Mention	—		—		—		—		—		2,394		—		2,394
Substandard	—		—		—		—		—		2,104		—		2,104
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	93,247	$	78,885	$	81,626	$	181,006	$	180,026	$	260,869	$	2,057	$	877,716

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

Table of Contents


	March 31, 2025
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2025		2024		2023		2022		2021		Prior

Commercial construction
Risk Rating
Pass	$	24,251	$	67,589	$	36,669	$	17,209	$	—	$	—	$	—	$	145,718
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		749		—		—		749
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	24,251	$	67,589	$	36,669	$	17,209	$	749	$	—	$	—	$	146,467

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

Multifamily construction
Risk Rating
Pass	$	75,390	$	154,933	$	238,951	$	143,560	$	—	$	—	$	942	$	613,776
Special Mention	—		5,166		—		—		—		—		—		5,166
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	75,390	$	160,099	$	238,951	$	143,560	$	—	$	—	$	942	$	618,942

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

One- to four- family construction
Risk Rating
Pass	$	159,807	$	309,703	$	30,214	$	—	$	—	$	—	$	833	$	500,557
Special Mention	—		—		—		—		—		—		—		—
Substandard	1,810		1,160		738		—		—		—		—		3,708
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	161,617	$	310,863	$	30,952	$	—	$	—	$	—	$	833	$	504,265

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

Table of Contents


	March 31, 2025
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2025		2024		2023		2022		2021		Prior

Land and land development
Risk Rating
Pass	$	73,090	$	173,261	$	62,290	$	31,082	$	21,461	$	22,204	$	6,001	$	389,389
Special Mention	—		—		—		—		—		—		—		—
Substandard	638		3,280		1,209		663		277		553		—		6,620
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	73,728	$	176,541	$	63,499	$	31,745	$	21,738	$	22,757	$	6,001	$	396,009

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

Commercial business
Risk Rating
Pass	$	25,411	$	172,684	$	123,940	$	175,530	$	82,125	$	290,255	$	354,508	$	1,224,453
Special Mention	—		231		—		72		13		—		5,775		6,091
Substandard	496		1,183		1,161		1,259		1,559		5,540		42,012		53,210
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	25,907	$	174,098	$	125,101	$	176,861	$	83,697	$	295,795	$	402,295	$	1,283,754

Current period gross charge-offs	$	—	$	1,706	$	864	$	—	$	—	$	125	$	220	$	2,915

Agricultural business, including secured by farmland
Risk Rating
Pass	$	2,604	$	21,466	$	39,663	$	21,304	$	23,112	$	68,322	$	120,140	$	296,611
Special Mention	—		—		5,963		670		—		—		292		6,925
Substandard	690		2,323		3,066		9,887		1,885		13,026		486		31,363
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business, including secured by farmland	$	3,294	$	23,789	$	48,692	$	31,861	$	24,997	$	81,348	$	120,918	$	334,899

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

Table of Contents


	December 31, 2024
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2024		2023		2022		2021		2020		Prior

Commercial real estate - owner occupied
Risk Rating
Pass	$	188,895	$	171,046	$	120,470	$	152,940	$	107,495	$	174,221	$	56,699	$	971,766
Special Mention	2,452		—		—		—		9,444		—		1,997		13,893
Substandard	—		292		22,020		2,182		—		17,273		—		41,767
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - owner occupied	$	191,347	$	171,338	$	142,490	$	155,122	$	116,939	$	191,494	$	58,696	$	1,027,426

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

Commercial real estate - investment properties
Risk Rating
Pass	$	128,132	$	144,473	$	209,107	$	270,202	$	142,808	$	659,253	$	51,925	$	1,605,900
Special Mention	—		—		—		—		—		2,649		2,027		4,676
Substandard	—		—		5,724		—		—		7,372		—		13,096
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial real estate - investment properties	$	128,132	$	144,473	$	214,831	$	270,202	$	142,808	$	669,274	$	53,952	$	1,623,672



Multifamily real estate
Risk Rating
Pass	$	124,675	$	87,955	$	206,373	$	205,964	$	94,637	$	170,235	$	2,461	$	892,300
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		2,125		—		2,125
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily real estate	$	124,675	$	87,955	$	206,373	$	205,964	$	94,637	$	172,360	$	2,461	$	894,425

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	December 31, 2024
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2024		2023		2022		2021		2020		Prior

Commercial construction
Risk Rating
Pass	$	75,095	$	34,032	$	12,481	$	—	$	—	$	—	$	—	$	121,608
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		754		—		—		—		754
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial construction	$	75,095	$	34,032	$	12,481	$	754	$	—	$	—	$	—	$	122,362



Multifamily construction
Risk Rating
Pass	$	151,244	$	226,411	$	121,706	$	—	$	—	$	—	$	14,345	$	513,706
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Multifamily construction	$	151,244	$	226,411	$	121,706	$	—	$	—	$	—	$	14,345	$	513,706



One- to four- family construction
Risk Rating
Pass	$	445,602	$	50,521	$	10,744	$	—	$	—	$	—	$	322	$	507,189
Special Mention	—		—		—		—		—		—		—		—
Substandard	6,293		738		—		—		—		—		—		7,031
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total One- to four- family construction	$	451,895	$	51,259	$	10,744	$	—	$	—	$	—	$	322	$	514,220

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

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	December 31, 2024
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2024		2023		2022		2021		2020		Prior

Land and land development
Risk Rating
Pass	$	197,490	$	85,344	$	33,283	$	22,897	$	9,575	$	13,871	$	1,106	$	363,566
Special Mention	—		—		—		—		—		—		—		—
Substandard	3,764		1,098		396		277		562		—		—		6,097
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Land and land development	$	201,254	$	86,442	$	33,679	$	23,174	$	10,137	$	13,871	$	1,106	$	369,663



Commercial business
Risk Rating
Pass	$	168,794	$	129,476	$	186,001	$	97,590	$	108,881	$	192,416	$	365,770	$	1,248,928
Special Mention	241		—		657		818		—		727		12,022		14,465
Substandard	2,889		1,714		547		947		3,214		2,274		43,355		54,940
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Commercial business	$	171,924	$	131,190	$	187,205	$	99,355	$	112,095	$	195,417	$	421,147	$	1,318,333

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

Agricultural business, including secured by farmland
Risk Rating
Pass	$	22,330	$	40,228	$	19,475	$	22,117	$	12,746	$	53,884	$	127,755	$	298,535
Special Mention	—		—		670		—		—		—		6,684		7,354
Substandard	1,962		8,980		9,999		1,183		3,367		8,850		50		34,391
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total Agricultural business, including secured by farmland	$	24,292	$	49,208	$	30,144	$	23,300	$	16,113	$	62,734	$	134,489	$	340,280

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The following tables present the Company’s portfolio of non-risk-rated loans by class and delinquency status as of March 31, 2025 and December 31, 2024 (in thousands). In addition, the tables include the gross charge-offs for the three months ended March 31, 2025 and the year ended December 31, 2024. Revolving loans that are converted to term loans are treated as new originations in the tables below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.


	March 31, 2025
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2025		2024		2023		2022		2021		Prior

Small balance CRE
Past Due Category
Current	$	25,904	$	68,317	$	85,644	$	197,490	$	208,323	$	629,876	$	—	$	1,215,554
30-59 Days Past Due	—		1,407		—		—		—		—		—		1,407
60-89 Days Past Due	—		497		—		—		—		—		—		497
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Small balance CRE	$	25,904	$	70,221	$	85,644	$	197,490	$	208,323	$	629,876	$	—	$	1,217,458

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

Small business scored
Past Due Category
Current	$	52,104	$	206,612	$	166,248	$	227,891	$	141,530	$	182,341	$	138,480	$	1,115,206
30-59 Days Past Due	—		127		422		2,118		73		366		851		3,957
60-89 Days Past Due	—		—		47		99		—		122		68		336
90 Days + Past Due	—		8		962		1,417		263		401		—		3,051
Total Small business scored	$	52,104	$	206,747	$	167,679	$	231,525	$	141,866	$	183,230	$	139,399	$	1,122,550

Current period gross charge-offs	$	—	$	7	$	60	$	192	$	121	$	6	$	—	$	386

One- to four- family residential
Past Due Category
Current	$	37,018	$	213,869	$	297,777	$	529,962	$	239,939	$	253,926	$	—	$	1,572,491
30-59 Days Past Due	—		1,746		4,938		2,996		2,099		3,297		—		15,076
60-89 Days Past Due	—		1,058		—		1,111		1,703		626		—		4,498
90 Days + Past Due	—		588		1,255		2,035		2,379		1,961		—		8,218
Total One- to four- family residential	$	37,018	$	217,261	$	303,970	$	536,104	$	246,120	$	259,810	$	—	$	1,600,283

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

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	March 31, 2025
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2025		2024		2023		2022		2021		Prior

Consumer—home equity revolving lines of credit
Past Due Category
Current	$	3,441	$	1,358	$	2,255	$	6,428	$	2,770	$	9,795	$	588,229	$	614,276
30-59 Days Past Due	—		—		—		649		226		430		1,204		2,509
60-89 Days Past Due	—		—		100		201		545		471		1		1,318
90 Days + Past Due	—		—		1,059		234		100		987		—		2,380
Total Consumer—home equity revolving lines of credit	$	3,441	$	1,358	$	3,414	$	7,512	$	3,641	$	11,683	$	589,434	$	620,483

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

Consumer-other
Past Due Category
Current	$	3,031	$	8,287	$	5,700	$	23,972	$	7,962	$	21,637	$	25,667	$	96,256
30-59 Days Past Due	—		—		9		122		—		178		120		429
60-89 Days Past Due	—		5		—		—		—		5		59		69
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Consumer-other	$	3,031	$	8,292	$	5,709	$	24,094	$	7,962	$	21,820	$	25,846	$	96,754

Current period gross charge-offs	$	—	$	13	$	36	$	65	$	38	$	27	$	185	$	364

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	December 31, 2024
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2024		2023		2022		2021		2020		Prior

Small balance CRE
Past Due Category
Current	$	66,708	$	87,829	$	198,461	$	209,983	$	166,244	$	484,567	$	—	$	1,213,792
30-59 Days Past Due	—		—		—		—		—		—		—		—
60-89 Days Past Due	—		—		—		—		—		—		—		—
90 Days + Past Due	—		—		—		—		—		—		—		—
Total Small balance CRE	$	66,708	$	87,829	$	198,461	$	209,983	$	166,244	$	484,567	$	—	$	1,213,792



Small business scored
Past Due Category
Current	$	209,692	$	172,327	$	236,769	$	146,220	$	69,795	$	123,250	$	139,836	$	1,097,889
30-59 Days Past Due	16		62		1,084		650		104		523		523		2,962
60-89 Days Past Due	—		823		75		252		—		88		30		1,268
90 Days + Past Due	—		135		1,349		343		5		166		—		1,998
Total Small business scored	$	209,708	$	173,347	$	239,277	$	147,465	$	69,904	$	124,027	$	140,389	$	1,104,117

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

One- to four- family residential
Past Due Category
Current	$	219,254	$	306,523	$	537,271	$	246,070	$	51,761	$	207,017	$	—	$	1,567,896
30-59 Days Past Due	1,743		1,731		2,733		762		469		1,818		—		9,256
60-89 Days Past Due	533		570		1,635		270		442		1,099		—		4,549
90 Days + Past Due	—		2,000		2,459		2,983		1,156		961		—		9,559
Total One- to four- family residential	$	221,530	$	310,824	$	544,098	$	250,085	$	53,828	$	210,895	$	—	$	1,591,260

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	December 31, 2024
	Term Loans by Year of Origination												Revolving Loans		Total Loans
By class:	2024		2023		2022		2021		2020		Prior

Consumer—home equity revolving lines of credit
Past Due Category
Current	$	4,551	$	975	$	6,884	$	1,964	$	2,243	$	6,582	$	595,115	$	618,314
30-59 Days Past Due	—		100		1,571		98		—		335		1,532		3,636
60-89 Days Past Due	—		—		237		561		—		384		136		1,318
90 Days + Past Due	—		766		247		190		190		1,019		—		2,412
Total Consumer—home equity revolving lines of credit	$	4,551	$	1,841	$	8,939	$	2,813	$	2,433	$	8,320	$	596,783	$	625,680

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

Consumer-other
Past Due Category
Current	$	9,329	$	6,333	$	25,334	$	8,243	$	5,390	$	17,374	$	23,185	$	95,188
30-59 Days Past Due	5		—		54		—		3		88		166		316
60-89 Days Past Due	2		15		20		39		—		1		94		171
90 Days + Past Due	—		—		45		—		—		—		—		45
Total Consumer-other	$	9,336	$	6,348	$	25,453	$	8,282	$	5,393	$	17,463	$	23,445	$	95,720

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

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The following tables provide the amortized cost basis of collateral-dependent loans as of March 31, 2025 and December 31, 2024 (in thousands). Our collateral dependent loans presented in the tables below have no significant concentrations by property type or location.


	March 31, 2025
	Real Estate		Accounts Receivable		Equipment		Inventory		Total
Commercial real estate:
Owner-occupied	$	2,182	$	—	$	—	$	—	$	2,182



Construction, land and land development:


One- to four-family construction	1,898		—		—		—		1,898
Land and land development	1,614		—		—		—		1,614
Commercial business
Commercial business	525		733		276		175		1,709
Small business scored	1,275		—		—		—		1,275
Agricultural business, including secured by farmland	6,731		—		3,447		—		10,178
One- to four-family residential	4,890		—		—		—		4,890

Consumer—home equity revolving lines of credit	956		—		—		—		956

Total	$	20,071	$	733	$	3,723	$	175	$	24,702


	December 31, 2024
	Real Estate		Accounts Receivable		Equipment		Inventory		Total
Commercial real estate:
Owner-occupied	$	2,182	$	—	$	—	$	—	$	2,182






One- to four-family construction	1,834		—		—		—		1,834
Land and land development	1,622		—		—		—		1,622
Commercial business
Commercial business	—		1,789		1,660		427		3,876
Small business scored	623		—		—		—		623
Agricultural business, including secured by farmland	5,013		—		3,447		—		8,460
One- to four-family residential	5,374		—		—		—		5,374

Consumer—home equity revolving lines of credit	977		—		—		—		977

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

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


	March 31, 2025
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	—	$	2,183	$	2,183	$	1,018,646	$	1,020,829	$	—	$	2,182	$	—
Investment properties	—		—		—		—		1,598,387		1,598,387		—		—		—
Small balance CRE	1,407		497		—		1,904		1,215,554		1,217,458		—		—		—
Multifamily real estate	—		—		—		—		877,716		877,716		—		—		—
Construction, land and land development:
Commercial construction	—		—		—		—		146,467		146,467		—		—		—
Multifamily construction	—		—		—		—		618,942		618,942		—		—		—
One- to four-family construction	1,160		—		737		1,897		502,368		504,265		1,897		1,897		—
Land and land development	1,216		271		1,675		3,162		392,847		396,009		1,033		2,462		—
Commercial business:
Commercial business	11,020		219		555		11,794		1,271,960		1,283,754		—		2,669		—
Small business scored	3,957		336		3,051		7,344		1,115,206		1,122,550		623		3,756		206
Agricultural business, including secured by farmland	—		3,466		5,680		9,146		325,753		334,899		6,255		10,301		—
One- to four-family residential	15,076		4,498		8,218		27,792		1,572,491		1,600,283		4,891		10,448		9
Consumer:
Consumer—home equity revolving lines of credit	2,509		1,318		2,380		6,207		614,276		620,483		956		4,874		155
Consumer—other	429		69		—		498		96,256		96,754		—		—		—
Total	$	36,774	$	10,674	$	24,479	$	71,927	$	11,366,869	$	11,438,796	$	15,655	$	38,589	$	370

