Good morning or good afternoon, everyone. Welcome to the Banner Corporation Third Quarter 2024 Conference Call and Webcast. My name is Adam, and I’ll be your operator today. I will now hand it over to Mark Grescovich to start. Mark, please proceed when you are ready.

Thank you, Adam, and good morning, everyone. I would also like to welcome you to the third quarter 2024 earnings call for Banner Corporation. Joining me on the call today is Rob Butterfield, Banner Corporation's Chief Financial Officer, Jill Rice, our Chief Credit Officer, and Rich Arnold, our Head of Investor Relations. Rich, would you please read our forward-looking safe harbor statement?

Sure, Mark. Good morning. Our presentation today discusses Banner's business outlook and will include forward-looking statements. Those statements include descriptions of management's plans, objectives, or goals for future operations, products or services, forecasts of financial or other performance measures and statements about Banner's general outlook for economic and other conditions. We also may make other forward-looking statements in the question-and-answer period following the management's discussion. These forward-looking statements are subject to a number of risks and uncertainties, and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and the most recently filed form 10-Q for the quarter ended June 30, 2024. Forward-looking statements are effective only as of the day they are made, and Banner assumes no obligation to update information concerning its expectations. Mark?

Thank you, Rich. As is customary, today we will cover four primary items with you. First, I will provide high-level comments on Banner's third quarter 2024 performance. Second, the actions Banner continues to take to support all of our stakeholders, including our Banner team, our clients, our communities, and our shareholders. Third, Jill Rice will provide comments on the status of our loan portfolio. Finally, Rob Butterfield will provide more detail on our operating performance for the quarter, as well as comments on our balance sheet. Before I get started, I want to again thank all of my 2,000 colleagues in our company who are working extremely hard to assist our clients and communities. Banner has lived our core values, summed up as doing the right thing for the past 134 years. Our overarching goal continues to be to do the right thing for our clients, our communities, our colleagues, our company, and our shareholders, and to provide a consistent and reliable source of commerce and capital through all economic cycles and changing events. I am pleased to report again to you that is exactly what we continue to do. I'm very proud of the entire Banner team that are living our core values. Now, let me turn to an overview of our performance. As announced, Banner Corporation reported a net profit available to common shareholders of $45.2 million or $1.30 per diluted share for the quarter ended September 30, 2024. This compares to a net profit to common shareholders of $1.15 per share for the second quarter of 2024. Our strategy to maintain a moderate risk profile and the investments we have made and continue to make to improve our operating performance have positioned the company well to weather recent market headwinds, and we saw that in this quarter's results. Rob will discuss these items in more detail with his remarks. To illustrate the core earnings power of Banner, I would direct your attention to pretax pre-provision earnings excluding gains and losses on the sale of securities and changes in fair value of financial instruments. Our third quarter 2024 core earnings were $57 million compared to $52 million for the prior quarter. Banner's third quarter 2024 revenue from core operations was approximately $154 million, an increase of $3 million compared to the second quarter of 2024. We continue to have a strong core deposit base that has proven to be resilient and loyal to Banner in the wake of a highly competitive environment and a very good net interest margin. Overall, this resulted in a return on average assets of 1.13% for the third quarter of 2024. Although we are in a very difficult operating environment for commercial banks, our core performance reflects continued execution on our super community bank strategy. That is: growing new client relationships, maintaining our core funding position, promoting client loyalty and advocacy through our responsive service model, and demonstrating our safety and soundness through all economic cycles and changing events. To that point, our core deposits represent 89% of total deposits. Further, we continued organic generation of new relationships, and our loans increased 6% over the same period last year. Reflective of the solid performance coupled with our strong regulatory capital ratios, and the fact that we increased our tangible common equity per share by 24% from the same period last year, we announced a core dividend of $0.48 per common share. Earlier this year, we released our environmental, social and governance report, which reflects the continued maturation of our approach to ESG. Banner has always been committed to doing the right thing in support of our clients, the many communities that we serve and our colleagues. The accomplishments highlighted in this report are meant to reflect the deep connection we have with all of our stakeholders and our commitment to creating positive change in the communities we serve. Finally, I am pleased to say that we continue to receive marketplace recognition and validation of our business model and our value proposition. Banner was again named one of America's 100 Best Banks and one of the best banks in the world by Forbes. News League named Banner one of the best, most trustworthy companies in America and the world again this year, and just recently named Banner one of the best regional banks in the country. S&P Global Market Intelligence ranked Banner's financial performance among the top 50 public banks with more than $10 billion in assets. The Digital Banking Provider Q2 Holdings awarded Banner their Bank of the Year for excellence. Additionally, the Kroll Bond rating agency affirmed all of Banner's investment-grade debt and deposit ratings, and as we've noted previously, Banner Bank received an outstanding CRA rating in our most recent CRA examination. Let me now turn the call over to Jill to discuss the trends in our loan portfolio and her comments on Banner's credit quality. Jill?

