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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM
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CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported):
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number (including area code) (
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Not Applicable
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(Former name or former address, if changed since last report)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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(d)
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Exhibits
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| 99.1 Press Release of Banner Corporation dated January 21, 2021 | ||
| 99.2 Banner Corporation Investor Materials | ||
| 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||
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*
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The information furnished under Item 2.02, Item 7.01 and Item 9.01 of this Current Report on Form 8-K, including the exhibit,
shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement
or other filings of Banner Corporation under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
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BANNER CORPORATION
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Date: January 21, 2021
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By: /s/ Peter J. Conner
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Peter J. Conner
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Executive Vice President
and Chief Financial Officer
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![]() |
![]() |
CONTACT:
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MARK J. GRESCOVICH,
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PRESIDENT & CEO
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PETER J. CONNER, CFO
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(509) 527-3636
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NEWS RELEASE
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|||
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•
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SBA Paycheck Protection
Program. The U.S. Small Business Administration (SBA) provides assistance to small businesses impacted by COVID-19 through the Paycheck Protection Program (PPP), which was designed to provide near-term relief to help small
businesses sustain operations. The deadline for PPP loan applications to the SBA under the original PPP was August 8, 2020. Under this program Banner funded 9,103 applications totaling $1.15 billion of loans in its service area and began
processing applications for loan forgiveness in the fourth quarter of 2020. As of December 31, 2020, Banner had received SBA forgiveness for 595 PPP loans totaling $112.3 million. In January, Banner began accepting and processing loan
applications under the second PPP program enacted in December 2020.
|
|
|
|
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•
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Loan Accommodations.
Banner is continuing to offer payment and financial relief programs for borrowers impacted by COVID-19. These programs include initial loan payment deferrals or interest-only payments for up to 90 days, waived late fees, and, on a more
limited basis, waived interest and temporarily suspended foreclosure proceedings. Deferred loans are re-evaluated at the end of the initial deferral period and will either return to the original loan terms or may be eligible for an
additional deferral period for up to 90 days. In addition, Banner has entered into payment forbearance agreements with other customers for periods of up to six months. At December 31, 2020, Banner had 158 loans totaling $75.4 million
still on deferral. Of the loans still on deferral, 26 loans totaling $33.9 million have received a second deferral. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these
modifications are not considered to be troubled debt restructurings through December 31, 2020 pursuant to applicable accounting and regulatory guidance.
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|
•
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Allowance for Credit Losses
- Loans. Banner recorded a recapture of provision for credit losses of $601,000 for the fourth quarter of 2020. This compares to a $13.6 million provision for credit losses recorded in the preceding quarter and a $4.0 million
provision for loan losses recorded in the fourth quarter a year ago. The recapture of provision for the current quarter primarily reflects the decrease in loan balances while the provision for credit losses recorded in the preceding
quarter primarily reflected the deterioration in forecasted economic indicators as a result of the COVID-19 pandemic and for both periods the economic outlook that existed at their respective quarter end.
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|
•
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Branch Operations, IT
Changes and One-Time Expenses. Banner has begun taking steps to resume more normal branch activities with specific guidelines in place to help safeguard the safety of its clients and personnel. To further the well-being of staff
and customers, Banner implemented measures to allow employees to work from home to the extent practicable. To facilitate this approach, Banner allocated additional computer equipment to staff and enhanced Banner’s network capabilities with
several upgrades. These expenses plus other expenses incurred in response to the COVID-19 pandemic resulted in $333,000 of related costs during the fourth quarter of 2020, compared to $778,000 of related costs in the third quarter of
2020. The COVID-19 pandemic response expenses for 2020 were $3.5 million.
|
|
•
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Capital Management. At
December 31, 2020, the tangible common shareholders’ equity to tangible assets* ratio was 8.69% and Banner’s capital was well in excess of all regulatory requirements. On June 30, 2020, Banner issued and sold in an underwritten offering
$100.0 million aggregate principal amount of 5.000% Fixed-to-Floating Rate Subordinated Notes due 2030 (Notes) at a public offering price equal to 100% of the aggregate principal amount of the Notes, resulting in net proceeds, after
underwriting discounts and estimated offering expenses, of approximately $98.1 million. On December 21, 2020, Banner announced that its Board of Directors authorized the repurchase of up to 1,757,781 shares of Banner’s common stock, which
is equivalent to approximately 5% of its common stock.
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•
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Revenues decreased to $144.9 million, compared to $149.2 million in the preceding quarter, and increased 4% when compared to
$139.8 million in the fourth quarter a year ago.
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•
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Net interest income, before the provision for credit losses, increased to $121.4 million in the fourth quarter of 2020,
compared to $121.0 million in the preceding quarter and $119.5 million in the fourth quarter a year ago.
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•
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Net interest margin was 3.57%, compared to 3.65% in the preceding quarter and 4.20% in the fourth quarter a year ago.
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•
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Net interest margin on a tax equivalent basis was 3.64%, compared to 3.72% in the preceding quarter and 4.26% in the fourth
quarter a year ago.
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•
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Mortgage banking revenues decreased 35% to $10.7 million, compared to $16.6 million in the preceding quarter, and increased
71% compared to $6.2 million in the fourth quarter a year ago.
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•
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Return on average assets was 1.04%, compared to 1.01% in the preceding quarter and 1.07% in the fourth quarter a year ago.
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•
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Net loans receivable decreased to $9.70 billion at December 31, 2020, compared to $10.00 billion at September 30, 2020, and
increased 5% when compared to $9.20 billion at December 31, 2019.
|
|
•
|
Non-performing assets decreased to $36.5 million, or 0.24% of total assets, at December 31, 2020, compared to $36.7 million,
or 0.25% of total assets in the preceding quarter, and decreased from $40.5 million, or 0.32% of total assets, at December 31, 2019.
|
|
•
|
The allowance for credit losses - loans was $167.3 million, or 1.69% of total loans receivable, as of December 31, 2020,
compared to $168.0 million, or 1.65% of total loans receivable as of September 30, 2020 and $100.6 million or 1.08% of total loans receivable as of December 31, 2019.
|
|
•
|
A $1.2 million provision for credit losses - unfunded loan commitments was recorded and the allowance for credit losses -
unfunded loan commitments was $13.3 million as of December 31, 2020, compared to $12.1 million as of September 30, 2020 and $2.7 million as of December 31, 2019.
|
|
•
|
Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased 3% to $11.65 billion at
December 31, 2020, compared to $11.30 billion at September 30, 2020, and increased 31% compared to $8.93 billion a year ago. Core deposits represented 93% of total deposits at December 31, 2020.
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•
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Dividends to shareholders were $0.41 per share in the quarter ended December 31, 2020.
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•
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Common shareholders’ equity per share increased 1% to $47.39 at December 31, 2020, compared to $46.83 at the preceding
quarter end, and increased 6% from $44.59 a year ago.
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•
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Tangible common shareholders’ equity per share* increased 2% to $36.17 at December 31, 2020, compared to $35.56 at the
preceding quarter end, and increased 9% from $33.33 a year ago.