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

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	December 31, 2024
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans		Non-accrual with no Allowance		Total Non-accrual (1)		Loans 90 Days or More Past Due and Accruing
Commercial real estate:
Owner-occupied	$	—	$	—	$	2,182	$	2,182	$	1,025,244	$	1,027,426	$	—	$	2,182	$	—
Investment properties	—		—		—		—		1,623,672		1,623,672		—		—		—
Small balance CRE	—		—		—		—		1,213,792		1,213,792		—		4		—
Multifamily real estate	—		—		—		—		894,425		894,425		—		—		—
Construction, land and land development:
Commercial construction	754		—		—		754		121,608		122,362		—		—		—
Multifamily construction	—		—		—		—		513,706		513,706		—		—		—
One- to four-family construction	—		—		738		738		513,482		514,220		1,834		1,834		—
Land and land development	1,600		796		1,568		3,964		365,699		369,663		1,622		2,129		—
Commercial business:
Commercial business	2,025		—		1,012		3,037		1,315,296		1,318,333		123		4,103		—
Small business scored	2,962		1,268		1,998		6,228		1,097,889		1,104,117		623		2,964		—
Agricultural business, including secured by farmland	190		—		7,077		7,267		333,013		340,280		4,829		8,485		—
One-to four-family residential	9,256		4,549		9,559		23,364		1,567,896		1,591,260		5,374		10,016		369
Consumer:
Consumer—home equity revolving lines of credit	3,636		1,318		2,412		7,366		618,314		625,680		977		4,790		35
Consumer—other	316		171		45		532		95,188		95,720		—		45		—
Total	$	20,739	$	8,102	$	26,591	$	55,432	$	11,299,224	$	11,354,656	$	15,382	$	36,552	$	404

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

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


	For the Three Months Ended March 31, 2025
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Total
Allowance for credit losses - loans:
Beginning balance	$	40,830	$	10,308	$	29,038	$	38,611	$	5,727	$	20,807	$	10,200	$	155,521
(Recapture)/provision for credit losses	(811)		(199)		3,004		2,798		(96)		(230)		83		4,549
Recoveries	57		—		—		557		10		188		119		931
Charge-offs	—		—		—		(3,301)		—		(13)		(364)		(3,678)
Ending balance	$	40,076	$	10,109	$	32,042	$	38,665	$	5,641	$	20,752	$	10,038	$	157,323


	For the Three Months Ended March 31, 2024
	Commercial Real Estate		Multifamily Real Estate		Construction and Land		Commercial Business		Agricultural Business		One- to Four-Family Residential		Consumer		Total
Allowance for credit losses - loans:
Beginning balance	$	44,384	$	9,326	$	28,095	$	35,464	$	3,865	$	19,271	$	9,238	$	149,643
(Recapture)/provision for credit losses	(2,218)		(33)		813		1,108		(81)		1,145		690		1,424

Recoveries	1,389		—		—		781		106		16		159		2,451
Charge-offs	—		—		—		(1,809)		—		—		(569)		(2,378)
Ending balance	$	43,555	$	9,293	$	28,908	$	35,544	$	3,890	$	20,432	$	9,518	$	151,140

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Note 5: GOODWILL, OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

Goodwill and Other Intangible Assets: At March 31, 2025, intangible assets are comprised of goodwill and core deposit intangibles (CDI) acquired in business combinations. Goodwill represents the excess of the purchase consideration paid over the fair value of the assets acquired, net of the fair values of liabilities assumed in a business combination, and is not amortized but is reviewed at least annually for impairment. The Company has identified one reporting unit for the purpose of evaluating goodwill for impairment. The Company completed an assessment of qualitative factors as of December 31, 2024 and concluded that no further analysis was required as it was more likely than not that the fair value of Banner Bank, the reporting unit, exceeded the carrying value.

CDI represents the value of transaction-related deposits and the value of the client relationships associated with the deposits. The Company amortizes CDI assets over their estimated useful lives and reviews them at least annually for events or circumstances that could impair their value.

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


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

Amortization	—		(2,626)		(2,626)


Balance, December 31, 2024	373,121		3,058		376,179

Amortization	—		(456)		(456)


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

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


	Estimated Amortization
Remainder of 2025	$	1,111
2026	904
2027	426
2028	126
2029	35

	$	2,602

Mortgage Servicing Rights: Mortgage and Small Business Administration (SBA) servicing rights are reported in other assets. SBA servicing rights are initially recorded and carried at fair value. Mortgage servicing rights are initially recognized at fair value and are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Mortgage servicing rights are subsequently evaluated for impairment based upon the fair value of the rights compared to the amortized cost (remaining unamortized initial fair value). If the fair value is less than the amortized cost, a valuation allowance is created through an impairment charge to servicing fee income. However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value. The unpaid principal balance of loans for which mortgage and SBA servicing rights have been recognized totaled $2.81 billion and $2.84 billion at March 31, 2025 and December 31, 2024, respectively. Custodial accounts maintained in connection with this servicing totaled $21.7 million and $12.2 million at March 31, 2025 and December 31, 2024, respectively.

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


	Three Months Ended March 31,
	2025		2024
Balance, beginning of the period	$	13,487	$	14,649
Additions—amounts capitalized	616		306
Additions—through purchase	2		35
Amortization (1)	(769)		(806)
Fair value adjustments (2)	85		109

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

(1) Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income within mortgage banking operations and any unamortized balance is fully amortized if the loan repays in full.

(2) Fair value adjustments relate to SBA servicing rights. These adjustments are estimated based on an independent dealer analysis by discounting estimated net future cash flows from servicing SBA loans.

Note 6: DEPOSITS

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


	March 31, 2025		December 31, 2024
Non-interest-bearing accounts	$	4,571,598	$	4,591,543
Interest-bearing checking	2,431,279		2,393,864
Regular savings accounts	3,542,005		3,478,423
Money market accounts	1,544,333		1,550,896
Total interest-bearing transaction and savings accounts	7,517,617		7,423,183
Certificates of deposit:
Certificates of deposit greater than or equal to $250,000	469,700		487,515
Certificates of deposit less than $250,000	1,034,350		1,012,157
Total certificates of deposit	1,504,050		1,499,672
Total deposits	$	13,593,265	$	13,514,398
Included in total deposits:
Public fund transaction and savings accounts	$	386,097	$	414,413
Public fund interest-bearing certificates	24,226		25,423
Total public deposits	$	410,323	$	439,836
Total brokered certificates of deposit	$	75,321	$	50,346

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


	March 31, 2025
	Amount		Weighted Average Rate
Maturing in one year or less	$	1,453,479	3.63	%
Maturing after one year through two years	32,306		1.40
Maturing after two years through three years	12,165		0.71
Maturing after three years through four years	2,752		0.73
Maturing after four years through five years	2,770		0.85
Maturing after five years	578		0.53
Total certificates of deposit	$	1,504,050	3.55	%

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Note 7: FAIR VALUE OF FINANCIAL INSTRUMENTS

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


		March 31, 2025				December 31, 2024
	Level	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Assets:
Cash and cash equivalents	1	$	441,945	$	441,945	$	501,858	$	501,858

Securities—available-for-sale	2	2,083,189		2,083,189		2,078,826		2,078,826
Securities—available-for-sale	3	25,756		25,756		25,685		25,685
Securities—held-to-maturity	2	985,506		813,010		995,237		819,230
Securities—held-to-maturity	3	6,290		6,251		6,327		6,298

Loans held for sale	2	24,536		24,714		32,021		32,215
Loans receivable, net	3	11,281,473		11,043,715		11,199,135		10,894,024
Equity securities	1	515		515		481		481
FHLB stock	3	17,286		17,286		22,451		22,451
Bank-owned life insurance	1	313,942		313,942		312,549		312,549
Mortgage servicing rights	3	12,467		36,029		12,618		37,926
SBA servicing rights	3	954		954		869		869
Investments in limited partnerships	3	15,648		15,648		13,955		13,955
Derivatives:
Interest rate swaps	2	11,776		11,776		14,507		14,507
Interest rate lock and forward sales commitments	2,3	388		388		331		331
Liabilities:
Demand, interest checking and money market accounts	2	8,547,210		8,547,210		8,536,303		8,536,303
Regular savings	2	3,542,005		3,542,005		3,478,423		3,478,423
Certificates of deposit	2	1,504,050		1,496,936		1,499,672		1,492,829
FHLB advances	2	168,000		168,000		290,000		290,000
Other borrowings	2	130,588		130,588		125,257		125,257
Subordinated notes, net	2	80,389		79,081		80,278		78,832
Junior subordinated debentures	3	67,711		67,711		67,477		67,477
Derivatives:
Interest rate swaps	2	24,393		24,393		30,184		30,184

Interest rate lock and forward sales commitments	2,3	144		144		2		2
Risk participation agreement	2	10		10		6		6

The Company measures and discloses certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (that is, not a forced liquidation or distressed sale). When measuring fair value, management will maximize the use of observable inputs and minimize the use of unobservable inputs whenever possible. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions.

The estimated fair value amounts of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize at a future date. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

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Items Measured at Fair Value on a Recurring Basis:

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


	March 31, 2025
	Level 1		Level 2		Level 3		Total
Assets:







Securities—available-for-sale
U.S. Government and agency obligations	$	—	$	7,556	$	—	$	7,556
Municipal bonds	—		126,516		—		126,516
Corporate bonds	—		100,318		25,756		126,074
Mortgage-backed or related securities	—		1,685,186		—		1,685,186
Asset-backed securities	—		163,613		—		163,613
	—		2,083,189		25,756		2,108,945

Loans held for sale(1)	—		20,403		—		20,403
Equity securities	515		—		—		515
SBA servicing rights	—		—		954		954
Investment in limited partnerships	—		—		15,025		15,025

Derivatives
Interest rate swaps	—		11,776		—		11,776
Interest rate lock and forward sales commitments	—		—		388		388
	$	515	$	2,115,368	$	42,123	$	2,158,006

Liabilities:

Junior subordinated debentures	$	—	$	—	$	67,711	$	67,711
Derivatives
Interest rate swaps	—		24,393		—		24,393

Interest rate lock and forward sales commitments	—		61		83		144
Risk participation agreement	—		10		—		10
	$	—	$	24,464	$	67,794	$	92,258

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	December 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:








Securities—available-for-sale
U.S. Government and agency obligations	$	—	$	7,933	$	—	$	7,933
Municipal bonds	—		123,982		—		123,982
Corporate bonds	—		99,305		25,685		124,990
Mortgage-backed or related securities	—		1,676,848		—		1,676,848
Asset-backed securities	—		170,758		—		170,758

	—		2,078,826		25,685		2,104,511

Loans held for sale(1)	—		26,185		—		26,185
Equity securities	481		—		—		481
SBA servicing rights	—		—		869		869
Investment in limited partnerships	—		—		13,955		13,955

Derivatives
Interest rate swaps	—		14,507		—		14,507
Interest rate lock and forward sales commitments	—		221		110		331
	$	481	$	2,119,739	$	40,619	$	2,160,839

Liabilities:

Junior subordinated debentures	$	—	$	—	$	67,477	$	67,477
Derivatives
Interest rate swaps	—		30,184		—		30,184

Interest rate lock and forward sales commitments	—		—		2		2
Risk participation agreement	—		6		—		6
	$	—	$	30,190	$	67,479	$	97,669

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

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

Securities: The estimated fair values of investment securities and mortgage-backed securities are priced using current active market quotes, if available, which are considered Level 1 measurements. For most of the portfolio, matrix pricing based on the securities’ relationship to other benchmark quoted prices is used to establish the fair value. These measurements are considered Level 2. Due to the continued limited activity in the trust preferred markets that have limited the observability of market spreads for some of the Company’s trust preferred securities (TPS), management has classified these securities, included in Corporate Bonds, as a Level 3 fair value measure. Management periodically reviews the pricing information received from third-party pricing services and tests those prices against other sources to validate the reported fair values.

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

Equity Securities: Equity securities are invested in a publicly traded stock. The fair value of these securities is based on daily quoted market prices.

SBA Servicing Rights: Fair values are estimated based on an independent dealer analysis by discounting estimated net future cash flows from servicing. The evaluation utilizes assumptions market participants would use in determining fair value including prepayment speeds, delinquency and foreclosure rates, the discount rate, servicing costs, and the timing of cash flows. The SBA servicing portfolio is stratified by loan type and fair value estimates are adjusted up or down based on the serviced loan interest rates versus current rates on new loan originations since the most recent independent analysis.

Junior Subordinated Debentures: The fair value of junior subordinated debentures is estimated using an income approach technique. The significant inputs included in the estimation of fair value are the credit risk adjusted spread and three month SOFR (Secured Overnight Financing Rate). The credit risk adjusted spread represents the nonperformance risk of the liability. The Company utilizes an external valuation firm to validate the reasonableness of the credit risk adjusted spread used to determine the fair value. The junior subordinated debentures are carried at fair value which represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to inactivity in the trust preferred markets that have limited the observability of market spreads, management has classified this as a Level 3 fair value measurement.

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Derivatives: Derivatives include interest rate swap agreements, interest rate lock commitments to originate loans held for sale, forward sales contracts to sell loans and securities related to mortgage banking activities and risk participation agreements. Fair values for these instruments, which generally change as a result of changes in the level of market interest rates, are estimated based on dealer quotes and secondary market sources. As the interest rate lock commitments use a pull-through rate that is considered an unobservable input, these derivatives are classified as a level 3 fair value measurement.

Off-Balance Sheet Items: Off-balance sheet financial instruments include unfunded commitments to extend credit, including standby letters of credit, and commitments to purchase investment securities. The fair value of these instruments is not considered to be material.

Limitations: The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2025 and December 31, 2024. The factors used in the fair value estimates are subject to change subsequent to the dates the fair value estimates are completed, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

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

The following table provides a description of the valuation technique, unobservable inputs, and quantitative and qualitative information about the unobservable inputs for the Company’s assets and liabilities classified as Level 3 and measured at fair value on a recurring and non-recurring basis at March 31, 2025 and December 31, 2024:


			Weighted Average Rate or Range
Financial Instruments	Valuation Technique	Unobservable Inputs	March 31, 2025		December 31, 2024
Corporate bonds (TPS)	Discounted cash flows	Discount rate	9.55	%	9.57	%

Junior subordinated debentures	Discounted cash flows	Discount rate	9.55	%	9.57	%

Loans individually evaluated	Collateral valuations	Discount to appraised value	0% to 100%		0% to 75%


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

SBA servicing rights	Discounted cash flows	Constant prepayment rate	18.64	%	18.85	%

Trust preferred securities: Management believes that the credit risk-adjusted spread used to develop the discount rate utilized in the fair value measurement of TPS is indicative of the risk premium a willing market participant would require under current market conditions for instruments with similar contractual rates and terms and conditions and issuers with similar credit risk profiles and with similar expected probability of default. Management attributes the change in fair value of these instruments, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of assets subsequent to their issuance.

