BANNER CORP

Banner is a bank holding company incorporated in the State of Washington, which wholly owns its subsidiary bank, Banner Bank. The Bank is a Washington-chartered commercial bank that conducts business from its main office in Walla Walla, Washington, and as of September 30, 2026, it had 153 branch offices and 19 loan production offices located in Washington, Oregon, California, Idaho, Utah and Nevada. Banner is subject to regulation by the Federal Reserve. The Bank is subject to regulation by the Washington State Department of Financial Institutions – Division of Banks (the DFI) and the Federal Deposit Insurance Corporation (the FDIC). As of September 30, 2026, we had total consolidated assets of $18.08 billion, total loans of $13.00 billion, total deposits of $15.39 billion and total shareholders’ equity of $2.13 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. 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.

Significant Recent Events

On September 1, 2026, Banner completed the acquisition of Pacific Financial, the holding company for Bank of the Pacific. At closing, Bank of the Pacific had 18 branch locations, including 15 in Washington and three in Oregon. Shareholders of Pacific Financial received 0.2633 shares of Banner common stock for each share of Pacific Financial common stock they owned, plus cash in lieu of any fractional shares, for total consideration paid of $186.8 million.

The Pacific Financial transaction was accounted for using the acquisition method of accounting. Accordingly, the assets (including identifiable intangible assets) and the liabilities of Pacific Financial were measured at their respective estimated fair values as of the merger date. The excess of the purchase price over the fair value of the net assets acquired was attributed to goodwill. The fair value on the merger date represents management's best estimates based on available information and facts and circumstances in existence on the merger date. The acquisition accounting is subject to adjustment within a measurement period of no longer than one year from the acquisition date. The acquisition brought $1.29 billion of assets, including $756.9 million of net loans receivable, and $1.14 billion of deposits to Banner.

Third Quarter 2026 Financial Highlights

•Net interest margin, on a tax equivalent basis, was 4.14% for current quarter, compared to 4.13% in the preceding quarter.

•Revenue was $177.3 million for the third quarter of 2026, compared to $172.0 million in the preceding quarter.

•Net interest income was $161.9 million in the third quarter of 2026, compared to $153.7 million in the preceding quarter.

•Return on average assets was 1.11% for the current quarter, compared to 1.20% in the preceding quarter.

•Net loans receivable were $12.82 billion at September 30, 2026, compared to $11.83 billion at June 30, 2026.

•Total deposits were $15.39 billion at September 30, 2026, compared to $13.79 billion at June 30, 2026.

•Core deposits represented 90% of total deposits at September 30, 2026.

•Non-performing assets were $63.0 million, or 0.35% of total assets, at September 30, 2026, compared to $60.5 million, or 0.36% of total assets at June 30, 2026.

•The allowance for credit losses - loans was $171.6 million, or 1.32% of total loans receivable, as of September 30, 2026, compared to $161.8 million, or 1.35% of total loans receivable, at June 30, 2026.

•Dividends paid to shareholders were $0.52 per share in the quarter ended September 30, 2026.

•Common shareholders’ equity per share decreased to $58.56 at September 30, 2026, compared to $58.83 at June 30, 2026.

•Tangible common shareholders’ equity per share* decreased to $45.84 at September 30, 2026, compared to $47.82 at June 30, 2026.

•Repurchased 200,000 shares of Banner common stock during the third quarter of 2026 at an average price of $71.03 per share.

*Non-GAAP Financial Measures.

Reconciliation of 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. 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, return on average tangible common 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).

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

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

(3)Tangible net income (non-GAAP) divided by average tangible common equity (non-GAAP).

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

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).

Summary of Critical Accounting Estimates

Our critical accounting estimates are described in detail in the Critical Accounting Estimates section of our 2025 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, which were identified as critical accounting estimates in our 2025 Form 10-K, require significant judgments and assumptions which are susceptible to significant changes based on the current environment. In addition to the critical accounting estimates of the allowance for credit losses and fair value measurements at December 31, 2025, Management believes business combination accounting and goodwill is also a critical accounting estimate this quarter as we completed the Pacific Financial acquisition on September 1, 2026.

Business Combinations and Goodwill. Business combinations are accounted for using the acquisition method, under which assets acquired and liabilities assumed are recorded at their estimated fair values as of the acquisition date. Goodwill represents the excess of the consideration transferred 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 evaluated for impairment at least annually, or more frequently if events or changes in circumstances indicate that it may be impaired. Various significant assumptions and judgments are used to determine the fair values of the assets acquired and liabilities assumed, particularly for acquired loans, where key assumptions include expected credit losses, prepayment speeds and discount rates, and for the core deposit intangible, where key assumptions include deposit attrition rates, the alternative cost of funds and discount rates. Because goodwill is the residual of these measurements, it depends directly on these estimates.

In connection with the Pacific Financial acquisition, the Company recorded a core deposit intangible of $28.6 million and goodwill of $61.2 million. These fair values are preliminary and may be adjusted for up to one year after the acquisition date as additional information about facts and circumstances that existed as of the acquisition date becomes available. The Company’s most recent annual goodwill impairment assessment, performed as of December 31, 2025, indicated no impairment. As of September 30, 2026, Management did not identify any events or circumstances indicating that it is more likely than not that the fair value of the Company’s reporting unit is below its carrying amount.