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RESULTS OF OPERATIONS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
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(in thousands except shares and per share data)
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
|||||||||||||||
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INTEREST INCOME:
|
|
|
|
|
||||||||||||||||
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Loans receivable
|
$
|
115,545
|
$
|
116,716
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$
|
120,915
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$
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466,360
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$
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471,473
|
||||||||||
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Mortgage-backed securities
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7,438
|
7,234
|
8,924
|
31,792
|
38,640
|
|||||||||||||||
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Securities and cash equivalents
|
6,170
|
5,631
|
3,570
|
20,994
|
15,574
|
|||||||||||||||
|
|
129,153
|
129,581
|
133,409
|
519,146
|
525,687
|
|||||||||||||||
|
INTEREST EXPENSE:
|
|
|
|
|
||||||||||||||||
|
Deposits
|
4,392
|
5,179
|
9,950
|
25,015
|
37,630
|
|||||||||||||||
|
Federal Home Loan Bank advances
|
987
|
988
|
2,281
|
5,023
|
12,234
|
|||||||||||||||
|
Other borrowings
|
121
|
128
|
121
|
603
|
330
|
|||||||||||||||
|
Junior subordinated debentures and subordinated notes
|
2,216
|
2,260
|
1,566
|
7,204
|
6,574
|
|||||||||||||||
|
|
7,716
|
8,555
|
13,918
|
37,845
|
56,768
|
|||||||||||||||
|
Net interest income before (recapture)/provision for credit losses
|
121,437
|
121,026
|
119,491
|
481,301
|
468,919
|
|||||||||||||||
|
(RECAPTURE)/PROVISION FOR CREDIT LOSSES
|
(601)
|
13,641
|
4,000
|
64,316
|
10,000
|
|||||||||||||||
|
Net interest income
|
122,038
|
107,385
|
115,491
|
416,985
|
458,919
|
|||||||||||||||
|
NON-INTEREST INCOME:
|
|
|
|
|
||||||||||||||||
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Deposit fees and other service charges
|
8,293
|
8,742
|
9,637
|
34,384
|
46,632
|
|||||||||||||||
|
Mortgage banking operations
|
10,690
|
16,562
|
6,248
|
51,581
|
22,215
|
|||||||||||||||
|
Bank-owned life insurance
|
1,319
|
1,286
|
1,170
|
5,972
|
4,645
|
|||||||||||||||
|
Miscellaneous
|
1,306
|
951
|
3,201
|
6,323
|
8,624
|
|||||||||||||||
|
|
21,608
|
27,541
|
20,256
|
98,260
|
82,116
|
|||||||||||||||
|
Net gain on sale of securities
|
197
|
644
|
62
|
1,012
|
33
|
|||||||||||||||
|
Net change in valuation of financial instruments carried at fair value
|
1,704
|
37
|
(36)
|
(656)
|
(208)
|
|||||||||||||||
|
Total non-interest income
|
23,509
|
28,222
|
20,282
|
98,616
|
81,941
|
|||||||||||||||
|
NON-INTEREST EXPENSE:
|
|
|
|
|
||||||||||||||||
|
Salary and employee benefits
|
60,906
|
61,171
|
57,050
|
245,400
|
226,409
|
|||||||||||||||
|
Less capitalized loan origination costs
|
(9,415)
|
(8,517)
|
(8,797)
|
(34,848)
|
(28,934)
|
|||||||||||||||
|
Occupancy and equipment
|
14,248
|
13,022
|
13,377
|
53,362
|
52,390
|
|||||||||||||||
|
Information / computer data services
|
6,402
|
6,090
|
6,202
|
24,386
|
22,458
|
|||||||||||||||
|
Payment and card processing services
|
3,960
|
4,044
|
4,638
|
16,095
|
16,993
|
|||||||||||||||
|
Professional and legal expenses
|
5,643
|
2,368
|
2,262
|
12,093
|
9,736
|
|||||||||||||||
|
Advertising and marketing
|
2,828
|
1,105
|
2,021
|
6,412
|
7,836
|
|||||||||||||||
|
Deposit insurance expense
|
1,548
|
1,628
|
1,608
|
6,516
|
2,840
|
|||||||||||||||
|
State/municipal business and use taxes
|
1,071
|
1,196
|
917
|
4,355
|
3,880
|
|||||||||||||||
|
Real estate operations
|
(283)
|
(11)
|
40
|
(190)
|
303
|
|||||||||||||||
|
Amortization of core deposit intangibles
|
1,865
|
1,864
|
2,061
|
7,732
|
8,151
|
|||||||||||||||
|
Provision for credit losses - unfunded loan commitments
|
1,203
|
1,539
|
—
|
3,559
|
—
|
|||||||||||||||
|
Miscellaneous
|
5,871
|
5,285
|
7,892
|
22,712
|
28,122
|
|||||||||||||||
|
95,847
|
90,784
|
89,271
|
367,584
|
350,184
|
||||||||||||||||
|
COVID-19 expenses
|
333
|
778
|
—
|
3,502
|
—
|
|||||||||||||||
|
Merger and acquisition-related expenses
|
579
|
5
|
4,419
|
2,062
|
7,544
|
|||||||||||||||
|
Total non-interest expense
|
96,759
|
91,567
|
93,690
|
373,148
|
357,728
|
|||||||||||||||
|
Income before provision for income taxes
|
48,788
|
44,040
|
42,083
|
142,453
|
183,132
|
|||||||||||||||
|
PROVISION FOR INCOME TAXES
|
9,831
|
7,492
|
8,428
|
26,525
|
36,854
|
|||||||||||||||
|
NET INCOME
|
$
|
38,957
|
$
|
36,548
|
$
|
33,655
|
$
|
115,928
|
$
|
146,278
|
||||||||||
|
Earnings per share available to common shareholders:
|
|
|
|
|
||||||||||||||||
|
Basic
|
$
|
1.11
|
$
|
1.04
|
$
|
0.96
|
$
|
3.29
|
$
|
4.20
|
||||||||||
|
Diluted
|
$
|
1.10
|
$
|
1.03
|
$
|
0.95
|
$
|
3.26
|
$
|
4.18
|
||||||||||
|
Cumulative dividends declared per common share
|
$
|
0.41
|
$
|
0.41
|
$
|
1.41
|
$
|
1.23
|
$
|
2.64
|
||||||||||
|
Weighted average common shares outstanding:
|
|
|
|
|
||||||||||||||||
|
Basic
|
35,200,769
|
35,193,109
|
35,188,399
|
35,264,252
|
34,868,434
|
|||||||||||||||
|
Diluted
|
35,425,810
|
35,316,679
|
35,316,736
|
35,528,848
|
34,967,684
|
|||||||||||||||
|
Increase (decrease) in common shares outstanding
|
632
|
669
|
1,578,219
|
(592,376)
|
568,804
|
|||||||||||||||
|
FINANCIAL CONDITION
|
|
|
Percentage Change
|
|||||||||||||||
|
(in thousands except shares and per share data)
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Prior
Qtr
|
Prior Yr
Qtr
|
|||||||||||||
|
ASSETS
|
|
|
||||||||||||||||
|
Cash and due from banks
|
$
|
311,899
|
$
|
289,144
|
$
|
234,359
|
7.9
|
%
|
33.1
|
%
|
||||||||
|
Interest-bearing deposits
|
922,284
|
416,394
|
73,376
|
121.5
|
%
|
1,156.9
|
%
|
|||||||||||
|
Total cash and cash equivalents
|
1,234,183
|
705,538
|
307,735
|
74.9
|
%
|
301.1
|
%
|
|||||||||||
|
Securities - trading
|
24,980
|
23,276
|
25,636
|
7.3
|
%
|
(2.6)
|
%
|
|||||||||||
|
Securities - available for sale
|
2,322,593
|
1,758,384
|
1,551,557
|
32.1
|
%
|
49.7
|
%
|
|||||||||||
|
Securities - held to maturity
