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Banner Corporation Earns $17.8 Million, or $0.52 per Diluted Share, in the First Quarter of 2016; First Quarter Highlighted by Net Interest Margin Expansion

WALLA WALLA, Wash., April 25, 2016 (GLOBE NEWSWIRE) -- Banner Corporation (NASDAQ GSM:BANR), the parent company of Banner Bank and Islanders Bank, today reported strong earnings growth propelled by growth from recent acquisitions, organic loan and core deposit growth and net interest margin expansion. Net income in the first quarter of 2016 increased to $17.8 million, or $0.52 per diluted share, compared to $6.9 million, or $0.20 per diluted share, in the preceding quarter and $12.1 million, or $0.61 per diluted share, in the first quarter a year ago. The current quarter results were impacted by $6.8 million of acquisition-related expenses which, net of tax benefit, reduced net income by $0.13 per diluted share, and the preceding quarter results were impacted by $18.4 million of acquisition-related expenses which, net of tax benefit, reduced net income by $0.37 per diluted share.

“Banner’s first quarter performance continued to reflect the success of our client acquisition strategies, which helped us realize strong operating results and increased our net interest margin,” stated Mark J. Grescovich, President and Chief Executive Officer. “We are continuing to benefit from the acquisition and integration of AmericanWest Bank, including the successful completion of our core system conversion during the recent quarter. Although there remains work to be done to fully realize the expected operating synergies, we have made solid progress on integration and can clearly observe the positive contributions from this merger in our first quarter results. This strategic combination is allowing us to deploy our super community bank model through a strengthened presence in Washington, Oregon and Idaho, as well as expanded opportunities in attractive growth markets in California and Utah.”

At March 31, 2016, Banner Corporation had $9.75 billion in assets, $7.11 billion in net loans and $8.03 billion in deposits. It operates 190 branch offices located in nine of the top 20 largest western Metropolitan Statistical Areas by population. As Banner Bank deploys its super community bank business model across five western states, the combined bank is benefiting from its increased scale and diversified geographic footprint with important economic drivers and significant growth opportunities.

First Quarter 2016 Highlights

  • Net income increased 47% to $17.8 million, compared to $12.1 million in the first quarter of 2015.
  • Acquisition-related expenses were $6.8 million which, net of tax benefit, reduced net income by $0.13 per diluted share for the quarter ended March 31, 2016.
  • Revenues from core operations* increased 86% to $111.0 million, compared to $59.7 million in the first quarter a year ago.
  • Net interest margin expanded to 4.13% for the current quarter, compared to 4.05% in the fourth quarter of 2015 and 4.09% a year ago.
  • Excluding acquisition accounting adjustments, the contractual net interest margin increased to 4.01% compared to 3.89% in the preceding quarter.
  • Deposit fees and other service charges were $11.8 million, compared to $13.2 million in the preceding quarter and $8.1 million a year ago.
  • Revenues from mortgage banking operations were $5.6 million, including $725,000 related to sale of multifamily loans, compared to $4.5 million in the preceding quarter and $4.1 million a year ago.
  • Net loans increased by $3.08 billion, or 76% year-over-year.
  • Total deposits increased 86% to $8.03 billion compared to a year ago.
  • Core deposits increased by $3.20 billion, or 90%, year-over-year.
  • Core deposits represented 84% of total deposits at March 31, 2016.
  • Quarterly dividend to shareholders increased 17% to $0.21 per share.
  • Common stockholders' tangible equity per share* increased to $30.38 at March 31, 2016, compared to $29.64 at the preceding quarter end and $29.75 a year ago.
  • The ratio of tangible common stockholders' equity to tangible assets* remained strong at 10.98% at March 31, 2016.

*Revenues from core operations and non-interest income from core operations (both of which exclude fair value adjustments and gains and losses on the sale of securities), acquisition accounting impact on net interest margin, non-interest expense from core operations (which excludes acquisition-related costs) and references to tangible common stockholders' equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last three pages of this press release.

Acquisition of AmericanWest Bank

Effective October 1, 2015, Banner completed the acquisition of Starbuck Bancshares, Inc. ("Starbuck") and its wholly owned subsidiary AmericanWest Bank. The merger was accounted for using the acquisition method of accounting. Accordingly, the acquired assets (including identifiable intangible assets) and assumed liabilities of Starbuck were recognized 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 allocated 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 post-closing measurement period. During the first quarter of 2016, post-closing adjustments reduced goodwill by $2.9 million.

In addition to the acquisition of AmericanWest Bank, the acquisition of Siuslaw Financial Group and its wholly-owned subsidiary Siuslaw Bank ("Siuslaw") on March 6, 2015 had a significant impact on the current and historical operating results of Banner. For additional details regarding these acquisitions and merger related expenses, see the tables under Business Combinations on pages 12 and 13 of this press release.

Income Statement Review

Banner’s first quarter net interest income, before the provision for loan losses, decreased slightly to $91.0 million, compared to $92.1 million in the preceding quarter, as a result of significant sales of multifamily loans acquired through the AmericanWest merger as well as expected seasonal factors, including the shorter quarter, and a $1.0 million reduction in the contribution from acquisition accounting. Nonetheless, the first quarter 2016 net interest income increased 96% compared to $46.5 million in the first quarter a year ago, largely reflecting the acquisitions of AmericanWest Bank and Siuslaw and continued client acquisition.

