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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) |
(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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*
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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 24, 2020
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By:/s/Peter J. Conner
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Peter J. Conner
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Executive Vice President, Treasurer
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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•
|
Revenues increased 2% to $139.8 million, compared to $137.5 million in the preceding quarter and increased nominally
compared to $138.5 million in the fourth quarter a year ago.
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|
•
|
Net interest income, before the provision for loan losses, was $119.5 million, compared to $116.6 million in the preceding
quarter and $117.5 million in the fourth quarter a year ago.
|
|
•
|
Net interest margin was 4.20%, compared to 4.25% in the preceding quarter and 4.47% in the fourth quarter a year ago.
|
|
•
|
Mortgage banking revenues were $6.2 million, compared to $6.6 million in the preceding quarter and increased 4% compared to
$6.0 million in the fourth quarter a year ago.
|
|
•
|
Return on average assets was 1.07% compared to 1.31% in the preceding quarter and 1.32% in the fourth quarter a year ago.
|
|
•
|
Net loans receivable increased 5% to $9.20 billion at December 31, 2019, compared to $8.74 billion at September 30, 2019,
and increased 7% when compared to $8.59 billion at December 31, 2018.
|
|
•
|
Non-performing assets increased to $40.5 million, or 0.32% of total assets, at December 31, 2019, compared to $18.6
million, or 0.15% of total assets in the preceding quarter, and $18.9 million, or 0.16% of total assets, at December 31, 2018.
|
|
•
|
Provision for loan losses was $4.0 million, and the allowance for loan losses was $100.6 million, or 1.08% of total loans
receivable, as of December 31, 2019.
|
|
•
|
Core deposits increased 5% to $8.93 billion at December 31, 2019, compared to $8.51 billion at September 30, 2019 and
increased 10% compared to $8.16 billion a year ago. Core deposits represented 89% of total deposits at December 31, 2019.
|
|
•
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Dividends to shareholders were $1.41 per share in the quarter ended December 31, 2019, including a $0.41 regular quarterly
dividend and a $1.00 special cash dividend.
|
|
•
|
Common shareholders’ equity per share decreased slightly to $44.59 at December 31, 2019, compared to $44.80 at the
preceding quarter end and increased 6% from $42.03 a year ago.
|
|
•
|
Tangible common shareholders' equity per share* decreased 2% to $33.33 at December 31, 2019, compared to $34.10 at the
preceding quarter end and increased 6% from $31.45 a year ago.
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|
RESULTS OF OPERATIONS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
(in thousands except shares and per share data)
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
|||||||||||||||
|
INTEREST INCOME:
|
||||||||||||||||||||
|
Loans receivable
|
$
|
120,915
|
$
|
118,096
|
$
|
114,627
|
$
|
471,473
|
$
|
413,370
|
||||||||||
|
Mortgage-backed securities
|
8,924
|
9,415
|
9,931
|
38,640
|
35,076
|
|||||||||||||||
|
Securities and cash equivalents
|
3,570
|
3,925
|
4,183
|
15,566
|
15,186
|
|||||||||||||||
|
133,409
|
131,436
|
128,741
|
525,679
|
463,632
|
||||||||||||||||
|
INTEREST EXPENSE:
|
||||||||||||||||||||
|
Deposits
|
9,950
|
10,014
|
7,503
|
37,630
|
20,642
|
|||||||||||||||
|
Federal Home Loan Bank advances
|
2,281
|
3,107
|
2,072
|
12,234
|
5,636
|
|||||||||||||||
|
Other borrowings
|
121
|
82
|
66
|
330
|
245
|
|||||||||||||||
|
Junior subordinated debentures
|
1,566
|
1,612
|
1,641
|
6,574
|
6,136
|
|||||||||||||||
|
13,918
|
14,815
|
11,282
|
56,768
|
32,659
|
||||||||||||||||
|
Net interest income before provision for loan losses
|
119,491
|
116,621
|
117,459
|
468,911
|
430,973
|
|||||||||||||||
|
PROVISION FOR LOAN LOSSES
|
4,000
|
2,000
|
2,500
|
10,000
|
8,500
|
|||||||||||||||
|
Net interest income
|
115,491
|
114,621
|
114,959
|
458,911
|
422,473
|
|||||||||||||||
|
NON-INTEREST INCOME:
|
||||||||||||||||||||
|
Deposit fees and other service charges
|
9,637
|
10,331
|
12,539
|
46,632
|
48,074
|
|||||||||||||||
|
Mortgage banking operations
|
6,248
|
6,616
|
6,019
|
22,215
|
21,343
|
|||||||||||||||
|
Bank-owned life insurance
|
1,170
|
1,076
|
994
|
4,645
|
4,505
|
|||||||||||||||
|
Miscellaneous
|
3,201
|
2,914
|
2,153
|
8,632
|
7,148
|
|||||||||||||||
|
20,256
|
20,937
|
21,705
|
82,124
|
81,070
|
||||||||||||||||
|
Net gain (loss) on sale of securities
|
62
|
(2
|
)
|
(885
|
)
|
33
|
(837
|
)
|
||||||||||||
|
Net change in valuation of financial instruments carried
at fair value