|
421,713
|
429,033
|
236,094
|
(1.7)
|
%
|
78.6
|
%
|
|||||||||||
|
Total securities
|
2,769,286
|
2,210,693
|
1,813,287
|
25.3
|
%
|
52.7
|
%
|
|||||||||||
|
Equity securities
|
—
|
450,255
|
—
|
(100.0)
|
%
|
nm
|
||||||||||||
|
Federal Home Loan Bank stock
|
16,358
|
16,363
|
28,342
|
—
|
%
|
(42.3)
|
%
|
|||||||||||
|
Loans held for sale
|
243,795
|
185,938
|
210,447
|
31.1
|
%
|
15.8
|
%
|
|||||||||||
|
Loans receivable
|
9,870,982
|
10,163,917
|
9,305,357
|
(2.9)
|
%
|
6.1
|
%
|
|||||||||||
|
Allowance for credit losses - loans
|
(167,279)
|
(167,965)
|
(100,559)
|
(0.4)
|
%
|
66.3
|
%
|
|||||||||||
|
Net loans receivable
|
9,703,703
|
9,995,952
|
9,204,798
|
(2.9)
|
%
|
5.4
|
%
|
|||||||||||
|
Accrued interest receivable
|
46,617
|
48,321
|
37,962
|
(3.5)
|
%
|
22.8
|
%
|
|||||||||||
|
Real estate owned held for sale, net
|
816
|
1,795
|
814
|
(54.5)
|
%
|
0.2
|
%
|
|||||||||||
|
Property and equipment, net
|
164,556
|
171,576
|
178,008
|
(4.1)
|
%
|
(7.6)
|
%
|
|||||||||||
|
Goodwill
|
373,121
|
373,121
|
373,121
|
—
|
%
|
—
|
%
|
|||||||||||
|
Other intangibles, net
|
21,426
|
23,291
|
29,158
|
(8.0)
|
%
|
(26.5)
|
%
|
|||||||||||
|
Bank-owned life insurance
|
191,830
|
191,755
|
192,088
|
—
|
%
|
(0.1)
|
%
|
|||||||||||
|
Other assets
|
265,932
|
267,477
|
228,271
|
(0.6)
|
%
|
16.5
|
%
|
|||||||||||
|
Total assets
|
$
|
15,031,623
|
$
|
14,642,075
|
$
|
12,604,031
|
2.7
|
%
|
19.3
|
%
|
||||||||
|
LIABILITIES
|
|
|
||||||||||||||||
|
Deposits:
|
|
|
||||||||||||||||
|
Non-interest-bearing
|
$
|
5,492,924
|
$
|
5,412,570
|
$
|
3,945,000
|
1.5
|
%
|
39.2
|
%
|
||||||||
|
Interest-bearing transaction and savings accounts
|
6,159,052
|
5,887,419
|
4,983,238
|
4.6
|
%
|
23.6
|
%
|
|||||||||||
|
Interest-bearing certificates
|
915,320
|
915,352
|
1,120,403
|
—
|
%
|
(18.3)
|
%
|
|||||||||||
|
Total deposits
|
12,567,296
|
12,215,341
|
10,048,641
|
2.9
|
%
|
25.1
|
%
|
|||||||||||
|
Advances from Federal Home Loan Bank
|
150,000
|
150,000
|
450,000
|
—
|
%
|
(66.7)
|
%
|
|||||||||||
|
Customer repurchase agreements and other borrowings
|
184,785
|
176,983
|
118,474
|
4.4
|
%
|
56.0
|
%
|
|||||||||||
|
Subordinated notes, net
|
98,201
|
98,114
|
—
|
0.1
|
%
|
nm
|
||||||||||||
|
Junior subordinated debentures at fair value
|
116,974
|
109,821
|
119,304
|
6.5
|
%
|
(2.0)
|
%
|
|||||||||||
|
Accrued expenses and other liabilities
|
202,643
|
200,038
|
227,889
|
1.3
|
%
|
(11.1)
|
%
|
|||||||||||
|
Deferred compensation
|
45,460
|
45,249
|
45,689
|
0.5
|
%
|
(0.5)
|
%
|
|||||||||||
|
Total liabilities
|
13,365,359
|
12,995,546
|
11,009,997
|
2.8
|
%
|
21.4
|
%
|
|||||||||||
|
SHAREHOLDERS’ EQUITY
|
|
|
||||||||||||||||
|
Common stock
|
1,349,879
|
1,347,612
|
1,373,940
|
0.2
|
%
|
(1.8)
|
%
|
|||||||||||
|
Retained earnings
|
247,316
|
222,959
|
186,838
|
10.9
|
%
|
32.4
|
%
|
|||||||||||
|
Other components of shareholders’ equity
|
69,069
|
75,958
|
33,256
|
(9.1)
|
%
|
107.7
|
%
|
|||||||||||
|
Total shareholders’ equity
|
1,666,264
|
1,646,529
|
1,594,034
|
1.2
|
%
|
4.5
|
%
|
|||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
15,031,623
|
$
|
14,642,075
|
$
|
12,604,031
|
2.7
|
%
|
19.3
|
%
|
||||||||
|
Common Shares Issued:
|
|
|
||||||||||||||||
|
Shares outstanding at end of period
|
35,159,200
|
35,158,568
|
35,751,576
|
|||||||||||||||
|
Common shareholders’ equity per share (1)
|
$
|
47.39
|
$
|
46.83
|
$
|
44.59
|
||||||||||||
|
Common shareholders’ tangible equity per share (1) (2)
|
$
|
36.17
|
$
|
35.56
|
$
|
33.33
|
||||||||||||
|
Common shareholders’ tangible equity to tangible assets (2)
|
8.69
|
%
|
8.78
|
%
|
9.77
|
%
|
||||||||||||
|
Consolidated Tier 1 leverage capital ratio
|
9.50
|
%
|
9.56
|
%
|
10.71
|
%
|
||||||||||||
|
(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 final two pages of the press release tables.
|
|
ADDITIONAL FINANCIAL INFORMATION
|
|
|
||||||||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||
|
Percentage Change
|
||||||||||||||||||
|
LOANS
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Prior Qtr
|
Prior Yr Qtr
|
|||||||||||||
|
|
|
|||||||||||||||||
|
Commercial real estate:
|
|
|
||||||||||||||||
|
Owner-occupied
|
$
|
1,076,467
|
$
|
1,049,877
|
$
|
980,021
|
2.5
|
%
|
9.8
|
%
|
||||||||
|
Investment properties
|
1,955,684
|
1,991,258
|
2,024,988
|
(1.8)
|
%
|
(3.4)
|
%
|
|||||||||||
|
Small balance CRE
|
573,849
|
597,971
|
613,484
|
(4.0)
|
%
|
(6.5)
|
%
|
|||||||||||
|
Multifamily real estate
|
428,223
|
426,659
|
388,388
|
0.4
|
%
|
10.3
|
%
|
|||||||||||
|
Construction, land and land development:
|
||||||||||||||||||
|
Commercial construction
|
228,937
|
220,285
|
210,668
|
3.9
|
%
|
8.7
|
%
|
|||||||||||
|
Multifamily construction
|
305,527
|
291,105
|
233,610
|
5.0
|
%
|
30.8
|
%
|
|||||||||||
|
One- to four-family construction
|
507,810
|
518,085
|
544,308
|
(2.0)
|
%
|
(6.7)
|
%
|
|||||||||||
|
Land and land development
|
248,915
|
240,803
|
245,530
|
3.4
|
%
|
1.4
|
%
|
|||||||||||
|
Commercial business:
|
||||||||||||||||||
|
Commercial business
|
2,178,461
|
2,343,619
|
1,364,650
|
(7.0)
|
%
|
59.6
|
%
|
|||||||||||
|
Small business scored
|
743,451
|
763,824
|
772,657
|
(2.7)
|
%
|
(3.8)
|
%
|
|||||||||||
|
Agricultural business, including secured by farmland
|
299,949
|
326,169
|
337,271
|
(8.0)
|
%
|
(11.1)
|
%
|
|||||||||||
|
One- to four-family residential
|
717,939
|
771,431
|
925,531
|
(6.9)
|
%
|
(22.4)
|
%
|
|||||||||||
|
Consumer:
|
||||||||||||||||||
|
Consumer—home equity revolving lines of credit
|
491,812
|
504,523
|
519,336
|
(2.5)
|
%
|
(5.3)
|
%
|
|||||||||||
|
Consumer—other
|
113,958
|
118,308
|
144,915
|
(3.7)
|
%
|
(21.4)
|
%
|
|||||||||||
|
Total loans receivable
|
$
|
9,870,982
|
$
|
10,163,917
|
$
|
9,305,357
|
(2.9)
|
%
|
6.1
|
%
|
||||||||
|
Restructured loans performing under their restructured terms
|
$
|
6,673
|
$
|
5,790
|
$
|
6,466
|
||||||||||||
|
Loans 30 - 89 days past due and on accrual
|
$
|
12,291
|
$
|
18,158
|
$
|
20,178
|
||||||||||||
|
Total delinquent loans (including loans on non-accrual), net
|
$
|
36,131
|
$
|
37,464
|
$
|
38,322
|
||||||||||||
|
Total delinquent loans / Total loans receivable
|
0.37
|
%
|
0.37
|
%
|
0.41