Thank you, Mark. And good morning, everyone. Our overall credit metrics remained strong in spite of the slight deterioration reported. Delinquent loans ended the quarter at 0.40%, up from 0.29% as of the linked quarter and from 0.27% as of September 30, 2023. Adversely classified loans increased by $28 million in the quarter, driven in large part by three isolated relationships and now represent 1.33% of total loans, up 24 basis points when compared to June 30. Nonperforming assets increased $12 million in the quarter, representing 0.28% of total assets and consist of $43 million in nonperforming loans and $2.2 million in REO. The net provision for credit losses for the quarter was $1.7 million, which includes a $2 million provision for loan losses and a $262,000 release related to unfunded loan commitments. The provision this quarter was primarily driven by an increase in the reserve for individually evaluated collateral-dependent loans. Loan losses in the quarter were a modest $964,000 and were partially offset by recoveries totaling $734,000. After the provision, the reserve for credit losses loans totaled $154.6 million and provides 1.38% coverage of the portfolio and 359% coverage of our nonperforming loans. By way of comparison, the reserve for loan losses provided 1.37% coverage of the loan portfolio as of the linked quarter and 1.38% coverage as of September 2023. Loan growth was muted this quarter and was further impacted by the decision to move $48 million from our one-to-four family portfolio to held for sale. In total, portfolio loan balances increased a modest $81 million or 1% from the linked quarter with year-over-year growth of 6%. Given the limited loan growth, my comments will be brief. The large increase in the multifamily real estate portfolio reflects movement from construction to permanent as several projects transitioned into their mini-firm status. The growth in investor CRE was a combination of new originations, as well as the shift from construction into the permanent portfolio, and we again reported solid growth in owner-occupied real estate this quarter, up 4% and 9% year-over-year with the growth spread across the footprint. Residential construction exposure remains moderate at 5% of the portfolio and reflects a slight shift in mix with approximately 70% for sale housing and 30% one-to-four family customer construction residential mortgage loans. Similar to previous quarters, when we include multifamily commercial construction and land, the total construction exposure is 14%. Given the market dynamics that continue to be driven by limited resale inventories, the absorption of the speculative housing starts across our markets remains timely with builders continuing to slowly rebuild inventory levels. Conversely, given the higher interest rate environment, our custom construction originations have slowed over the past few quarters. The decline reflected in C&I is driven by reduced line utilization, down 1% quarter-over-quarter. This was, however, largely offset by additional growth in the small business portfolio. As expected, agricultural balances increased again this quarter due to line utilization up 4% compared to last quarter. As I stated earlier, our overall credit metrics remained strong, while increasing the level of adversely classified assets remains modest as a percentage of total loans with no concentration in any specific industry or market. The office and multifamily segments of the commercial real estate book continued to perform well and repricing risk continues to be manageable. The spike in agricultural nonaccrual loans as a Northern California agricultural relationship, and we believe that we are adequately reserved for any potential loss exposure. As I stated last quarter, our credit underwriting criteria has not changed materially over the course of the last decade. The vast majority of our loan book has solid sponsorship, personal guarantees, and properly margined collateral support. Our reserve for loan losses remained strong, and we continue to have a robust capital base, which further solidifies our balance sheet. We remain well positioned for the future. With that, I will hand the call over to Rob for his comments. Rob?