Junior subordinated debentures: Similar to the TPS discussed above, management believes that the credit risk-adjusted spread utilized in the fair value measurement of the junior subordinated debentures is indicative of the risk premium a willing market participant would require under current market conditions for an issuer with Banner’s credit risk profile. Management attributes the change in fair value of the junior subordinated debentures, compared to their par value, primarily to perceived general market adjustments to the risk premiums for these types of liabilities subsequent to their issuance. Future contractions in the risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of March 31, 2025, or the passage of time, will result in negative fair value adjustments. At March 31, 2025, the discount rate utilized was based on a credit spread of 526 basis points and three-month SOFR of 429 basis points.

Interest rate lock commitments: The fair value of the interest rate lock commitments is based on secondary market sources adjusted for an estimated pull-through rate. The pull-through rate is based on historical loan closing rates for similar interest rate lock commitments. An increase or decrease in the pull-through rate would have a corresponding, positive or negative fair value adjustment.

SBA servicing asset: The constant prepayment rate (CPR) is set based on industry data. An increase in the CPR would result in a negative fair value adjustment, where a decrease in CPR would result in a positive fair value adjustment.

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


	Three Months Ended March 31, 2025
	Level 3 Fair Value Inputs
	TPS Securities		Borrowings—Junior Subordinated Debentures		Interest Rate Lock and Forward Sales Commitments		Investments in Limited Partnerships		SBA Servicing Asset
Beginning balance	$	25,685	$	67,477	$	108	$	13,955	$	869
Net change recognized in earnings	74		—		197		280		85
Net change recognized in accumulated other comprehensive income (AOCI)	(3)		234		—		—		—
Purchases, issuances and settlements	—		—		—		790		—


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













	Three Months Ended March 31, 2024
	Level 3 Fair Value Inputs
	TPS		Borrowings—Junior Subordinated Debentures		Interest Rate Lock and Forward Sales Commitments		Investments in Limited Partnerships		SBA Servicing Asset
Beginning balance	$	25,304	$	66,413	$	251	$	13,475	$	740
Net change recognized in earnings	64		—		(33)		(930)		109
Net change recognized in AOCI	(11)		173		—		—		—
Purchases, issuances and settlements	—		—		—		430		—



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

Interest income, dividends and amortization related to TPS are recorded as a component of interest income. Interest expense related to the junior subordinated debentures is measured based on contractual interest rates and reported in interest expense. The change in fair value of the junior subordinated debentures, which represents changes in instrument specific credit risk, and the change in fair value of TPS securities are recorded in other comprehensive income. The change in fair value of investments in limited partnerships and the SBA servicing asset are recorded as a component of non-interest income. The change in fair value of the interest rate lock and forward sales commitments are included in mortgage banking operations in non-interest income.

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

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


	March 31, 2025
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	6,480	$	6,480
Real Estate Owned (REO)	—		—		3,468		3,468



	December 31, 2024
	Level 1		Level 2		Level 3		Total
Loans individually evaluated	$	—	$	—	$	6,590	$	6,590
REO	—		—		2,367		2,367

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The following table presents the gains and losses resulting from non-recurring fair value adjustments for the three months ended March 31, 2025 (in thousands). There were no gains or losses resulting from non-recurring fair value adjustments for the three months ended March 31, 2024.
	Three Months Ended March 31,
	2025
Loans individually evaluated	$	(1,705)

Loans individually evaluated: Expected credit losses for loans evaluated individually are measured based on the present value of expected future cash flows discounted at the loan’s original effective interest rate or when the Bank determines that foreclosure is probable, the expected credit loss is measured based on the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. As a practical expedient, the Bank measures the expected credit loss for a loan using the fair value of the collateral, if repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the Bank’s assessment as of the reporting date. In both cases, if the fair value of the collateral is less than the amortized cost basis of the loan, the Bank will recognize an allowance as the difference between the fair value of the collateral, less costs to sell (if applicable) and the amortized cost basis of the loan. If the fair value of the collateral exceeds the amortized cost basis of the loan, any expected recovery added to the amortized cost basis will be limited to the amount previously charged-off. Subsequent changes in the expected credit losses for loans evaluated individually are included within the provision for credit losses in the same manner in which the expected credit loss initially was recognized or as a reduction in the provision that would otherwise be reported.

REO: The Company records REO (acquired through a lending relationship) at fair value on a non-recurring basis. Fair value adjustments on REO are based on updated real estate appraisals which are based on current market conditions. All REO properties are recorded at the lower of the estimated fair value of the real estate, less expected selling costs, or the carrying amount of the defaulted loans. From time to time, non-recurring fair value adjustments to REO are recorded to reflect partial write-downs based on an observable market price or current appraised value of property. Banner considers any valuation inputs related to REO to be Level 3 inputs. The individual carrying values of these assets are reviewed for impairment at least annually and any additional impairment charges are expensed.

Note 8: INCOME TAXES, DEFERRED TAXES, AND TAX CREDIT INVESTMENTS

As of March 31, 2025, the Company had a net deferred tax asset of $139.4 million. In addition, the Company recognized $2.0 million of unrecognized tax benefits related to uncertain tax positions.

The Company recorded income tax expense of $10.7 million and $8.8 million for the three months ended March 31, 2025 and 2024, respectively, representing effective tax rates of 19.1% and 19.0%, respectively. The effective tax rates differed from the statutory rate principally due to the effects of tax-exempt income, certain tax credits, and tax benefits related to restricted stock vesting.

Tax credit investments: The Company invests in low income housing tax credit funds that are designed to generate a return primarily through the realization of federal tax credits. The Company accounts for these investments by amortizing the cost of tax credit investments over the life of the investment using a proportional amortization method and this tax credit investment amortization expense is a component of the provision for income taxes. The current balance of these tax credit investments is included in other assets, while the unfunded commitments are included in accrued expenses and other liabilities on the Consolidated Statements of Financial Condition.

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


	March 31, 2025		December 31, 2024
Tax Credit Investments:
Total commitments	$	150,108	$	153,618
Unfunded commitments	89,018		94,416

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


	Three Months Ended March 31,
	2025		2024
Tax credits and other tax benefits recognized	$	4,245	$	2,994
Tax credit amortization expense included in provision for income taxes	3,510		2,499

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Note 9: CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING FOR EARNINGS PER SHARE (EPS)

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


	Three Months Ended March 31,
	2025		2024
Net income	$	45,135	$	37,559

Basic weighted average shares outstanding	34,509,815		34,391,564
Dilutive effect of unvested restricted stock	268,872		129,541
Diluted weighted shares outstanding	34,778,687		34,521,105
Earnings per common share
Basic	$	1.31	$	1.09
Diluted	$	1.30	$	1.09
Anti-dilutive restricted stock excluded from the diluted average outstanding share calculation (1)	—		2,734

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

Note 10: STOCK-BASED COMPENSATION PLANS

The Company operates the 2014 Omnibus Incentive Plan (the 2014 Plan), the 2018 Omnibus Incentive Plan (the 2018 Plan) and the 2023 Omnibus Incentive Plan (the 2023 Plan), all of which were approved by its shareholders. The purpose of these plans is to promote the success and enhance the value of the Company by providing a means for attracting and retaining highly skilled employees, officers and directors of the Company and linking their personal interests with those of the Company’s shareholders. Under these plans, the Company currently has outstanding awards of restricted stock shares and restricted stock units.

The Company reserved 900,000 shares of its common stock for issuance under the 2014 Plan in connection with the exercise of awards. As of March 31, 2025, 589,417 restricted stock units have been granted under the 2014 Plan of which 150,197 restricted stock units were unvested. No further awards will be granted under the 2014 Plan.

The Company reserved 900,000 shares of common stock for issuance under the 2018 Plan in connection with the exercise of awards. As of March 31, 2025, 822,942 restricted stock units have been granted under the 2018 Plan of which 237,836 restricted stock units were unvested.

The Company reserved 625,000 shares of common stock for issuance under the 2023 Plan in connection with the exercise of awards. As of March 31, 2025, 4,927 restricted stock shares and 9,798 restricted stock units have been granted under the 2023 Plan, all of which were unvested.

The expense associated with all restricted stock grants (including restricted stock shares and restricted stock units) was $2.2 million for both the three months ended March 31, 2025 and 2024. Unrecognized compensation expense for these awards as of March 31, 2025, was $10.7 million and will be recognized over a weighted average period of 11 months.

Note 11: COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk - The Company has financial instruments with off-balance-sheet risk generated in the normal course of business to meet the financing needs of its clients. These financial instruments include commitments to extend credit, commitments related to standby letters of credit, commitments to originate loans, commitments to sell loans, and commitments to buy or sell securities. These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved in on-balance sheet items.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument from commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. We apply the same credit policies to these commitments and conditional obligations as we do to our on-balance sheet financial instruments.

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


	Contract or Notional Amount
	March 31, 2025		December 31, 2024
Commitments to extend credit	$	3,786,586	$	3,857,782
Standby letters of credit and financial guarantees	20,973		28,287



Risk participation agreements	43,396		43,913

Derivatives also included in Note 12:
Commitments to originate loans held for sale	42,213		35,512
Commitments to sell loans secured by one- to four-family residential properties	22,628		17,963
Commitments to sell securities related to mortgage banking activities	33,252		37,500

In addition to the commitments disclosed in the table above, the Company is also committed to funding the unfunded portion of its tax credit investments, as well as the remaining unfunded portion of its investments in limited partnerships. As of March 31, 2025 and December 31, 2024, the remaining outstanding commitments related to the unfunded tax credit investments and limited partnership investments were as follows (in thousands):


Unfunded commitment balance for:	March 31, 2025		December 31, 2024
Tax credit investments	$	89,018	$	94,416
Limited partnerships investments	$	13,292	$	14,706

Commitments to extend credit are agreements to lend to a client, as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of the commitments may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. Each client’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on management’s credit evaluation of the client. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties. The Company’s allowance for credit losses - unfunded loan commitments at March 31, 2025 and December 31, 2024 was $12.2 million and $13.6 million, respectively.

Standby letters of credit are conditional commitments issued to guarantee a client’s performance or payment to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients. Under a risk participation agreement, the Bank guarantees the financial performance of a borrower on the participated portion of an interest rate swap on a loan.

Interest rates on one- to four-family residential loan applications are typically rate locked (committed) to clients during the application stage for periods ranging from 30 to 60 days, the most typical period being 45 days. Traditionally, these loan applications with rate lock commitments have the pricing for the sale of these loans locked with various qualified investors under a best-efforts delivery program at or near the time the interest rate is locked with the client. The Bank then attempts to deliver these loans before their rate locks expire. This arrangement generally requires delivery of the loans prior to the expiration of the rate lock. Delays in funding the loans may require a lock extension. The cost of a lock extension is sometimes covered by the client and other times by the Bank. These lock extension costs have not had a material impact to the Company’s operations. For mandatory delivery commitments the Company enters into forward commitments at specific prices and settlement dates to deliver either: (1) residential mortgage loans for purchase by secondary market investors (i.e., Freddie Mac or Fannie Mae), or (2) mortgage-backed securities to broker/dealers. The purpose of these forward commitments is to offset the movement in interest rates between the execution of its residential mortgage rate lock commitments with borrowers and the sale of those loans to the secondary market investor. There were no counterparty default losses on forward contracts during the three months ended March 31, 2025 or March 31, 2024. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Company limits its exposure to market risk by monitoring differences between commitments to clients and forward contracts with market investors and securities broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the transaction is completed by either paying or receiving a fee to or from the investor or broker/dealer equal to the increase or decrease in the market value of the forward contract. Changes in the value of rate lock commitments are recorded as assets and liabilities.

In the normal course of business, the Company and/or its subsidiaries have various legal proceedings and other contingent matters outstanding. These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable. These claims and counterclaims typically arise during the course of collection efforts on problem loans or with respect to action to enforce liens on properties in which the Bank holds a security interest. Based upon the information known to management, there were no legal proceedings that management believes would have a material adverse effect on the results of operations or consolidated financial position at March 31, 2025.

In connection with certain asset sales, the Bank typically makes representations and warranties about the underlying assets conforming to specified guidelines. If the underlying assets do not conform to the specifications, the Bank may have an obligation to repurchase the assets or indemnify the purchaser against any loss. The Bank believes that the potential for material loss under these arrangements is remote. Accordingly, the fair value of such obligations is not material.

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Note 12: DERIVATIVES AND HEDGING

The Company is party to various derivative instruments that are used for asset and liability management and client financing needs. Derivative instruments are contracts between two or more parties that have a notional amount and an underlying variable, require no net investment and allow for the net settlement of positions. The notional amount serves as the basis for the payment provision of the contract and takes the form of units, such as shares or dollars. The underlying variable represents a specified interest rate, index, or other component. The interaction between the notional amount and the underlying variable determines the number of units to be exchanged between the parties and influences the market value of the derivative contract.

The Company’s predominant derivative and hedging activities involve interest rate swaps related to certain term loans and forward sales contracts associated with mortgage banking activities. Generally, these instruments help the Company manage exposure to market risk and meet client financing needs. Market risk represents the possibility that economic value or net interest income will be adversely affected by fluctuations in external factors such as market-driven interest rates and prices or other economic factors.

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


	Asset Derivatives								Liability Derivatives
	March 31, 2025				December 31, 2024				March 31, 2025				December 31, 2024
	Notional/ Contract Amount		Fair Value		Notional/ Contract Amount		Fair Value		Notional/ Contract Amount		Fair Value		Notional/ Contract Amount		Fair Value



Interest rate swaps	$	386,502	$	24,371	$	386,995	$	30,134	$	386,502	$	24,393	$	386,995	$	30,184
Master netting agreements			(12,595)				(15,627)				—				—
Cash offset/(settlement)			—				—				—				—
Net interest rate swaps			11,776				14,507				24,393				30,184

Risk participation agreements	758		—		817		—		42,637		10		43,097		6
Mortgage loan commitments	42,213		388		30,085		108		—		—		5,427		2
Forward sales contracts	9,667		—		49,628		223		42,080		144		—		—

Total	$	439,140	$	12,164	$	467,525	$	14,838	$	471,219	$	24,547	$	435,519	$	30,192

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

Interest Rate Swaps: The Bank offers an interest rate swap program for commercial loan clients that provides the client with a variable-rate loan and enters into an interest rate swap in which the client receives a variable-rate payment in exchange for a fixed-rate payment. The Bank offsets its risk exposure by entering into an offsetting interest rate swap with a dealer counterparty for the same notional amount and length of term as the client interest rate swap providing the dealer counterparty with a fixed-rate payment in exchange for a variable-rate payment. These swaps do not qualify as designated hedges; therefore, each swap is accounted for as a freestanding derivative.

Risk Participation Agreements: In conjunction with the purchase or sale of participating interests in loans, the Company also participates in related swaps through risk participation agreements. The existing credit derivatives resulting from these participations are not designated as hedges as they are not used to manage interest rate risk in the Company’s assets or liabilities and are not speculative.

Mortgage Loan Commitments: The Company sells originated one- to four-family residential loans into the secondary mortgage loan markets. During the period of loan origination and prior to the sale of the loans in the secondary market, the Company has exposure to movements in interest rates associated with written interest rate lock commitments with potential borrowers to originate one- to four-family residential loans that are intended to be sold and for closed one- to four-family residential loans held for sale for which fair value accounting has been elected, that are awaiting sale and delivery into the secondary market. The Company economically hedges the risk of changing interest rates associated with these one- to four-family residential loan commitments by entering into forward sales contracts to sell these loans or mortgage-backed securities to broker/dealers at specific prices and dates.