|
%
|
||||||||||||
|
LOANS BY GEOGRAPHIC LOCATION
|
Percentage Change
|
|||||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31,
2019
|
Prior
Qtr
|
Prior Yr Qtr
|
||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
|||||||||||||||||
|
Washington
|
$
|
4,647,553
|
47.0%
|
$
|
4,767,113
|
$
|
4,364,764
|
(2.5)
|
%
|
6.5
|
%
|
|||||||||
|
California
|
2,279,749
|
23.1%
|
2,316,739
|
2,129,789
|
(1.6)
|
%
|
7.0
|
%
|
||||||||||||
|
Oregon
|
1,792,156
|
18.2%
|
1,858,465
|
1,650,704
|
(3.6)
|
%
|
8.6
|
%
|
||||||||||||
|
Idaho
|
537,996
|
5.5%
|
576,983
|
530,016
|
(6.8)
|
%
|
1.5
|
%
|
||||||||||||
|
Utah
|
80,704
|
0.8%
|
76,314
|
60,958
|
5.8
|
%
|
32.4
|
%
|
||||||||||||
|
Other
|
532,824
|
5.4%
|
568,303
|
569,126
|
(6.2)
|
%
|
(6.4)
|
%
|
||||||||||||
|
Total loans receivable
|
$
|
9,870,982
|
100.0%
|
$
|
10,163,917
|
$
|
9,305,357
|
(2.9)
|
%
|
6.1
|
%
|
|||||||||
|
LOAN ORIGINATIONS
|
Quarters Ended
|
Twelve Months Ended
|
|||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
|||||||||||||||
|
Commercial real estate
|
$
|
93,838
|
$
|
74,400
|
$
|
165,064
|
$
|
356,361
|
$
|
428,936
|
|||||||||
|
Multifamily real estate
|
7,900
|
2,664
|
20,035
|
27,119
|
71,124
|
||||||||||||||
|
Construction and land
|
515,280
|
412,463
|
530,193
|
1,588,311
|
1,433,313
|
||||||||||||||
|
Commercial business:
|
|||||||||||||||||||
|
Commercial business
|
133,112
|
128,729
|
228,050
|
628,981
|
840,237
|
||||||||||||||
|
SBA PPP
|
—
|
24,848
|
—
|
1,176,018
|
—
|
||||||||||||||
|
Agricultural business
|
11,552
|
16,990
|
25,993
|
76,096
|
85,663
|
||||||||||||||
|
One-to four-family residential
|
28,402
|
32,733
|
30,432
|
116,713
|
112,165
|
||||||||||||||
|
Consumer
|
97,416
|
132,100
|
70,539
|
423,526
|
350,601
|
||||||||||||||
|
Total loan originations (excluding loans held for sale)
|
$
|
887,500
|
$
|
824,927
|
$
|
1,070,306
|
$
|
4,393,125
|
$
|
3,322,039
|
|||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
|
|
|
|
|
|||||||||||||||
|
(dollars in thousands)
|
|
|
|
|
|
|||||||||||||||
|
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
CHANGE IN THE
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
|||||||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - LOANS
|
|
|
|
|
|
|||||||||||||||
|
Balance, beginning of period
|
$
|
167,965
|
$
|
156,352
|
$
|
97,801
|
$
|
100,559
|
$
|
96,485
|
||||||||||
|
Beginning balance adjustment for adoption of ASC 326
|
—
|
—
|
—
|
7,812
|
—
|
|||||||||||||||
|
(Recapture)/provision for credit losses - loans
|
(593)
|
13,641
|
4,000
|
64,285
|
10,000
|
|||||||||||||||
|
Recoveries of loans previously charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
31
|
23
|
199
|
275
|
476
|
|||||||||||||||
|
Construction and land
|
—
|
—
|
—
|
105
|
208
|
|||||||||||||||
|
One- to four-family real estate
|
194
|
94
|
159
|
467
|
561
|
|||||||||||||||
|
Commercial business
|
2,444
|
246
|
225
|
3,265
|
625
|
|||||||||||||||
|
Agricultural business, including secured by farmland
|
51
|
—
|
10
|
1,823
|
47
|
|||||||||||||||
|
Consumer
|
90
|
82
|
61
|
328
|
548
|
|||||||||||||||
|
|
2,810
|
445
|
654
|
6,263
|
2,465
|
|||||||||||||||
|
Loans charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
(1,375)
|
(379)
|
—
|
(1,854)
|
(1,138)
|
|||||||||||||||
|
Multifamily real estate
|
—
|
—
|
—
|
(66)
|
—
|
|||||||||||||||
|
Construction and land
|
—
|
—
|
(45)
|
(100)
|
(45)
|
|||||||||||||||
|
One- to four-family real estate
|
—
|
(72)
|
—
|
(136)
|
(86)
|
|||||||||||||||
|
Commercial business
|
(1,019)
|
(1,297)
|
(1,180)
|
(7,253)
|
(4,171)
|
|||||||||||||||
|
Agricultural business, including secured by farmland
|
(37)
|
(492)
|
(4)
|
(591)
|
(911)
|
|||||||||||||||
|
Consumer
|
(472)
|
(233)
|
(667)
|
(1,640)
|
(2,040)
|
|||||||||||||||
|
|
(2,903)
|
(2,473)
|
(1,896)
|
(11,640)
|
(8,391)
|
|||||||||||||||
|
Net charge-offs
|
(93)
|
(2,028)
|
(1,242)
|
(5,377)
|
(5,926)
|
|||||||||||||||
|
Balance, end of period
|
$
|
167,279
|
$
|
167,965
|
$
|
100,559
|
$
|
167,279
|
$
|
100,559
|
||||||||||
|
Net charge-offs / Average loans receivable
|
(0.001)
|
%
|
(0.019)
|
%
|
(0.013)
|
%
|
(0.053)
|
(0.066)
|
%
|
|||||||||||
|
ALLOCATION OF
|
|
|||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - LOANS
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
|||||||||
|
Specific or allocated credit loss allowance:
|
|
|||||||||||
|
Commercial real estate
|
$
|
57,791
|
$
|
59,705
|
$
|
30,591
|
||||||
|
Multifamily real estate
|
3,893
|
3,256
|
4,754
|
|||||||||
|
Construction and land
|
41,295
|
39,477
|
22,994
|
|||||||||
|
One- to four-family real estate
|
9,913
|
12,868
|
4,136
|
|||||||||
|
Commercial business
|
35,007
|
35,369
|
23,370
|
|||||||||
|
Agricultural business, including secured by farmland
|
4,914
|
5,051
|
4,120
|
|||||||||
|
Consumer
|
14,466
|
12,239
|
8,202
|
|||||||||
|
Total allocated
|
167,279
|
167,965
|
98,167
|
|||||||||
|
Unallocated
|
—
|
—
|
2,392
|
|||||||||
|
Total allowance for credit losses - loans
|
$
|
167,279
|
$
|
167,965
|
$
|
100,559
|
||||||
|
Allowance for credit losses - loans / Total loans receivable
|
1.69
|
%
|
1.65
|
%
|
1.08
|
%
|
||||||
|
Allowance for credit losses - loans / Non-performing loans
|
470
|
%
|
482
|
%
|
254
|
%
|
||||||
|
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
CHANGE IN THE
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
|||||||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
|
|
|
|
|
|
|||||||||||||||
|
Balance, beginning of period
|
$
|
12,094
|
$
|
10,555
|
$
|
2,599
|
$
|
2,716
|
$
|
2,599
|
||||||||||
|
Beginning balance adjustment for adoption of ASC 326
|
—
|
—
|
—
|
7,022
|
—
|
|||||||||||||||
|
Provision for credit losses - unfunded loan commitments
|
1,203
|
1,539
|
—
|
3,559
|
—
|
|||||||||||||||
|
Additions through acquisitions
|
—
|
—
|
117
|
—
|
117
|
|||||||||||||||
|
Balance, end of period
|
$
|
13,297
|
$
|
12,094
|
$
|
2,716
|
$
|
13,297
|
$
|
2,716
|
||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||||||
|
(dollars in thousands)
|
|||||||||||
|
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
||||||||
|
NON-PERFORMING ASSETS
|
|
|
|||||||||
|
Loans on non-accrual status:
|
|
|
|||||||||