Great. Thank you, Jill. We reported $1.30 per diluted share for the second quarter compared to $1.15 per diluted share for the prior quarter. The $0.15 increase in earnings per share was primarily due to an increase in net interest income and lower expenses compared to the prior quarter. Total loans increased $146 million during the quarter with portfolio loans increasing $81 million and held for sale loans increasing $65 million. The increase in held-for-sale loans was primarily due to transferring $48 million of loans from held for investment to held for sale. The loan-to-deposit ratio ended the quarter at 83%. Total securities increased $31 million, primarily due to the fair value increases as a result of interest rate decreases during the quarter, partially offset by normal portfolio cash flows. Deposits increased by $459 million during the quarter due to core deposits increasing $462 million, which included an increase of $150 million in noninterest-bearing deposits. The increase in core deposits was partially offset by time deposits decreasing $3 million due to brokered deposits decreasing $55 million, partially offset by retail time deposits increasing $52 million. Core deposits ended the quarter at 89% of total deposits. Total borrowings decreased $89 million during the quarter as the growth in core deposits was used to fund loan growth and reduce FHLB advances. Banner's liquidity and capital profile continue to remain strong with a robust core funding base, a low reliance on wholesale borrowings, and significant off-balance sheet borrowing capacity. In addition, all of our capital ratios are in excess of regulatory well-capitalized levels. Net interest income increased $3.1 million from the prior quarter, primarily due to average earning assets increasing $142 million and tax equivalent net interest margin increasing 2 basis points to 3.72%. Compared to the prior quarter, average loan balances increased $217 million. This increase was partially offset by total average interest-bearing cash and investment balances decreasing $75 million. The yield on earning assets increased 8 basis points, driven by loan yields increasing at an equal amount. The increase in loan yields was the result of adjustable-rate loans repricing higher, as well as new production continuing to come on at interest rates above the overall portfolio yield. The average rate on new loan production for the quarter was 8.23% compared to 8.47% in the prior quarter. Total cost of funds increased 7 basis points to 173 basis points due to an increase in the cost of deposits, partially offset by lower borrowing balances. Total cost of deposits increased 11 basis points to 161 basis points, primarily due to much of the growth in core deposits during the quarter occurring in higher-cost deposit products. The cost of deposits for the month of September was 162 basis points. Noninterest-bearing deposits ended at 35% of total deposits, identical to the prior quarter. The 50 basis point reduction in Fed funds in the middle of September had limited impact on our net interest margin in the current quarter. The 28% of our loan portfolio that are variable rate loans will reprice down in equal amount within 30 days of the rate reduction. We expect deposit cost reductions to lag portfolio repricing, resulting in some moderate compression in net interest margin in the fourth quarter. Total noninterest income increased $864,000 from the prior quarter, primarily due to the prior quarter including a $562,000 loss on a bond called early. The current quarter also benefited from having lower fair value write-downs on fair value instruments carried at fair value. Total noninterest expense decreased $1.8 million from the prior quarter. The decrease reflected lower benefit expense due to a payroll tax refund of $800,000 and self-insured medical expense decreasing by $1 million. The current quarter also had lower payment and card processing service expense and lower REO expense. These decreases were partially offset by higher legal expenses as the prior quarter benefited from an $874,000 reversal of expense related to finalizing two legal matters. Our capital and liquidity positions continue to position us well to execute on our super community bank business model. This concludes my prepared comments. Now I'll turn it back over to Mark.

Thank you, Jill and Rob for your detailed comments. That concludes our prepared remarks. And Adam, we will now open the call and welcome questions.

And our first question comes from Andrew Turrell from Stephens. Andrew, please go ahead. Your line is open.

Hey, good morning.

Good morning, Andrew.

Hey, if I could just start on the expense side. So we saw a drop in compensation this quarter. I think it was called out in medical premiums and compensation. Just was that drop this quarter lower than you might have expected? Should the run rate normalize higher from here? Can you just help us better understand kind of the fluctuation in comp expense and then kind of the overall expense outlook into 4Q?