“Our net interest margin expanded eight basis points compared to the preceding quarter and four basis points compared to a year ago, importantly as a result of increased contractual yields for both loans and investment securities, reflecting changes in the mix of assets and the increase in short-term market interest rates,” said Grescovich. “By contrast, the accretion impact of acquisition accounting on the net interest margin declined by four basis points compared to the preceding quarter.” Net interest margin is enhanced by the amortization of acquisition accounting discounts on purchased loans acquired in the acquisitions, which are accreted into loan interest income, as well as by net premiums on non-market-rate certificate of deposit liabilities assumed, which are amortized as a reduction to deposit interest expense. Banner's net interest margin was 4.13% for the first quarter of 2016, which included eight basis points as a result of accretion from acquisition accounting loan discounts, two basis points from the amortization of deposit premiums and two basis points as a result of the impact of the net loan acquisition discounts on average earning assets from both the AmericanWest Bank and Siuslaw acquisitions, compared to a net interest margin of 4.05% in the preceding quarter and 4.09% in the first quarter a year ago. Excluding the effects of acquisition accounting, the contractual net interest margin increased to 4.01% compared to 3.89% in the preceding quarter although, primarily as a result of the acquisition of AmericanWest Bank, the contractual net interest margin decreased slightly compared to 4.07% in the first quarter a year ago reflecting a proportionately larger portfolio of investment securities.

Average interest-earning asset yields increased eight basis points to 4.32% compared to 4.24% for the preceding quarter and increased one basis point from 4.31% for the first quarter a year ago. Loan yields increased six basis points compared to the preceding quarter and decreased two basis points from the first quarter a year ago. The accretion of discounts and related balance sheet impact on the loans acquired through the acquisitions added 12 basis points to reported loan yields for the quarter. Deposit costs remained unchanged compared to the preceding quarter and decreased three basis points compared to the first quarter a year ago. Amortization of acquisition accounting net premiums on certificates of deposit reduced the cost of deposits by two basis points in the first quarter 2016. The total cost of funds remained unchanged at 0.20% during the first quarter compared to the preceding quarter and declined four basis points compared to 0.24% for the first quarter a year ago.

“Home purchase activity remains robust in our markets, and revenues from mortgage banking were strong, reflecting Banner’s increased market presence and our investment in this business line,” said Grescovich. “In addition, our multifamily origination unit that was acquired in the merger with AmericanWest Bank produced $725,000 of gains on the sale of loans that were originated subsequent to the acquisition date.” Mortgage banking revenues increased 26% to $5.6 million in the first quarter compared to $4.5 million in the preceding quarter and increased 37% compared to $4.1 million in the first quarter of 2015. Home purchase activity accounted for 61% of first quarter one- to four-family mortgage banking loan originations.

Deposit fees and other service charges contributed $11.8 million of first quarter revenues, compared to $13.2 million in the preceding quarter and increased 45% compared to $8.1 million in the first quarter a year ago. The decline compared to the preceding quarter reflects normal seasonal patterns as well as one-time fee waivers in connection with the systems conversion.

Revenues from core operations* (revenues excluding gains and losses on the sale of securities and net change in valuation of financial instruments) were $111.0 million in the first quarter ended March 31, 2016, compared to $112.0 million in the preceding quarter and increased 86% compared to $59.7 million in the first quarter of 2015. Total revenues were $111.0 million for the quarter ended March 31, 2016, compared to $110.5 million in the preceding quarter and $60.2 million in the first quarter a year ago.

Banner’s first quarter 2016 results included a $29,000 net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, as well as a $21,000 net gain on the sale of securities. In the preceding quarter, results included a $1.5 million net loss for fair value adjustments, as well as a $3,000 net loss on the sale of securities and in the first quarter a year ago results included a $1.1 million net gain for fair value adjustments, as well as a $510,000 loss on the sale of securities.

Banner’s total non-interest income, which includes the changes in the valuation of financial instruments carried at fair value and gains and losses on the sale of securities, was $20.0 million in the first quarter of 2016, compared to $18.4 million in the fourth quarter of 2015 and $13.7 million in the first quarter a year ago. Non-interest income from core operations,* which excludes gains and losses on sale of securities and net changes in the valuation of financial instruments, was $19.9 million for the first quarter of 2016, which was unchanged compared to the preceding quarter. Non-interest income from core operations* was $13.2 million for the first quarter a year ago.

Total non-interest expenses were $84.0 million in the first quarter of 2016, compared to $100.3 million in the preceding quarter and $41.9 million in the first quarter of 2015. The year-over-year increase in non-interest expenses was largely attributable to acquisition-related expenses and incremental costs associated with operating the 98 branches acquired in the AmericanWest Bank merger on October 1, 2015 and the ten Siuslaw branches acquired in March 2015, as well as generally increased compensation, occupancy and payment and card processing services reflecting increased transaction volume. There were $6.8 million in acquisition-related expenses in the current quarter compared to $18.4 million in the preceding quarter and $1.6 million in the first quarter a year ago.

For the first quarter of 2016, Banner recorded $9.2 million in state and federal income tax expense for an effective tax rate of 34.1%, which reflects normal statutory tax rates increased by the effect of certain non-deductible merger expenses and reduced by the effect of tax-exempt income and certain tax credits.

Balance Sheet Review

Largely as a result of the AmericanWest Bank acquisition but also reflecting organic growth, total assets increased by 87% to $9.75 billion at March 31, 2016, compared to $5.21 billion a year ago. Total assets were $9.80 billion at December 31, 2015. The total of securities and interest-bearing deposits held at other banks was $1.59 billion at March 31, 2016, compared to $1.54 billion at December 31, 2015 and $782.4 million a year ago. Compared to a year earlier, the increase in the securities portfolio is primarily a result of positions held by AmericanWest at the time of the merger. The average effective duration of Banner's securities portfolio was approximately 2.9 years at March 31, 2016.

“Net loans increased by $3.08 billion, or 76%, year-over-year due to the AmericanWest Bank acquisition and strong organic growth. Net loans decreased compared to the preceding quarter end, largely as a result of the sale of $139.1 million of multifamily loans and expected seasonal reductions in agricultural loans. Nevertheless, loan production remained solid, as did the regional economy, and we continue to see significant potential for growth in our loan origination pipelines,” said Grescovich.