|
Secured by real estate:
|
|
|
|||||||||
|
Commercial
|
$
|
18,199
|
$
|
7,824
|
$
|
5,952
|
|||||
|
Multifamily
|
—
|
—
|
85
|
||||||||
|
Construction and land
|
936
|
937
|
1,905
|
||||||||
|
One- to four-family
|
3,556
|
2,978
|
3,410
|
||||||||
|
Commercial business
|
5,407
|
14,867
|
23,015
|
||||||||
|
Agricultural business, including secured by farmland
|
1,743
|
2,066
|
661
|
||||||||
|
Consumer
|
2,719
|
2,896
|
2,473
|
||||||||
|
|
32,560
|
31,568
|
37,501
|
||||||||
|
Loans more than 90 days delinquent, still on accrual:
|
|
|
|||||||||
|
Secured by real estate:
|
|
|
|||||||||
|
Commercial
|
—
|
—
|
89
|
||||||||
|
Construction and land
|
—
|
—
|
332
|
||||||||
|
One- to four-family
|
1,899
|
2,649
|
877
|
||||||||
|
Commercial business
|
1,025
|
425
|
401
|
||||||||
|
Consumer
|
130
|
181
|
398
|
||||||||
|
|
3,054
|
3,255
|
2,097
|
||||||||
|
Total non-performing loans
|
35,614
|
34,823
|
39,598
|
||||||||
|
Real estate owned (REO)
|
816
|
1,795
|
814
|
||||||||
|
Other repossessed assets
|
51
|
37
|
122
|
||||||||
|
Total non-performing assets
|
$
|
36,481
|
$
|
36,655
|
$
|
40,534
|
|||||
|
Total non-performing assets to total assets
|
0.24
|
%
|
0.25
|
%
|
0.32
|
%
|
|||||
|
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
||||||||
|
LOANS BY CREDIT RISK RATING
|
|
|
|||||||||
|
|
|
||||||||||
|
Pass
|
$
|
9,494,147
|
$
|
9,699,098
|
$
|
9,130,662
|
|||||
|
Special Mention
|
36,598
|
41,575
|
61,189
|
||||||||
|
Substandard
|
340,237
|
423,244
|
113,448
|
||||||||
|
Doubtful
|
—
|
—
|
58
|
||||||||
|
Total
|
$
|
9,870,982
|
$
|
10,163,917
|
$
|
9,305,357
|
|||||
|
|
Quarters Ended
|
Twelve Months Ended
|
|||||||||||||||||
|
REAL ESTATE OWNED
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
||||||||||||||
|
Balance, beginning of period
|
$
|
1,795
|
$
|
2,400
|
$
|
228
|
$
|
814
|
$
|
2,611
|
|||||||||
|
Additions from loan foreclosures
|
—
|
—
|
—
|
1,588
|
109
|
||||||||||||||
|
Additions from acquisitions
|
—
|
—
|
650
|
—
|
650
|
||||||||||||||
|
Proceeds from dispositions of REO
|
(1,555)
|
(707)
|
(105)
|
(2,360)
|
(2,588)
|
||||||||||||||
|
Gain (loss) on sale of REO
|
603
|
120
|
41
|
819
|
32
|
||||||||||||||
|
Valuation adjustments in the period
|
(27)
|
(18)
|
—
|
(45)
|
—
|
||||||||||||||
|
Balance, end of period
|
$
|
816
|
$
|
1,795
|
$
|
814
|
$
|
816
|
$
|
814
|
|||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
|
DEPOSIT COMPOSITION
|
Percentage Change
|
|||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Prior Qtr
|
Prior Yr
Qtr
|
||||||||||||||
|
Non-interest-bearing
|
$
|
5,492,924
|
$
|
5,412,570
|
$
|
3,945,000
|
1.5
|
%
|
39.2
|
%
|
||||||||
|
Interest-bearing checking
|
1,569,435
|
1,434,224
|
1,280,003
|
9.4
|
%
|
22.6
|
%
|
|||||||||||
|
Regular savings accounts
|
2,398,482
|
2,332,287
|
1,934,041
|
2.8
|
%
|
24.0
|
%
|
|||||||||||
|
Money market accounts
|
2,191,135
|
2,120,908
|
1,769,194
|
3.3
|
%
|
23.8
|
%
|
|||||||||||
|
Total interest-bearing transaction and savings accounts
|
6,159,052
|
5,887,419
|
4,983,238
|
4.6
|
%
|
23.6
|
%
|
|||||||||||
|
Total core deposits
|
11,651,976
|
11,299,989
|
8,928,238
|
3.1
|
%
|
30.5
|
%
|
|||||||||||
|
Interest-bearing certificates
|
915,320
|
915,352
|
1,120,403
|
—
|
%
|
(18.3)
|
%
|
|||||||||||
|
Total deposits
|
$
|
12,567,296
|
$
|
12,215,341
|
$
|
10,048,641
|
2.9
|
%
|
25.1
|
%
|
||||||||
|
GEOGRAPHIC CONCENTRATION OF DEPOSITS
|
|||||||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Percentage Change
|
||||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
Prior Qtr
|
Prior Yr
Qtr
|
||||||||||||||||
|
Washington
|
$
|
7,058,404
|
56.2
|
%
|
$
|
6,820,329
|
$
|
5,861,809
|
3.5
|
%
|
20.4
|
%
|
|||||||||
|
Oregon
|
2,604,908
|
20.7
|
%
|
2,486,760
|
2,006,163
|
4.8
|
%
|
29.8
|
%
|
||||||||||||
|
California
|
2,237,949
|
17.8
|
%
|
2,254,681
|
1,698,289
|
(0.7)
|
%
|
31.8
|
%
|
||||||||||||
|
Idaho
|
666,035
|
5.3
|
%
|
653,571
|
482,380
|
1.9
|
%
|
38.1
|
%
|
||||||||||||
|
Total deposits
|
$
|
12,567,296
|
100.0
|
%
|
$
|
12,215,341
|
$
|
10,048,641
|
2.9
|
%
|
25.1
|
%
|
|||||||||
|
INCLUDED IN TOTAL DEPOSITS
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
|||||||||
|
Public non-interest-bearing accounts
|
$
|
175,352
|
$
|
142,415
|
$
|
111,015
|
||||||
|
Public interest-bearing transaction & savings accounts
|
127,523
|
117,514
|
133,403
|
|||||||||
|
Public interest-bearing certificates
|
59,127
|
54,219
|
35,184
|
|||||||||
|
Total public deposits
|
$
|
362,002
|
$
|
314,148
|
$
|
279,602
|
||||||
|
Total brokered deposits
|
$
|
—
|
$
|
—
|
$
|
202,884
|
||||||
|
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 DECEMBER 31, 2020
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||
|
Banner Corporation-consolidated:
|
|
|
|
|
|||||||||||||||||
|
Total capital to risk-weighted assets
|
$
|
1,608,387
|
14.73
|
%
|
$
|
873,472
|
8.00
|
%
|
$
|
1,091,840
|
10.00
|
%
|
|||||||||
|
Tier 1 capital to risk-weighted assets
|
1,371,736
|
12.56
|
%
|
655,104
|
6.00
|
%
|
655,104
|
6.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
1,371,736
|
9.50
|
%
|
577,331
|
4.00
|
%
|
n/a
|
n/a
|
|||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,228,236
|
11.25
|
%
|
491,328
|
4.50
|
%
|
n/a
|
n/a
|
|||||||||||||
|
Banner Bank:
|
|
|
|
|
|||||||||||||||||
|
Total capital to risk-weighted assets
|
1,438,012
|
13.39
|
%
|
859,260
|
8.00
|
%
|
1,074,075
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
1,303,590
|
12.14
|
%
|
644,445
|
6.00
|
%
|
859,260
|
8.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
1,303,590
|
9.22
|
%
|
565,620
|
4.00
|
%
|
707,025
|
5.00
|
%
|
||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,303,590
|
12.14
|
%
|
483,334
|
4.50
|
%
|
698,149
|
6.50
|
%
|
||||||||||||
|
Islanders Bank:
|
|
|
|
|
|||||||||||||||||
|
Total capital to risk-weighted assets
|
29,333
|
15.65
|
%
|
14,997
|
8.00
|
%
|
18,747
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
26,983
|
14.39
|
%
|
11,248
|
6.00
|
%
|
14,997
|
8.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
26,983
|
7.87
|
%
|
13,720
|
4.00
|
%
|
17,150
|
5.00
|
%
|
||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
26,983
|
14.39
