Banner Corporation Reports Net Income of $51.2 Million, or $1.49 Per Diluted Share, for Fourth Quarter 2025; Earns $195.4 Million in Net Income, or $5.64 Per Diluted Share, for the Full Year of 2025

Declares Quarterly Cash Dividend of $0.50 Per Share

Banner Corporation (NASDAQ:BANR) ("Banner"), the parent company of Banner Bank, today reported net income of $51.2 million, or $1.49 per diluted share, for the fourth quarter of 2025, compared to $53.5 million, or $1.54 per diluted share, for the preceding quarter and $46.4 million, or $1.34 per diluted share, for the fourth quarter of 2024. Net interest income was $152.4 million for the fourth quarter of 2025, compared to $150.0 million in the preceding quarter and $140.5 million for the fourth quarter a year ago. The increase in net interest income compared to both the preceding quarter and the prior year quarter primarily reflects a decrease in overall funding costs and an increase in the average balance of interest-earning assets. The increase compared to the prior year quarter also reflects an increase in the average yield of interest-earning assets. Fourth quarter 2025 results included a $2.4 million provision for credit losses, compared to $2.7 million in the preceding quarter and $3.0 million in the fourth quarter of 2024. Net income was $195.4 million, or $5.64 per diluted share, for the year ended December 31, 2025, compared to net income of $168.9 million, or $4.88 per diluted share, for the year ended December 31, 2024. Banner's results for the year ended December 31, 2025 include a $13.0 million provision for credit losses, a $374,000 net gain on the sale of securities and a $1.4 million net decrease in the fair value adjustments on financial instruments carried at fair value, compared to a $7.6 million provision for credit losses, a $5.2 million net loss on the sale of securities and a $1.0 million net decrease in the fair value adjustments on financial instruments carried at fair value during the same period in 2024.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.50 per share payable February 13, 2026, to common shareholders of record on February 3, 2026.

"Banner's fourth quarter performance reaffirms the value 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 fourth quarter of 2025 benefited from year over year loan growth as well as lower funding costs and an improved net interest margin. 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 strong, supported by stable credit metrics, 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 year-end. For 135 years, Banner has honored 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 December 31, 2025, Banner, on a consolidated basis, had $16.35 billion in assets, $11.56 billion in net loans and $13.74 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.

Fourth Quarter 2025 Highlights

• Net interest margin, on a tax equivalent basis, was 4.03% for the current quarter, compared to 3.98% in the preceding quarter and 3.82% in the fourth quarter a year ago.
• Revenue was $167.7 million for the fourth quarter of 2025, compared to $170.7 million in the preceding quarter and increased 4% from $160.6 million in the fourth quarter a year ago.
• Adjusted revenue* (the total of net interest income and total non-interest income adjusted for the net gain or loss on the sale of securities, the net change in valuation of financial instruments, and gains or losses incurred on building and lease exits) was $169.9 million in the fourth quarter of 2025, compared to $168.7 million in the preceding quarter and $160.1 million in the fourth quarter a year ago.
• Net interest income was $152.4 million in the fourth quarter of 2025, compared to $150.0 million in the preceding quarter and increased 8% from $140.5 million in the fourth quarter a year ago.
• Mortgage banking operations revenue was $3.6 million for the fourth quarter of 2025, compared to $3.3 million in the preceding quarter and $3.7 million the fourth quarter a year ago.
• Return on average assets was 1.24% for the fourth quarter of 2025, compared to 1.30% in the preceding quarter and 1.15% in the fourth quarter a year ago.
• Net loans receivable were $11.56 billion at December 31, 2025, compared to $11.54 billion at September 30, 2025, and increased 3% compared to $11.20 billion at December 31, 2024.
• Total deposits were $13.74 billion at December 31, 2025, compared to $14.02 billion at September 30, 2025 and $13.51 billion at December 31, 2024.
• Core deposits represented 89% of total deposits at December 31, 2025.
• Non-performing assets were $51.2 million, or 0.31% of total assets, at December 31, 2025, compared to $45.3 million, or 0.27% of total assets, at September 30, 2025, and $39.6 million, or 0.24% of total assets, at December 31, 2024.
• The allowance for credit losses - loans was $160.3 million, or 1.37% of total loans receivable, as of December 31, 2025, compared to $159.7 million, or 1.36% of total loans receivable, as of September 30, 2025, and $155.5 million, or 1.37% of total loans receivable, as of December 31, 2024.
• Dividends paid to shareholders were $0.50 per share in the quarter ended December 31, 2025, up from $0.48 per share paid in the preceding quarter.
• Common shareholders' equity per share increased 2% to $57.08 at December 31, 2025, compared to $55.71 at the preceding quarter end, and increased 11% from $51.49 at December 31, 2024.
• Tangible common shareholders' equity per share* increased 3% to $46.09 at December 31, 2025, compared to $44.79 at September 30, 2025, and increased 14% from $40.57 at December 31, 2024.
• Repurchased 249,975 shares of Banner common stock during the fourth quarter of 2025 at an average price of $63.14 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 $152.4 million in the fourth quarter of 2025, compared to $150.0 million in the preceding quarter and $140.5 million in the fourth quarter a year ago. Net interest margin, on a tax equivalent basis, increased five basis points to 4.03% for the fourth quarter of 2025, compared to 3.98% in the preceding quarter, and increased 21 basis points from 3.82% in the fourth quarter a year ago. The net interest margin for the current quarter benefited from lower funding costs.