Yes. Thanks, Andrew. It's Rob. So, yes, I mean, I don't think it's unusual for expenses to kind of bounce around a couple million dollars quarter-to-quarter. Clearly this quarter we benefited from a couple of items that were not expected. So the run rate was a bit lower this quarter. I would expect that to normalize certainly with the payroll tax refund that we received. I mean, that's not an ongoing item. We could see the trend of self-insured medical expenses carry over into Q4, but eventually it's going to normalize back to normal expected levels there. So I don't think that's a long-term item. So I'm expecting that we'll see some normalization as we move forward in our expenses.

Okay. And then if I just look back at kind of the past few years, you've generally been growing overall operating expenses in, call it, the low single digits range. I guess, we've seen inflation come down quite a bit. Is it fair to think that absent any kind of M&A, you could continue that kind of low single digits expense growth into 2025?

Yes. In general, the way I would think about it is, we would expect normal inflationary increases, whatever inflation is for a particular period. If you think about compensation expenses, two-thirds of our expenses. So there's going to be obviously some increases in that next year, just due to normal inflationary pressures on it. Beyond that, I would say that we continue to make strategic investments in the organization. And so, if we were going to continue to make those investments, there could be a little bit of additional expense related to that.

Okay. And then, moving over to the margin, just quickly, can you talk about where were spot deposit costs, either interest-bearing or total at the end of the period? And then just more broadly, kind of what's your approach is to repricing deposits lower for the 50 basis points and cuts we've already seen as well as kind of expected future cuts?

Sure. Just first on the cost of deposits for September, it was 162 basis points, so 1 basis point higher than the quarter number. If we think about how we approached kind of the reduction in deposit cost related to the reduction in Fed funds in the middle of September. We did make some reductions subsequent to that rate reduction. If you look at our advertised CD specials, those went down by 25 basis points initially. We also did some repricing of our exception price deposits and then also the tiers in our high-yield savings account. And I would say overall probably the reductions that we did in those were similar to what we did on the CD book. At this point, we're just monitoring what competitors are doing in the environment. We think that we'll be able to take some additional portion of that 50 basis points in a month or so.

Okay, great. I appreciate the color. I'll hop back in the queue. Thank you.

Thank you, Andrew.

The next question comes from Jeff Rulis from D.A. Davidson. Jeff, your line is open. Please go ahead.

Thanks. Good morning. Rob, maybe just to follow-on on the margin. So, got your comments about expectations into the fourth quarter, and it sounds like a kind of a wait and see a little bit on the competition. A little bit further out into 2025 and where the balance sheets position, I think you mentioned 28% of loans variable. If we do see further cuts, could you either specific to margin or big picture, and how you think the balance of margin, how that reacts in 2025?

Yes, sure. So I would point to the ramp down scenarios that we provided in the investor presentation. We use Moody's for the interest rate forecast, and their forecast right now seems to be kind of a gradual decline in the Fed funds rate. If that's the scenario that comes into play, if you look at our down 100 basis point ramp scenario, it suggests that we're slightly asset sensitive where we would see a negative 1% reduction in our net interest income over the next 12 months. Of course, that assumes a flat balance sheet, which isn't the reality of the situation. That assumption is that we have a deposit beta on the downside of 28%. The deposit beta that we've experienced on the upside is 45%. So I think we have a chance to outperform that. But, I think we want to see kind of what deposit behavior is as rates start to decline, what competitor behavior is to get a better read on that.

Thanks, Rob. Jill, just hopping over to credit. The $12 million increase in non-accruals, I think you mentioned the Northern California ag credit. Could you just outline the additions this quarter? Sounds like it was isolated into a few credits.

Yes, good morning, Jeff. So in that non-performing, the primary driver was that one larger agricultural relationship, but outside of that it was primarily consumer in the one-to-four family home equity space and then small business related. The average loan size of the rest of the non-performing was roughly $200,000.

Got it. Okay. And the ag credit, is that sort of commodity pricing? I mean, it's been a challenged industry. Is this more operator or more climate sort of pressures on the industry or is it operator issues?