|
%
|
8,436
|
4.50
|
%
|
12,185
|
6.50
|
%
|
||||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||||||||
|
(rates / ratios annualized)
|
||||||||||||||||||||||||||||||||
|
ANALYSIS OF NET INTEREST SPREAD
|
Quarters Ended
|
|||||||||||||||||||||||||||||||
|
December 31, 2020
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||||||||||||||||||
|
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:
|
||||||||||||||||||||||||||||||||
|
Held for sale loans
|
$
|
110,414
|
$
|
976
|
3.52
|
%
|
$
|
161,385
|
$
|
1,535
|
3.78
|
%
|
$
|
202,686
|
$
|
2,048
|
4.01
|
%
|
||||||||||||||
|
Mortgage loans
|
7,251,101
|
84,634
|
4.64
|
%
|
7,339,181
|
88,011
|
4.77
|
%
|
7,134,231
|
93,653
|
5.21
|
%
|
||||||||||||||||||||
|
Commercial/agricultural loans
|
2,752,352
|
29,145
|
4.21
|
%
|
2,862,291
|
26,396
|
3.67
|
%
|
1,853,447
|
23,829
|
5.10
|
%
|
||||||||||||||||||||
|
Consumer and other loans
|
135,498
|
2,057
|
6.04
|
%
|
140,493
|
2,195
|
6.22
|
%
|
169,197
|
2,685
|
6.30
|
%
|
||||||||||||||||||||
|
Total loans(1)(3)
|
10,249,365
|
116,812
|
4.53
|
%
|
10,503,350
|
118,137
|
4.47
|
%
|
9,359,561
|
122,215
|
5.18
|
%
|
||||||||||||||||||||
|
Mortgage-backed securities
|
1,429,635
|
7,536
|
2.10
|
%
|
1,250,759
|
7,333
|
2.33
|
%
|
1,371,438
|
9,024
|
2.61
|
%
|
||||||||||||||||||||
|
Other securities
|
975,166
|
6,634
|
2.71
|
%
|
884,916
|
6,036
|
2.71
|
%
|
418,767
|
3,032
|
2.87
|
%
|
||||||||||||||||||||
|
Equity securities
|
234,822
|
64
|
0.11
|
%
|
379,483
|
186
|
0.19
|
%
|
—
|
—
|
—
|
%
|
||||||||||||||||||||
|
Interest-bearing deposits with banks
|
611,234
|
219
|
0.14
|
%
|
171,894
|
123
|
0.28
|
%
|
107,959
|
531
|
1.95
|
%
|
||||||||||||||||||||
|
FHLB stock
|
16,361
|
162
|
3.94
|
%
|
16,363
|
163
|
3.96
|
%
|
26,036
|
376
|
5.73
|
%
|
||||||||||||||||||||
|
Total investment securities (3)
|
3,267,218
|
14,615
|
1.78
|
%
|
2,703,415
|
13,841
|
2.04
|
%
|
1,924,200
|
12,963
|
2.67
|
%
|
||||||||||||||||||||
|
Total interest-earning assets
|
13,516,583
|
131,427
|
3.87
|
%
|
13,206,765
|
131,978
|
3.98
|
%
|
11,283,761
|
135,178
|
4.75
|
%
|
||||||||||||||||||||
|
Non-interest-earning assets
|
1,349,055
|
|
|
1,259,816
|
1,152,751
|
|
|
|||||||||||||||||||||||||
|
Total assets
|
$
|
14,865,638
|
|
|
$
|
14,466,581
|
$
|
12,436,512
|
|
|
||||||||||||||||||||||
|
Deposits:
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,483,183
|
315
|
0.08
|
%
|
$
|
1,413,085
|
321
|
0.09
|
%
|
$
|
1,228,936
|
564
|
0.18
|
%
|
|||||||||||||||||
|
Savings accounts
|
2,375,015
|
691
|
0.12
|
%
|
2,251,294
|
813
|
0.14
|
%
|
1,999,656
|
2,027
|
0.40
|
%
|
||||||||||||||||||||
|
Money market accounts
|
2,165,960
|
1,047
|
0.19
|
%
|
2,096,037
|
1,224
|
0.23
|
%
|
1,607,954
|
2,842
|
0.70
|
%
|
||||||||||||||||||||
|
Certificates of deposit
|
916,286
|
2,339
|
1.02
|
%
|
966,028
|
2,821
|
1.16
|
%
|
1,189,530
|
4,517
|
1.51
|
%
|
||||||||||||||||||||
|
Total interest-bearing deposits
|
6,940,444
|
4,392
|
0.25
|
%
|
6,726,444
|
5,179
|
0.31
|
%
|
6,026,076
|
9,950
|
0.66
|
%
|
||||||||||||||||||||
|
Non-interest-bearing deposits
|
5,499,240
|
—
|
—
|
%
|
5,340,688
|
—
|
—
|
%
|
3,959,097
|
—
|
—
|
%
|
||||||||||||||||||||
|
Total deposits
|
12,439,684
|
4,392
|
0.14
|
%
|
12,067,132
|
5,179
|
0.17
|
%
|
9,985,173
|
9,950
|
0.40
|
%
|
||||||||||||||||||||
|
Other interest-bearing liabilities:
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
FHLB advances
|
150,000
|
987
|
2.62
|
%
|
150,000
|
988
|
2.62
|
%
|
387,435
|
2,281
|
2.34
|
%
|
||||||||||||||||||||
|
Other borrowings
|
187,560
|
121
|
0.26
|
%
|
177,628
|
128
|
0.29
|
%
|
126,782
|
121
|
0.38
|
%
|
||||||||||||||||||||
|
Junior subordinated debentures and subordinated notes
|
247,944
|
2,216
|
3.56
|
%
|
247,944
|
2,260
|
3.63
|
%
|
145,339
|
1,566
|
4.27
|
%
|
||||||||||||||||||||
|
Total borrowings
|
585,504
|
3,324
|
2.26
|
%
|
575,572
|
3,376
|
2.33
|
%
|
659,556
|
3,968
|
2.39
|
%
|
||||||||||||||||||||
|
Total funding liabilities
|
13,025,188
|
7,716
|
0.24
|
%
|
12,642,704
|
8,555
|
0.27
|
%
|
10,644,729
|
13,918
|
0.52
|
%
|
||||||||||||||||||||
|
Other non-interest-bearing liabilities(2)
|
195,965
|
|
|
193,256
|
189,682
|
|
|
|||||||||||||||||||||||||
|
Total liabilities
|
13,221,153
|
|
|
12,835,960
|
10,834,411
|
|
|
|||||||||||||||||||||||||
|
Shareholders’ equity
|
1,644,485
|
|
|
1,630,621
|
1,602,101
|
|
|
|||||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
14,865,638
|
|
|
$
|
14,466,581
|
$
|
12,436,512
|
|
|
||||||||||||||||||||||
|
Net interest income/rate spread (tax equivalent)
|
$
|
123,711
|
3.63
|
%
|
$
|
123,423
|
3.71
|
%
|
$
|
121,260
|
4.23
|
%
|
||||||||||||||||||||
|
Net interest margin (tax equivalent)
|
3.64
|
%
|
3.72
|
%
|
4.26
|
%
|
||||||||||||||||||||||||||
|
Reconciliation to reported net interest income:
|
||||||||||||||||||||||||||||||||
|
Adjustments for taxable equivalent basis
|
(2,274)
|
(2,397)
|
(1,769)
|
|||||||||||||||||||||||||||||
|
Net interest income and margin, as reported
|
$
|
121,437
|
3.57
|
%
|
$
|
121,026
|
3.65
|
%
|
$
|
119,491
|
4.20
|
%
|
||||||||||||||||||||
|
Additional Key Financial Ratios:
|
||||||||||||||||||||||||||||||||
|
Return on average assets
|
1.04
|
%
|
1.01
|
%
|
1.07
|
%
|
||||||||||||||||||||||||||
|
Return on average equity
|
9.42
|
%
|
8.92
|
%
|
8.33
|
%
|
||||||||||||||||||||||||||
|
Average equity/average assets
|
11.06
|
%
|
11.27
|
%
|
12.88
|
%
|
||||||||||||||||||||||||||
|
Average interest-earning assets/average interest-bearing liabilities
|
179.60
|
%
|
180.86
|
%
|
168.78
|
%
|
||||||||||||||||||||||||||
|
Average interest-earning assets/average funding liabilities
|
103.77
|
%
|
104.46
|
%
|
106.00
|
%
|
||||||||||||||||||||||||||
|
Non-interest income/average assets
|
0.63
|
%
|
0.78
|
%
|
0.65
|
%
|
||||||||||||||||||||||||||
|
Non-interest expense/average assets
|
2.59
|
%
|
2.52
|
%
|
2.99
|
%
|
||||||||||||||||||||||||||
|
Efficiency ratio(4)
|
66.76
|
%
|
61.35
|
%
|
67.03
|
%
|
||||||||||||||||||||||||||
|
Adjusted efficiency ratio(5)
|
64.31
|
%
|
58.02
|
%
|
61.19
|
%
|
||||||||||||||||||||||||||
|
(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 junior subordinated debentures.
