Banner Corporation Reports Net Income of $54.7 Million, or $1.60 Per Diluted Share, for First Quarter 2026; Increases Quarterly Cash Dividend Declared by 4% to $0.52 Per Share

Banner Corporation (NASDAQ:BANR) ("Banner"), the parent company of Banner Bank, today reported net income of $54.7 million, or $1.60 per diluted share, for the first quarter of 2026, compared to $51.2 million, or $1.49 per diluted share, for the preceding quarter, and $45.1 million, or $1.30 per diluted share, for the first quarter of 2025. Net interest income was $150.2 million for the first quarter of 2026, compared to $152.4 million in the preceding quarter and $141.1 million for the first quarter a year ago. Net interest margin expanded by eight basis points to 4.11%, driven by continued reductions in funding costs. The decrease in net interest income compared to the prior quarter primarily reflects two fewer calendar days in the current quarter and a slight decrease in average earning assets, both of which were largely offset by the margin improvement. The increase in net interest income compared to the first quarter a year ago primarily reflects a decrease in overall funding costs and an increase in the average balance of interest-earning assets. First quarter 2026 results included a $796,000 recapture of provision for credit losses, compared to $2.4 million of provision for credit losses in the preceding quarter and $3.1 million of provision for credit losses in the first quarter of 2025.

Banner announced that its Board of Directors increased its regular quarterly cash dividend by 4% to $0.52 per share payable May 15, 2026, to common shareholders of record on May 5, 2026.

"Banner's first quarter results demonstrate the continued strength of our super community bank strategy, which focuses on building client relationships, preserving a strong funding base, and delivering exceptional service while sustaining a moderate risk profile," said Mark Grescovich, President and CEO. "Our earnings for the first quarter of 2026 benefited from an improved net interest margin, increased non-interest income and decreased non-interest expense. The strategic investments we have made across the organization are delivering tangible returns and are further strengthening Banner for long-term success. Additionally, Banner's credit quality remains solid, supported by a well-funded reserve for loan losses and a robust capital position that provides resilience and flexibility for future growth. We also continue to benefit from a strong core deposit base, with core deposits representing 89% of total deposits at quarter-end. For 135 years, Banner has upheld its core values by consistently doing the right thing for our clients, communities, colleagues, company and shareholders. Our long-standing commitment has enabled us to earn trust, navigate change with confidence and continue building a strong foundation for the future."

At March 31, 2026, Banner, on a consolidated basis, had $16.34 billion in assets, $11.55 billion in net loans and $13.84 billion in deposits. Banner operates 135 full-service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

First Quarter 2026 Highlights

• Net interest margin, on a tax equivalent basis, was 4.11% for the current quarter, compared to 4.03% in the preceding quarter and 3.92% in the first quarter a year ago.
• Revenue was $169.3 million for the first quarter of 2026, compared to $167.7 million in the preceding quarter and an increase of 6% from $160.2 million in the first quarter a year ago.
• Net interest income was $150.2 million in the first quarter of 2026, compared to $152.4 million in the preceding quarter and $141.1 million in the first quarter a year ago.
• Mortgage banking operations revenue was $3.2 million for the first quarter of 2026, compared to $3.6 million in the preceding quarter and $3.1 million the first quarter a year ago.
• Return on average assets was 1.37% for the first quarter of 2026, compared to 1.24% in the preceding quarter and 1.15% in the first quarter a year ago.
• Net loans receivable were $11.55 billion at March 31, 2026, compared to $11.56 billion at December 31, 2025, and compared to $11.28 billion at March 31, 2025.
• Total deposits were $13.84 billion at March 31, 2026, compared to $13.74 billion at December 31, 2025 and $13.59 billion at March 31, 2025.
• Core deposits represented 89% of total deposits at March 31, 2026.
• Non-performing assets were $51.7 million, or 0.32% of total assets, at March 31, 2026, compared to $51.2 million, or 0.31% of total assets, at December 31, 2025, and $42.7 million, or 0.26% of total assets, at March 31, 2025.
• The allowance for credit losses - loans was $160.4 million, or 1.37% of total loans receivable, as of March 31, 2026, compared to $160.3 million, or 1.37% of total loans receivable, as of December 31, 2025, and $157.3 million, or 1.38% of total loans receivable, as of March 31, 2025.
• Dividends paid to shareholders were $0.50 per share in the quarter ended March 31, 2026.
• Common shareholders' equity per share increased 2% to $58.06 at March 31, 2026, compared to $57.08 at the preceding quarter end, and increased 9% from $53.16 at March 31, 2025.
• Tangible common shareholders' equity per share* increased 2% to $47.00 at March 31, 2026, compared to $46.09 at December 31, 2025, and increased 11% from $42.27 at March 31, 2025.
• Repurchased 250,000 shares of Banner common stock during the first quarter of 2026 at an average price of $64.56 per share.