|
(36
|
)
|
(69
|
)
|
198
|
(208
|
)
|
3,775
|
||||||||||||
|
Total non-interest income
|
20,282
|
20,866
|
21,018
|
81,949
|
84,008
|
|||||||||||||||
|
NON-INTEREST EXPENSE:
|
||||||||||||||||||||
|
Salary and employee benefits
|
57,050
|
59,090
|
52,122
|
226,409
|
202,613
|
|||||||||||||||
|
Less capitalized loan origination costs
|
(8,797
|
)
|
(7,889
|
)
|
(4,863
|
)
|
(28,934
|
)
|
(17,925
|
)
|
||||||||||
|
Occupancy and equipment
|
13,377
|
12,566
|
13,490
|
52,390
|
49,215
|
|||||||||||||||
|
Information / computer data services
|
6,202
|
5,657
|
5,112
|
22,458
|
18,823
|
|||||||||||||||
|
Payment and card processing services
|
4,638
|
4,330
|
4,233
|
16,993
|
15,412
|
|||||||||||||||
|
Professional and legal expenses
|
2,262
|
2,704
|
6,669
|
9,736
|
17,945
|
|||||||||||||||
|
Advertising and marketing
|
2,021
|
2,221
|
2,588
|
7,836
|
8,346
|
|||||||||||||||
|
Deposit insurance expense (benefit)
|
1,608
|
(1,604
|
)
|
1,093
|
2,840
|
4,446
|
||||||||||||||
|
State/municipal business and use taxes
|
917
|
1,011
|
854
|
3,880
|
3,284
|
|||||||||||||||
|
Real estate operations
|
40
|
126
|
251
|
303
|
804
|
|||||||||||||||
|
Amortization of core deposit intangibles
|
2,061
|
1,985
|
1,935
|
8,151
|
6,047
|
|||||||||||||||
|
Miscellaneous
|
7,892
|
6,435
|
7,310
|
28,122
|
26,754
|
|||||||||||||||
| |
89,271
|
86,632
|
90,794
|
350,184
|
335,764
|
|||||||||||||||
|
Acquisition-related expenses
|
4,419
|
676
|
4,602
|
7,544
|
5,607
|
|||||||||||||||
|
Total non-interest expense
|
93,690
|
87,308
|
95,396
|
357,728
|
341,371
|
|||||||||||||||
|
Income before provision for income taxes
|
42,083
|
48,179
|
40,581
|
183,132
|
165,110
|
|||||||||||||||
|
PROVISION FOR INCOME TAXES
|
8,428
|
8,602
|
3,053
|
36,854
|
28,595
|
|||||||||||||||
|
NET INCOME
|
$
|
33,655
|
$
|
39,577
|
$
|
37,528
|
$
|
146,278
|
$
|
136,515
|
||||||||||
|
Earnings per share available to common shareholders:
|
||||||||||||||||||||
|
Basic
|
$
|
0.96
|
$
|
1.15
|
$
|
1.10
|
$
|
4.20
|
$
|
4.16
|
||||||||||
|
Diluted
|
$
|
0.95
|
$
|
1.15
|
$
|
1.09
|
$
|
4.18
|
$
|
4.15
|
||||||||||
|
Cumulative dividends declared per common share
|
$
|
1.41
|
$
|
0.41
|
$
|
0.38
|
$
|
2.64
|
$
|
1.96
|
||||||||||
|
Weighted average common shares outstanding:
|
||||||||||||||||||||
|
Basic
|
35,188,399
|
34,407,462
|
34,221,048
|
34,868,434
|
32,784,724
|
|||||||||||||||
|
Diluted
|
35,316,736
|
34,497,994
|
34,342,641
|
34,967,684
|
32,894,425
|
|||||||||||||||
|
Increase (decrease) in common shares outstanding
|
1,578,219
|
(400,286
|
)
|
2,780,015
|
568,804
|
2,456,287
|
|
|||||||||||||
|
FINANCIAL CONDITION
|
Percentage Change
|
|||||||||||||||||||
|
(in thousands except shares and per share data)
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Prior Qtr
|
Prior Yr Qtr
|
|||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Cash and due from banks
|
$
|
234,359
|
$
|
250,671
|
$
|
231,029
|
(6.5
|
)%
|
1.4
|
%
|
||||||||||
|
Interest-bearing deposits
|
73,376
|
73,785
|
41,167
|
(0.6
|
)%
|
78.2
|
%
|
|||||||||||||
|
Total cash and cash equivalents
|
307,735
|
324,456
|
272,196
|
(5.2
|
)%
|
13.1
|
%
|
|||||||||||||
|
Securities - trading
|
25,636
|
25,672
|
25,896
|
(0.1
|
)%
|
(1.0
|
)%
|
|||||||||||||
|
Securities - available for sale
|
1,551,557
|
1,539,908
|
1,636,223
|
0.8
|
%
|
(5.2
|
)%
|
|||||||||||||
|
Securities - held to maturity
|
236,094
|
230,056
|
234,220
|
2.6
|
%
|
0.8
|
%
|
|||||||||||||
|
Total securities
|
1,813,287
|
1,795,636
|
1,896,339
|
1.0
|
%
|
(4.4
|
)%
|
|||||||||||||
|
Federal Home Loan Bank stock
|
28,342
|
25,623
|
31,955
|
10.6
|
%
|
(11.3
|
)%
|
|||||||||||||
|
Loans held for sale
|
210,447
|
244,889
|
171,031
|
(14.1
|
)%
|
23.0
|
%
|
|||||||||||||
|
Loans receivable
|
9,305,357
|
8,835,368
|
8,684,595
|
5.3
|
%
|
7.1
|
%
|
|||||||||||||
|
Allowance for loan losses
|
(100,559
|
)
|
(97,801
|
)
|
(96,485
|
)
|
2.8
|
%
|
4.2
|
%
|
||||||||||
|
Net loans receivable
|
9,204,798
|
8,737,567
|
8,588,110
|
5.3
|
%
|
7.2
|
%
|
|||||||||||||
|
Accrued interest receivable
|
37,962
|
40,033
|
38,593
|
(5.2
|
)%
|
(1.6
|
)%
|
|||||||||||||
|
Real estate owned held for sale, net
|
814
|
228
|
2,611
|
257.0
|
%
|
(68.8
|
)%
|
|||||||||||||
|
Property and equipment, net
|
178,008
|
171,279
|
171,809
|
3.9
|
%
|
3.6
|
%
|
|||||||||||||
|
Goodwill
|
373,121
|
339,154
|
339,154
|
10.0
|
%
|
10.0
|
%
|
|||||||||||||
|
Other intangibles, net
|
29,158
|
26,610
|
32,924
|
9.6
|
%
|
(11.4
|
)%
|
|||||||||||||
|
Bank-owned life insurance
|
192,088
|
179,076
|
177,467
|
7.3
|
%
|
8.2
|
%
|
|||||||||||||
|
Other assets
|
228,271
|
213,291
|
149,128
|
7.0
|
%
|
53.1
|
%
|
|||||||||||||
|
Total assets
|
$
|
12,604,031
|
$
|
12,097,842
|
$
|
11,871,317
|
4.2
|
%
|
6.2
|
%
|
||||||||||
|
LIABILITIES
|
||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||
|
Non-interest-bearing
|
$
|
3,945,000
|
$
|
3,885,210
|
$
|
3,657,817
|
1.5
|
%
|
7.9
|
%
|
||||||||||
|
Interest-bearing transaction and savings accounts
|
4,983,238