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


	Three Months Ended March 31,
	2025		2024

Mortgage loan commitments	$	281	$	33
Forward sales contracts	(457)		70

	$	(176)	$	103

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The Company is exposed to credit-related losses in the event of nonperformance by the counterparty to these agreements. Credit risk of the financial contract is controlled through the credit approval, limits, and monitoring procedures and management does not expect the counterparties to fail their obligations.

In connection with the interest rate swaps between the Bank and the dealer counterparties, the agreements contain a provision where if the Bank fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations. Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required the Bank to maintain a specific capital level. If the Bank had breached any of these provisions at March 31, 2025 or December 31, 2024, it could have been required to settle its obligations under the agreements at the termination value. As of March 31, 2025 and December 31, 2024, the Company had no obligations to dealer counterparties related to these agreements. The Company generally posts collateral against derivative liabilities in the form of cash, government agency-issued bonds, mortgage-backed securities, or commercial mortgage-backed securities. Collateral posted against derivative liabilities was $17.8 million and $19.9 million as of March 31, 2025 and December 31, 2024, respectively. The collateral posted included restricted cash of $16.9 million and $18.9 million as of March 31, 2025 and December 31, 2024, respectively.

Derivative assets and liabilities are recorded at fair value on the balance sheet. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis and to offset net derivative positions with related collateral where applicable. In addition, some interest rate swap derivatives between the Company and the dealer counterparties are cleared through central clearing houses. These clearing houses characterize the variation margin payments as settlements of the derivative’s market exposure and not as collateral. The variation margin is treated as an adjustment to our cash collateral, as well as a corresponding adjustment to our derivative asset or liability. The variation margin adjustment was a positive adjustment of $12.6 million and a positive adjustment of $15.6 million as of March 31, 2025 and December 31, 2024, respectively.

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


	March 31, 2025
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statement of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	24,371	$	(12,595)	$	11,776	$	—	$	—	$	11,776
	$	24,371	$	(12,595)	$	11,776	$	—	$	—	$	11,776

Derivative liabilities
Interest rate swaps	$	24,393	$	—	$	24,393	$	—	$	(16,208)	$	8,185
	$	24,393	$	—	$	24,393	$	—	$	(16,208)	$	8,185

	December 31, 2024
							Gross Amounts of Financial Instruments Not Offset in the Consolidated Statement of Financial Condition
	Gross Amounts Recognized		Amounts offset in the Statement of Financial Condition		Net Amounts in the Statement of Financial Condition		Netting Adjustment Per Applicable Master Netting Agreements		Fair Value of Financial Collateral in the Statement of Financial Condition		Net Amount
Derivative assets
Interest rate swaps	$	30,134	$	(15,627)	$	14,507	$	—	$	—	$	14,507
	$	30,134	$	(15,627)	$	14,507	$	—	$	—	$	14,507

Derivative liabilities
Interest rate swaps	$	30,184	$	—	$	30,184	$	—	$	(18,228)	$	11,956
	$	30,184	$	—	$	30,184	$	—	$	(18,228)	$	11,956

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Note 13: SEGMENT DISCLOSURES

The Company is managed by legal entity, rather than by lines of business, and its activities are considered a single operating segment for financial reporting purposes. The Bank is engaged in the single line of business of community banking, which involves gathering deposits and originating loans in its primary market areas. The Bank manages its operations, allocates resources, and monitors and reports its financials as a single operating segment.

The Company’s performance is assessed based on net income that is reported on our Consolidated Statements of Operations with consolidated net income being the primary measure to evaluate resource allocations. In addition to our consolidated financial statements, the operating and financial condition data below is used to monitor budget versus actual results and assess performance:



OPERATING DATA:	Quarters Ended
(In thousands)	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
Interest income	$	193,868	$	196,436	$	184,688
Interest expense	52,785		55,900		51,729
Net interest income	141,083		140,536		132,959
Provision for credit losses	3,139		3,000		520







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



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


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


FINANCIAL CONDITION DATA:	Quarters Ended
(In thousands)	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
Cash and securities (1)	$	3,542,686	$	3,607,933	$	3,492,527
Loans receivable, net	11,281,473		11,199,135		10,717,956
Total assets	16,170,812		16,200,037		15,518,279
Core deposits	12,089,215		12,014,726		11,672,891
Total deposits	13,593,265		13,514,398		13,158,771


KEY FINANCIAL RATIOS:	Quarters Ended
	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
Performance Ratios:
Return on average assets (2)	1.15	%	1.15	%	0.97	%





Net interest margin (tax equivalent) (3)	3.92		3.82		3.74

Non-interest expense to average assets	2.57		2.48		2.52
Efficiency ratio (4)	63.21		61.95		67.55

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

(2)Net income divided by average assets.

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

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

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ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

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 March 31, 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 March 31, 2025, we had total consolidated assets of $16.17 billion, total loans of $11.44 billion, total deposits of $13.59 billion and total shareholders’ equity of $1.83 billion.

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.

The Company’s successful execution of its super community bank model and strategic initiatives has delivered solid core operating results and profitability over the last several years. The Company’s longer term strategic initiatives continue to focus on originating high quality assets and client acquisition, which we believe will continue to generate strong revenue while maintaining the Company’s moderate risk profile.

First Quarter 2025 Financial Highlights

•Net interest margin, on a tax equivalent basis, was 3.92%, compared to 3.82% in the preceding quarter.

•Revenue was $160.2 million for the first quarter of 2025, compared to $160.6 million in the preceding quarter.

•Net interest income was $141.1 million in the first quarter of 2025, compared to $140.5 million in the preceding quarter.

•Mortgage banking operations revenue was $3.1 million for the first quarter of 2025, compared to $3.7 million in the preceding quarter.

•Return on average assets was 1.15% for both the current and preceding quarter.

•Net loans receivable increased to $11.28 billion at March 31, 2025, compared to $11.20 billion at December 31, 2024.

•Non-performing assets were $42.7 million, or 0.26% of total assets, at March 31, 2025, compared to $39.6 million, or 0.24% of total assets at December 31, 2024.

•The allowance for credit losses - loans was $157.3 million, or 1.38% of total loans receivable, as of March 31, 2025, compared to $155.5 million, or 1.37% of total loans receivable, at December 31, 2024.

•Total deposits increased to $13.59 billion at March 31, 2025, compared to $13.51 billion at December 31, 2024.

•Core deposits represented 89% of total deposits at March 31, 2025.

•Dividends paid to shareholders were $0.48 per share in the quarter ended March 31, 2025.

•Common shareholders’ equity per share increased 3% to $53.16 at March 31, 2025, compared to $51.49 at December 31, 2024.

•Tangible common shareholders’ equity per share* increased 4% to $42.27 at March 31, 2025, compared to $40.57 at December 31, 2024.

*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.

Adjusted revenue, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity and adjusted efficiency ratio are non-GAAP financial measures. To calculate these non-GAAP measures, we make adjustments to our GAAP revenues and expenses as reported on our Consolidated Statements of Operations. Management believes that these non-GAAP financial measures provide information to investors that is useful in evaluating the operating performance and trends of financial services companies, including the Company (dollars in thousands except per share data).


	Quarters Ended
	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
ADJUSTED REVENUE
Net interest income (GAAP)	$	141,083	$	140,536	$	132,959
Non-interest income (GAAP)	19,108		20,035		11,591
Total revenue (GAAP)	160,191		160,571		144,550
Exclude: Net (gain) loss on sale of securities	—		(275)		4,903

Net change in valuation of financial instruments carried at fair value	(315)		(161)		992


Adjusted revenue (non-GAAP)	$	159,876	$	160,135	$	150,445

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	Quarters Ended
	Mar 31, 2025			Dec 31, 2024			Mar 31, 2024
ADJUSTED EARNINGS
Net income (GAAP)	$	45,135		$	46,391		$	37,559
Exclude: Net (gain) loss on sale of securities	—			(275)			4,903
Net change in valuation of financial instruments carried at fair value	(315)			(161)			992



Related net tax expense (benefit)	76			105			(1,415)
Total adjusted earnings (non-GAAP)	$	44,896		$	46,060		$	42,039
Diluted earnings per share (GAAP)	$	1.30		$	1.34		$	1.09
Adjusted diluted earnings per share (non-GAAP)	$	1.29		$	1.33		$	1.22
Return on average assets	1.15		%	1.15		%	0.97		%
Adjusted return on average assets (1)	1.14		%	1.15		%	1.08		%
Return on average equity	10.17		%	10.35		%	9.14		%
Adjusted return on average equity (2)	10.12		%	10.28		%	10.24		%


	Quarters Ended
	Mar 31, 2025			Dec 31, 2024			Mar 31, 2024
ADJUSTED EFFICIENCY RATIO
Non-interest expense (GAAP)	$	101,259		$	99,478		$	97,641


Exclude: CDI amortization	(456)			(589)			(723)
State and municipal tax expense	(1,454)			(1,518)			(1,304)
REO operations	61			(113)			220

Adjusted non-interest expense (non-GAAP)	$	99,410		$	97,258		$	95,834

Net interest income (GAAP)	$	141,083		$	140,536		$	132,959
Non-interest income (GAAP)	19,108			20,035			11,591
Total revenue (GAAP)	160,191			160,571			144,550
Exclude: Net (gain) loss on sale of securities	—			(275)			4,903
Net change in valuation of financial instruments carried at fair value	(315)			(161)			992

Adjusted revenue (non-GAAP)	$	159,876		$	160,135		$	150,445

Efficiency ratio (GAAP)	63.21		%	61.95		%	67.55		%
Adjusted efficiency ratio (non-GAAP) (3)	62.18		%	60.74		%	63.70		%

(1)Adjusted earnings (non-GAAP) divided by average assets.

(2)Adjusted earnings (non-GAAP) divided by average equity.

(3)Adjusted non-interest expense (non-GAAP) divided by adjusted revenue.

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The ratio of tangible common shareholders’ equity to tangible assets is also a non-GAAP financial measure. We calculate tangible common equity by excluding goodwill and other intangible assets from shareholders’ equity. We calculate tangible assets by excluding the balance of goodwill and other intangible assets from total assets. We believe that this is consistent with the treatment by our bank regulatory agencies, which exclude goodwill and other intangible assets from the calculation of risk-based capital ratios. Management believes that this non-GAAP financial measure provides information to investors that is useful in understanding the basis of our capital position (dollars in thousands except share and per share data).


TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
	March 31, 2025			December 31, 2024			March 31, 2024
Shareholders’ equity (GAAP)	$	1,833,453		$	1,774,326		$	1,664,508
Exclude goodwill and other intangible assets, net	375,723			376,179			378,082
Tangible common shareholders’ equity (non-GAAP)	$	1,457,730		$	1,398,147		$	1,286,426
Total assets (GAAP)	$	16,170,812		$	16,200,037		$	15,518,279
Exclude goodwill and other intangible assets, net	375,723			376,179			378,082
Total tangible assets (non-GAAP)	$	15,795,089		$	15,823,858		$	15,140,197
Common shareholders’ equity to total assets (GAAP)	11.34		%	10.95		%	10.73		%
Tangible common shareholders’ equity to tangible assets (non-GAAP)	9.23		%	8.84		%	8.50		%

TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
	March 31, 2025			December 31, 2024			March 31, 2024
Shareholders’ equity (GAAP)	$	1,833,453		$	1,774,326		$	1,664,508
Tangible common shareholders’ equity (non-GAAP)	$	1,457,730		$	1,398,147		$	1,286,426
Common shares outstanding at end of period	34,489,972			34,459,832			34,395,221
Common shareholders’ equity (book value) per share (GAAP)	$	53.16		$	51.49		$	48.39
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)	$	42.27		$	40.57		$	37.40

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding our financial condition and results of operations. The information contained in this section should be read in conjunction with the Consolidated Financial Statements and accompanying Selected Notes to the Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Summary of Critical Accounting Estimates

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.

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Comparison of Financial Condition at March 31, 2025 and December 31, 2024

General: Total assets decreased $29.2 million to $16.17 billion at March 31, 2025, from $16.20 billion at December 31, 2024. The decrease compared to year end was primarily due to a decrease in securities and interest-bearing deposits, partially offset by loan growth.

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, 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 $84.1 million at March 31, 2025, compared to December 31, 2024, reflecting increased commercial construction, multifamily construction and land and land development loans, partially offset by decreased commercial real estate, multifamily, commercial business and one-to-four family construction loans. At March 31, 2025, loans receivable totaled $11.44 billion compared to $11.35 billion at December 31, 2024.

The following table sets forth the composition of the Company’s loans receivable by type of loan as of the dates indicated (dollars in thousands):


							Percentage Change
	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024		Year End		Prior Year Qtr. End
Commercial real estate:
Owner-occupied	$	1,020,829	$	1,027,426	$	905,063	(1)	%	13	%
Investment properties	1,598,387		1,623,672		1,544,885		(2)		3
Small balance CRE	1,217,458		1,213,792		1,159,355		—		5
Total Commercial real estate	3,836,674		3,864,890		3,609,303		(1)		6
Multifamily real estate	877,716		894,425		809,101		(2)		8
Construction, land and land development:
Commercial construction	146,467		122,362		158,011		20		(7)
Multifamily construction	618,942		513,706		573,014		20		8
One- to four-family construction	504,265		514,220		495,931		(2)		2
Land and land development	396,009		369,663		344,563		7		15
Total Construction, land and land development	1,665,683		1,519,951		1,571,519		10		6
Commercial business:
Commercial business	1,283,754		1,318,333		1,262,716		(3)		2
Small business scored	1,122,550		1,104,117		1,028,067		2		9
Total Commercial business	2,406,304		2,422,450		2,290,783		(1)		5

Agricultural business, including secured by farmland	334,899		340,280		317,958		(2)		5

One- to four-family residential	1,600,283		1,591,260		1,566,834		1		2
Consumer:
Consumer—home equity revolving lines of credit	620,483		625,680		597,060		(1)		4
Consumer—other	96,754		95,720		106,538		1		(9)
Total Consumer	717,237		721,400		703,598		(1)		2
Total loans receivable	$	11,438,796	$	11,354,656	$	10,869,096	1	%	5	%

Commercial real estate loans totaled $3.84 billion, or 33% of our loan portfolio, and multifamily real estate loans totaled $877.7 million, or 8% of our loan portfolio, at March 31, 2025. Commercial real estate loans decreased by $28.2 million during the first three months of 2025, while multifamily real estate loans decreased by $16.7 million, primarily due to payoffs and paydowns exceeding new production.

Our construction, land and land development loans totaled $1.67 billion, or 15% of our loan portfolio, at March 31, 2025, compared to $1.52 billion at December 31, 2024. Multifamily construction loans increased $105.2 million, or 20%, to $618.9 million at March 31, 2025, compared to December 31, 2024. Multifamily construction represented approximately 6% of our total loan portfolio at March 31, 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 $24.1 million, or 20%, to $146.5 million at March 31, 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 $26.3 million, or 7%, to $396.0 million at March 31, 2025, compared to December 31, 2024, primarily due to new loan production, partially offset by payoffs and paydowns.