*Non-GAAP (Generally Accepted Accounting Principles) financial measure; See, "Additional Financial Information - Non-GAAP Financial Measures" on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Income Statement Review

Net interest income was $150.2 million in the first quarter of 2026, compared to $152.4 million in the preceding quarter and $141.1 million in the first quarter a year ago. Net interest margin, on a tax equivalent basis, increased eight basis points to 4.11% for the first quarter of 2026, compared to 4.03% in the preceding quarter, and increased 19 basis points from 3.92% in the first quarter a year ago. The net interest margin for the current quarter benefited from lower funding costs.

Interest income was $197.8 million in the first quarter of 2026, compared to $205.0 million in the preceding quarter and $193.9 million in the first quarter of 2025. Average yields on interest-earning assets were 5.39% for both the first quarter of 2026 and the preceding quarter. Compared to the first quarter a year ago, average yields on interest-earning assets increased by four basis points from 5.35%, primarily due to increases in the average balance of loans. Average loan yields decreased by three basis points to 6.07% in the first quarter of 2026, compared to 6.10% in the preceding quarter, and was consistent with 6.07% in the first quarter a year ago.

Interest expense was $47.6 million in the first quarter of 2026, compared to $52.5 million in the preceding quarter and $52.8 million in the first quarter a year ago. Total deposit costs decreased by eight basis points to 1.35% in the first quarter of 2026, compared to 1.43% in the preceding quarter, and decreased by 12 basis points compared to 1.47% in the first quarter a year ago. The decrease in deposit costs in the current quarter compared to the prior quarter was primarily due to a decrease in market interest rates, as well as a lower percentage of interest-bearing deposits being held in higher cost certificates of deposits. The decrease in deposit costs in the current quarter compared to the same quarter a year ago was primarily due to the decreases in market interest rates, partially offset by an increase in the average balance of interest-bearing deposits. The average rate paid on borrowings decreased three basis points to 3.90% in the first quarter of 2026, compared to 3.93% in the preceding quarter, and decreased by 42 basis points compared to 4.32% in the first quarter a year ago. The year-over-year decrease was primarily due to declines in both interest rates paid and the average balance of higher costing FHLB advances. The total cost of funding liabilities decreased nine basis points to 1.38% in the first quarter of 2026, compared to 1.47% in the preceding quarter, and decreased 17 basis points from 1.55% in the first quarter a year ago, primarily due to deposit interest rate declines.

A $796,000 recapture of provision for credit losses was recorded in the current quarter (comprised of a $1.3 million provision for credit losses - loans and a $2.1 million recapture of provision for credit losses - unfunded loan commitments). This compares to a $2.4 million provision for credit losses in the prior quarter (comprised of a $1.5 million provision for credit losses - loans and a $945,000 provision for credit losses - unfunded loan commitments) and a $3.1 million provision for credit losses in the first quarter a year ago (comprised of a $4.5 million provision for credit losses - loans and a $1.4 million recapture of provision for credit losses - unfunded loan commitments).

Total non-interest income was $19.2 million in the first quarter of 2026, compared to $15.2 million in the preceding quarter and $19.1 million in the first quarter a year ago. The sequential increase was driven primarily by a $3.7 million favorable shift in fair value adjustments on financial instruments. This was partially offset by a $1.2 million net loss on the sale of securities during the current quarter. Compared to the prior year quarter, the slight increase in non-interest income was primarily attributable to an increase in fair value adjustments on financial instruments carried at fair value, partially offset by the net loss recognized on the sale of securities during the current quarter.

Total non-interest expense was $102.6 million in the first quarter of 2026, compared to $104.1 million in the preceding quarter and $101.3 million in the first quarter of 2025. The decrease from the previous quarter reflected a $1.2 million decrease in occupancy and equipment costs, primarily due to lower rent expense as well as lower building repair and maintenance expenses, a $988,000 decrease in professional and legal expenses, primarily due to expenses recognized on a pending legal settlement during the prior quarter and lower audit and regulatory exam expenses, and a $1.0 million decrease in advertising and marketing expense, primarily due to decreases in direct mail marketing and community development expenses. These decreases were partially offset by a $2.3 million increase in salary and employee benefits, resulting from increased medical premiums and payroll tax expenses. The increase compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, partially offset by a decrease in occupancy and equipment costs.