|
4,624,970
|
4,498,966
|
7.7
|
%
|
10.8
|
%
|
|||||||||||||
|
Interest-bearing certificates
|
1,120,403
|
1,218,591
|
1,320,265
|
(8.1
|
)%
|
(15.1
|
)%
|
|||||||||||||
|
Total deposits
|
10,048,641
|
9,728,771
|
9,477,048
|
3.3
|
%
|
6.0
|
%
|
|||||||||||||
|
Advances from Federal Home Loan Bank
|
450,000
|
382,000
|
540,189
|
17.8
|
%
|
(16.7
|
)%
|
|||||||||||||
|
Customer repurchase agreements and other borrowings
|
118,474
|
120,014
|
118,995
|
(1.3
|
)%
|
(0.4
|
)%
|
|||||||||||||
|
Junior subordinated debentures at fair value
|
119,304
|
113,417
|
114,091
|
5.2
|
%
|
4.6
|
%
|
|||||||||||||
|
Accrued expenses and other liabilities
|
227,889
|
181,351
|
102,061
|
25.7
|
%
|
123.3
|
%
|
|||||||||||||
|
Deferred compensation
|
45,689
|
41,354
|
40,338
|
10.5
|
%
|
13.3
|
%
|
|||||||||||||
|
Total liabilities
|
11,009,997
|
10,566,907
|
10,392,722
|
4.2
|
%
|
5.9
|
%
|
|||||||||||||
|
SHAREHOLDERS' EQUITY
|
||||||||||||||||||||
|
Common stock
|
1,373,940
|
1,286,711
|
1,337,436
|
6.8
|
%
|
2.7
|
%
|
|||||||||||||
|
Retained earnings
|
186,838
|
203,704
|
134,055
|
(8.3
|
)%
|
39.4
|
%
|
|||||||||||||
|
Other components of shareholders' equity
|
33,256
|
40,520
|
7,104
|
(17.9
|
)%
|
nm
|
||||||||||||||
|
Total shareholders' equity
|
1,594,034
|
1,530,935
|
1,478,595
|
4.1
|
%
|
7.8
|
%
|
|||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
12,604,031
|
$
|
12,097,842
|
$
|
11,871,317
|
4.2
|
%
|
6.2
|
%
|
||||||||||
|
Common Shares Issued:
|
||||||||||||||||||||
|
Shares outstanding at end of period
|
35,751,576
|
34,173,357
|
35,182,772
|
|||||||||||||||||
|
Common shareholders' equity per share (1)
|
$
|
44.59
|
$
|
44.80
|
$
|
42.03
|
||||||||||||||
|
Common shareholders' tangible equity per share (1) (2)
|
$
|
33.33
|
$
|
34.10
|
$
|
31.45
|
||||||||||||||
|
Common shareholders' tangible equity to tangible assets (2)
|
9.77
|
%
|
9.93
|
%
|
9.62
|
%
|
||||||||||||||
|
Consolidated Tier 1 leverage capital ratio
|
10.71
|
%
|
10.70
|
%
|
10.98
|
%
|
||||||||||||||
|
(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,
2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Prior
Qtr
|
Prior
Yr Qtr
|
|||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||
|
Owner occupied
|
$
|
1,580,650
|
$
|
1,463,303
|
$
|
1,430,097
|
8.0
|
%
|
10.5
|
%
|
||||||||||
|
Investment properties
|
2,309,221
|
2,150,938
|
2,131,059
|
7.4
|
%
|
8.4
|
%
|
|||||||||||||
|
Multifamily real estate
|
473,152
|
399,814
|
368,836
|
18.3
|
%
|
28.3
|
%
|
|||||||||||||
|
Commercial construction
|
210,668
|
190,532
|
172,410
|
10.6
|
%
|
22.2
|
%
|
|||||||||||||
|
Multifamily construction
|
233,610
|
214,878
|
184,630
|
8.7
|
%
|
26.5
|
%
|
|||||||||||||
|
One- to four-family construction
|
544,308
|
488,945
|
534,678
|
11.3
|
%
|
1.8
|
%
|
|||||||||||||
|
Land and land development:
|
||||||||||||||||||||
|
Residential
|
154,688
|
163,829
|
188,508
|
(5.6
|
)%
|
(17.9
|
)%
|
|||||||||||||
|
Commercial
|
26,290
|
26,119
|
27,278
|
0.7
|
%
|
(3.6
|
)%
|
|||||||||||||
|
Commercial business
|
1,693,824
|
1,619,391
|
1,483,614
|
4.6
|
%
|
14.2
|
%
|
|||||||||||||
|
Agricultural business including secured by farmland
|
370,549
|
390,505
|
404,873
|
(5.1
|
)%
|
(8.5
|
)%
|
|||||||||||||
|
One- to four-family real estate
|
945,622
|
947,475
|
973,616
|
(0.2
|
)%
|
(2.9
|
)%
|
|||||||||||||
|
Consumer:
|
||||||||||||||||||||
|
Consumer secured by one- to four-family real estate
|
550,960
|
566,792
|
568,979
|
(2.8
|
)%
|
(3.2
|
)%
|
|||||||||||||
|
Consumer-other
|
211,815
|
212,847
|
216,017
|
(0.5
|
)%
|
(1.9
|
)%
|
|||||||||||||
|
Total loans receivable
|
$
|
9,305,357
|
$
|
8,835,368
|
$
|
8,684,595
|
5.3
|
%
|
7.1
|
%
|
||||||||||
|
Restructured loans performing under their restructured terms
|
$
|
6,466
|
$
|
6,721
|
$
|
13,422
|
||||||||||||||
|
Loans 30 - 89 days past due and on accrual (1)
|
$
|
20,178
|
$
|
11,496
|
$
|
25,108
|
||||||||||||||
|
Total delinquent loans (including loans on non-accrual), net (2)
|
$
|
38,322
|
$
|
26,830
|
$
|
38,721
|
||||||||||||||
|
Total delinquent loans / Total loans receivable
|
0.41
|
%
|
0.30
|
%
|
0.45
|
%
|
||||||||||||||
|
LOANS BY GEOGRAPHIC LOCATION
|
Percentage Change
|
|||||||||||||||||||||||
|
Dec 31, 2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Prior
Qtr
|
Prior
Yr Qtr
|
||||||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
|||||||||||||||||||||
|
Washington
|
$
|
4,364,764
|
46.9
|
%
|
$
|
4,313,972
|
$
|
4,324,588
|
1.2
|
%
|
0.9
|
%
|
||||||||||||
|
Oregon
|
1,650,704
|
17.7
|
%
|
1,615,192
|
1,636,152
|
2.2
|
%
|
0.9
|
%
|
|||||||||||||||
|
California
|
2,129,789
|
22.9
|
%
|
1,729,208
|
1,596,604
|
23.2
|
%
|
33.4
|
%
|
|||||||||||||||
|
Idaho
|
530,016
|
5.7
|
%
|
552,523
|
521,026
|
(4.1
|
)%
|
1.7
|
%
|
|||||||||||||||
|
Utah
|
60,958
|
0.7
|
%
|
62,197
|
57,318
|
(2.0
|
)%
|
6.4
|
%
|
|||||||||||||||
|
Other
|
569,126
|
6.1
|
%
|
562,276
|
548,907
|
1.2
|
%
|
3.7
|
%
|
|||||||||||||||
|
Total loans receivable
|
$
|
9,305,357
|
100.0
|
%
|
$
|
8,835,368