Net loans increased 76% to $7.11 billion at March 31, 2016, compared to $4.03 billion a year ago. Net loans were $7.24 billion at December 31, 2015. Reflecting the recent loan sales, commercial real estate and multifamily real estate loans decreased 4% to $3.44 billion at March 31, 2016, compared to $3.57 billion at December 31, 2015, but increased 94% compared to $1.77 billion a year ago. Commercial business loans increased 1% to $1.22 billion at March 31, 2016, compared to $1.21 billion three months earlier and increased 58% compared to $776.6 million a year ago. Agricultural business loans decreased 10% to $340.4 million at March 31, 2016, compared to $376.5 million three months earlier but increased 63% compared to $208.6 million a year ago. Total construction, land and land development loans increased 10% to $632.1 million at March 31, 2016, compared to $574.4 million at December 31, 2015, and increased 47% compared to $431.0 million a year earlier.

Banner’s total deposits were $8.03 billion at March 31, 2016, a slight decline compared to $8.06 billion at December 31, 2015 but an increase of 86% compared to $4.32 billion a year ago. In connection with certain product changes during the first quarter, Banner converted approximately $420 million of former AmericanWest Bank interest-bearing deposits to non-interest-bearing deposits. As a result of the product changes, non-interest-bearing account balances increased 16% to $3.04 billion at March 31, 2016, compared to $2.62 billion three months earlier and reflecting the acquisition and organic account growth increased 102% compared to $1.50 billion a year ago. Also as a result of the product changes, interest-bearing transaction and savings accounts decreased 9% to $3.71 billion at March 31, 2016, compared to $4.08 billion three months earlier but increased 82% compared to $2.04 billion a year ago. Certificates of deposit decreased 5% to $1.29 billion at March 31, 2016, compared to $1.35 billion at December 31, 2015, but increased 66% compared to $778.0 million a year earlier. Brokered deposits totaled $135.6 million at March 31, 2016, compared to $162.9 million at December 31, 2015 and $4.8 million a year ago.

Core deposits represented 84% of total deposits at March 31, 2016, compared to 82% of total deposits a year earlier. The cost of deposits was 0.15% for the quarter ended March 31, 2016, the same as in the preceding quarter, and declined three basis points from 0.18% for the quarter ended March 31, 2015.

At March 31, 2016, total common stockholders' equity was $1.32 billion, or $38.58 per share, compared to $1.30 billion at December 31, 2015 and $651.3 million a year ago. The year-over-year increase was mostly due to 13.23 million shares of voting common and non-voting common stock issued on October 1, 2015 in connection with the AmericanWest Bank acquisition, which were valued at $47.67 per share and increased stockholders’ equity by $630.7 million. At March 31, 2016, tangible common stockholders' equity*, which excludes goodwill and other intangible assets, was $1.04 billion, or 10.98% of tangible assets*, compared to $1.01 billion, or 10.67% of tangible assets, at December 31, 2015, and $624.1 million, or 12.04% of tangible assets, a year ago. Banner's tangible book value per share* increased to $30.38 at March 31, 2016, compared to $29.75 per share a year ago.

Banner Corporation and its subsidiary banks continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under the Basel III and Dodd Frank regulatory standards. At March 31, 2016, Banner Corporation's common equity Tier 1 capital ratio was 11.93%, its Tier 1 leverage capital to average assets ratio was 11.28% and its total capital to risk-weighted assets ratio was 13.58%.

Credit Quality

“Our credit quality metrics continue to reflect our moderate risk profile and our reserve levels remain strong. As a result, no provision for loan losses was required again during the current quarter,” said Grescovich. “However, as we continue to accrete the acquisition accounting discounts for the loans acquired through last year’s acquisitions and experience further growth in the loan portfolio, we expect to increase the allowance for loan losses through renewed loan loss provisioning at some point before year-end 2016.”

In accordance with acquisition accounting, loans acquired from AmericanWest Bank and Siuslaw were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, of which a portion reflects a discount for possible credit losses. Credit discounts are included in the determination of fair value and as a result no allowance for loan and lease losses is recorded for acquired loans at the acquisition date. Although the discount recorded on the acquired loans is not reflected in the allowance for loan losses or related allowance coverage ratios, we believe it should be considered when comparing the current ratios to similar ratios in periods prior to the acquisitions of AmericanWest Bank and Siuslaw.

The allowance for loan losses was $78.2 million at March 31, 2016, or 1.09% of total loans outstanding and 501% of non-performing loans compared to $75.4 million at March 31, 2015, or 1.83% of total loans outstanding and 305% of non-performing loans. Banner had net recoveries of $189,000 in the first quarter compared to net recoveries of $688,000 in the fourth quarter of 2015 and net charge-offs of $542,000 in the first quarter a year ago. If the allowance for loan losses and loans were grossed up for the remaining loan discount the adjusted allowance for loan losses to adjusted loans would have been 1.67% as of March 31, 2016. Non-performing loans were $15.6 million at March 31, 2016, compared to $15.2 million at December 31, 2015, and $24.7 million a year ago. Real estate owned and other repossessed assets decreased to $7.2 million at March 31, 2016, compared to $11.6 million at December 31, 2015, but increased compared to $4.9 million a year ago, primarily due to additional real estate owned acquired in the mergers.

Banner's non-performing assets were 0.24% of total assets at March 31, 2016, compared to 0.28% at December 31, 2015 and 0.57% a year ago. Non-performing assets were $23.0 million at March 31, 2016, compared to $27.1 million at December 31, 2015 and $29.7 million a year ago. In addition to non-performing assets, purchased credit-impaired loans decreased to $53.3 million at March 31, 2016 compared to $58.6 million at December 31, 2015 and increased from $5.7 million a year ago.