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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 $2.74 billion at March 31, 2025 and $2.76 billion at December 31, 2024. Commercial and agricultural business loans represented approximately 24% of our loan portfolio at March 31, 2025. Our commercial business lending also includes participation in certain syndicated loans, including shared national credits, which totaled $223.6 million, or 2% of our loan portfolio, at March 31, 2025, compared to $227.4 million, or 2% of our loan portfolio, at December 31, 2024.

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, 2025, one- to four-family residential loans retained in our portfolio increased $9.0 million, to $1.60 billion, compared to $1.59 billion at December 31, 2024. The increase in one- to four-family residential loans was primarily the result of a higher percentage of one- to four-family construction loans converting to permanent one- to four-family residential loans and new loan production. One- to four-family residential loans represented 14% of our loan portfolio at March 31, 2025.

Our consumer loan activity is primarily directed at meeting demand from our existing deposit clients. At March 31, 2025, consumer loans, including home equity revolving lines of credit, decreased $4.2 million to $717.2 million, compared to $721.4 million at December 31, 2024.

The following table shows the commitment amount for loan origination activity (excluding loans held for sale) for the periods indicated (in thousands):


	Three Months Ended
	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
Commercial real estate	$	37,041	$	124,554	$	67,362
Multifamily real estate	9,555		3,120		385
Construction and land	287,565		303,345		437,273
Commercial business	103,739		250,515		154,715

Agricultural business	12,765		17,177		34,406
One-to four- family residential	5,139		29,531		17,568
Consumer	80,030		73,791		66,145
Total commitment amount for loan originations (excluding loans held for sale)	$	535,834	$	802,033	$	777,854

Loans held for sale decreased to $24.5 million at March 31, 2025, compared to $32.0 million at December 31, 2024. The decrease in loans held for sale compared to the preceding quarter was primarily the result of loan sales exceeding new originations of one- to four- family residential mortgage loans held for sale during the quarter. Originations of loans held for sale increased to $75.2 million for the three months ended March 31, 2025, compared to $48.4 million for the same period last year. The volume of one- to four-family residential mortgage loans sold was $108.1 million during the three months ended March 31, 2025, compared to $65.9 million in the same period a year ago.

The following table presents loans by geographic concentration at the dates indicated (dollars in thousands):


	Mar 31, 2025				Dec 31, 2024		Mar 31, 2024		Percentage Change
	Amount		Percentage		Amount		Amount		Year End		Prior Year Qtr. End
Washington	$	5,260,906	46	%	$	5,245,886	$	5,091,912	—	%	3	%
California	2,927,835		26		2,861,435		2,687,114		2		9
Oregon	2,122,953		18		2,113,229		2,013,453		—		5
Idaho	665,625		6		665,158		613,155		—		9
Utah	88,858		1		82,459		72,652		8		22
Other	372,619		3		386,489		390,810		(4)		(5)
Total loans receivable	$	11,438,796	100	%	$	11,354,656	$	10,869,096	1	%	5	%

Investment Securities: Total securities decreased $5.3 million to $3.10 billion at March 31, 2025, from $3.11 billion at December 31, 2024, primarily due to securities paydowns and maturities exceeding purchases during the three months ended March 31, 2025. Purchases during the three months ended March 31, 2025, consisted primarily of state and local government obligations. The average effective duration of the Company’s securities portfolio was 6.5 years at March 31, 2025, compared to 6.6 years at December 31, 2024. Fair value adjustments for securities designated as available-for-sale increased $38.3 million for the three months ended March 31, 2025, which was included, net of the associated tax expense of $9.2 million, as a component of other comprehensive income, and occurred as a result of decreases in market interest rates during the three months ended March 31, 2025.

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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.

The following table sets forth the Company’s deposits by type of deposit account as of the dates indicated (dollars in thousands):


							Percentage Change
	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024		Year End		Prior Year Qtr. End
Non-interest-bearing	$	4,571,598	$	4,591,543	$	4,699,553	—	%	(3)	%
Interest-bearing checking	2,431,279		2,393,864		2,112,799		2		15
Regular savings accounts	3,542,005		3,478,423		3,171,933		2		12
Money market accounts	1,544,333		1,550,896		1,688,606		—		(9)
Interest-bearing transaction & savings accounts	7,517,617		7,423,183		6,973,338		1		8
Total core deposits	12,089,215		12,014,726		11,672,891		1		4
Interest-bearing certificates	1,504,050		1,499,672		1,485,880		—		1
Total deposits	$	13,593,265	$	13,514,398	$	13,158,771	1	%	3	%

Total deposits increased $78.9 million at March 31, 2025, compared to December 31, 2024, with core deposits increasing $74.5 million and certificates of deposit increasing $4.4 million. The increase in core deposits primarily reflects increases in interest-bearing transaction and savings accounts. We had $75.3 million of brokered deposits at March 31, 2025, compared to $50.3 million at December 31, 2024. Core deposits represented 89% of total deposits at both March 31, 2025 and December 31, 2024. Competition for deposits in our market areas remains strong.

The following table sets forth the number and average account balance of the Company’s deposit accounts as of the dates indicated (dollars in thousands):



	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024
Number of deposit accounts	453,808		460,004		461,399
Average account balance per account	$	30	$	30	$	29

The following table presents deposits by geographic concentration at the dates indicated (dollars in thousands):


	Mar 31, 2025				Dec 31, 2024		Mar 31, 2024		Percentage Change
	Amount		Percentage		Amount		Amount		Year End		Prior Year Qtr. End
Washington	$	7,394,201	54	%	$	7,441,413	$	7,258,785	(1)	%	2	%
Oregon	3,045,078		22		2,981,327		2,914,605		2		4
California	2,463,012		18		2,392,573		2,316,515		3		6
Idaho	690,974		5		699,085		668,866		(1)		3

Total deposits	$	13,593,265	100	%	$	13,514,398	$	13,158,771	1	%	3	%

Borrowings: We had $168.0 million of FHLB advances at March 31, 2025, compared to $290.0 million at December 31, 2024. Other borrowings, consisting of retail repurchase agreements primarily related to client cash management accounts, increased $5.3 million to $130.6 million at March 31, 2025, compared to $125.3 million at December 31, 2024. The overall decrease in borrowings reflects the increased use of deposits to fund loan growth. At March 31, 2025, the Company’s off-balance sheet liquidity included additional borrowing capacity of $3.14 billion at the FHLB and $1.65 billion at the Federal Reserve, as well as federal funds line of credit agreements with other financial institutions of $125.0 million. Junior subordinated debentures totaled $67.7 million at March 31, 2025, compared to $67.5 million at December 31, 2024. Subordinated notes, net of issuance costs were $80.4 million at March 31, 2025, compared to $80.3 million at December 31, 2024.

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Shareholders’ Equity: Total shareholders’ equity increased $59.1 million to $1.83 billion, or 11.34% of total assets, at March 31, 2025, compared to $1.77 billion, or 10.95% of total assets, at December 31, 2024. The increase in shareholders’ equity was primarily due to a $28.3 million increase in retained earnings as a result of $45.1 million in net income, partially offset by the accrual of cash dividends during the three months ended March 31, 2025. In addition, accumulated other comprehensive loss decreased by $29.3 million, primarily due to a decrease in the unrealized losses on the security portfolio. There were no shares of common stock repurchased during the three months ended March 31, 2025. Tangible common shareholders’ equity, which excludes goodwill and other intangible assets and is a non-GAAP financial measure, increased $59.6 million to $1.46 billion, or 9.23% of tangible assets, at March 31, 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 “First Quarter 2025 Financial Highlights.”

Comparison of Results of Operations for the Three Months Ended March 31, 2025 and December 31, 2024, and March 31, 2024

For the quarter ended March 31, 2025, net income was $45.1 million, or $1.30 per diluted share, compared to $46.4 million, or $1.34 per diluted share, for the preceding quarter and $37.6 million, or $1.09 per diluted share for three months ended March 31, 2024. The decrease in net income for the current quarter compared to the preceding quarter was primarily due to a decrease in non-interest income as well as an increase in non-interest expense, partially offset by an increase in net interest income. The increase in net income for the current quarter compared to the prior year quarter 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.

The increase in net interest income compared to the preceding quarter reflects an overall increase in the yield on interest-earning assets and a decrease in funding costs, partially offset by a decrease in the average balance of interest-earning assets. Net interest margin for the current quarter benefited from decreased funding costs, primarily due to decreases in market interest rates, and increased yields on loans, primarily due to new loans being originated at higher interest rates and adjustable rate loans repricing higher. In 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve lowered the target range for the federal funds rate three times, resulting in a target range of 4.25% to 4.50% at March 31, 2025. The increase in net interest income compared to the prior year quarter reflects an increase in both the yield and average balance of interest-earning assets, partially offset by an increase in funding costs.

We recorded a $3.1 million provision for credit losses for the quarter ended March 31, 2025, compared to a $3.0 million provision for credit losses in the preceding quarter and a $520,000 provision for credit losses for the three months ended March 31, 2024. The provision for credit losses for the current quarter primarily reflected loan growth in the construction portfolio and to a lesser extent risk rating migration and qualitative adjustments applied to address economic uncertainty.

Total non-interest income decreased for the quarter ended March 31, 2025, compared to the preceding quarter and increased 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 decreases in mortgage banking operations revenue and miscellaneous income, partially offset by an increase in bank owned life insurance income. The increase in non-interest income during the current quarter compared to the prior year quarter 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.

Total non-interest expense increased for the quarter ended March 31, 2025, compared to the preceding quarter and the same period a year ago. The increase in non-interest expense for the current quarter compared to the preceding quarter reflects an increase in salary and employee benefits, primarily resulting from increased medical premiums expense and payroll tax expense, and a decrease in capitalized loan costs, partially offset by a decrease in advertising and marketing expenses. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits and professional and legal expenses.

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OPERATING DATA:	Quarters Ended
(In thousands)	March 31, 2025		December 31, 2024		March 31, 2024
Interest income	$	193,868	$	196,436	$	184,688
Interest expense	52,785		55,900		51,729
Net interest income	141,083		140,536		132,959
Provision for credit losses	3,139		3,000		520
Net interest income after provision for credit losses	137,944		137,536		132,439
Deposit fees and other service charges	10,769		11,018		11,022
Mortgage banking operations	3,103		3,686		2,335
Net gain (loss) on sale of securities	—		275		(4,903)
Net change in valuation of financial instruments carried at fair value	315		161		(992)
All other non-interest income	4,921		4,895		4,129
Total non-interest income	19,108		20,035		11,591

Salary and employee benefits	64,857		62,523		62,369
All other non-interest expenses	36,402		36,955		35,272
Total non-interest expense	101,259		99,478		97,641
Income before provision for income tax expense	55,793		58,093		46,389
Provision for income tax expense	10,658		11,702		8,830
Net income	$	45,135	$	46,391	$	37,559



PER COMMON SHARE DATA:	Quarters Ended
	March 31, 2025		December 31, 2024		March 31, 2024
Net income:
Basic	$	1.31	$	1.34	$	1.09
Diluted	1.30		1.34		1.09

Net Interest Income. Net interest income increased for the quarter ended March 31, 2025, compared to the preceding quarter and the same period one year earlier. The increase in net interest income compared to both comparable periods reflects an overall increase in net interest margin for the current period.

Net interest margin on a tax equivalent basis increased ten basis points to 3.92% for the first quarter of 2025, compared to 3.82% in the preceding quarter and increased 18 basis points compared to 3.74% for the same period in the prior year. Net interest margin for the current quarter, compared to the preceding quarter, benefited from decreased funding costs, primarily due to a decrease in market rates, partially offset by a shift in the average balance of non-interest-bearing deposits to higher costing interest-bearing checking accounts, savings accounts and certificates of deposit, and higher yields on interest earning assets, primarily due to an increase in the average loan yield. Net interest margin for the current quarter, compared to the prior year quarter, benefited from an increase in both the yield and the average balance of interest-earning assets, partially offset by higher funding costs.

Interest Income. Interest income for the quarter ended March 31, 2025 was $193.9 million, compared to $196.4 million for the preceding quarter and $184.7 million for the same period in the prior year. The decrease in interest income during the current quarter compared to the preceding quarter primarily reflects two fewer interest earning days in the current quarter and a decrease in the average balance of interest-earning assets due to a decrease in the average balance of investment securities. The increase in interest income during the current quarter compared to the prior period a year ago reflects an increase in interest income on loans due to an increase in the overall average loan yield, mostly due to the high interest rate environment. In addition, the increase reflects growth in the average balance of loans, partially offset by a decreases in both the yield and average balance of investment securities.

The decreased interest income on loans for the current quarter compared to the preceding quarter was primarily driven by two fewer days in the quarter. The increase in interest income on loans for the current quarter compared to the same period in the prior year was due to an increase in both the average balance and yield on loans. Loan yields increased five basis points to 6.07% for the quarter ended March 31, 2025, from 6.02% in the preceding quarter and increased 20 basis points compared to 5.87% in the first quarter a year ago, 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 March 31, 2025 increased compared to both comparable periods, primarily reflecting increases in the average balances of mortgage loans, specifically commercial real estate and construction loans.

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Interest and dividend income on total investment securities for the current quarter decreased from both the preceding and prior year quarters due to a lower average yield earned on total investment securities during the current quarter and a decrease in the average balance of total investment securities. The average balance of total investment securities decreased to $3.52 billion for the quarter ended March 31, 2025 (excluding the effect of fair value adjustments), compared to $3.61 billion for the preceding quarter and $3.78 billion for same period in the prior year. The average yield on the combined portfolio decreased to 3.02% for the quarter ended March 31, 2025, from 3.07% for the preceding quarter and 3.11% for the same period in the prior year.

Interest Expense. Interest expense for the quarter ended March 31, 2025 decreased $3.1 million, or 6%, to $52.8 million compared to $55.9 million for the preceding quarter, and increased compared to $51.7 million for the same period in the prior year. The decrease compared to the preceding quarter occurred as a result of a five basis-point decrease in the average cost of all funding liabilities to 1.55% for the quarter ended March 31, 2025. The increase compared to the prior year occurred as a result of an increase in both the average cost and balance of total funding liabilities.

Deposit interest expense for the quarter ended March 31, 2025 decreased $3.5 million, or 7%, to $48.7 million compared to $52.2 million for the preceding quarter, and increased compared to $44.6 million for the same period in the prior year. The decrease in deposit costs in the current quarter compared to the prior quarter was primarily due to the lagging effect of interest rate decreases in the prior quarter. The average cost of interest-bearing deposits decreased to 2.22% for the quarter ended March 31, 2025, compared to 2.33% in the preceding quarter and increased compared to 2.15% for the same period a year earlier. The decrease in the cost of interest-bearing deposits compared to the preceding quarter reflects the interest rate decreases implemented on our interest-bearing deposits in the prior quarter. The increase in the cost of interest-bearing deposits compared to the same period a year earlier was primarily the result of an overall increase in the average rate paid on interest-bearing deposits. The average rate paid on total deposits, which includes non-interest-bearing deposits, was 1.47% for the quarter ended March 31, 2025, compared to 1.53% in the preceding quarter and 1.37% for the same period in the prior year. Average deposit balances decreased to $13.45 billion for the quarter ended March 31, 2025, from $13.56 billion for the preceding quarter and increased from $13.06 billion for the same period a year earlier.