Interest income was $205.0 million in the fourth quarter of 2025, compared to $205.8 million in the preceding quarter and $196.4 million in the fourth quarter of 2024. Average yields on interest-earning assets decreased four basis points to 5.39% for the fourth quarter of 2025, compared to 5.43% for the preceding quarter, primarily reflecting lower average loan yields. Compared to the fourth quarter of 2024, average yields on interest-earning assets increased eight basis points from 5.31%, primarily due to increases in both the yield and average balance of loans. Average loan yields decreased seven basis points to 6.10% in the fourth quarter of 2025, compared to 6.17% in the preceding quarter, and increased eight basis points from 6.02% in the fourth quarter a year ago. The decrease in average loan yields during the current quarter was largely the result of three 25 basis point decreases by the Federal Reserve in the target Fed Funds Rate during the third and fourth quarters of 2025.

Interest expense was $52.5 million in the fourth quarter of 2025, compared to $55.9 million in both the preceding quarter and the fourth quarter a year ago. Total deposit costs decreased seven basis points to 1.43% in the fourth quarter of 2025, compared to 1.50% in the preceding quarter and decreased 10 basis points compared to 1.53% in the fourth quarter a year ago. The decrease in deposit costs in the current quarter compared to the same quarter a year ago was primarily due to the previously mentioned decrease in the target Fed Funds Rate. The average rate paid on borrowings decreased 25 basis points to 3.93% in the fourth quarter of 2025, compared to 4.18% in the preceding quarter, and decreased compared to 4.57% in the fourth quarter a year ago, primarily due to declines in both market interest rates and the average balance of borrowings. The total cost of funding liabilities decreased 10 basis points to 1.47% in the fourth quarter of 2025, compared to 1.57% in the preceding quarter, and decreased 13 basis points from 1.60% in the fourth quarter a year ago, primarily due to deposit interest rate declines and decreases in both the average balance and cost of borrowings.

A $2.4 million provision for credit losses was recorded in the current quarter (comprised of a $1.5 million provision for credit losses - loans and a $945,000 provision for credit losses - unfunded loan commitments). This compares to a $2.7 million provision for credit losses in the prior quarter (comprised of a $1.4 million provision for credit losses - loans and a $1.3 million provision for credit losses - unfunded loan commitments) and a $3.0 million provision for credit losses in the fourth quarter a year ago (comprised of a $3.2 million provision for credit losses - loans and a $203,000 recapture of provision for credit losses - unfunded loan commitments).

Total non-interest income was $15.2 million in the fourth quarter of 2025, compared to $20.7 million in the preceding quarter and $20.0 million in the fourth quarter a year ago. The decrease from the preceding quarter was primarily due to a $2.7 million decline in miscellaneous income, reflecting losses incurred on the disposition of assets during the current quarter, compared to gains recognized on asset sales in the prior quarter. In addition, fair value adjustments on financial instruments carried at fair value decreased by $2.2 million during the current quarter. Compared to the fourth quarter of 2024, the decrease in non-interest income was also primarily attributable to lower miscellaneous income, reflecting losses incurred on asset dispositions during the current quarter, compared to a gain recognized on the sale of a non-performing loan in the fourth quarter of 2024. Total non-interest income was $72.8 million for the year ended December 31, 2025, compared to $66.9 million for the same period a year earlier.