Conference Call

Banner will host a conference call on Tuesday, April 26, 2016, at 8:00 a.m. PDT, to discuss its first quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (866) 235-9915 to participate in the call. A replay will be available for one week at (877) 344-7529 using access code 10093182, or at www.bannerbank.com.

About the Company

On October 1, 2015, Banner Corporation completed the acquisition of AmericanWest Bank which was merged into Banner Bank, a transformational merger that brought together two financially strong, well-respected institutions and created a leading Western bank. Banner Corporation is now a $9.7 billion bank holding company operating two commercial banks in five 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 “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” 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. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banner's operating and stock price performance.

Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from the merger of Banner Bank and Siuslaw Bank and the merger of Banner Bank and AmericanWest Bank might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the credit risks of 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 loan losses, which could necessitate additional provisions for loan losses, resulting both from loans originated and loans acquired from other financial institutions; (3) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for loan losses or writing down of assets; (4) competitive pressures among depository institutions; (5) interest rate movements and their impact on customer behavior and net interest margin; (6) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (7) fluctuations in real estate values; (8) the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place; (9) the ability to access cost-effective funding; (10) changes in financial markets; (11) changes in economic conditions in general and in Washington, Idaho, Oregon, Utah and California in particular; (12) the costs, effects and outcomes of litigation; (13) new legislation or regulatory changes, including but not limited to the Dodd-Frank Act and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (14) changes in accounting principles, policies or guidelines; (15) future acquisitions by Banner of other depository institutions or lines of business; (16) future goodwill impairment due to changes in Banner's business, changes in market conditions, or other factors and (17) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks detailed from time to time in our filings with the Securities and Exchange Commission including our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K.


RESULTS OF OPERATIONS Quarters Ended
(in thousands except shares and per share data) Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
INTEREST INCOME:
Loans receivable $86,958 $88,100 $46,365
Mortgage-backed securities 5,390 5,440 1,027
Securities and cash equivalents 2,953 2,955 1,677
95,301 96,495 49,069
INTEREST EXPENSE:
Deposits 2,946 3,146 1,733
Federal Home Loan Bank advances 279 287 17
Other borrowings 75 73 43
Junior subordinated debentures 958 890 740
4,258 4,396 2,533
Net interest income before provision for loan losses 91,043 92,099 46,536
PROVISION FOR LOAN LOSSES
Net interest income 91,043 92,099 46,536
NON-INTEREST INCOME:
Deposit fees and other service charges 11,818 13,172 8,126
Mortgage banking operations 5,643 4,482 4,109
Bank owned life insurance 1,185 1,056 438
Miscellaneous 1,263 1,196 483
19,909 19,906 13,156
Net gain (loss) on sale of securities 21 (3) (510)
Net change in valuation of financial instruments carried at fair value 29 (1,547) 1,050
Total non-interest income 19,959 18,356 13,696
NON-INTEREST EXPENSE:
Salary and employee benefits 46,564 49,225 24,287
Less capitalized loan origination costs (4,250) (4,007) (2,838)
Occupancy and equipment 10,388 11,533 6,006
Information / computer data services 4,920 5,365 2,253
Payment and card processing services 4,785 5,504 3,016
Professional services 2,614 2,341 814
Advertising and marketing 1,734 1,882 1,610
Deposit insurance 1,338 1,284 567
State/municipal business and use taxes 838 505 453
Real estate operations 397 207 24
Amortization of core deposit intangibles 1,808 1,896 616
Miscellaneous 6,085 6,150 3,458
77,221 81,885 40,266
Acquisition related costs 6,813 18,369 1,648
Total non-interest expense 84,034 100,254 41,914
Income before provision for income taxes 26,968 10,201 18,318
PROVISION FOR INCOME TAXES 9,194 3,308 6,184
NET INCOME $17,774 $6,893 $12,134
Earnings per share available to common shareholders:
Basic $0.52 $0.20 $0.61
Diluted $0.52 $0.20 $0.61
Cumulative dividends declared per common share $0.21 $0.18 $0.18
Weighted average common shares outstanding:
Basic 34,023,800 33,842,350 19,760,645
Diluted 34,103,727 33,934,426 19,845,019
Increase (decrease) in common shares outstanding (20,804) 13,279,955 1,405,093