Interest expense on total borrowings for the quarter ended March 31, 2025 increased 10%, to $4.0 million compared to $3.7 million for the prior quarter, primarily due to an increase in the average balance of total borrowings, and decreased from $7.1 million for the same period a year earlier, primarily due to decreases in both the rate paid and the average balance of total borrowings. The average balance of total borrowings increased to $379.7 million for the quarter ended March 31, 2025, compared to $320.3 million for the preceding quarter, primarily due to a $67.8 million increase in the average balance of FHLB advances, and decreased compared to $575.3 million for the same period a year earlier, primarily due to a $137.7 million decrease in the average balance of FHLB advances and $45.9 million decrease in the average balance of other borrowings. The average rate paid on total borrowings for the quarter ended March 31, 2025 decreased to 4.32% from 4.57% for the preceding quarter and 4.98% for the same period a year earlier.

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Analysis of Net Interest Spread. The following table presents for the periods indicated our condensed average balance sheet information, together with interest income and yields earned on average interest-earning assets and interest expense and rates paid on average interest-bearing liabilities with additional comparative data on our operating performance (dollars in thousands). Average balances are computed using daily average balances.





ANALYSIS OF NET INTEREST SPREAD	Quarters Ended
(rates / ratios annualized)	Mar 31, 2025						Dec 31, 2024						Mar 31, 2024
(dollars in thousands)	Average Balance		Interest and Dividends		Yield / Cost (3)		Average Balance		Interest and Dividends		Yield / Cost (3)		Average Balance		Interest and Dividends		Yield / Cost (3)
Interest-earning assets:
Held for sale loans	$	22,457	$	357	6.45	%	$	61,585	$	1,049	6.78	%	$	9,939	$	167	6.76	%
Mortgage loans	9,366,213		137,724		5.96	%	9,267,076		136,831		5.87	%	8,892,561		125,284		5.67	%
Commercial/agricultural loans	1,907,212		30,752		6.54	%	1,900,337		31,873		6.67	%	1,830,095		30,847		6.78	%
Consumer and other loans	121,492		2,092		6.98	%	124,726		2,078		6.63	%	133,854		2,196		6.60	%
Total loans (1)	11,417,374		170,925		6.07	%	11,353,724		171,831		6.02	%	10,866,449		158,494		5.87	%
Mortgage-backed securities	2,542,983		15,895		2.53	%	2,576,908		16,228		2.51	%	2,728,640		17,076		2.52	%
Other securities	902,732		9,687		4.35	%	919,742		10,281		4.45	%	984,639		11,501		4.70	%

Interest-bearing deposits with banks	65,758		484		2.99	%	107,404		1,043		3.86	%	45,264		459		4.08	%
FHLB stock	12,804		149		4.72	%	9,887		316		12.71	%	19,073		209		4.41	%
Total investment securities	3,524,277		26,215		3.02	%	3,613,941		27,868		3.07	%	3,777,616		29,245		3.11	%
Total interest-earning assets	14,941,651		197,140		5.35	%	14,967,665		199,699		5.31	%	14,644,065		187,739		5.16	%
Non-interest-earning assets	1,006,497						1,016,366						943,725
Total assets	$	15,948,148					$	15,984,031					$	15,587,790
Deposits:
Interest-bearing checking accounts	$	2,381,106	8,537		1.45	%	$	2,377,179	9,279		1.55	%	$	2,104,242	6,716		1.28	%
Savings accounts	3,450,908		18,103		2.13	%	3,441,196		19,447		2.25	%	3,066,448		15,279		2.00	%
Money market accounts	1,555,262		7,860		2.05	%	1,584,092		8,510		2.14	%	1,674,159		8,388		2.02	%
Certificates of deposit	1,531,428		14,237		3.77	%	1,513,966		14,981		3.94	%	1,500,429		14,230		3.81	%
Total interest-bearing deposits	8,918,704		48,737		2.22	%	8,916,433		52,217		2.33	%	8,345,278		44,613		2.15	%
Non-interest-bearing deposits	4,526,596		—		—	%	4,640,557		—		—	%	4,711,922		—		—	%
Total deposits	13,445,300		48,737		1.47	%	13,556,990		52,217		1.53	%	13,057,200		44,613		1.37	%
Other interest-bearing liabilities:
FHLB advances	75,300		860		4.63	%	7,522		85		4.50	%	212,989		2,972		5.61	%
Other borrowings	134,761		694		2.09	%	143,097		817		2.27	%	180,692		1,175		2.62	%
Junior subordinated debentures and subordinated notes	169,678		2,494		5.96	%	169,678		2,781		6.52	%	181,579		2,969		6.58	%
Total borrowings	379,739		4,048		4.32	%	320,297		3,683		4.57	%	575,260		7,116		4.98	%
Total funding liabilities	13,825,039		52,785		1.55	%	13,877,287		55,900		1.60	%	13,632,460		51,729		1.53	%
Other non-interest-bearing liabilities (2)	324,031						324,447						303,412
Total liabilities	14,149,070						14,201,734						13,935,872
Shareholders’ equity	1,799,078						1,782,297						1,651,918
Total liabilities and shareholders’ equity	$	15,948,148					$	15,984,031					$	15,587,790
Net interest income/rate spread (tax equivalent)			$	144,355	3.80	%			$	143,799	3.71	%			$	136,010	3.63	%
Net interest margin (tax equivalent)					3.92	%					3.82	%					3.74	%
Reconciliation to reported net interest income:
Adjustments for taxable equivalent basis			(3,272)						(3,263)						(3,051)
Net interest income and margin, as reported			$	141,083	3.83	%			$	140,536	3.74	%			$	132,959	3.65	%
Additional Key Financial Ratios:
Return on average assets					1.15	%					1.15	%					0.97	%
Adjusted return on average assets(4)					1.14	%					1.15	%					1.08	%
Return on average equity					10.17	%					10.35	%					9.14	%
Adjusted return on average equity(4)					10.12	%					10.28	%					10.24	%
Average equity/average assets					11.28	%					11.15	%					10.60	%
Average interest-earning assets/average interest-bearing liabilities					160.69	%					162.05	%					164.16	%
Average interest-earning assets/average funding liabilities					108.08	%					107.86	%					107.42	%
Non-interest income/average assets					0.49	%					0.50	%					0.30	%
Non-interest expense/average assets					2.57	%					2.48	%					2.52	%
Efficiency ratio					63.21	%					61.95	%					67.55	%
Adjusted efficiency ratio (4)					62.18	%					60.74	%					63.70	%

(1)Average balances include loans accounted for on a nonaccrual basis and accruing loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.

(2)Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.

(3)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $2.2 million for both the quarters ended March 31, 2025 and December 31, 2024, and $2.0 million for the quarter ended March 31, 2024. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million for the quarters ended March 31, 2025, December 31, 2024, and March 31, 2024.

(4)Represents non-GAAP financial measures. See non-GAAP financial measure reconciliations presented above following First Quarter 2025 Highlights.

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Provision and Allowance for Credit Losses. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loan based on evaluating historical credit loss experience and making adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. These factors include, among others, changes in the size and composition of the loan portfolio, differences in underwriting standards, delinquency rates, actual loss experience and current economic conditions. The following table sets forth an analysis of our allowance for credit losses - loans for the periods indicated (dollars in thousands):


	Quarters Ended
CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES - LOANS	Mar 31, 2025			Dec 31, 2024			Mar 31, 2024

Balance, beginning of period	$	155,521		$	154,585		$	149,643
Provision for credit losses – loans	4,549			3,219			1,424
Recoveries of loans previously charged off:
Commercial real estate	57			1,215			1,389


One- to four-family residential	188			124			16
Commercial business	557			245			781
Agricultural business, including secured by farmland	10			2			106
Consumer	119			164			159
	931			1,750			2,451
Loans charged off:
Commercial real estate	—			(4)			—

Construction and land	—			(5)			—
One- to four-family residential	(13)			—			—
Commercial business	(3,301)			(3,595)			(1,809)

Consumer	(364)			(429)			(569)
	(3,678)			(4,033)			(2,378)
Net (charge-offs) recoveries	(2,747)			(2,283)			73
Balance, end of period	$	157,323		$	155,521		$	151,140
Net (charge-offs) recoveries / Average loans receivable	(0.024)		%	(0.020)		%	0.001		%
Allowance for credit losses - loans as a percentage of total loans	1.38		%	1.37		%	1.39		%

The provision for credit losses - loans reflects the amount required to maintain the allowance for credit losses - loans at an appropriate level based upon management’s evaluation of the adequacy of collective and individual loss reserves. During the quarter ended March 31, 2025, we recorded a provision for credit losses - loans of $4.5 million, compared to a provision for credit losses - loans of $3.2 million during the preceding quarter. The provision for credit losses for the current quarter primarily reflected loan growth in the construction portfolio and to a lesser extent risk rating migration and qualitative adjustments applied to address economic uncertainty. The provision for credit losses for the preceding quarter primarily reflected risk rating downgrades as well as growth in loan balances. Future provisions for credit losses will continue to be influenced by changes in the amount and composition of the loan portfolio, updates to the reasonable and supportable forecast of future economic conditions, revisions to qualitative factor assessments, and any necessary changes to the reversion period applied in estimating expected credit losses.

The provision for credit losses - unfunded loan commitments reflects the amount required to maintain the allowance for credit losses - unfunded loan commitments at an appropriate level based upon management’s evaluation of the adequacy of collective and individual loss reserves. The following table sets forth an analysis of our allowance for credit losses - unfunded loan commitments for the periods indicated (dollars in thousands):


	Quarters Ended
CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS	Mar 31, 2025		Dec 31, 2024		Mar 31, 2024

Balance, beginning of period	$	13,562	$	13,765	$	14,484

Recapture of provision for credit losses - unfunded loan commitments	(1,400)		(203)		(887)

Balance, end of period	$	12,162	$	13,562	$	13,597

The decrease in the allowance for credit losses - unfunded loan commitments for the current quarter primarily reflects a decrease in unfunded loan commitments in the construction portfolio.

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Non-interest Income. The following table presents the key components of non-interest income for the periods indicated (dollars in thousands):


	Quarters Ended
	Mar 31, 2025		Dec 31, 2024		Change Amount		Change Percent		Mar 31, 2024		Change Amount		Change Percent
Deposit fees and other service charges	$	10,769	$	11,018	$	(249)	(2)	%	$	11,022	$	(253)	(2)	%
Mortgage banking operations	3,103		3,686		(583)		(16)		2,335		768		33
Bank owned life insurance	2,575		2,144		431		20		2,237		338		15
Miscellaneous	2,346		2,751		(405)		(15)		1,892		454		24
	18,793		19,599		(806)		(4)		17,486		1,307		7
Net gain (loss) on sale of securities	—		275		(275)		(100)		(4,903)		4,903		(100)
Net change in valuation of financial instruments carried at fair value	315		161		154		96		(992)		1,307		(132)

Total non-interest income	$	19,108	$	20,035	$	(927)	(5)	%	$	11,591	$	7,517	65	%

The decrease in non-interest income during the current quarter compared to the preceding quarter was primarily due to decreases in mortgage banking operations revenue and miscellaneous income, partially offset by an increase in bank owned life insurance income. The increase in non-interest income during the current quarter compared to the prior year quarter 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

Revenue from mortgage banking operations decreased $583,000 for the quarter ended March 31, 2025, compared to the preceding quarter and increased $768,000 compared to the same period a year earlier. The volume of one- to four-family loans sold during the current quarter decreased compared to the preceding quarter and increased compared to the prior year quarter. While the volume of one- to four-family loans sold increased compared to the prior year quarter, overall volumes remained low due to reduced refinancing and purchase activity in the current interest rate environment. The decrease in mortgage banking operations revenue from the preceding quarter reflects a $508,000 gain related to the pooled loan sale of $34.8 million of one- to four-family loans during the fourth quarter of 2024 and a decrease in the market value of our hedge, partially offset by an increase in the pricing of one- to four-family loans sold during the current quarter. Gains on sales of one- to four-family loans totaled $2.1 million for the quarter ended March 31, 2025, compared to $2.6 million in the preceding quarter and $1.3 million for the three months ended March 31, 2024. Home purchase activity accounted for 84% of one- to four-family residential mortgage loan originations in the first quarter of 2025, compared to 79% in the preceding quarter.

Bank owned life insurance income increased for the three months ended March 31, 2025, compared to the preceding and prior year quarters due to the receipt of death benefit proceeds during the current quarter.

Miscellaneous income decreased for the three months ended March 31, 2025, compared to the prior quarter, primarily due to a gain recognized on the sale of a non-performing loan during the fourth quarter of 2024, and increased compared to same period a year earlier, primarily as a result of an increase in the gain on sale of SBA loans.

The net loss on the sale of securities recognized for the three months ended March 31, 2024 reflected strategic sales of securities to minimize the impact of increasing rates on our securities portfolio. The net loss for fair value adjustments for changes in the valuation of financial instruments carried at fair value for the three months ended March 31, 2024 were due to declines in the current market valuation of limited partnership investments.

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Non-interest Expense. The following table represents key elements of non-interest expense for the periods indicated (dollars in thousands):


	Quarters Ended
	Mar 31, 2025		Dec 31, 2024		Change Amount		Change Percent.		Mar 31, 2024		Change Amount		Change Percent
Salary and employee benefits	$	64,857	$	62,523	$	2,334	4	%	$	62,369	$	2,488	4	%
Less capitalized loan origination costs	(3,330)		(4,188)		858		(20)		(3,676)		346		(9)
Occupancy and equipment	12,097		12,141		(44)		—		12,462		(365)		(3)
Information and computer data services	7,628		7,471		157		2		7,320		308		4
Payment and card processing services	5,750		5,771		(21)		—		5,710		40		1
Professional and legal expenses	2,430		3,025		(595)		(20)		1,530		900		59
Advertising and marketing	590		1,711		(1,121)		(66)		1,079		(489)		(45)
Deposit insurance	2,797		2,857		(60)		(2)		2,809		(12)		—
State and municipal business and use taxes	1,454		1,518		(64)		(4)		1,304		150		12
Real estate operations, net	(61)		113		(174)		(154)		(220)		159		(72)
Amortization of core deposit intangibles	456		589		(133)		(23)		723		(267)		(37)

Miscellaneous	6,591		5,947		644		11		6,231		360		6



Total non-interest expense	$	101,259	$	99,478	$	1,781	2	%	$	97,641	$	3,618	4	%

The increase in non-interest expense for the current quarter compared to the prior quarter reflects an increase in salary and employee benefits and a decrease in capitalized loan costs, partially offset by a decrease in advertising and marketing expenses. The increase in non-interest expense for the three months ended March 31, 2025, compared to the same period a year earlier primarily reflects increases in salary and employee benefits and professional and legal expenses.

Salary and employee benefits increased compared to the prior quarter, primarily as a result of increased medical premiums expense, as well as payroll tax expense that typically increases in the first quarter due to the reset of payroll tax wage bases. The increase compared to the same period a year earlier was primarily the result of normal salary and wage increases.

Advertising and marketing expense decreased for the quarter ended March 31, 2025, primarily due to decreases in printed media marketing and community development expenses.

Professional and legal expense decreased for the three months ended March 31, 2025, compared to the preceding quarter primarily due to a decrease in consultant and audit expenses due to the timing of these engagements. The increase compared to the same period a year ago was primarily due to an increase in legal expenses as the prior period reflected a one-time true-up.