|
|
(3)
|
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.3 million, $1.4
million, and $1.3 million for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million,
$976,000, and $469,000 for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively.
|
|
(4)
|
Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP Financial Measures on the
final two pages of the press release tables.
|
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||
|
(rates / ratios annualized)
|
|||||||||||||||||||||
|
ANALYSIS OF NET INTEREST SPREAD
|
Twelve Months Ended
|
||||||||||||||||||||
|
December 31, 2020
|
December 31, 2019
|
||||||||||||||||||||
|
Average
Balance
|
Interest
and
Dividends
|
Yield/Cost(3)
|
Average
Balance
|
Interest
and
Dividends
|
Yield/Cost(3)
|
||||||||||||||||
|
Interest-earning assets:
|
|||||||||||||||||||||
|
Held for sale loans
|
$
|
144,220
|
$
|
5,482
|
3.80
|
%
|
$
|
126,086
|
$
|
5,343
|
4.24
|
%
|
|||||||||
|
Mortgage loans
|
7,303,584
|
352,878
|
4.83
|
%
|
6,911,067
|
363,241
|
5.26
|
%
|
|||||||||||||
|
Commercial/agricultural loans
|
2,526,177
|
103,700
|
4.11
|
%
|
1,784,468
|
95,915
|
5.37
|
%
|
|||||||||||||
|
Consumer and other loans
|
147,827
|
9,208
|
6.23
|
%
|
176,373
|
11,230
|
6.37
|
%
|
|||||||||||||
|
Total loans(1)(3)
|
10,121,808
|
471,268
|
4.66
|
%
|
8,997,994
|
475,729
|
5.29
|
%
|
|||||||||||||
|
Mortgage-backed securities
|
1,330,355
|
32,188
|
2.42
|
%
|
1,368,927
|
38,809
|
2.83
|
%
|
|||||||||||||
|
Other securities
|
777,378
|
21,839
|
2.81
|
%
|
441,402
|
13,926
|
3.15
|
%
|
|||||||||||||
|
Equity securities
|
182,846
|
373
|
0.20
|
%
|
169
|
8
|
4.73
|
%
|
|||||||||||||
|
Interest-bearing deposits with banks
|
272,725
|
907
|
0.33
|
%
|
72,579
|
1,649
|
2.27
|
%
|
|||||||||||||
|
FHLB stock
|
18,952
|
947
|
5.00
|
%
|
29,509
|
1,407
|
4.77
|
%
|
|||||||||||||
|
Total investment securities(3)
|
2,582,256
|
56,254
|
2.18
|
%
|
1,912,586
|
55,799
|
2.92
|
%
|
|||||||||||||
|
Total interest-earning assets
|
12,704,064
|
527,522
|
4.15
|
%
|
10,910,580
|
531,528
|
4.87
|
%
|
|||||||||||||
|
Non-interest-earning assets
|
1,262,170
|
|
1,078,108
|
||||||||||||||||||
|
Total assets
|
$
|
13,966,234
|
|
$
|
11,988,688
|
||||||||||||||||
|
Deposits:
|
|
|
|||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,385,252
|
1,479
|
0.11
|
%
|
$
|
1,188,985
|
2,224
|
0.19
|
%
|
|||||||||||
|
Savings accounts
|
2,194,418
|
4,257
|
0.19
|
%
|
1,890,467
|
8,310
|
0.44
|
%
|
|||||||||||||
|
Money market accounts
|
1,996,870
|
6,275
|
0.31
|
%
|
1,534,909
|
10,693
|
0.70
|
%
|
|||||||||||||
|
Certificates of deposit
|
1,030,722
|
13,004
|
1.26
|
%
|
1,175,942
|
16,403
|
1.39
|
%
|
|||||||||||||
|
Total interest-bearing deposits
|
6,607,262
|
25,015
|
0.38
|
%
|
5,790,303
|
37,630
|
0.65
|
%
|
|||||||||||||
|
Non-interest-bearing deposits
|
4,929,768
|
—
|
—
|
%
|
3,751,878
|
—
|
—
|
%
|
|||||||||||||
|
Total deposits
|
11,537,030
|
25,015
|
0.22
|
%
|
9,542,181
|
37,630
|
0.39
|
%
|
|||||||||||||
|
Other interest-bearing liabilities:
|
|
|
|
|
|
|
|||||||||||||||
|
FHLB advances
|
215,093
|
5,023
|
2.34
|
%
|
477,796
|
12,234
|
2.56
|
%
|
|||||||||||||
|
Other borrowings
|
193,862
|
603
|
0.31
|
%
|
122,343
|
330
|
0.27
|
%
|
|||||||||||||
|
Junior subordinated debentures and subordinated notes
|
198,490
|
7,204
|
3.63
|
%
|
141,504
|
6,574
|
4.65
|
%
|
|||||||||||||
|
Total borrowings
|
607,445
|
12,830
|
2.11
|
%
|
741,643
|
19,138
|
2.58
|
%
|
|||||||||||||
|
Total funding liabilities
|
12,144,475
|
37,845
|
0.31
|
%
|
10,283,824
|
56,768
|
0.55
|
%
|
|||||||||||||
|
Other non-interest-bearing liabilities(2)
|
197,422
|
|
164,318
|
||||||||||||||||||
|
Total liabilities
|
12,341,897
|
|
10,448,142
|
||||||||||||||||||
|
Shareholders’ equity
|
1,624,337
|
|
1,540,546
|
||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
13,966,234
|
|
$
|
11,988,688
|
||||||||||||||||
|
Net interest income/rate spread (tax equivalent)
|
$
|
489,677
|
3.84
|
%
|
$
|
474,760
|
4.32
|
%
|
|||||||||||||
|
Net interest margin (tax equivalent)
|
3.85
|
%
|
4.35
|
%
|
|||||||||||||||||
|
Reconciliation to reported net interest income:
|
|||||||||||||||||||||
|
Adjustments for taxable equivalent basis
|
(8,376)
|
(5,841)
|
|||||||||||||||||||
|
Net interest income and margin, as reported
|
$
|
481,301
|
3.79
|
%
|
$
|
468,919
|
4.30
|
%
|
|||||||||||||
|
Additional Key Financial Ratios:
|
|||||||||||||||||||||
|
Return on average assets
|
0.83
|
%
|
1.22
|
%
|
|||||||||||||||||
|
Return on average equity
|
7.14
|
%
|
9.50
|
%
|
|||||||||||||||||
|
Average equity/average assets
|
11.63
|
%
|
12.85
|
%
|
|||||||||||||||||
|
Average interest-earning assets/average interest-bearing liabilities
|
`
|
176.09
|
%
|
167.03
|
%
|
||||||||||||||||
|
Average interest-earning assets/average funding liabilities
|
104.61
|
%
|
106.09
|
%
|
|||||||||||||||||
|
Non-interest income/average assets
|
0.71
|
%
|
0.68
|
%
|
|||||||||||||||||
|
Non-interest expense/average assets
|
2.67
|
%
|
2.98
|
%
|
|||||||||||||||||
|
Efficiency ratio(4)
|
64.35
|
%
|
64.94
|
%
|
|||||||||||||||||
|
Adjusted efficiency ratio(5)
|
60.76
|
%
|
61.18
|
%
|
|||||||||||||||||
|
(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 junior subordinated debentures.