FINANCIAL CONDITION Percentage Change
(in thousands except shares and per share data) Mar 31, 2016 Dec 31, 2015 Mar 31, 2015 Prior Qtr Prior Yr
Qtr
ASSETS
Cash and due from banks $153,706 $117,657 $83,401 30.6% 84.3%
Interest-bearing deposits 106,864 144,260 215,114 (25.9)% (50.3)%
Total cash and cash equivalents 260,570 261,917 298,515 (0.5)% (12.7)%
Securities - trading 33,994 34,134 38,074 (0.4)% (10.7)%
Securities - available for sale 1,199,279 1,138,573 395,607 5.3% 203.1%
Securities - held to maturity 246,320 220,666 133,649 11.6% 84.3%
Federal Home Loan Bank stock 13,347 16,057 25,544 (16.9)% (47.7)%
Loans held for sale 47,523 44,712 9,419 6.3% 404.5%
Loans receivable 7,185,999 7,314,504 4,105,399 (1.8)% 75.0%
Allowance for loan losses (78,197) (78,008) (75,365) 0.2% 3.8%
Net loans 7,107,802 7,236,496 4,030,034 (1.8)% 76.4%
Accrued interest receivable 30,674 29,627 16,873 3.5% 81.8%
Real estate owned held for sale, net 7,207 11,627 4,922 (38.0)% 46.4%
Property and equipment, net 168,807 167,604 98,728 0.7% 71.0%
Goodwill 244,811 247,738 21,148 (1.2)% nm
Other intangibles, net 35,598 37,472 6,110 (5.0)% 482.6%
Bank-owned life insurance 156,928 156,865 71,290 % 120.1%
Other assets 192,734 192,810 61,459 % 213.6%
Total assets $9,745,594 $9,796,298 $5,211,372 (0.5)% 87.0%
LIABILITIES
Deposits:
Non-interest-bearing $3,036,330 $2,619,618 $1,504,768 15.9% 101.8%
Interest-bearing transaction and savings accounts 3,705,658 4,081,580 2,036,600 (9.2)% 82.0%
Interest-bearing certificates 1,287,873 1,353,870 778,049 (4.9)% 65.5%
Total deposits 8,029,861 8,055,068 4,319,417 (0.3)% 85.9%
Advances from Federal Home Loan Bank at fair value 75,400 133,381 250 (43.5)% nm
Customer repurchase agreements and other borrowings 106,132 98,325 97,020 7.9% 9.4%
Junior subordinated debentures at fair value 92,879 92,480 84,326 0.4% 10.1%
Accrued expenses and other liabilities 81,485 76,511 38,164 6.5% 113.5%
Deferred compensation 39,682 40,474 20,882 (2.0)% 90.0%
Total liabilities 8,425,439 8,496,239 4,560,059 (0.8)% 84.8%
SHAREHOLDERS' EQUITY
Common stock 1,262,050 1,261,174 627,553 0.1% 101.1%
Retained earnings 50,230 39,615 22,623 26.8% 122.0%
Other components of shareholders' equity 7,875 (730) 1,137 nm 592.6%
Total shareholders' equity 1,320,155 1,300,059 651,313 1.5% 102.7%
Total liabilities and shareholders' equity $9,745,594 $9,796,298 $5,211,372 (0.5)% 87.0%
Common Shares Issued:
Shares outstanding at end of period 34,221,451 34,242,255 20,976,641
Common shareholders' equity per share (1) $38.58 $37.97 $31.05
Common shareholders' tangible equity per share (1) (2) $30.38 $29.64 $29.75
Common shareholders' tangible equity to tangible assets (2) 10.98% 10.67% 12.04%
Consolidated Tier 1 leverage capital ratio 11.28% 11.06% 14.67%


(1)Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
(2)Common shareholders' tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of the press release tables.


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Percentage Change
LOANS Mar 31, 2016 Dec 31, 2015 Mar 31, 2015 Prior Qtr Prior Yr
Commercial real estate:
Owner occupied $1,328,034 $1,327,807 $627,531 % 111.6%
Investment properties 1,805,243 1,765,353 936,693 2.3% 92.7%
Multifamily real estate 307,019 472,976 208,687 (35.1)% 47.1%
Commercial construction 87,711 72,103 30,434 21.6% 188.2%
Multifamily construction 79,737 63,846 56,201 24.9% 41.9%
One- to four-family construction 297,348 278,469 228,224 6.8% 30.3%
Land and land development:
Residential 142,841 126,773 98,930 12.7% 44.4%
Commercial 24,493 33,179 17,174 (26.2)% 42.6%
Commercial business 1,224,915 1,207,944 776,579 1.4% 57.7%
Agricultural business including secured by farmland 340,350 376,531 208,635 (9.6)% 63.1%
One- to four-family real estate 910,719 952,633 543,004 (4.4)% 67.7%
Consumer:
Consumer secured by one- to four-family real estate 481,590 478,420 233,643 0.7% 106.1%
Consumer-other 155,999 158,470 139,664 (1.6)% 11.7%
Total loans outstanding $7,185,999 $7,314,504 $4,105,399 (1.8)% 75.0%
Restructured loans performing under their restructured terms $19,450 $21,777 $27,558
Loans 30 - 89 days past due and on accrual $28,264 $18,834 $8,157
Total delinquent loans (including loans on non-accrual), net(1) $43,986 $30,994 $20,822
Total delinquent loans / Total loans outstanding 0.61% 0.42% 0.51%
Purchased credit-impaired loans, net $53,271 $58,555 $5,674


(1) Delinquent loans include $4.9 million of delinquent purchased credit-impaired loans at March 31, 2015 compared to $6.3 million at December 31, 2015 and $1.1 million at March 31, 2015.


LOANS BY GEOGRAPHIC LOCATION Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Amount Percentage Amount Percentage Amount Percentage
Washington $3,333,912 46.4% $3,343,112 45.7% $2,398,848 58.5%
Oregon 1,420,749 19.8% 1,446,531 19.8% 1,088,596 26.5%
California 1,173,203 16.3% 1,234,016 16.9% 119,805 2.9%
Idaho 493,905 6.9% 496,870 6.8% 309,948 7.5%
Utah 289,082 4.0% 325,011 4.4% 4,490 0.1%
Other 475,148 6.6% 468,964 6.4% 183,712 4.5%
Total loans $7,185,999 100.0% $7,314,504 100.0% $4,105,399 100.0%


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Quarters Ended
CHANGE IN THE Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $78,008 $77,320 $75,907
Provision for loan losses
Recoveries of loans previously charged off:
Commercial real estate 38 233 14
Construction and land 471 578 108
One- to four-family real estate 12 631 6
Commercial business 720 143 178
Agricultural business, including secured by farmland 17 261 295
Consumer 207 197 46
1,465 2,043 647
Loans charged off:
Commercial real estate (180) (537)
One- to four-family real estate (292) (75)
Commercial business (139) (107)
Agricultural business, including secured by farmland (567) (161) (818)
Consumer (390) (365) (189)
(1,276) (1,355) (1,189)
Net (charge-offs) recoveries 189 688 (542)
Balance, end of period $78,197 $78,008 $75,365
Net (charge-offs) recoveries / Average loans outstanding 0.003% 0.009% (0.014)%