|
$
|
8,684,595
|
5.3
|
%
|
7.1
|
%
|
||||||||||||
|
LOAN ORIGINATIONS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
|
Commercial real estate
|
$
|
190,584
|
$
|
114,528
|
$
|
172,885
|
$
|
480,669
|
$
|
536,784
|
||||||||||
|
Multifamily real estate
|
21,848
|
29,645
|
16,731
|
80,761
|
25,771
|
|||||||||||||||
|
Construction and land
|
530,632
|
303,151
|
397,702
|
1,435,501
|
1,460,536
|
|||||||||||||||
|
Commercial business
|
196,069
|
194,606
|
206,922
|
757,721
|
839,290
|
|||||||||||||||
|
Agricultural business
|
27,926
|
12,363
|
18,901
|
93,050
|
123,702
|
|||||||||||||||
|
One-to four-family residential
|
31,564
|
27,734
|
81,522
|
117,297
|
177,332
|
|||||||||||||||
|
Consumer
|
71,683
|
101,613
|
72,500
|
357,040
|
331,661
|
|||||||||||||||
|
Total loan originations (excluding loans held for sale)
|
$
|
1,070,306
|
$
|
783,640
|
$
|
967,163
|
$
|
3,322,039
|
$
|
3,495,076
|
||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
Quarters Ended
|
Twelve Months Ended
|
|||||||||||||||||||
|
CHANGE IN THE
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
|||||||||||||||
|
ALLOWANCE FOR LOAN LOSSES
|
||||||||||||||||||||
|
Balance, beginning of period
|
$
|
97,801
|
$
|
98,254
|
$
|
95,263
|
$
|
96,485
|
$
|
89,028
|
||||||||||
|
Provision for loan losses
|
4,000
|
2,000
|
2,500
|
10,000
|
8,500
|
|||||||||||||||
|
Recoveries of loans previously charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
199
|
107
|
66
|
476
|
1,646
|
|||||||||||||||
|
Construction and land
|
—
|
156
|
23
|
208
|
213
|
|||||||||||||||
|
One- to four-family real estate
|
159
|
129
|
18
|
561
|
750
|
|||||||||||||||
|
Commercial business
|
225
|
162
|
193
|
625
|
1,049
|
|||||||||||||||
|
Agricultural business, including secured by farmland
|
10
|
2
|
23
|
47
|
64
|
|||||||||||||||
|
Consumer
|
61
|
154
|
102
|
548
|
366
|
|||||||||||||||
|
654
|
710
|
425
|
2,465
|
4,088
|
||||||||||||||||
|
Loans charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
—
|
(314
|
)
|
—
|
(1,138
|
)
|
(401
|
)
|
||||||||||||
|
Construction and land
|
(45
|
)
|
—
|
—
|
(45
|
)
|
(479
|
)
|
||||||||||||
|
One- to four-family real estate
|
—
|
(86
|
)
|
—
|
(86
|
)
|
(43
|
)
|
||||||||||||
|
Commercial business
|
(1,180
|
)
|
(1,599
|
)
|
(684
|
)
|
(4,171
|
)
|
(2,051
|
)
|
||||||||||
|
Agricultural business, including secured by farmland
|
(4
|
)
|
(741
|
)
|
(415
|
)
|
(911
|
)
|
(756
|
)
|
||||||||||
|
Consumer
|
(667
|
)
|
(423
|
)
|
(604
|
)
|
(2,040
|
)
|
(1,401
|
)
|
||||||||||
|
(1,896
|
)
|
(3,163
|
)
|
(1,703
|
)
|
(8,391
|
)
|
(5,131
|
)
|
|||||||||||
|
Net charge-offs
|
(1,242
|
)
|
(2,453
|
)
|
(1,278
|
)
|
(5,926
|
)
|
(1,043
|
)
|
||||||||||
|
Balance, end of period
|
$
|
100,559
|
$
|
97,801
|
$
|
96,485
|
$
|
100,559
|
$
|
96,485
|
||||||||||
|
Net charge-offs / Average loans receivable
|
(0.013
|
)%
|
(0.027
|
)%
|
(0.015
|
)%
|
(0.066
|
)%
|
(0.013
|
)%
|
||||||||||
|
ALLOCATION OF
|
||||||||||||
|
ALLOWANCE FOR LOAN LOSSES
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
|||||||||
|
Specific or allocated loss allowance:
|
||||||||||||
|
Commercial real estate
|
$
|
30,591
|
$
|
28,515
|
$
|
27,132
|
||||||
|
Multifamily real estate
|
4,754
|
4,283
|
3,818
|
|||||||||
|
Construction and land
|
22,994
|
22,569
|
24,442
|
|||||||||
|
One- to four-family real estate
|
4,136
|
4,569
|
4,714
|
|||||||||
|
Commercial business
|
23,370
|
21,147
|
19,438
|
|||||||||
|
Agricultural business, including secured by farmland
|
4,120
|
3,895
|
3,778
|
|||||||||
|
Consumer
|
8,202
|
8,441
|
7,972
|
|||||||||
|
Total allocated
|
98,167
|
93,419
|
91,294
|
|||||||||
|
Unallocated
|
2,392
|
4,382
|
5,191
|
|||||||||
|
Total allowance for loan losses
|
$
|
100,559
|
$
|
97,801
|
$
|
96,485
|
||||||
|
Allowance for loan losses / Total loans receivable
|
1.08
|
%
|
1.11
|
%
|
1.11
|
%
|
||||||
|
Allowance for loan losses / Non-performing loans
|
254
|
%
|
536
|
%
|
616
|
%
|
||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
||||||||||
|
NON-PERFORMING ASSETS
|
||||||||||||
|
Loans on non-accrual status:
|
||||||||||||
|
Secured by real estate:
|
||||||||||||
|
Commercial
|
$
|
5,952
|
$
|
5,092
|
$
|
4,088
|
||||||
|
Multifamily
|
85
|
87
|
—
|
|||||||||
|
Construction and land
|
1,905
|
1,318
|
3,188
|
|||||||||
|
One- to four-family
|
3,410
|
3,007
|
1,544
|
|||||||||
|
Commercial business
|
23,015
|
3,035
|
2,936
|
|||||||||
|
Agricultural business, including secured by farmland
|
661
|
757
|
1,751
|
|||||||||
|
Consumer
|
2,473
|
2,473
|
1,241
|
|||||||||
|
37,501
|
15,769
|
14,748
|
||||||||||
|
Loans more than 90 days delinquent, still on accrual:
|
||||||||||||
|
Secured by real estate:
|
||||||||||||
|
Commercial
|
89
|
89
|
—
|
|||||||||
|
Construction and land
|
332
|
1,141
|
—
|
|||||||||
|
One- to four-family
|
877
|
652
|
658
|
|||||||||
|
Commercial business
|
401
|
358
|
1
|
|||||||||
|
Consumer
|
398
|
247
|
247
|
|||||||||
|
2,097
|
2,487
|
906
|
||||||||||
|
Total non-performing loans
|
39,598