This one I would suggest is a mix of both of those issues. This is a large agricultural processing operation, walnuts and almonds and yes, it involves not just the commodities pricing.

Okay. Thank you. And then lastly, yes, I guess, a question for Mark. Any thoughts on the credit unions in the Northwest in terms of M&A activity? You've been pretty aggressive, but I guess I'm just interested in your thoughts of how that impacts expectations as you have conversations or little to no impact. Just thought I'd bounce it off to see if you have any thoughts on that activity.

Thank you for the question. I don't have much to share publicly regarding the credit unions and the advantages they may have in their business models. However, I can tell you that, especially on the West Coast, there are only a few buyers capable of acquiring some of these banks, and fortunately, Banner is among them. So, it's likely that if the institutions being acquired by credit unions are available, other buyers in our market are considering them as well. I'm not here to criticize their business choices, but they do have certain pricing advantages. Additionally, if some of these institutions prefer cash, it changes the dynamics quite a bit. It's reasonable to say that West Coast buyers have evaluated the institutions that credit unions are interested in.

Okay. Fair enough. Thanks, Mark.

Thanks, Jeff.

The next question comes from David Feaster from Raymond James. David, your line is open. Please go ahead.

Hey, good morning, everybody. I wanted to touch on the deposit landscape. You guys have done a great job growing core deposits broadly, especially good to see the increase in non-interest-bearing. I'm just curious, how do you think about your ability to continue to drive core deposits? Where are you having success there? And would you kind of expect core deposit growth to continue outpacing loan growth and maybe be able to reduce borrowings and broker deposits continuing to do that?

Yes. David, it's Rob and let's see if Mark or Jill has any additional comments, but maybe on the last point first, I don't think long-term we would expect that deposit growth would outpace loan growth. We would expect that loan growth would probably outpace deposit growth. But long term, we have to grow our core deposit if we're going to grow our loan book. I mean, I think we saw some seasonality in Q3. I mean, we talked about that before we went into Q3, that we expected it to be a good quarter. Historically, Q3 is our best quarter for us. Better than historical is the way I'd describe the third quarter. I think what we saw is, we saw some carryover from the second quarter. Normally, we see some build in deposits as we move through the second quarter into June, especially, and we really didn't see that in the second quarter. So I think there was some carryover from the second quarter, just normal build back after the payment of taxes and stuff like that. Beyond that, we also had some success this quarter in kind of bringing some core deposits back to the bank, some core deposits that had left to some brokerage accounts, that type of stuff. And so, we had some success in bringing some of those core deposits back to the organization. I think long-term, if you think about it, really where the core deposit growth comes from is really the small business area as a percentage of the loan balances. That's been very good for us historically. We have a focus on small business lending, and as part of that small business lending, the deposits come with it and typically are pretty rich from a loan to deposit ratio standpoint. So pause there. I don't know, Mark or Jill, if you guys want to add anything there?

No, I think you covered it well.

That's great. Now, shifting gears to loan growth, we've discussed the low to mid-single digit growth rate. I'm interested in your outlook for loan growth moving forward. How is demand looking? What do you see as the main factors driving growth? Considering the current state of the five-year rates and CRE pricing, are you noticing any early payoffs or refinancing in the CRE portfolio that might impact growth?

Thank you, David. In response to the last part of your question, we haven't yet observed any accelerated payoffs in commercial real estate. As we approach refinancing opportunities, we should consider whether we want to hold those at market rates. The commercial pipelines have been steadily rebuilding throughout the year, supported by the success of our new relationship managers, which gives me confidence. We are still projecting a low to mid-single-digit growth rate for 2024. Looking further ahead to 2025, I would expect a mid-single-digit growth rate unless there is a significant real estate refinancing event.

Okay. That's helpful. And then just going back to the margin, I don't want to beat a dead horse here, but just kind of thinking, how do you think about the trajectory? I mean, because you did talk about the lag impact on the repricing side. I mean, assuming the forward curve kind of comes to fruition, I'm just kind of curious how you think about the timing of a potential trough in 2025? Because there's other moving parts into that, obviously. I'm just kind of curious how you think about the margin trajectory as we look forward.