ALLOCATION OF
ALLOWANCE FOR LOAN LOSSES Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Specific or allocated loss allowance:
Commercial real estate $19,732 $20,716 $19,103
Multifamily real estate 2,853 4,195 4,401
Construction and land 29,318 27,131 24,398
One- to four-family real estate 2,170 4,732 8,141
Commercial business 15,118 13,856 12,892
Agricultural business, including secured by farmland 4,282 3,645 3,732
Consumer 3,541 902 585
Total allocated 77,014 75,177 73,252
Unallocated 1,183 2,831 2,113
Total allowance for loan losses $78,197 $78,008 $75,365
Allowance for loan losses / Total loans outstanding 1.09% 1.07% 1.83%
Allowance for loan losses / Non-performing loans 501% 512% 305%


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
NON-PERFORMING ASSETS
Loans on non-accrual status:
Secured by real estate:
Commercial$4,145 $3,751 $4,141
Multifamily 578
Construction and land2,250 2,260 7,523
One- to four-family4,803 4,700 7,111
Commercial business1,558 2,159 418
Agricultural business, including secured by farmland663 697 1,566
Consumer906 703 1,843
14,325 14,270 23,180
Loans more than 90 days delinquent, still on accrual:
One- to four-family1,039 899 1,548
Commercial business 8
Consumer251 45 7
1,290 952 1,555
Total non-performing loans15,615 15,222 24,735
Real estate owned (REO)7,207 11,627 4,922
Other repossessed assets202 268 62
Total non-performing assets$23,024 $27,117 $29,719
Total non-performing assets / Total assets0.24% 0.28% 0.57%
Purchase credit impaired loans (net)$53,271 $58,555 $5,674


Quarters Ended
REAL ESTATE OWNEDMar 31, 2016 Dec 31, 2015 Mar 31, 2015
Balance, beginning of period$11,627 $6,363 $3,352
Additions from loan foreclosures2 1,125 668
Additions from acquisitions400 5,706 2,525
Proceeds from dispositions of REO(4,666) (1,585) (1,738)
Gain on sale of REO49 18 115
Valuation adjustments in the period(205)
Balance, end of period$7,207 $11,627 $4,922


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT COMPOSITION Percentage Change
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015 Prior Qtr Prior Yr
Non-interest-bearing $3,036,330 $2,619,618 $1,504,768 15.9% 101.8%
Interest-bearing checking 767,460 1,159,846 472,033 (33.8)% 62.6%
Regular savings accounts 1,327,558 1,284,642 979,824 3.3% 35.5%
Money market accounts 1,610,640 1,637,092 584,743 (1.6)% 175.4%
Interest-bearing transaction & savings accounts 3,705,658 4,081,580 2,036,600 (9.2)% 82.0%
Interest-bearing certificates 1,287,873 1,353,870 778,049 (4.9)% 65.5%
Total deposits $8,029,861 $8,055,068 $4,319,417 (0.3)% 85.9%


GEOGRAPHIC CONCENTRATION OF DEPOSITS Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Amount Percentage Amount Percentage Amount Percentage
Washington $4,209,332 52.4% $4,219,304 52.4% $2,865,536 66.4%
Oregon 1,668,421 20.8% 1,648,421 20.4% 1,206,944 27.9%
California 1,565,326 19.5% 1,592,365 19.8% %
Idaho 428,681 5.3% 435,099 5.4% 246,937 5.7%
Utah 158,101 2.0% 159,879 2.0% %
Total deposits $8,029,861 100.0% $8,055,068 100.0% $4,319,417 100.0%


INCLUDED IN TOTAL DEPOSITS Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Public non-interest-bearing accounts $82,527 $85,489 $44,195
Public interest-bearing transaction & savings accounts 123,713 123,941 58,023
Public interest-bearing certificates 29,983 31,281 35,326
Total public deposits $236,223 $240,711 $137,544
Total brokered deposits $135,603 $162,936 $4,800


ADDITIONAL FINANCIAL INFORMATION
(in thousands)
BUSINESS COMBINATIONS
ACQUISITION OF STARBUCK BANCSHARES, INC.* October 1, 2015
Cash paid $130,000
Fair value of common shares issued 630,674
Total consideration 760,674
Fair value of assets acquired:
Cash and cash equivalents $95,821
Securities 1,037,238
Loans receivable 2,999,130
Real estate owned held for sale 6,105
Property and equipment 66,728
Core deposit intangible 33,500
Deferred tax asset 108,454
Other assets 112,782
Total assets acquired 4,459,758
Fair value of liabilities assumed:
Deposits 3,638,596
FHLB advances 221,442
Junior subordinated debentures 5,806
Other liabilities 56,359
Total liabilities assumed 3,922,203
Net assets acquired 537,555
Goodwill $223,119


ACQUISITION OF SIUSLAW FINANCIAL GROUP March 6, 2015
Cash paid $5,806
Fair value of common shares issued 58,100
Total consideration 63,906
Fair value of assets acquired:
Cash and cash equivalents $84,405
Securities - available for sale 12,865
Loans receivable 247,098
Real estate owned held for sale 2,525
Property and equipment 8,127
Core deposit intangible 3,895
Other assets 10,848
Total assets acquired 369,763
Fair value of liabilities assumed:
Deposits 316,406
Junior subordinated debentures 5,959
Other liabilities 5,183
Total liabilities assumed 327,548
Net assets acquired 42,215
Goodwill $21,691


* Amounts recorded in this table are preliminary estimates of fair value. Additional adjustments to the purchase price allocation may be required.