|
18,256
|
15,654
|
|||||||||
|
Real estate owned (REO)
|
814
|
228
|
2,611
|
|||||||||
|
Other repossessed assets
|
122
|
115
|
592
|
|||||||||
|
Total non-performing assets
|
$
|
40,534
|
$
|
18,599
|
$
|
18,857
|
||||||
|
Total non-performing assets to total assets
|
0.32
|
%
|
0.15
|
%
|
0.16
|
%
|
||||||
|
Purchased credit-impaired loans, net
|
$
|
15,938
|
$
|
12,575
|
$
|
14,413
|
||||||
|
Quarters Ended
|
Twelve Months Ended
|
|||||||||||||||||||
|
REAL ESTATE OWNED
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
|||||||||||||||
|
Balance, beginning of period
|
$
|
228
|
$
|
2,513
|
$
|
364
|
$
|
2,611
|
$
|
360
|
||||||||||
|
Additions from loan foreclosures
|
—
|
48
|
139
|
109
|
641
|
|||||||||||||||
|
Additions from acquisitions
|
650
|
—
|
2,593
|
650
|
2,593
|
|||||||||||||||
|
Proceeds from dispositions of REO
|
(105
|
)
|
(2,333
|
)
|
(453
|
)
|
(2,588
|
)
|
(838
|
)
|
||||||||||
|
Gain on sale of REO
|
41
|
—
|
168
|
32
|
242
|
|||||||||||||||
|
Valuation adjustments in the period
|
—
|
—
|
(200
|
)
|
—
|
(387
|
)
|
|||||||||||||
|
Balance, end of period
|
$
|
814
|
$
|
228
|
$
|
2,611
|
$
|
814
|
$
|
2,611
|
||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
DEPOSIT COMPOSITION
|
Percentage Change
|
|||||||||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Prior Qtr
|
Prior Yr
Qtr
|
||||||||||||||||
|
Non-interest-bearing
|
$
|
3,945,000
|
$
|
3,885,210
|
$
|
3,657,817
|
1.5
|
%
|
7.9
|
%
|
||||||||||
|
Interest-bearing checking
|
1,280,003
|
1,209,826
|
1,191,016
|
5.8
|
%
|
7.5
|
%
|
|||||||||||||
|
Regular savings accounts
|
1,934,041
|
1,863,839
|
1,842,581
|
3.8
|
%
|
5.0
|
%
|
|||||||||||||
|
Money market accounts
|
1,769,194
|
1,551,305
|
1,465,369
|
14.0
|
%
|
20.7
|
%
|
|||||||||||||
|
Total interest-bearing transaction and savings accounts
|
4,983,238
|
4,624,970
|
4,498,966
|
7.7
|
%
|
10.8
|
%
|
|||||||||||||
|
Total core deposits
|
8,928,238
|
8,510,180
|
8,156,783
|
4.9
|
%
|
9.5
|
%
|
|||||||||||||
|
Interest-bearing certificates
|
1,120,403
|
1,218,591
|
1,320,265
|
(8.1
|
)%
|
(15.1
|
)%
|
|||||||||||||
|
Total deposits
|
$
|
10,048,641
|
$
|
9,728,771
|
$
|
9,477,048
|
3.3
|
%
|
6.0
|
%
|
||||||||||
| GEOGRAPHIC CONCENTRATION OF DEPOSITS | Percentage |
Change |
||||||||||||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Prior Qtr
|
Prior Yr
Qtr
|
||||||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
|||||||||||||||||||||
|
Washington
|
$
|
5,861,809
|
58.3
|
%
|
$
|
5,833,547
|
$
|
5,674,328
|
0.5
|
%
|
3.3
|
%
|
||||||||||||
|
Oregon
|
2,006,163
|
20.0
|
%
|
1,990,155
|
1,891,145
|
0.8
|
%
|
6.1
|
%
|
|||||||||||||||
|
California
|
1,698,289
|
16.9
|
%
|
1,429,939
|
1,434,033
|
18.8
|
%
|
18.4
|
%
|
|||||||||||||||
|
Idaho
|
482,380
|
4.8
|
%
|
475,130
|
477,542
|
1.5
|
%
|
1.0
|
%
|
|||||||||||||||
|
Total deposits
|
$
|
10,048,641
|
100.0
|
%
|
$
|
9,728,771
|
$
|
9,477,048
|
3.3
|
%
|
6.0
|
%
|
||||||||||||
|
INCLUDED IN TOTAL DEPOSITS
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
|||||||||
|
Public non-interest-bearing accounts
|
$
|
111,015
|
$
|
114,879
|
$
|
96,009
|
||||||
|
Public interest-bearing transaction & savings accounts
|
133,403
|
119,729
|
121,392
|
|||||||||
|
Public interest-bearing certificates
|
35,184
|
26,609
|
30,089
|
|||||||||
|
Total public deposits
|
$
|
279,602
|
$
|
261,217
|
$
|
247,490
|
||||||
|
Total brokered deposits
|
$
|
202,884
|
$
|
299,496
|
$
|
377,347
|
||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||
|
(in thousands)
|
||||||||
|
ACQUISITION OF ALTAPACIFIC BANCORP
|
||||||||
|
The following table* provides the estimated fair value of the assets acquired and liabilities assumed in the AltaPacific acquisition
at November 1, 2019 (in thousands):
|
||||||||
|
November 1, 2019
|
||||||||
|
Cash paid
|
$
|
2,360
|
||||||
|
Fair value of common shares issued
|
85,200
|
|||||||
|
Total consideration
|
87,560
|
|||||||
|
Fair value of assets acquired:
|
||||||||
|
Cash and cash equivalents
|
39,686
|
|||||||
|
Securities
|
20,348
|
|||||||
|
Federal Home Loan Bank stock
|
2,005
|
|||||||
|
Loans receivable
|
332,355
|
|||||||
|
Real estate owned held for sale
|
650
|
|||||||
|
Property and equipment
|
3,809
|
|||||||
|
Core deposit intangible
|
4,610
|
|||||||
|
Bank-owned life insurance
|
11,890
|
|||||||
|
Deferred tax asset
|
166
|
|||||||
|
Other assets
|
11,090
|
|||||||
|
Total assets acquired
|
426,609
|
|||||||
|
Fair value of liabilities assumed:
|
||||||||
|
Deposits
|
313,374
|
|||||||
|
Advances from FHLB
|
40,226
|
|||||||
|
Junior subordinated debentures
|
5,814
|
|||||||
|
Deferred compensation
|
4,508
|
|||||||
|
Other liabilities
|
9,094
|
|||||||
|
Total liabilities assumed
|
373,016
|
|||||||
|
Net assets acquired
|
53,593
|
|||||||
|
Goodwill
|
$
|
33,967
|
||||||
|
* Amounts recorded in this table are preliminary estimates of fair value. Additional adjustments to the acquisition accounting may be
required with a measurement period of one-year from the acquisition date.