Mortgage banking operations revenue was $3.6 million in the fourth quarter of 2025, compared to $3.3 million in the preceding quarter and $3.7 million in the fourth quarter a year ago. The volume of one- to four-family loans sold during the fourth quarter of 2025 decreased compared to both the preceding quarter and the prior year quarter. The decrease compared to the preceding quarter was primarily due to seasonal trends and market conditions. The decrease from the same quarter in the prior year was mainly attributable to a pooled loan sale that occurred during the fourth quarter of 2024. Home purchase activity accounted for 81% of one- to four-family mortgage loan originations in the fourth quarter of 2025, compared to 88% in the preceding quarter and 79% in the fourth quarter of 2024.

Total non-interest expense was $104.1 million in the fourth quarter of 2025, compared to $102.0 million in the preceding quarter and $99.5 million in the fourth quarter of 2024. The increase from the previous quarter reflected a $493,000 increase in salary and employee benefits, resulting from increased medical claims expense, a $639,000 decrease in capitalized loan origination costs, primarily due to a reduction in the origination of construction, land and land development loans, as well as a reduction in the volume of one- to four-family loans sold, an $842,000 increase in information and computer data services expense, primarily due to increased software expense, and a $411,000 increase in professional and legal expenses, primarily due to a pending legal settlement. The increases were partially offset by a $666,000 decrease in occupancy and equipment costs, primarily due to lower rent expense. In addition, the current quarter included losses of $434,000 related to building and lease exit costs, compared to $1.0 million of such costs in the previous quarter. The increase compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, information and computer data services, payment and card processing services and miscellaneous expenses, partially offset by a decrease in professional and legal expenses. For the year ended December 31, 2025, total non-interest expense was $408.8 million, compared to $391.5 million for the year ended December 31, 2024.

Banner's efficiency ratio was 62.11% for the fourth quarter of 2025, compared to 59.76% in the preceding quarter and 61.95% in the same quarter a year ago. Banner's adjusted efficiency ratio, a non-GAAP financial measure, was 59.87% for the fourth quarter of 2025, compared to 58.54% in the preceding quarter and 60.74% 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 $16.35 billion at December 31, 2025, compared to $16.56 billion at September 30, 2025, and $16.20 billion at December 31, 2024. The decrease compared to the prior quarter was primarily due to a decrease in interest-bearing deposits held at other banks. Securities and interest-bearing deposits held at other banks totaled $3.22 billion at December 31, 2025, compared to $3.47 billion at September 30, 2025 and $3.40 billion at December 31, 2024. The average effective duration of the securities portfolio was approximately 6.2 years and 6.6 years at December 31, 2025 and December 31, 2024, respectively.

Total loans receivable were $11.72 billion at December 31, 2025, compared to $11.70 billion at September 30, 2025, and increased 3% from $11.35 billion at December 31, 2024. Commercial real estate loans totaled $4.05 billion at December 31, 2025, compared to $4.00 billion at September 30, 2025, and increased 5% from $3.86 billion at December 31, 2024. 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 to $850.8 million at December 31, 2025, compared to $860.7 million at September 30, 2025, and declined 5% from $894.4 million at December 31, 2024. The decreases from both periods were primarily due to payoffs and paydowns exceeding new production, partially offset by the conversion of multifamily construction loans to the multifamily real estate portfolio upon completion of the construction phase. Construction, land and land development loans totaled $1.71 billion at December 31, 2025, compared to $1.74 billion at September 30, 2025, and increased 13% from $1.52 billion at December 31, 2024. The increase was primarily attributable to new loan production and advances, partially offset by payoffs and transfers to permanent loan portfolios upon completion of the construction phase. Consumer loans increased 4% to $768.5 million at December 31, 2025, compared to $740.3 million at September 30, 2025, and increased 7% compared to $721.4 million at December 31, 2024. The increases from both periods reflected new loan production and advances, primarily related to home equity revolving lines of credit.