Yes, the way I think about it, David, is I talked about some of the scenarios we have out there as far as the ramp scenarios and stuff. And so I would certainly point back to those as well. But if I just think about it from a big picture standpoint, I mean, we did see an increase in net interest margin during the current quarter, which was before the Fed started to cut. So, during the up cycle, I guess, or the longer higher for longer cycle, we kind of troughed there. I think what's going to happen there just overall is that as long as the Fed takes kind of a balanced approach to things where it's a more balanced approach, 25 basis points a quarter or something like that, I think we can overcome that, and we certainly could see margin flat to up in that scenario. If the Fed's more aggressive and takes 50 basis points or higher a quarter, we could see some initial decline there, moderate compression as the lag in the deposit cost funding there. But longer-term, I think really what we want to get back to, and I think the whole industry wants to get back to as a normal shape yield curve. And so, if I think out longer, I think that's where we can really start to really expand margin again once we get back to that normal shape yield curve.

Has there been any change in your appetite for securities repositioning or anything to help maybe accelerate some of that margin? Just given the decline in rates and maybe the metrics a little bit less painful?

Yes, sure. So we've kind of had that barometer out there where we were willing to make a security repositioning if we are going to have an earn back within that three-year period of time. Currently, there's probably limited opportunities for us to stay within that three-year earn back, so we would have to expand that earn back in order to do that. Certainly, as the rate environment continues to change, we continue to evaluate whether that makes sense or not. I can't say that we have anything planned at this point in time, but we're also remaining flexible there and continuing to do evaluations. So I can't say it never will happen or it won't happen, but we don't have anything currently planned.

All right. Great. Thanks, everybody.

Thank you, David.

The next question comes from Andrew Liesch from Piper Sandler. Andrew, your line is open. Please go ahead.

Thanks. Good morning, everyone. Just one question from me here on the M&A environment. Mark, you've got much better currency over the last few months. I guess how is the chatter in your markets? I'm guessing going up and down the West Coast because you can acquire in a lot of different regions. Are you getting inbound interest? Are you reaching out? How is the M&A chatter? What's the M&A chatter been?

Great. Thank you, Andrew, for the question. Look, our philosophy has never changed. So you're probably tired of hearing my same story, which is, we recognize there are some partners on the West Coast that would be a great fit for our organization. We continue to have dialogue with all of those parties. I think we have a great reputation. We have a very strong integration team. And so those conversations, when the timing is right, if the timing is right, that continues. But again, we are very focused on our organic business growth strategy. And to the extent there's something opportunistic that presents itself, the good news is we're in a position to take advantage of that.

Got it. From a size perspective, is there a certain size range that you're targeting that you would like to do or something too big or too small?

No, I don't think so. I think certainly on the smaller end, something less than $1 billion doesn't make a lot of sense with the current regulatory environment, right? What you don't want to do is find yourself in a position where just because an opportunity presents itself that the regulators lock you out for a period of time. So I think all parties, not just me, but all of my colleagues are being very thoughtful in what the approach is going to be to M&A. But I wouldn't rule out any size variable that doesn't make a lot of sense. We've done small deals, as small as $350 million or $400 million in asset size.

Right, right. All my other questions have been asked and answered. Thanks so much. I'll step back.

Thank you, Andrew.

And the next question comes from Kelly Motta from KBW. Kelly, your line is open. Please go ahead.

Hey, good morning. I guess circling back to the funding side, you had incredible deposit growth and I think in the release you called out some seasonality, it's been a couple of years where normal seasonal trends have kind of gotten buried in some of the just overall deposit trends here. So I'm just hoping to get a better color and a better sense of how we should be thinking about the seasonality now. And if now that liquidity is more normalized to normal levels, is that something you see returning more prominently on a go-forward basis?