|
||||||||
|
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, 2019
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
|
Banner Corporation-consolidated:
|
||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
$
|
1,386,483
|
12.93
|
%
|
$
|
857,555
|
8.00
|
%
|
$
|
1,071,943
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
1,283,208
|
11.97
|
%
|
643,166
|
6.00
|
%
|
643,166
|
6.00
|
%
|
|||||||||||||||
|
Tier 1 leverage capital to average assets
|
1,283,208
|
10.71
|
%
|
479,458
|
4.00
|
%
|
n/a
|
n/a
|
||||||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,139,708
|
10.63
|
%
|
482,375
|
4.50
|
%
|
n/a
|
n/a
|
||||||||||||||||
|
Banner Bank:
|
||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
1,321,580
|
12.55
|
%
|
842,227
|
8.00
|
%
|
1,052,784
|
10.00
|
%
|
|||||||||||||||
|
Tier 1 capital to risk-weighted assets
|
1,220,811
|
11.60
|
%
|
631,670
|
6.00
|
%
|
842,227
|
8.00
|
%
|
|||||||||||||||
|
Tier 1 leverage capital to average assets
|
1,220,811
|
10.45
|
%
|
467,330
|
4.00
|
%
|
584,163
|
5.00
|
%
|
|||||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,220,811
|
11.60
|
%
|
473,753
|
4.50
|
%
|
684,310
|
6.50
|
%
|
|||||||||||||||
|
Islanders Bank:
|
||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
37,044
|
19.42
|
%
|
15,258
|
8.00
|
%
|
19,073
|
10.00
|
%
|
|||||||||||||||
|
Tier 1 capital to risk-weighted assets
|
34,658
|
18.17
|
%
|
11,444
|
6.00
|
%
|
15,258
|
8.00
|
%
|
|||||||||||||||
|
Tier 1 leverage capital to average assets
|
34,658
|
11.66
|
%
|
11,887
|
4.00
|
%
|
14,859
|
5.00
|
%
|
|||||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
34,658
|
18.17
|
%
|
8,583
|
4.50
|
%
|
12,397
|
6.50
|
%
|
|||||||||||||||
|
ANALYSIS OF NET INTEREST SPREAD
|
Quarters Ended
|
||||||||||||||||||||||||||||||||||
|
December 31, 2019
|
September 30, 2019
|
December 31, 2018
|
|||||||||||||||||||||||||||||||||
|
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
|
$
|
202,686
|
$
|
2,048
|
4.01
|
%
|
$
|
154,529
|
$
|
1,607
|
4.13
|
%
|
$
|
83,741
|
$
|
1,055
|
5.00
|
%
|
|||||||||||||||||
|
Mortgage loans
|
7,134,231
|
92,926
|
5.17
|
%
|
6,872,426
|
89,948
|
5.19
|
%
|
6,573,278
|
88,561
|
5.35
|
%
|
|||||||||||||||||||||||
|
Commercial/agricultural loans
|
1,853,447
|
23,256
|
4.98
|
%
|
1,809,397
|
23,750
|
5.21
|
%
|
1,631,133
|
22,257
|
5.41
|
%
|
|||||||||||||||||||||||
|
Consumer and other loans
|
169,197
|
2,685
|
6.30
|
%
|
173,342
|
2,791
|
6.39
|
%
|
172,934
|
2,754
|
6.32
|
%
|
|||||||||||||||||||||||
|
Total loans(1)
|
9,359,561
|
120,915
|
5.13
|
%
|
9,009,694
|
118,096
|
5.20
|
%
|
8,461,086
|
114,627
|
5.37
|
%
|
|||||||||||||||||||||||
|
Mortgage-backed securities
|
1,371,438
|
8,924
|
2.58
|
%
|
1,358,448
|
9,415
|
2.75
|
%
|
1,400,508
|
9,931
|
2.81
|
%
|
|||||||||||||||||||||||
|
Other securities
|
418,767
|
2,663
|
2.52
|
%
|
414,994
|
3,058
|
2.92
|
%
|
474,659
|
3,633
|
3.04
|
%
|
|||||||||||||||||||||||
|
Interest-bearing deposits with banks
|
107,959
|
531
|
1.95
|
%
|
82,836
|
489
|
2.34
|
%
|
54,577
|
305
|
2.22
|
%
|
|||||||||||||||||||||||
|
FHLB stock
|
26,036
|
376
|
5.73
|
%
|
29,400
|
378
|
5.10
|
%
|
22,791
|
245
|
4.26
|
%
|
|||||||||||||||||||||||
|
Total investment securities
|
1,924,200
|
12,494
|
2.58
|
%
|
1,885,678
|
13,340
|
2.81
|
%
|
1,952,535
|
14,114
|
2.87
|
%
|
|||||||||||||||||||||||
|
Total interest-earning assets
|
11,283,761
|
133,409
|
4.69
|
%
|
10,895,372
|
131,436
|
4.79
|
%
|
10,413,621
|
128,741
|
4.90
|
%
|
|||||||||||||||||||||||
|
Non-interest-earning assets
|
1,152,751
|
1,078,277
|
903,165
|
||||||||||||||||||||||||||||||||
|
Total assets
|
$
|
12,436,512
|
$
|
11,973,649
|
$
|
11,316,786
|
|||||||||||||||||||||||||||||
|
Deposits:
|
|||||||||||||||||||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,228,936
|
564
|
0.18
|
%
|
$
|
1,194,633
|
621
|
0.21
|
%
|
$
|
1,131,030
|
403
|