MERGER AND ACQUISITION EXPENSE (1)Quarters Ended
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
By expense category:
Personnel severance/retention fees$1,313 $6,134 $
Professional services852 5,757 1,280
Branch consolidation and other occupancy expenses1,949 976 24
Client communications251 306 66
Information/computer data services1,417 2,069 40
Miscellaneous1,031 3,127 238
Total merger and acquisition expense$6,813 $18,369 $1,648
By acquisition:
Siuslaw Financial Group$ $133 $670
Starbuck Bancshares, Inc. (AmericanWest)6,813 18,236 978
Total merger and acquisition expense$6,813 $18,369 $1,648


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Actual Minimum to be
categorized as
"Adequately Capitalized"
Minimum to be
categorized as
"Well Capitalized"
REGULATORY CAPITAL RATIOS AS OF MARCH 31, 2016 Amount Ratio Amount Ratio Amount Ratio
Banner Corporation-consolidated:
Total capital to risk-weighted assets $1,146,218 13.58% $675,182 8.00% $843,977 10.00%
Tier 1 capital to risk-weighted assets 1,064,372 12.61% 506,386 6.00% 675,182 8.00%
Tier 1 leverage capital to average assets 1,064,372 11.28% 377,320 4.00% 471,650 5.00%
Common equity tier 1 capital to risk-weighted assets 1,006,886 11.93% 379,790 4.50% 548,585 6.50%
Banner Bank:
Total capital to risk-weighted assets 1,034,320 12.54% 659,676 8.00% 824,595 10.00%
Tier 1 capital to risk-weighted assets 954,697 11.58% 494,757 6.00% 659,676 8.00%
Tier 1 leverage capital to average assets 954,697 10.42% 366,529 4.00% 458,161 5.00%
Common equity tier 1 capital to risk-weighted assets 954,697 11.58% 371,068 4.50% 535,987 6.50%
Islanders Bank:
Total capital to risk-weighted assets 38,876 20.23% 15,371 8.00% 19,214 10.00%
Tier 1 capital to risk-weighted assets 36,653 19.08% 11,528 6.00% 15,371 8.00%
Tier 1 leverage capital to average assets 36,653 13.71% 10,695 4.00% 13,369 5.00%
Common equity tier 1 capital to risk-weighted assets 36,653 19.08% 8,646 4.50% 12,489 6.50%


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET INTEREST SPREADQuarter Ended
March 31, 2016 December 31, 2015 March 31, 2015
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:
Mortgage loans$5,707,882 $68,743 4.84% $5,785,986 $69,552 4.77% $2,913,207 $35,561 4.95%
Commercial/agricultural loans1,471,638 16,025 4.38% 1,469,445 16,303 4.40% 885,940 8,967 4.10%
Consumer and other loans141,361 2,190 6.23% 142,599 2,245 6.25% 121,108 1,837 6.15%
Total loans(1)7,320,881 86,958 4.78% 7,398,030 88,100 4.72% 3,920,255 46,365 4.80%
Mortgage-backed securities1,004,836 5,390 2.16% 1,025,612 5,440 2.10% 308,068 1,027 1.35%
Other securities421,241 2,772 2.65% 457,521 2,787 2.42% 265,796 1,617 2.47%
Interest-bearing deposits with banks103,775 101 0.39% 129,797 76 0.23% 91,202 53 0.24%
FHLB stock17,531 80 1.84% 17,268 92 2.11% 26,942 7 0.11%
Total investment securities1,547,383 8,343 2.17% 1,630,198 8,395 2.04% 692,008 2,704 1.58%
Total interest-earning assets8,868,264 95,301 4.32% 9,028,228 96,495 4.24% 4,612,263 49,069 4.31%
Non-interest-earning assets900,296 870,169 230,634
Total assets$9,768,560 $9,898,397 $4,842,897
Deposits:
Interest-bearing checking accounts$934,072 196 0.08% $1,127,541 234 0.08% $445,614 90 0.08%
Savings accounts1,307,369 423 0.13% 1,595,451 420 0.10% 929,852 344 0.15%
Money market accounts1,620,524 862 0.21% 1,311,383 881 0.27% 521,839 203 0.16%
Certificates of deposit1,328,741 1,465 0.44% 1,418,774 1,611 0.45% 769,378 1,096 0.58%
Total interest-bearing deposits5,190,706 2,946 0.23% 5,453,149 3,146 0.23% 2,666,683 1,733 0.26%
Non-interest-bearing deposits2,788,372 % 2,665,676 % 1,331,080 %
Total deposits7,979,078 2,946 0.15% 8,118,825 3,146 0.15% 3,997,763 1,733 0.18%
Other interest-bearing liabilities:
FHLB advances169,204 279 0.66% 178,399 287 0.64% 17,744 17 0.39%
Other borrowings102,865 75 0.29% 99,515 73 0.29% 88,304 43 0.20%
Junior subordinated debentures140,212 958 2.75% 140,212 890 2.52% 126,099 740 2.38%
Total borrowings412,281 1,312 1.28% 418,126 1,250 1.19% 232,147 800 1.40%
Total funding liabilities8,391,359 4,258 0.20% 8,536,951 4,396 0.20% 4,229,910 2,533 0.24%
Other non-interest-bearing liabilities(2)63,014 54,967 4,569
Total liabilities8,454,373 8,591,918 4,234,479
Shareholders' equity1,314,187 1,306,479 608,418
Total liabilities and shareholders' equity$9,768,560 $9,898,397 $4,842,897
Net interest income/rate spread $91,043 4.12% $92,099 4.04% $46,536 4.07%
Net interest margin 4.13% 4.05% 4.09%
Additional Key Financial Ratios:
Return on average assets 0.73% 0.28% 1.02%
Return on average equity 5.44% 2.09% 8.09%
Average equity/average assets 13.45% 13.20% 12.56%
Average interest-earning assets/average interest-bearing liabilities 158.28% 153.77% 159.11%
Average interest-earning assets/average funding liabilities 105.68% 105.75% 109.04%
Non-interest income/average assets 0.82% 0.74% 1.15%
Non-interest expense/average assets 3.46% 4.02% 3.51%
Efficiency ratio(4) 75.70% 90.76% 69.59%


(1)Average balances include loans accounted for on a nonaccrual basis and 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 FHLB advances and junior subordinated debentures.
(3)Yields and costs have not been adjusted for the effect of tax-exempt interest.
(4)Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income.