Banner's efficiency ratio was 60.60% for the first quarter of 2026, compared to 62.11% in the preceding quarter and 63.21% in the same quarter a year ago. Banner's adjusted efficiency ratio, a non-GAAP financial measure, was 59.45% for the first quarter of 2026, compared to 59.87% in the preceding quarter and 62.18% in the year-ago quarter. See, "Additional Financial Information - Non-GAAP Financial Measures" on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Balance Sheet Review

Total assets were $16.34 billion at March 31, 2026, compared to $16.35 billion at December 31, 2025, and $16.17 billion at March 31, 2025. The decrease compared to the prior quarter was primarily due to decreases in both loans held for sale and loans receivable and a reduction in FHLB stock resulting from the repayment of FHLB advances, partially offset by growth in interest-bearing deposits held at other banks. Securities and interest-bearing deposits held at other banks totaled $3.24 billion at March 31, 2026, compared to $3.22 billion at December 31, 2025 and $3.33 billion at March 31, 2025. The average effective duration of the securities portfolio was approximately 6.1 years and 6.5 years at March 31, 2026 and March 31, 2025, respectively.

Total loans receivable were $11.71 billion at March 31, 2026, compared to $11.72 billion at December 31, 2025, and increased from $11.44 billion at March 31, 2025. Commercial real estate loans totaled $4.11 billion at March 31, 2026, an increase of 2% compared to $4.05 billion at December 31, 2025, and an increase of 7% from $3.84 billion at March 31, 2025. The increases from both periods reflected a combination of new loan production and the conversion of commercial construction loans to the commercial real estate portfolio upon completion of the construction phase. Multifamily real estate loans decreased 6% to $798.2 million at March 31, 2026, compared to $850.8 million at December 31, 2025, and decreased 9% from $877.7 million at March 31, 2025. The decreases from both periods were primarily due to payoffs and paydowns. Agricultural business loans decreased 6% to $332.4 million at March 31, 2026, compared to $353.2 million at December 31, 2025, and decreased from $334.9 million at March 31, 2025. The decrease was primarily due to operating line paydowns and payoffs exceeding new production. Consumer loans increased to $774.0 million at March 31, 2026, compared to $768.5 million at December 31, 2025, and increased 8% compared to $717.2 million at March 31, 2025. The increases resulted from both new loan production and advances, primarily related to home equity revolving lines of credit.

Loans held for sale were $33.8 million at March 31, 2026, compared to $42.9 million at December 31, 2025, and $24.5 million at March 31, 2025. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $132.6 million, compared to $104.2 million in the preceding quarter, and $108.1 million in the first quarter a year ago. The decrease in loans held for sale at March 31, 2026, compared to the preceding quarter, was primarily attributable to higher sales volumes of one- to four-family residential mortgage loans held for sale during the current quarter. The increase in loans held for sale at March 31, 2026, compared to the prior-year quarter, was primarily attributable to increased originations of one- to four- family residential mortgage loans held for sale.

Total deposits were $13.84 billion at March 31, 2026, compared to $13.74 billion at December 31, 2025, and $13.59 billion a year ago. Core deposits increased to $12.38 billion at March 31, 2026, compared to $12.21 billion at December 31, 2025, and $12.09 billion at March 31, 2025. The increase compared to the preceding quarter primarily reflects increases in non-interest-bearing deposits and interest-bearing transaction and savings accounts. The increase compared to the prior year quarter primarily reflects increases in interest-bearing transaction and savings accounts. Core deposits remained stable at 89% of total deposits at March 31, 2026, December 31, 2025 and March 31, 2025. Certificates of deposit decreased 4% to $1.46 billion at March 31, 2026, compared to $1.53 billion at December 31, 2025, and decreased 3% from $1.50 billion a year earlier.

There were no outstanding FHLB advances at March 31, 2026, compared to $150.0 million at December 31, 2025, and $168.0 million a year ago, as the increase in core deposits was used to pay off FHLB advances during the current quarter. At March 31, 2026, off-balance sheet liquidity included additional borrowing capacity of $3.76 billion at the FHLB and $1.74 billion at the Federal Reserve, as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At March 31, 2026, total common shareholders' equity was $1.97 billion, or 12.03% of total assets, compared to $1.95 billion, or 11.90% of total assets at December 31, 2025, and $1.83 billion, or 11.34% of total assets at March 31, 2025. The increase in total common shareholders' equity from December 31, 2025, was primarily attributable to a $37.4 million increase in retained earnings resulting from $54.7 million in net income, partially offset by the accrual of $17.3 million in cash dividends during the first quarter of 2026. In addition, Banner repurchased 250,000 shares of its common stock in the first quarter of 2026 at an average price of $64.56 per share. At March 31, 2026, tangible common shareholders' equity, a non-GAAP financial measure, was $1.59 billion, or 9.97% of tangible assets, compared to $1.57 billion, or 9.84% of tangible assets, at December 31, 2025, and $1.46 billion, or 9.23% of tangible assets, a year ago. See "Additional Financial Information - Non-GAAP Financial Measures" on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as "well-capitalized." At March 31, 2026, Banner's estimated common equity Tier 1 capital ratio was 12.97%, its estimated Tier 1 leverage capital to average assets ratio was 11.68%, and its estimated total capital to risk-weighted assets ratio was 14.85%. These regulatory capital ratios are estimates, pending completion and filing of Banner's regulatory reports.