Our efficiency ratio was 63.21% for the current quarter, compared to 61.95% in the preceding quarter. Our adjusted efficiency ratio, a non-GAAP financial measure, was 62.18% for the current quarter, compared to 60.74% in the preceding quarter. The efficiency ratio for the current quarter reflects a decrease in total revenues in addition to the increase in non-interest expenses. See non-GAAP financial measure reconciliations presented above under “First Quarter 2025 Financial Highlights.”

Income Taxes. For the quarter ended March 31, 2025, we recognized $10.7 million in income tax expense for an effective tax rate of 19.1%, which reflects our blended statutory tax rate reduced by the effect of tax-exempt income, certain tax credits, and tax benefits related to restricted stock vesting. Our statutory income tax rate is 23.7%, representing a statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates. For the quarter ended December 31, 2024, we recognized $11.7 million in income tax expense for an effective tax rate of 20.1%. For the three months ended March 31, 2024, we recognized $8.8 million in income tax expense for an effective tax rate of 19.0%.

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Asset Quality

Maintaining a moderate risk profile by employing appropriate underwriting standards, avoiding excessive asset concentrations and aggressively managing troubled assets has been and will continue to be a primary focus for us. We actively engage with our borrowers to resolve adversely classified loans and other problem assets.

Non-Performing Assets: Non-performing assets totaled $42.7 million, or 0.26% of total assets, at March 31, 2025, compared to $39.6 million, or 0.24% of total assets, at December 31, 2024. Our allowance for credit losses - loans was $157.3 million, or 404% of non-performing loans, at March 31, 2025, compared to $155.5 million, or 421% of non-performing loans, at December 31, 2024.

The following table sets forth information with respect to our non-performing assets at the dates indicated (dollars in thousands):


	March 31, 2025			December 31, 2024			March 31, 2024
Nonaccrual Loans:
Secured by real estate:
Commercial	$	2,182		$	2,186		$	2,753

Construction and land	4,359			3,963			5,029
One- to four-family	10,448			10,016			7,750
Commercial business	6,425			7,067			7,355
Agricultural business, including secured by farmland	10,301			8,485			2,496
Consumer	4,874			4,835			3,411
	38,589			36,552			28,794
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:


Construction and land	—			—			286
One- to four-family	9			369			409
Commercial business	206			—			—

Consumer	155			35			—
	370			404			695
Total non-performing loans	38,959			36,956			29,489

REO, net	3,468			2,367			448
Other repossessed assets held for sale	300			300			—
Total non-performing assets	$	42,727		$	39,623		$	29,937

Total non-performing assets to total assets	0.26		%	0.24		%	0.19		%
Total nonaccrual loans to total loans receivable	0.34		%	0.32		%	0.26		%
Loans 30-89 days past due and on accrual	$	37,339		$	26,824		$	19,649

For the three months ended March 31, 2025, interest income was reduced by $870,000 as a result of nonaccrual loan activity, which included the reversal of $263,000 of accrued interest as of the date the loan was placed on nonaccrual. There was no interest income recognized on nonaccrual loans for the three months ended March 31, 2025.

The following table presents the Company’s portfolio of loans by risk grade at the dates indicated (in thousands):


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

Pass	$	11,207,852	$	11,118,744	$	10,731,015
Special Mention	33,133		43,451		22,029
Substandard	197,811		192,461		116,052

Total	$	11,438,796	$	11,354,656	$	10,869,096

As of March 31, 2025, total substandard loans primarily consisted of loans within the commercial business, commercial real estate and agricultural loan segments.

Liquidity and Capital Resources

Our primary sources of funds are deposits, borrowings, proceeds from loan principal and interest payments and sales of loans, and the maturity of and interest payments on mortgage-backed and investment securities. While maturities and scheduled amortization of loans and securities are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by market interest rates, economic conditions, competition and our pricing strategies.

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Our primary investing activity is the origination of loans and, in certain periods, the purchase of securities or loans. During the three months ended March 31, 2025 and 2024, our loan originations, including originations of loans held for sale, exceeded our loan repayments by $186.2 million and $120.4 million, respectively. There were $10.8 million of loan purchases during the three months ended March 31, 2025, and $4.7 million loan purchases during the three months ended March 31, 2024. During the three months ended March 31, 2025 and 2024, we received proceeds of $120.7 million and $71.5 million, respectively, from the sale of loans. Securities purchased during the three months ended March 31, 2025 and 2024 totaled $9.8 million and $10.5 million, respectively, and securities repayments, maturities and sales in those periods were $52.9 million and $134.2 million, respectively.

Our primary financing activity is gathering deposits. Total deposits increased by $78.9 million during the three months ended March 31, 2025, primarily due to an increase in core deposits. Core deposits were $12.09 billion at March 31, 2025, compared to $12.01 billion at December 31, 2024. Certificates of deposit are generally more vulnerable to competition and more price sensitive than other retail deposits and our pricing of those deposits varies significantly based upon our liquidity management strategies at any point in time. At March 31, 2025, certificates of deposit totaled $1.50 billion, or 11% of our total deposits, including $1.45 billion which were scheduled to mature within one year. While no assurance can be given as to future periods, historically, we have been able to retain a significant amount of our certificates of deposit as they mature.

We had $168.0 million of FHLB advances at March 31, 2025, compared to $290.0 million at December 31, 2024. Other borrowings increased to $130.6 million at March 31, 2025 from $125.3 million at December 31, 2024. Subordinated notes, net of issuance costs decreased to $80.4 million at March 31, 2025, compared to $80.3 million at December 31, 2024.

We must maintain an adequate level of liquidity to ensure the availability of sufficient funds to accommodate deposit withdrawals, to support loan growth, to satisfy financial commitments, and to take advantage of investment opportunities. During the three months ended March 31, 2025, we used our sources of funds primarily to fund loan growth. At March 31, 2025, we had outstanding loan commitments totaling $3.89 billion, relating to undisbursed loans in process and unused credit lines. While representing potential growth in the loan portfolio and lending activities, this level of commitments is proportionally consistent with our historical experience and does not represent a departure from normal operations.

We generally maintain sufficient cash and readily marketable securities to meet short-term liquidity needs; however, our primary liquidity management practice to supplement deposits is to increase or decrease short-term borrowings, including FHLB advances and Federal Reserve Bank of San Francisco (FRBSF) borrowings. We maintain credit facilities with the FHLB, which provide for advances that in the aggregate would equal the lesser of 45% of the Bank’s assets or adjusted qualifying collateral (subject to a sufficient level of ownership of FHLB stock). At March 31, 2025, under these credit facilities based on pledged collateral, the Bank had $3.14 billion of available credit capacity. Advances under these credit facilities totaled $168.0 million at March 31, 2025. In addition, the Bank has been approved for participation in the FRBSF’s Borrower-In-Custody program. Under this program, based on pledged collateral, the Bank had available lines of credit of approximately $1.65 billion as of March 31, 2025, subject to certain collateral requirements, namely the collateral type and risk rating of eligible pledged loans. We had no funds borrowed from the FRBSF at March 31, 2025 or December 31, 2024. At March 31, 2025, the Bank also had uncommitted federal funds line of credit agreements with other financial institutions totaling $125.0 million. No balances were outstanding under these agreements as of March 31, 2025 or December 31, 2024. Availability of lines is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs and the agreements may restrict consecutive day usage. Management believes it has adequate resources and funding potential to meet our foreseeable liquidity requirements.

Banner is a separate legal entity from the Bank and, on a stand-alone level, must provide for its own liquidity, and pay its own operating expenses and cash dividends. At March 31, 2025, Banner (on an unconsolidated basis) had liquid assets of $84.2 million. At March 31, 2025, Banner had an intercompany loan agreement with the Bank of $50.0 million. The note receivable from the Bank has a rolling one-year term, automatically renewed each quarter, and is eliminated upon consolidation.

Banner’s primary sources of funds consist of capital raised through dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. We currently expect to continue our current practice of paying quarterly cash dividends on our common stock subject to our Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice. Our current quarterly common stock dividend rate is $0.48 per share, as approved by our Board of Directors, which we believe is a dividend rate per share which enables us to balance our multiple objectives of managing and investing in the Bank, and returning a substantial portion of our cash to our shareholders. Assuming continued dividend payments during 2025 at this rate of $0.48 per share, our average total dividend paid each quarter would be approximately $16.6 million based on the number of outstanding shares at March 31, 2025.

As noted below, Banner Corporation and its subsidiary bank continued to maintain capital levels in excess of the requirements to be categorized as “Well-Capitalized” under applicable regulatory standards. During the three months ended March 31, 2025, total shareholders’ equity increased $59.1 million, to $1.83 billion or 11.34% of total assets. At March 31, 2025, tangible common shareholders’ equity, which excludes goodwill and other intangible assets, was $1.46 billion, or 9.23% of tangible assets. Tangible common shareholders’ equity represents a non-GAAP financial measure. See, non-GAAP financial measure reconciliations presented above under “First Quarter 2025 Financial Highlights.”

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Capital Requirements

Banner is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. The Bank, as a state-chartered, federally insured commercial bank, is subject to the capital requirements established by the FDIC.

The capital adequacy requirements are quantitative measures established by regulation that require Banner and the Bank to maintain minimum amounts and ratios of capital. The Federal Reserve requires Banner to maintain capital adequacy that generally parallels the FDIC requirements. The FDIC requires the Bank to maintain minimum capital ratios of total capital, tier 1 capital, and common equity tier 1 capital to risk-weighted assets as well as tier 1 leverage capital to average assets. In addition to the minimum capital ratios, the Bank must to maintain a capital conservation buffer consisting of additional common equity tier 1 capital greater than 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses. At March 31, 2025, Banner and the Bank each exceeded all regulatory capital requirements to be “well capitalized.”

The actual regulatory capital ratios calculated for Banner Corporation and Banner Bank as of March 31, 2025, along with the minimum capital amounts and ratios, were as follows (dollars in thousands):


	Actual				Minimum to be Categorized as “Adequately Capitalized”				Minimum to be Categorized as “Well-Capitalized”
	Amount		Ratio		Amount		Ratio		Amount		Amount
Banner Corporation—consolidated
Total capital to risk-weighted assets	$	2,052,497	15.23	%	$	1,078,147	8.00	%	$	1,347,684	10.00	%
Tier 1 capital to risk-weighted assets	1,784,020		13.24	%	808,610		6.00	%	808,610		6.00	%
Tier 1 leverage capital to average assets	1,784,020		11.22	%	636,113		4.00	%	n/a		n/a
Common equity tier 1 capital	1,697,520		12.60	%	606,458		4.50	%	n/a		n/a
Banner Bank
Total capital to risk-weighted assets	$	1,911,810	14.16	%	$	1,079,945	8.00	%	$	1,349,932	10.00	%
Tier 1 capital to risk-weighted assets	1,743,056		12.91	%	809,959		6.00	%	1,079,945		8.00	%
Tier 1 leverage capital to average assets	1,743,056		10.95	%	636,570		4.00	%	795,713		5.00	%
Common equity tier 1 capital	1,743,056		12.91	%	607,469		4.50	%	877,456		6.50	%

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk

Market Risk and Asset/Liability Management

Our financial condition and operations are influenced significantly by general economic conditions, including the absolute level of interest rates as well as changes in interest rates and the slope of the yield curve. Our profitability is dependent, to a large extent, on our net interest income, which is the difference between the interest received from our interest-earning assets and the interest expense incurred on our interest-bearing liabilities.

Our activities, like all financial institutions, inherently involve the assumption of interest rate risk. Interest rate risk is the risk that changes in market interest rates will have an adverse impact on the institution’s earnings and underlying economic value. Interest rate risk is determined by the maturity and repricing characteristics of an institution’s assets, liabilities and off-balance-sheet contracts. Interest rate risk is measured by the variability of financial performance and economic value resulting from changes in interest rates. Interest rate risk is the primary market risk affecting our financial performance.

For the Company, the greatest source of interest rate risk results from the mismatch of maturities or repricing intervals for rate sensitive assets, liabilities and off-balance-sheet contracts. This mismatch, or gap, is generally characterized by a substantially shorter maturity structure for interest-bearing liabilities than interest-earning assets, although our floating-rate assets tend to be more immediately responsive to changes in market rates than most deposit liabilities. Additional interest rate risk results from mismatched repricing indices and formula (basis risk and yield curve risk), and product caps and floors and early repayment or withdrawal provisions (option risk), which may be contractual or market driven, that are generally more favorable to clients than to us. An exception to this generalization is the beneficial effect of interest rate floors on a portion of our performing floating-rate loans, which help us maintain higher loan yields in periods when market interest rates decline significantly. However, in a declining interest rate environment, as loans with floors are repaid they generally are replaced with new loans which have lower interest rate floors. As of March 31, 2025, our loans with interest rate floors totaled $5.27 billion and had a weighted average floor rate of 4.80%, compared to a current average note rate of 6.45%. Our loans with interest rates at their floors at March 31, 2025, totaled $1.29 billion and had a weighted average note rate of 4.45%. The Company actively manages its exposure to interest rate risk through on-going adjustments to the mix of interest-earning assets and funding sources that affect the repricing speeds of loans, investments, interest-bearing deposits and borrowings.

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The principal objectives of asset/liability management are to evaluate the interest rate risk exposure; to determine the appropriate level of risk given our operating environment, business plan strategies, performance objectives, capital and liquidity constraints, and asset and liability allocation alternatives; and to manage our interest rate risk consistent with regulatory guidelines and policies approved by the Board of Directors. Through such management, we seek to reduce the vulnerability of our earnings and capital position to changes in the level of interest rates. Our actions in this regard are taken under the guidance of the Asset/Liability Management Committee, which is comprised of members of our senior management. The Committee closely monitors our interest sensitivity exposure, asset and liability allocation decisions, liquidity and capital positions, and local and national economic conditions and attempts to structure the loan and investment portfolios and funding sources to maximize earnings within acceptable risk tolerances.

Sensitivity Analysis

Our primary monitoring tool for assessing interest rate risk is asset/liability simulation modeling, which is designed to capture the dynamics of balance sheet, interest rate and spread movements and to quantify variations in net interest income resulting from those movements under different rate environments. The sensitivity of net interest income to changes in the modeled interest rate environments provides a measurement of interest rate risk. We also utilize economic value analysis, which addresses changes in estimated net economic value of equity arising from changes in the level of interest rates. The net economic value of equity is estimated by separately valuing our assets and liabilities under varying interest rate environments. The extent to which assets gain or lose value in relation to the gains or losses of liability values under the various interest rate assumptions determines the sensitivity of net economic value to changes in interest rates and provides an additional measure of interest rate risk.

The interest rate sensitivity analysis performed by us incorporates beginning-of-the-period rate, balance and maturity data, using various levels of aggregation of that data, as well as certain assumptions concerning the maturity, repricing, amortization and prepayment characteristics of loans and other interest-earning assets and the repricing and withdrawal of deposits and other interest-bearing liabilities into an asset/liability simulation model. The interest rate sensitivity analysis includes a rate ramp sensitivity scenario, which assumes a gradual change in market interest rates at all maturities during the first year, as well as a rate shock interest rate sensitivity scenario, which assumes an instantaneous and sustained uniform change in market interest rates at all maturities. We update and prepare simulation modeling at least quarterly for review by senior management and oversight by the Board of Directors. We believe the data and assumptions are realistic representations of our portfolio and possible outcomes under the various interest rate scenarios. Nonetheless, the interest rate sensitivity of our net interest income and net economic value of equity could vary substantially if different assumptions were used or if actual experience differs from the assumptions used.

