BANR

• Overall Quarterly Performance • Reported solid core earnings growth, with core pre-tax pre-provision earnings up 3% year-over-year, driven by 6% core revenue growth, strong net interest margin expansion, and continued core expense discipline. • Maintained a strong balance sheet, high regulatory capital ratios, and increased tangible common equity per share by 11% year-over-year, enabling a declared core dividend of $0.52 per common share. • Received multiple industry and marketplace recognitions, including being named one of America's 100 Best Banks, one of the world's best banks by Forbes, one of America's and the world's most trustworthy companies by Newsweek, and ranked among the top 50 public banks >$10 billion in assets by S&P Global Market Intelligence. Kroll Bond Rating Agency affirmed all investment-grade ratings, and Banner Bank retained an outstanding CRA rating.

• Credit Quality and Loan Portfolio • Overall credit metrics remain stable and healthy: delinquent loans declined 5 bps quarter-over-quarter to 0.51% of total loans, adversely classified assets declined 19 bps quarter-over-quarter to 1.82% of total loans, and non-performing assets equal a modest 0.36% of total assets. The single increase in non-performing assets stemmed from one California condo construction project moving to non-accrual. • Loan loss reserve remains strong at 1.35% coverage of total loans, aligned with prior quarter and year-ago levels. Net provision for credit losses was $3.8 million, driven primarily by loan growth, with net charge-offs of just $101,000 in the quarter. • The construction portfolio is well-balanced at 14% of total loans, with residential construction representing only 5% of total loans. While days on market for completed 1-4 family construction projects increased modestly amid high rates, unsold inventory remains within historical norms.

• Strategic and Operational Updates • Continues to execute on its super community bank strategy, focused on growing new client relationships, maintaining a strong core deposit base, driving client loyalty via responsive service, and demonstrating consistent safety through all economic cycles. • Completed replacement of the legacy commercial loan origination system, consolidating three separate consumer, small business, and commercial loan systems into one unified platform. This investment streamlines back-office operations, reduces manual processing, and speeds up loan pipeline turnaround to support higher origination volumes. • The Bank of the Pacific acquisition remains on track to close in the third quarter of 2026, with all required approvals progressing as planned.

• Full year 2026 net loan growth is expected to come in at a mid-single digit rate, with slower originations and growth anticipated in the third quarter relative to the strong Q2 performance, and strong underlying pipeline supporting full year targets. • Loan yields are expected to see only gradual, slowing growth, with management projecting just 1 to 2 basis points of quarterly increase in overall loan yields through the end of 2026. • Deposit costs are expected to remain relatively flat for the foreseeable future, as the CD book has nearly fully repriced; management's primary goal is to hold deposit costs steady amid emerging competitive pricing pressure on CDs. • Modest margin expansion of a couple of basis points is expected in the third quarter 2026, driven by seasonal deposit inflows reducing reliance on expensive FHLB wholesale advances, partially offset by modest ongoing loan yield increases. • After adjusting for one-time Q2 items (legacy loan system write-off, M&A expenses), non-interest expense is expected to stabilize at a steady run rate, with quarterly volatility of only $1 to $2 million driven by timing of expenses. • Share repurchase activities are paused until the Bank of the Pacific acquisition closes, but the full year planned repurchase volume is unchanged, only timing has been pushed back.

The call does not break out performance into separate product segments, so segment-level absolute and percentage contribution data is not provided. Aggregate firm-level performance for the quarter is as follows: net profit available to common shareholders was $48.9 million ($1.43 per diluted share), compared to $1.31 per diluted share in Q2 2025 and $1.60 per diluted share in Q1 2026. Core pre-tax, pre-provision earnings (adjusted for one-time items) were $64.4 million, up from $62.5 million in Q2 2025 and $3 million (3%) higher sequentially from Q1 2026. Core operating revenue was $172 million, a 6% increase from Q2 2025. Net interest income increased $3.6 million sequentially, with a tax equivalent net interest margin of 4.13% (up 2 bps from Q1 2026). Non-interest income decreased $939,000 sequentially, while non-interest expense increased $5.4 million sequentially. Total loans outstanding grew $287 million in the quarter (10% annualized), with loan originations up 45% quarter-over-quarter: commercial originations up 85%, construction originations up 73%, and consumer originations up 55%. Total deposits decreased $51 million sequentially (seasonal tax-driven outflow), with core deposits accounting for 89% of total deposits at quarter-end, unchanged from prior quarter. The loan-to-deposit ratio was 87%, and tangible common equity to assets ratio increased to 10.02%. Return on average assets was 1.2% and return on average tangible common equity was 12.27% for the quarter.

• Persistent inflation, a higher-for-longer interest rate environment, and heightened geopolitical tensions remain ongoing macroeconomic headwinds that create ongoing market uncertainty. • Competitive pressure on certificate of deposit pricing is increasing in Banner's operating markets, creating some upward pressure on deposit costs. • Elevated interest rates have slowed sales velocity for completed residential construction projects, particularly at the higher end of the market, requiring close monitoring. • The consumer segment (residential mortgages and home equity lines of credit) is facing ongoing strain from prolonged high interest rates, and represents the largest portion of Banner's non-performing assets, requiring continued close monitoring. • Elevated payoffs of commercial real estate and C&I loans continue to temper net loan growth, though the pace of CRE payoffs is slowing.

Q: What was the average yield on new Q2 loans, what is the outlook for loan yields, and what are your expectations for deposit costs if the Fed holds rates steady? / A: The average yield on new Q2 2026 loan production was 6.53%. The pace of overall loan yield increases from back-book repricing is slowing, with just 2 bps of overall growth in Q2, and management expects only 1-2 bps of quarterly yield increases through end of 2026. Deposit costs were flat in Q2, as the CD book has fully repriced, so management expects deposit costs to hold steady going forward, with the goal of keeping costs flat amid emerging competitive CD pricing pressure. The full effect of CD repricing benefits were already realized in Q2.

Q: After strong Q2 loan growth with continued elevated payoffs, what is the expected net loan growth pace for the rest of the year, and how do you view M&A opportunities after the Bank of the Pacific deal? / A: Despite ongoing commercial real estate and unexpected elevated C&I payoffs from business transactions, loan pipelines remain strong and full. Originations are expected to moderate in Q3, but full year 2026 net loan growth is still on track to hit a mid-single digit rate. Management will remain opportunistic for future M&A on the West Coast, where there is limited acquisition targets available. Banner's strong capital and core earnings position it well to pursue complementary non-organic growth opportunities after integrating Bank of the Pacific.

Q: What are your capital return priorities near term, and what is the current closing timeline for the Bank of the Pacific acquisition? / A: All capital actions beyond the regular core dividend are on hold until the Bank of the Pacific deal closes. The total number of shares planned for repurchase this year remains unchanged, but timing of buybacks has been pushed back. The acquisition is still on track to close in Q3 2026, with all required regulatory approvals progressing on schedule and no changes to the deal timeline or terms since announcement.

Q: Broad-based loan growth was strong in Q2 – is this due to improving borrower demand or better execution from your team, and where are the best growth opportunities? / A: The strong growth comes from both factors: improving demand as clients adapt to the current rate environment, and more new business from recently hired relationship managers plus expansion of existing client relationships, leaving the bank hitting on all cylinders. Growth is broad-based across all geographies from Northern to Southern California, the Pacific Northwest, and Eastern Washington, with no single industry or region driving all growth.