Yes, this year we have observed a return to more typical seasonal patterns. In the first quarter, we experienced an increase in core deposits due to tax refunds. In the second quarter, we saw outflows related to tax payments and agricultural clients using their deposits for operational funding before drawing down their lines. The third quarter was exceptionally strong, even surpassing what we would generally expect seasonally. It appears we are reverting to normal seasonal flows, with some variations. Looking ahead to the fourth quarter, it is likely to be more stable for us. We might see our agricultural clients who received cash from their crops initially increase their deposits, while also beginning to pay down their lines, which is customary. Additionally, many states have property tax payments due in October, contributing to seasonal outflows. Overall, it feels like we have returned to a more normal seasonal pattern, despite some unpredictable events that can affect deposit balances.

Got it. Thanks for that. That was helpful, Rob. Maybe last one for me. Most of my questions have been asked and answered at this point. You have about $100 million of sub-debt that is redeemable in a couple of quarters potentially. Just wondering if you look at your capital stacks, I know we already discussed M&A, but capital more broadly, how you're potentially looking at, would that be on the table and you have the buyback authorization, your thoughts around that?

Sure. We're currently assessing the sub debt to decide if we should call and replace it or simply pull it back, given our strong capital position. The sub debt will shift to a variable rate, which is less favorable for us, starting July 1st, 2025. At that time, we will lose part of the capital treatment and the rate will increase. For now, we are monitoring the sub-debt market to determine if it makes sense to replace or call it. Regarding our overall capital structure, maintaining the core dividend is a top priority, and it remains at a reasonable payout level, which is essential for its long-term sustainability. Our board has authorized share repurchases since late July, and we're evaluating the potential to restart them. We've also issued special dividends in the past, although we have utilized that option less frequently recently. That's our current perspective on capital.

Awesome. Thanks for the questions. I'll step back.

Thank you, Kelly.

The next question comes from Tim Coffey at Janney. Tim, your line is open. Please go ahead.

Thank you for the opportunity to ask a question. I would like to inquire about loan growth, specifically regarding loan originations. Clearly, originations increased by $100 million year-over-year and rates are decreasing. Do you believe there is pent-up demand for credit from your customer base?

Yes, thanks, Tim. The way I would answer that is, yes, there is demand and I think that as we get past the election and get some understanding of what the economy maybe is going to look like under whatever the administration is, I think we'll start to see some of that break loose. Certainly there was waiting for rates and that playing in as well, but I do believe there is demand.

Okay. All right. Great. Thanks. And then my second question was on the new Chief Banking Officer role, kind of a two-part question. First, kind of provide some insight into the strategy to refilling that position. And two, does putting that seat in Sacramento reflect greater emphasis on originated loans in California?

Yes, thanks, Tim, for the question. Look, Banner has been very focused over many years on making sure that succession planning is a significant part of our operation. As you know, in the commercial banking space, succession is a very big deal in finding talent, recruiting talent, and having great leadership. We were very fortunate to have the opportunity for Mark to join our organization. He's got depth as a CEO. He has depth in the California and West Coast market, in commercial banking and retail banking. So anytime you have an opportunity to add talent to the organization, I think it's a great scenario for the company. At the same time, I think it's really important to say that we have focused and you've heard us talk about improving operating efficiency. We've isolated the chief operating officer, Jim Costa, with the operations and how we can improve efficiency from an operation standpoint. Cindy Purcell from a strategy standpoint and integration if we were to do some combinations or acquisitions. She has 45 years of experience with this organization and a great background in integration. The opportunity to add all the revenue lines under a Chief Banking Officer really streamlines the operations going forward. So I think it's a very focused approach on behalf of the company.

Okay. And then having a presence in Sacramento, does that suggest a stronger focus on originated loans in California?

I think California is a fantastic market opportunity for us. So I would just leave it at that.

All right. Thank you. Those are my questions.

Thanks, Tim.

We have no further questions, so I'll hand the call back to Mark for some concluding remarks.

Thank you all for your questions and certainly for your participation today in our third quarter earnings call. As I stated, we're very proud of the Banner team and our results for the quarter. Given the current operating environment, it's been challenging, but it's nice to see that we're making great progress and it's been evidenced by our performance this quarter. Thank you for your interest in our company and joining the call. We look forward to reporting our results to you again in the future. Thank you, everyone, and have a wonderful day.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.