Credit Quality

The allowance for credit losses - loans was $160.4 million, or 1.37% of total loans receivable and 353% of non-performing loans, at March 31, 2026, compared to $160.3 million, or 1.37% of total loans receivable and 351% of non-performing loans, at December 31, 2025, and $157.3 million, or 1.38% of total loans receivable and 404% of non-performing loans, at March 31, 2025. The allowance ratio remained stable compared to both prior periods, reflecting consistent portfolio composition and credit performance. Coverage of non-performing loans remained strong at 353% at March 31, 2026, compared to 351% at December 31, 2025. The year-over-year decline from 404% at March 31, 2025 reflects moderate growth in non-performing loans over the past year, from $39.0 million to $45.4 million, while the allowance level has remained stable and commensurate with the portfolio's risk profile. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $12.9 million at March 31, 2026, compared to $15.0 million at December 31, 2025, and $12.2 million at March 31, 2025. Net loan charge-offs remained low at $1.2 million in the first quarter of 2026, compared to net loan charge-offs of $934,000 and $2.7 million in the preceding quarter and first quarter a year ago, respectively. Non-performing loans were $45.4 million at March 31, 2026, compared to $45.6 million at December 31, 2025, and $39.0 million a year ago. Substandard loans were $235.0 million as of March 31, 2026, compared to $193.1 million as of December 31, 2025, and $197.8 million a year ago. Total non-performing assets were $51.7 million, or 0.32% of total assets, at March 31, 2026, compared to $51.2 million, or 0.31% of total assets, at December 31, 2025, and $42.7 million, or 0.26% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, April 23, 2026, at 8:00 a.m. PDT, to discuss its first quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (800) 715-9871 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $16.34 billion bank holding company operating a commercial bank primarily in Washington, Oregon, California and Idaho through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Forward-Looking Statements

When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the "SEC"), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "may," "believe," "will," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "plans," "potential," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Forward-looking statements may relate to, among other things, future financial performance, strategic plans or objectives, revenues or earnings projections, and other financial or operational information. These statements are inherently subject to numerous risks and uncertainties, including ongoing market volatility and evolving global conditions, which may cause actual results to differ materially from those expressed or implied. These factors include, but are not limited to: (1) adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company's business operations or financial markets, including, without limitation, as a result of labor shortages, elevated inflation, recessionary pressures, or slowing economic growth; (2) changes in interest rate levels, volatility, and the timing and pace of such changes, including actions by the Federal Reserve, which could materially affect our net interest margin, funding costs, asset values, access to capital and liquidity; (3) the impact of inflation and monetary and fiscal policy responses thereto, and their impact on consumer and business behavior; (4) geopolitical developments and international conflicts, including but not limited to tensions or instability in Eastern Europe, South America, the Middle East, and Asia, or the imposition of new or increased tariffs and trade restrictions, which may disrupt financial markets, global supply chains, commodity prices, or economic activity in specific industry sectors, including, but not limited to, agriculture-based lending; (5) the effects of a federal government shutdown, debt ceiling standoff, or other fiscal policy uncertainty; (6) the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment; (7) expectations regarding key growth initiatives and strategic priorities; (8) credit risks from lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (9) results of examinations by regulatory authorities, which could result in the imposition of penalties, required changes to our business practices, or additional reserves; (10) competitive pressures among depository and non-depository institutions that adversely affect pricing, market share, deposit flows or product offerings; (11) fluctuations in real estate values; (12) the ability to adapt to rapid technological changes, including advancements in artificial intelligence, digital banking platforms, and cybersecurity; (13) vulnerabilities in information systems or third-party service providers, including disruptions, breaches, or attacks; (14) market volatility or deterioration in capital markets affecting liquidity, valuations, or investor confidence; (15) the costs, effects and outcomes of litigation or other legal proceedings involving the Company; (16) legislation or regulatory changes, including but not limited to shifts in capital requirements, banking regulation, tax laws, or consumer protection laws; (17) climate-related risks and natural disasters, which may affect loan collateral, operations, or compliance obligations; (18) changes in accounting principles, policies or guidelines; (19) the impact of future acquisitions or business combinations, including related goodwill impairment risks and integration challenges; (20) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (21) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (22) other risks detailed from time to time in Banner's other reports filed with and furnished to the Securities and Exchange Commission including Banner's Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.