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
* Non-GAAP Financial Measures (unaudited)
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented.
REVENUE FROM CORE OPERATIONSQuarters Ended
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Net interest income before provision for loan losses$91,043 $92,099 $46,536
Total non-interest income19,959 18,356 13,696
Total GAAP revenue111,002 110,455 60,232
Exclude net (gain) loss on sale of securities(21) 3 510
Exclude change in valuation of financial instruments carried at fair value(29) 1,547 (1,050)
Revenue from core operations (non-GAAP)$110,952 $112,005 $59,692


ACQUISITION ACCOUNTING IMPACT ON NET INTEREST MARGINQuarters Ended
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Net interest income before provision for loan losses (GAAP)$91,043 $92,099 $46,536
Exclude discount accretion on purchased loans(1,689) (2,579) (111)
Exclude premium amortization on acquired certificates of deposit(461) (572) (69)
Net interest income before discount accretion (non-GAAP)$88,893 $88,948 $46,356
Average interest-earning assets (GAAP)$8,868,264 $9,028,228 $4,612,263
Exclude average net loan discount on acquired loans43,347 43,109 1,576
Average interest-earning assets before acquired loan discount (non-GAAP)$8,911,611 $9,071,337 $4,613,839
Net interest margin (GAAP)4.13% 4.05% 4.09%
Exclude impact on net interest margin from discount accretion(0.08) (0.11) (0.01)
Exclude impact on net interest margin from CD premium amortization(0.02) (0.03) (0.01)
Exclude impact of net loan discount on average earning assets(0.02) (0.02)
Net margin before discount accretion (non-GAAP)4.01% 3.89% 4.07%


NON-INTEREST INCOME/EXPENSE FROM CORE OPERATIONSQuarters Ended
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
Total non-interest income (GAAP)$19,959 $18,356 $13,696
Exclude net (gain) loss on sale of securities(21) 3 510
Exclude change in valuation of financial instruments carried at fair value(29) 1,547 (1,050)
Non-interest income from core operations (non-GAAP)$19,909 $19,906 $13,156
Total non-interest expense (GAAP)$84,034 $100,254 $41,914
Exclude acquisition related costs(6,813) (18,369) (1,648)
Non-interest expense from core operations (non-GAAP)$77,221 $81,885 $40,266


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands except shares and per share data)
Quarters Ended
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
EARNINGS FROM CORE OPERATIONS
Net income (GAAP) $17,774 $6,893 $12,134
Exclude net (gain) loss on sale of securities (21) 3 510
Exclude change in valuation of financial instruments carried at fair value (29) 1,547 (1,050)
Exclude acquisition-related costs 6,813 18,369 1,648
Exclude related tax expense (benefit) (2,417) (6,425) (120)
Total earnings from core operations (non-GAAP) $22,120 $20,387 $13,122
Diluted earnings per share (GAAP) $0.52 $0.20 $0.61
Diluted core earnings per share (non-GAAP) $0.65 $0.60 $0.66
NET EFFECT OF ACQUISITION-RELATED COSTS ON EARNINGS
Acquisition-related costs $(6,813) $(18,369) $(1,648)
Related tax benefit 2,435 5,867 315
Total net effect of acquisition-related costs on earnings $(4,378) $(12,502) $(1,333)
Diluted weighted average shares outstanding 34,103,727 33,934,426 19,845,019
Total net effect of acquisition-related costs on diluted weighted average earnings per share $(0.13) $(0.37) $(0.07)


Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
TANGIBLE COMMON SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS
Shareholders' equity (GAAP)$1,320,155 $1,300,059 $651,313
Exclude goodwill and other intangible assets, net280,409 285,210 27,258
Tangible common shareholders' equity (non-GAAP)$1,039,746 $1,014,849 $624,055
Total assets (GAAP)$9,745,594 $9,796,298 $5,211,372
Exclude goodwill and other intangible assets, net280,409 285,210 27,258
Total tangible assets (non-GAAP)$9,465,185 $9,511,088 $5,184,114
Tangible common shareholders' equity to tangible assets (non-GAAP)10.98% 10.67% 12.04%
TANGIBLE COMMON SHAREHOLDERS' EQUITY PER SHARE
Tangible common shareholders' equity$1,039,746 $1,014,849 $624,055
Common shares outstanding at end of period34,221,451 34,242,255 20,976,641
Common shareholders' equity (book value) per share (GAAP)$38.58 $37.97 $31.05
Tangible common shareholders' equity (tangible book value) per share (non-GAAP)$30.38 $29.64 $29.75


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands except shares and per share data)
Mar 31, 2016 Dec 31, 2015 Mar 31, 2015
RATIO OF ADJUSTED ALLOWANCE FOR LOAN LOSSES TO ADJUSTED LOANS
Loans receivable (GAAP) $7,185,999 $7,314,504 $4,105,399
Net loan discount on acquired loans 42,302 43,657 5,032
Adjusted loans (non-GAAP) $7,228,301 $7,358,161 $4,110,431
Allowance for loan losses (GAAP) $78,197 $78,008 $75,365
Net loan discount on acquired loans 42,302 43,657 5,032
Adjusted allowance for loan losses (non-GAAP) $120,499 $121,665 $80,397
Adjusted allowance for loan losses / Adjusted loans (non-GAAP) 1.67% 1.65% 1.96%


CONTACT: MARK J. GRESCOVICH, PRESIDENT & CEO LLOYD W. BAKER, CFO (509) 527-3636

Source:Banner Corporation