0.14
|
%
|
||||||||||||||||||||
|
Savings accounts
|
1,999,656
|
2,027
|
0.40
|
%
|
1,854,967
|
2,244
|
0.48
|
%
|
1,779,288
|
1,505
|
0.34
|
%
|
|||||||||||||||||||||||
|
Money market accounts
|
1,607,954
|
2,842
|
0.70
|
%
|
1,542,264
|
2,944
|
0.76
|
%
|
1,440,889
|
1,638
|
0.45
|
%
|
|||||||||||||||||||||||
|
Certificates of deposit
|
1,189,530
|
4,517
|
1.51
|
%
|
1,155,710
|
4,205
|
1.44
|
%
|
1,287,114
|
3,957
|
1.22
|
%
|
|||||||||||||||||||||||
|
Total interest-bearing deposits
|
6,026,076
|
9,950
|
0.66
|
%
|
5,747,574
|
10,014
|
0.69
|
%
|
5,638,321
|
7,503
|
0.53
|
%
|
|||||||||||||||||||||||
|
Non-interest-bearing deposits
|
3,959,097
|
—
|
—
|
%
|
3,786,143
|
—
|
—
|
%
|
3,608,930
|
—
|
—
|
%
|
|||||||||||||||||||||||
|
Total deposits
|
9,985,173
|
9,950
|
0.40
|
%
|
9,533,717
|
10,014
|
0.42
|
%
|
9,247,251
|
7,503
|
0.32
|
%
|
|||||||||||||||||||||||
|
Other interest-bearing liabilities:
|
|||||||||||||||||||||||||||||||||||
|
FHLB advances
|
387,435
|
2,281
|
2.34
|
%
|
476,435
|
3,107
|
2.59
|
%
|
311,046
|
2,072
|
2.64
|
%
|
|||||||||||||||||||||||
|
Other borrowings
|
126,782
|
121
|
0.38
|
%
|
122,035
|
82
|
0.27
|
%
|
117,724
|
66
|
0.22
|
%
|
|||||||||||||||||||||||
|
Junior subordinated debentures
|
145,339
|
1,566
|
4.27
|
%
|
140,212
|
1,612
|
4.56
|
%
|
140,212
|
1,641
|
4.64
|
%
|
|||||||||||||||||||||||
|
Total borrowings
|
659,556
|
3,968
|
2.39
|
%
|
738,682
|
4,801
|
2.58
|
%
|
568,982
|
3,779
|
2.64
|
%
|
|||||||||||||||||||||||
|
Total funding liabilities
|
10,644,729
|
13,918
|
0.52
|
%
|
10,272,399
|
14,815
|
0.57
|
%
|
9,816,233
|
11,282
|
0.46
|
%
|
|||||||||||||||||||||||
|
Other non-interest-bearing liabilities(2)
|
189,682
|
163,809
|
92,003
|
||||||||||||||||||||||||||||||||
|
Total liabilities
|
10,834,411
|
10,436,208
|
9,908,236
|
||||||||||||||||||||||||||||||||
|
Shareholders' equity
|
1,602,101
|
1,537,785
|
1,408,550
|
||||||||||||||||||||||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
12,436,512
|
$
|
11,973,993
|
$
|
11,316,786
|
|||||||||||||||||||||||||||||
|
Net interest income/rate spread
|
$
|
119,491
|
4.17
|
%
|
$
|
116,621
|
4.22
|
%
|
$
|
117,459
|
4.44
|
%
|
|||||||||||||||||||||||
|
Net interest margin
|
4.20
|
%
|
4.25
|
%
|
4.47
|
%
|
|||||||||||||||||||||||||||||
|
Additional Key Financial Ratios:
|
|||||||||||||||||||||||||||||||||||
|
Return on average assets
|
1.07
|
%
|
1.31
|
%
|
1.32
|
%
|
|||||||||||||||||||||||||||||
|
Return on average equity
|
8.33
|
%
|
10.21
|
%
|
10.57
|
%
|
|||||||||||||||||||||||||||||
|
Average equity/average assets
|
12.88
|
%
|
12.84
|
%
|
12.45
|
%
|
|||||||||||||||||||||||||||||
|
Average interest-earning assets/average interest-bearing
liabilities
|
168.78
|
%
|
167.98
|
%
|
167.76
|
%
|
|||||||||||||||||||||||||||||
|
Average interest-earning assets/average funding liabilities
|
106.00
|
%
|
106.06
|
%
|
106.09
|
%
|
|||||||||||||||||||||||||||||
|
Non-interest income/average assets
|
0.65
|
%
|
0.69
|
%
|
0.74
|
%
|
|||||||||||||||||||||||||||||
|
Non-interest expense/average assets
|
2.99
|
%
|
2.89
|
%
|
3.34
|
%
|
|||||||||||||||||||||||||||||
|
Efficiency ratio(4)
|
67.03
|
%
|
63.50
|
%
|
68.89
|
%
|
|||||||||||||||||||||||||||||
|
Adjusted efficiency ratio(5)
|
61.19
|
%
|
60.71
|
%
|
63.06
|
%
|
|||||||||||||||||||||||||||||
|
(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)
|
Yields and costs have not been adjusted for the effect of tax-exempt interest.
|
|
(4)
|
Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. Adjusted revenue excludes net gain (loss) on sale of securities and fair
value adjustments. Adjusted non-interest expense excludes acquisition-related expenses, amortization of core deposit intangibles (CDI), REO gain (loss), FHLB prepayment penalties and state/municipal business and use taxes. These represent
non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.