|
|
(3)
|
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $4.9 million and
$4.3 million for the twelve months ended December 31, 2020 and December 31, 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.5 million and $1.6 million for the twelve months ended
December 31, 2020 and December 31, 2019, respectively.
|
|
(4)
|
Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP Financial Measures on
the final two pages of the press release tables.
|
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
|
* Non-GAAP Financial Measures
|
|||||||||||||||||||
|
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. However, these non-GAAP financial measures
are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our
presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
|
|||||||||||||||||||
|
ADJUSTED REVENUE
|
Quarters Ended
|
Twelve Months Ended
|
|||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
|||||||||||||||
|
Net interest income before provision for credit losses
|
$
|
121,437
|
$
|
121,026
|
$
|
119,491
|
$
|
481,301
|
$
|
468,919
|
|||||||||
|
Total non-interest income
|
23,509
|
28,222
|
20,282
|
98,616
|
81,941
|
||||||||||||||
|
Total GAAP revenue
|
144,946
|
149,248
|
139,773
|
579,917
|
550,860
|
||||||||||||||
|
Exclude net gain on sale of securities
|
(197)
|
(644)
|
(62)
|
(1,012)
|
(33)
|
||||||||||||||
|
Exclude net change in valuation of financial instruments carried at fair value
|
(1,704)
|
(37)
|
36
|
656
|
208
|
||||||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
143,045
|
$
|
148,567
|
$
|
139,747
|
$
|
579,561
|
$
|
551,035
|
|||||||||
|
ADJUSTED EARNINGS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
||||||||||||||||
|
Net income (GAAP)
|
$
|
38,957
|
$
|
36,548
|
$
|
33,655
|
$
|
115,928
|
$
|
146,278
|
||||||||||
|
Exclude net gain on sale of securities
|
(197)
|
(644)
|
(62)
|
(1,012)
|
(33)
|
|||||||||||||||
|
Exclude net change in valuation of financial instruments carried at fair value
|
(1,704)
|
(37)
|
36
|
656
|
208
|
|||||||||||||||
|
Exclude merger and acquisition-related expenses
|
579
|
5
|
4,419
|
2,062
|
7,544
|
|||||||||||||||
|
Exclude COVID-19 expenses
|
333
|
778
|
—
|
3,502
|
—
|
|||||||||||||||
|
Exclude related net tax expense (benefit)
|
237
|
(24)
|
(1,074)
|
(1,239)
|
(1,741)
|
|||||||||||||||
|
Exclude FHLB prepayment penalties
|
—
|
—
|
735
|
—
|
735
|
|||||||||||||||
|
Total adjusted earnings (non-GAAP)
|
$
|
38,205
|
$
|
36,626
|
$
|
37,709
|
$
|
119,897
|
$
|
152,991
|
||||||||||
|
Diluted earnings per share (GAAP)
|
$
|
1.10
|
$
|
1.03
|
$
|
0.95
|
$
|
3.26
|
$
|
4.18
|
||||||||||
|
Diluted adjusted earnings per share (non-GAAP)
|
$
|
1.08
|
$
|
1.04
|
$
|
1.07
|
$
|
3.37
|
$
|
4.38
|
||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
ADJUSTED EFFICIENCY RATIO
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
Dec 31, 2020
|
Dec 31, 2019
|
||||||||||||||||
|
Non-interest expense (GAAP)
|
$
|
96,759
|
$
|
91,567
|
$
|
93,690
|
$
|
373,148
|
$
|
357,728
|
||||||||||
|
Exclude merger and acquisition-related expenses
|
(579)
|
(5)
|
(4,419)
|
(2,062)
|
(7,544)
|
|||||||||||||||
|
Exclude COVID-19 expenses
|
(333)
|
(778)
|
—
|
(3,502)
|
—
|
|||||||||||||||
|
Exclude CDI amortization
|
(1,865)
|
(1,864)
|
(2,061)
|
(7,732)
|
(8,151)
|
|||||||||||||||
|
Exclude state/municipal tax expense
|
(1,071)
|
(1,196)
|
(917)
|
(4,355)
|
(3,880)
|
|||||||||||||||
|
Exclude REO operations
|
283
|
11
|
(40)
|
190
|
(303)
|
|||||||||||||||
|
Exclude FHLB prepayment penalties
|
—
|
—
|
(735)
|
—
|
(735)
|
|||||||||||||||
|
Exclude provision for credit losses - unfunded loan commitments
|
(1,203)
|
(1,539)
|
—
|
(3,559)
|
—
|
|||||||||||||||
|
Adjusted non-interest expense (non-GAAP)
|
$
|
91,991
|
$
|
86,196
|
$
|
85,518
|
$
|
352,128
|
$
|
337,115
|
||||||||||
|
Net interest income before provision for credit losses (GAAP)
|
$
|
121,437
|
$
|
121,026
|
$
|
119,491
|
$
|
481,301
|
$
|
468,919
|
||||||||||
|
Non-interest income (GAAP)
|
23,509
|
28,222
|
20,282
|
98,616
|
81,941
|
|||||||||||||||
|
Total revenue
|
144,946
|
149,248
|
139,773
|
579,917
|
550,860
|
|||||||||||||||
|
Exclude net gain on sale of securities
|
(197)
|
(644)
|
(62)
|
(1,012)
|
(33)
|
|||||||||||||||
|
Exclude net change in valuation of financial instruments carried at fair value
|
(1,704)
|
(37)
|
36
|
656
|
208
|
|||||||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
143,045
|
$
|
148,567
|
$
|
139,747
|
$
|
579,561
|
$
|
551,035
|
||||||||||
|
Efficiency ratio (GAAP)
|
66.76
|
%
|
61.35
|
%
|
67.03
|
%
|
64.35
|
%
|
64.94
|
%
|
||||||||||
|
Adjusted efficiency ratio (non-GAAP)
|
64.31
|
%
|
58.02
|
%
|
61.19
|
%
|
60.76
|
%
|
61.18
|
%
|
||||||||||
|
TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
|
Dec 31, 2020
|
Sep 30, 2020
|
Dec 31, 2019
|
|||||||||
|
Shareholders’ equity (GAAP)
|
$
|
1,666,264
|
$
|
1,646,529
|
$
|
1,594,034
|
||||||
|
Exclude goodwill and other intangible assets, net
|
394,547
|
396,412
|
402,279
|
|||||||||
|
Tangible common shareholders’ equity (non-GAAP)
|
$
|
1,271,717
|
$
|
1,250,117
|
$
|
1,191,755
|
||||||
|
Total assets (GAAP)
|
$
|
15,031,623
|
$
|
14,642,075
|
$
|
12,604,031
|
||||||
|
Exclude goodwill and other intangible assets, net
|
394,547
|
396,412
|
402,279
|
|||||||||
|
Total tangible assets (non-GAAP)
|
$
|
14,637,076
|
$
|
14,245,663
|
$
|
12,201,752
|
||||||
|
Common shareholders’ equity to total assets (GAAP)
|
11.09
|
%
|
11.25
|
%
|
12.65
|
%
|
||||||
|
Tangible common shareholders’ equity to tangible assets (non-GAAP)
|
8.69
|
%
|
8.78
|
%
|
9.77
|
%
|
||||||
|
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
|
||||||||||||
|
Tangible common shareholders’ equity (non-GAAP)
|
$
|
1,271,717
|
$
|
1,250,117
|
$
|
1,191,755
|
||||||
|
Common shares outstanding at end of period
|
35,159,200
|
35,158,568
|
35,751,576
|
|||||||||
|
Common shareholders’ equity (book value) per share (GAAP)
|
$
|
47.39
|
$
|
46.83
|
$
|
44.59
|
||||||
|
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)
|
$
|
36.17
|
$
|
35.56
|
$
|
33.33
|
||||||



