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The following tables set forth, as of March 31, 2025, the estimated changes in our net interest income over one-year and two-year time horizons for our rate ramp and rate shock interest rate sensitivity scenarios, and the estimated changes in economic value of equity for our rate shock interest rate sensitivity scenario based on the indicated interest rate environments (dollars in thousands):

Interest Rate Risk Indicators - Rate Ramp


	March 31, 2025
	Estimated Increase (Decrease) in
Change (in Basis Points) in Interest Rates (1)	Net Interest Income Next 12 Months				Net Interest Income Next 24 Months

+300	$	3,207	0.5	%	$	22,077	1.8	%
+200	5,821		1.0		30,872		2.5
+100	5,108		0.9		23,996		1.9
0	—		—		—		—


-100	(7,078)		(1.2)		(31,290)		(2.5)
-200	(12,951)		(2.1)		(59,663)		(4.8)
-300	(17,774)		(2.9)		(85,271)		(6.8)

(1)Assumes a gradual change in market interest rates at all maturities during the first year; however, no rates are allowed to go below zero.

Interest Rate Risk Indicators - Rate Shock


	March 31, 2025
	Estimated Increase (Decrease) in
Change (in Basis Points) in Interest Rates (1)	Net Interest Income Next 12 Months				Net Interest Income Next 24 Months				Economic Value of Equity

+300	$	1,418	0.2	%	$	37,549	3.0	%	$	(396,458)	(14.1)	%
+200	11,800		2.0		48,976		3.9		(223,317)		(8.0)
+100	11,654		1.9		37,090		3.0		(82,412)		(2.9)
0	—		—		—		—		—		—


-100	(16,211)		(2.7)		(47,996)		(3.8)		40,750		1.5
-200	(29,431)		(4.9)		(93,016)		(7.4)		48,320		1.7
-300	(40,913)		(6.8)		(136,967)		(10.9)		(3,361)		(0.1)

(1)Assumes an instantaneous and sustained uniform change in market interest rates at all maturities; however, no rates are allowed to go below zero.

At March 31, 2025, as demonstrated by the tables above, the Company’s interest rate risk profile reflected moderate asset sensitivity, with net interest income projected to increase in rising rate scenarios and decrease in falling rate scenarios. Economic value of equity declined meaningfully in rising rate scenarios and increased modestly in falling rate scenarios. These results indicate earnings benefit from higher rates in the near term, while long-term value is more sensitive to rate increases.

Another monitoring tool for assessing interest rate risk is gap analysis. The matching of the repricing characteristics of assets and liabilities may be analyzed by examining the extent to which assets and liabilities are interest sensitive and by monitoring an institution’s interest sensitivity gap. An asset or liability is said to be interest sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets anticipated, based upon certain assumptions, to mature or reprice within a specific time period and the amount of interest-bearing liabilities anticipated to mature or reprice, based upon certain assumptions, within that same time period. A gap is considered positive when the amount of interest-sensitive assets exceeds the amount of interest-sensitive liabilities. A gap is considered negative when the amount of interest-sensitive liabilities exceeds the amount of interest-sensitive assets. Generally, during a period of rising rates, a negative gap would tend to adversely affect net interest income while a positive gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to adversely affect net interest income.

Certain shortcomings are inherent in gap analysis. For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as adjustable-rate mortgage loans, have features that restrict changes in interest rates on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of some borrowers to service their debt may decrease in the event of a severe change in market rates.

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The following table presents our interest sensitivity gap between interest-earning assets and interest-bearing liabilities at March 31, 2025 (dollars in thousands), based on the amounts of interest-earning assets and interest-bearing liabilities which are anticipated by us, based upon certain assumptions, to reprice or mature in each of the future periods shown. At March 31, 2025, total interest-earning assets maturing or repricing within one year exceeded total interest-bearing liabilities maturing or repricing in the same time period by $2.67 billion, representing a one-year cumulative gap to total assets ratio of 16.49%. Both the interest rate risk indicators and interest sensitivity gaps as of March 31, 2025 were within our internal policy guidelines, and management believes the current level of interest rate risk to be reasonable.


	Within 6 Months			After 6 Months Within 1 Year			After 1 Year Within 3 Years			After 3 Years Within 5 Years			After 5 Years Within 10 Years			Over 10 Years			Total
Interest-earning assets: (1)
Construction loans	$	1,222,866		$	142,468		$	81,960		$	7,947		$	1,071		$	2,344		$	1,458,656
Fixed-rate mortgage loans	255,934			214,948			656,756			591,863			752,599			403,691			2,875,791
Adjustable-rate mortgage loans	1,186,281			428,796			1,615,641			843,588			426,122			1,330			4,501,758
Fixed-rate mortgage-backed securities	98,587			101,958			360,471			366,750			791,072			765,753			2,484,591
Adjustable-rate mortgage-backed securities	204,034			47			202			216			3,799			—			208,298
Fixed-rate commercial/agricultural loans	120,535			84,341			255,120			134,079			132,579			15,854			742,508
Adjustable-rate commercial/agricultural loans	970,727			35,483			83,593			51,699			1,115			—			1,142,617
Consumer and other loans	572,094			23,454			53,251			18,362			19,810			40,882			727,853
Investment securities and interest-earning deposits	290,471			17,052			20,270			47,240			126,805			487,280			989,118
Total rate sensitive assets	4,921,529			1,048,547			3,127,264			2,061,744			2,254,972			1,717,134			15,131,190
Interest-bearing liabilities: (2)
Regular savings	485,672			167,770			572,923			445,826			743,307			1,126,507			3,542,005
Interest checking accounts	292,378			102,897			363,934			298,230			531,257			842,584			2,431,280
Money market deposit accounts	209,731			123,283			386,251			259,301			336,828			228,939			1,544,333
Certificates of deposit	1,140,866			313,015			44,471			5,522			177			—			1,504,051
FHLB advances	168,000			—			—			—			—			—			168,000
Subordinated notes	80,500			—			—			—			—			—			80,500
Junior subordinated debentures	89,178			—			—			—			—			—			89,178
Retail repurchase agreements	130,588			—			—			—			—			—			130,588
Total rate sensitive liabilities	2,596,913			706,965			1,367,579			1,008,879			1,611,569			2,198,030			9,489,935
Excess of interest-sensitive assets over interest-sensitive liabilities	$	2,324,616		$	341,582		$	1,759,685		$	1,052,865		$	643,403		$	(480,896)		$	5,641,255
Cumulative excess of interest-sensitive assets	$	2,324,616		$	2,666,198		$	4,425,883		$	5,478,748		$	6,122,151		$	5,641,255		$	5,641,255
Cumulative ratio of interest-earning assets to interest-bearing liabilities	189.51		%	180.70		%	194.74		%	196.45		%	183.96		%	159.44		%	159.44		%
Interest sensitivity gap to total assets	14.38			2.11			10.88			6.51			3.98			(2.97)			34.89
Ratio of cumulative gap to total assets	14.38			16.49			27.37			33.88			37.86			34.89			34.89

(Footnotes on following page)

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Footnotes for Table of Interest Sensitivity Gap

(1)Adjustable-rate assets are included in the period in which interest rates are next scheduled to adjust rather than in the period in which they are due to mature, and fixed-rate assets are included in the period in which they are scheduled to be repaid based upon scheduled amortization, in each case adjusted to take into account estimated prepayments. Mortgage loans and other loans are not reduced for allowances for credit losses and non-performing loans. Mortgage loans, mortgage-backed securities, other loans and investment securities are not adjusted for deferred fees or unamortized acquisition premiums and discounts.

(2)Adjustable-rate liabilities are included in the period in which interest rates are next scheduled to adjust rather than in the period they are due to mature. Although regular savings, demand, interest checking, and money market deposit accounts are subject to immediate withdrawal, based on historical experience management considers a substantial amount of such accounts to be core deposits having significantly longer maturities. For the purpose of the gap analysis, these accounts have been assigned decay rates to reflect their longer effective maturities. If all of these accounts had been assumed to be short-term, the one-year cumulative gap of interest-sensitive assets would have been a negative $3.5 billion, or negative 21.46% of total assets, at March 31, 2025.

ITEM 4 – Controls and Procedures

The management of Banner Corporation is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Securities Exchange Act of 1934 (Exchange Act). A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. Also, because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. As a result of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

(a)Evaluation of Disclosure Controls and Procedures: An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) was carried out under the supervision and with the participation of our Chief Executive Officer, Chief Financial Officer and several other members of our senior management as of the end of the period covered by this report. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2025, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports it files or submits under the Exchange Act is (i) accumulated and communicated to our management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b)Changes in Internal Controls Over Financial Reporting: In the quarter ended March 31, 2025, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – Legal Proceedings

In the normal course of our business, we have various legal proceedings and other contingent matters pending. These proceedings and the associated legal claims are often contested and the outcome of individual matters is not always predictable. Furthermore, in some matters, it is difficult to assess potential exposure because the legal proceeding is still in the pretrial stage. These claims and counter claims typically arise during the course of collection efforts on problem loans or with respect to actions to enforce liens on properties in which we hold a security interest, although we also are subject to claims related to employment matters. Claims related to employment matters may include, but are not limited to, claims by our employees of discrimination, harassment, violations of wage and hour requirements, or violations of other federal, state, or local laws and claims of misconduct or negligence on the part of our employees. Some or all of these claims may lead to litigation, including class action litigation, and these matters may cause us to incur negative publicity with respect to alleged claims. Our insurance may not cover all claims that may be asserted against us, and any claims asserted against us, regardless of merit or eventual outcome, may harm our reputation. Should the ultimate judgments or settlements in any litigation exceed our insurance coverage, they could have a material adverse effect on our financial condition and results of operation for any period. The ultimate outcome of these legal proceedings could be more or less than what we have accrued. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, operations or cash flows.

ITEM 1A – Risk Factors

There have been no material changes in the risk factors previously disclosed in Part 1, Item 1A of our 2024 Form 10-K.

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ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table provides information about repurchases of common stock by the Company during the quarter ended March 31, 2025:


Period	Total Number of Common Shares Purchased (1)	Average Price Paid per Common Share		Total Number of Shares Purchased as Part of Publicly Announced Authorization	Maximum Number of Remaining Shares that May be Purchased as Part of Publicly Announced Authorization
January 1, 2025 - January 31, 2025	219	$	70.93	—	1,722,787
February 1, 2025 - February 28, 2025	—	—		—	1,722,787
March 1, 2025 - March 31, 2025	11,846	63.89		—	1,722,787
Total for quarter	12,065	$	64.02	—

(1) Includes 12,065 shares surrendered by employees to satisfy tax withholding obligations upon the vesting of restricted stock grants during the three months ended March 31, 2025.

On July 25, 2024, the Company announced that its Board of Directors had authorized repurchases of up to 1,722,787 shares of the Company’s common stock (approximately 5% of the Company’s outstanding shares) over the next 12 months. Under the authorization, shares may be repurchased by the Company in open market purchases. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

ITEM 3 – Defaults upon Senior Securities

Not Applicable.

ITEM 4 – Mine Safety Disclosures

Not Applicable.

ITEM 5 – Other Information

(a) None

(b) None

(c) During the quarter ended March 31, 2025, there were no Rule 10b5‑1 trading arrangements (as defined in Item 408(a) of Regulation S-K) or non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K) adopted or terminated by any director or officer (as defined in Rule 16a‑1(f) under the Exchange Act) of the Company.

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ITEM 6 – Exhibits


Exhibit			Index of Exhibits

3{a}			Restated Articles of Incorporation of Banner Corporation [incorporated by reference to Exhibit 3.1 (b) to the Registrant’s Current Report on Form 8-K filed with the SEC on May 24, 2022 (File No. 000-26584)].

3{b}			Amended and Restated Bylaws of Banner Corporation [incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on May 24, 2022 (File No. 000-26584)].

10{a}*			Amended and Restated Employment Agreement, with Mark J. Grescovich [incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 4, 2013 (File No. 000-26584].

10{b}*			Form of Supplemental Executive Retirement Program Agreement with Gary Sirmon, Michael K. Larsen, Lloyd W. Baker, Cynthia D. Purcell and Richard B. Barton [incorporated by reference to exhibits filed with the Annual Report on Form 10-K for the year ended December 31, 2001 and the exhibits filed with the Form 8-K on May 6, 2008 (File No. 000-26584)].

10{c}*			Form of Employment Contract entered into with Peter J. Conner, Cynthia D. Purcell and Judith A. Steiner [incorporated by reference to exhibits filed with the Form 8-K on June 25, 2014 (File No. 000-26584)].

10{d}*			2005 Executive Officer and Director Stock Account Deferred Compensation Plan [incorporated by reference to exhibits filed with the Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 000-26584)].

10{e}*			Entry into an Indemnification Agreement with each of the Registrant’s Directors [incorporated by reference to exhibits filed with the Form 8-K on January 29, 2010 (File No. 000-26584)].

10{f}*			2014 Omnibus Incentive Plan [incorporated by reference as Appendix C to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on March 24, 2014 (File No. 000-26584)] and amendments [incorporated by reference to the Form 8-K filed on March 25, 2015 (File No. 000-26584)].

10{g}*			Forms of Equity-Based Award Agreements: Incentive Stock Option Award Agreement, Non-Qualified Stock Option Award Agreement, Restricted Stock Award Agreement, Restricted Stock Unit Award Agreement, Stock Appreciation Right Award Agreement, and Performance Unit Award Agreement [incorporated by reference to Exhibits 10.2 - 10.7 included in the Registration Statement on Form S-8 dated May 9, 2014 (File No. 333-195835)].

10{h}*			2018 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.1 included in the Registration Statement on Form S-8 dated May 4, 2018 (File No. 333-224693)].

10{i}*			Amended and Restated Executive Severance and Change in Control Plan and Summary Plan Description (Amended and Restated effective as of July 1, 2023) [incorporated by reference to exhibit 10{j} included in the Form 10-Q dated June 30, 2023 (File No. 000-26584)]

10{j}*			2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.1 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No. 333-274273)].

10{k}*			Form of Director Restricted Stock Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.2 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No. 333-274273)].

10{l}*			Form of Director Restricted Stock Unit Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.3 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No. 333-274273)].

10{m}*			Form of Employee Restricted Stock Unit Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.4 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No. 333-274273)].

10{n}*			Form of Executive Restricted Stock Unit Performance Award Agreement under the Banner Corporation 2023 Omnibus Incentive Plan [incorporated by reference to Exhibit 10.5 included in the Registration Statement on Form S-8 dated August 30, 2023 (File No. 333-274273)].

10{o}*			2020 Banner Corporation Amended and Restated Deferred Compensation Plan [incorporated by reference to exhibit 10{o} filed with the Annual Report on Form 10-K for the year ended December 31, 2023 (File No. 000-26584)].

31.1			Certification of Chief Executive Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Exhibit			Index of Exhibits
31.2			Certification of Chief Financial Officer pursuant to the Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

101.SCH			Inline XBRL Taxonomy Extension Schema Document.

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (included in Exhibit 101).

* Compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Banner Corporation


May 6, 2025			/s/ Mark J. Grescovich
			Mark J. Grescovich
			President and Chief Executive Officer (Principal Executive Officer)


May 6, 2025			/s/ Robert G. Butterfield
			Robert G. Butterfield
			Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)