Loans held for sale were $42.9 million at December 31, 2025, compared to $20.3 million at September 30, 2025, and $32.0 million at December 31, 2024. One- to four- family residential mortgage held for sale loans sold in the current quarter totaled $104.2 million, compared to $136.9 million in the preceding quarter and $153.2 million in the fourth quarter a year ago. The increase in loans held for sale at December 31, 2025 compared to both the preceding quarter and the prior-year quarter was primarily attributable to lower sales volumes of one- to four-family residential mortgage loans held for sale during the current quarter.

Total deposits were $13.74 billion at December 31, 2025, compared to $14.02 billion at September 30, 2025, and $13.51 billion a year ago. Core deposits decreased 2% to $12.21 billion at December 31, 2025, compared to $12.48 billion at September 30, 2025, and increased 2% compared to $12.01 billion at December 31, 2024. The decrease compared to the preceding quarter primarily reflects decreases in non-interest-bearing deposits and interest-bearing transaction and savings accounts, as clients used excess liquidity to paydown operating lines of credit. 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 December 31, 2025, September 30, 2025, and December 31, 2024. Certificates of deposit decreased to $1.53 billion at December 31, 2025, compared to $1.54 billion at September 30, 2025, and increased 2% from $1.50 billion a year earlier.

FHLB advances increased 50% to $150.0 million at December 31, 2025, compared to $100.0 million at September 30, 2025, and decreased 48% compared to $290.0 million a year ago, as deposits were used as the primary source of funds during the current quarter. At December 31, 2025, off-balance sheet liquidity included additional borrowing capacity of $3.65 billion at the FHLB and $1.55 billion at the Federal Reserve, as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At December 31, 2025, total common shareholders' equity was $1.95 billion, or 11.90% of total assets, compared to $1.91 billion, or 11.55% of total assets at September 30, 2025, and $1.77 billion, or 10.95% of total assets at December 31, 2024. The increase in total common shareholders' equity from September 30, 2025, was primarily attributable to a $34.0 million increase in retained earnings resulting from $51.2 million in net income, partially offset by the accrual of $17.3 million in cash dividends during the fourth quarter of 2025. In addition, Banner repurchased 249,975 shares of its common stock in the fourth quarter of 2025 at an average price of $63.14 per share. At December 31, 2025, tangible common shareholders' equity, a non-GAAP financial measure, was $1.57 billion, or 9.84% of tangible assets, compared to $1.54 billion, or 9.50% of tangible assets, at September 30, 2025, and $1.40 billion, or 8.84% 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 December 31, 2025, Banner's estimated common equity Tier 1 capital ratio was 12.81%, its estimated Tier 1 leverage capital to average assets ratio was 11.41%, and its estimated total capital to risk-weighted assets ratio was 14.69%. These regulatory capital ratios are estimates, pending completion and filing of Banner's regulatory reports.

Credit Quality

The allowance for credit losses - loans was $160.3 million, or 1.37% of total loans receivable and 351% of non-performing loans, at December 31, 2025, compared to $159.7 million, or 1.36% of total loans receivable and 399% of non-performing loans, at September 30, 2025, and $155.5 million, or 1.37% of total loans receivable and 421% of non-performing loans, at December 31, 2024. The allowance ratio remained stable compared to both prior periods, reflecting consistent portfolio composition and credit performance, while continuing to provide substantial coverage of non-performing loans. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $15.0 million at December 31, 2025, compared to $14.0 million at September 30, 2025, and $13.6 million at December 31, 2024. Net loan charge-offs totaled $934,000 in the fourth quarter of 2025, compared to net loan charge-offs of $2.2 million and $2.3 million in the preceding quarter and fourth quarter a year ago, respectively. The decline in net charge-offs during the current quarter reflects stable borrower repayment performance and the absence of any significant credit events. Non-performing loans were $45.6 million at December 31, 2025, compared to $40.0 million at September 30, 2025, and $37.0 million a year ago. Substandard loans were $193.1 million as of December 31, 2025, compared to $174.0 million as of September 30, 2025, and $192.5 million a year ago. Total non-performing assets were $51.2 million, or 0.31% of total assets, at December 31, 2025, compared to $45.3 million, or 0.27% of total assets, at September 30, 2025, and $39.6 million, or 0.24% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, January 22, 2026, at 8:00 a.m. PST, to discuss its fourth quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 013437 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $16.35 billion bank holding company operating a commercial bank in four Western states 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.