|
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||
|
(dollars in thousands)
|
|||||||
|
(rates / ratios annualized)
|
|
ANALYSIS OF NET INTEREST SPREAD
|
Twelve Months Ended
|
|||||||||||||||||||||||
|
December 31, 2019
|
December 31, 2018
|
|||||||||||||||||||||||
|
Average
Balance
|
Interest and Dividends
|
Yield/Cost(3)
|
Average
Balance
|
Interest and Dividends
|
Yield/Cost(3)
|
|||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Held for sale loans
|
$
|
126,086
|
$
|
5,343
|
4.24
|
%
|
$
|
81,873
|
$
|
3,926
|
4.80
|
%
|
||||||||||||
|
Mortgage loans
|
6,911,067
|
361,158
|
5.23
|
%
|
6,188,279
|
320,264
|
5.18
|
%
|
||||||||||||||||
|
Commercial/agricultural loans
|
1,784,468
|
93,742
|
5.25
|
%
|
1,519,871
|
79,605
|
5.24
|
%
|
||||||||||||||||
|
Consumer and other loans
|
176,373
|
11,230
|
6.37
|
%
|
149,184
|
9,575
|
6.42
|
%
|
||||||||||||||||
|
Total loans(1)
|
8,997,994
|
471,473
|
5.24
|
%
|
7,939,207
|
413,370
|
5.21
|
%
|
||||||||||||||||
|
Mortgage-backed securities
|
1,368,927
|
38,640
|
2.82
|
%
|
1,247,758
|
35,076
|
2.81
|
%
|
||||||||||||||||
|
Other securities
|
441,402
|
12,510
|
2.83
|
%
|
468,416
|
13,332
|
2.85
|
%
|
||||||||||||||||
|
Interest-bearing deposits with banks
|
72,579
|
1,649
|
2.27
|
%
|
59,031
|
1,080
|
1.83
|
%
|
||||||||||||||||
|
FHLB stock
|
29,509
|
1,407
|
4.77
|
%
|
20,496
|
774
|
3.78
|
%
|
||||||||||||||||
|
Total investment securities
|
1,912,417
|
54,206
|
2.83
|
%
|
1,795,701
|
50,262
|
2.80
|
%
|
||||||||||||||||
|
Total interest-earning assets
|
10,910,411
|
525,679
|
4.82
|
%
|
9,734,908
|
463,632
|
4.76
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
1,078,277
|
828,184
|
||||||||||||||||||||||
|
Total assets
|
$
|
11,988,688
|
$
|
10,563,092
|
||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,188,985
|
2,224
|
0.19
|
%
|
$
|
1,048,327
|
1,200
|
0.11
|
%
|
||||||||||||||
|
Savings accounts
|
1,890,467
|
8,310
|
0.44
|
%
|
1,665,608
|
3,944
|
0.24
|
%
|
||||||||||||||||
|
Money market accounts
|
1,534,909
|
10,693
|
0.70
|
%
|
1,421,161
|
4,107
|
0.29
|
%
|
||||||||||||||||
|
Certificates of deposit
|
1,175,942
|
16,403
|
1.39
|
%
|
1,127,612
|
11,391
|
1.01
|
%
|
||||||||||||||||
|
Total interest-bearing deposits
|
5,790,303
|
37,630
|
0.65
|
%
|
5,262,708
|
20,642
|
0.39
|
%
|
||||||||||||||||
|
Non-interest-bearing deposits
|
3,751,878
|
—
|
—
|
%
|
3,411,010
|
—
|
—
|
%
|
||||||||||||||||
|
Total deposits
|
9,542,181
|
37,630
|
0.39
|
%
|
8,673,718
|
20,642
|
0.24
|
%
|
||||||||||||||||
|
Other interest-bearing liabilities:
|
||||||||||||||||||||||||
|
FHLB advances
|
477,796
|
12,234
|
2.56
|
%
|
253,661
|
5,636
|
2.22
|
%
|
||||||||||||||||
|
Other borrowings
|
122,343
|
330
|
0.27
|
%
|
108,730
|
245
|
0.23
|
%
|
||||||||||||||||
|
Junior subordinated debentures
|
141,504
|
6,574
|
4.65
|
%
|
140,212
|
6,136
|
4.38
|
%
|
||||||||||||||||
|
Total borrowings
|
741,643
|
19,138
|
2.58
|
%
|
502,603
|
12,017
|
2.39
|
%
|
||||||||||||||||
|
Total funding liabilities
|
10,283,824
|
56,768
|
0.55
|
%
|
9,176,321
|
32,659
|
0.36
|
%
|
||||||||||||||||
|
Other non-interest-bearing liabilities(2)
|
164,318
|
79,901
|
||||||||||||||||||||||
|
Total liabilities
|
10,448,142
|
9,256,222
|
||||||||||||||||||||||
|
Shareholders' equity
|
1,540,546
|
1,306,870
|
||||||||||||||||||||||
|
Total liabilities and shareholders' equity
|
$
|
11,988,688
|
$
|
10,563,092
|
||||||||||||||||||||
|
Net interest income/rate spread
|
$
|
468,911
|
4.27
|
%
|
$
|
430,973
|
4.40
|
%
|
||||||||||||||||
|
Net interest margin
|
4.30
|
%
|
4.43
|
%
|
||||||||||||||||||||
|
Additional Key Financial Ratios:
|
||||||||||||||||||||||||
|
Return on average assets
|
1.22
|
%
|
1.29
|
%
|
||||||||||||||||||||
|
Return on average equity
|
9.50
|
%
|
10.45
|
%
|
||||||||||||||||||||
|
Average equity/average assets
|
12.85
|
%
|
12.37
|
%
|
||||||||||||||||||||
|
Average interest-earning assets/average interest-bearing liabilities
|
167.03
|
%
|
168.85
|
%
|
||||||||||||||||||||
|
Average interest-earning assets/average funding liabilities
|
106.09
|
%
|
106.09
|
%
|
||||||||||||||||||||
|
Non-interest income/average assets
|
0.68
|
%
|
0.80
|
%
|
||||||||||||||||||||
|
Non-interest expense/average assets
|
2.98
|
%
|
3.23
|
%
|
||||||||||||||||||||
|
Efficiency ratio(4)
|
64.94
|
%
|
66.29
|
%
|
||||||||||||||||||||
|
Adjusted efficiency ratio(5)
|
61.18
|
%
|
63.59
|
%
|
||||||||||||||||||||
|
(1)
|
Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net deferred
loan fees/costs is included with interest on loans.
|
|
(2)
|
Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
|
|
(3)
|
Yields and costs have not been adjusted for the effect of tax-exempt interest.
|
|
(4)
|
Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. Adjusted revenue excludes net gain (loss) on sale of securities and fair
value adjustments. Adjusted non-interest expense excludes acquisition-related expenses, amortization of CDI, REO gain (loss), FHLB prepayment penalties and state/municipal business and use taxes. These represent non-GAAP financial
measures. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.
|
|
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, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
|
Net interest income before provision for loan losses
|
$
|
119,491
|
$
|
116,621
|
$
|
117,459
|
$
|
468,911
|
$
|
430,973
|
||||||||||
|
Total non-interest income
|
20,282
|
20,866
|
21,018
|
81,949
|
84,008
|
|||||||||||||||
|
Total GAAP revenue
|
139,773
|
137,487
|
138,477
|
550,860
|
514,981
|
|||||||||||||||
|
Exclude net (gain) loss on sale of securities
|
(62
|
)
|
2
|
885
|
(33
|
)
|
837
|
|||||||||||||
|
Exclude net change in valuation of financial instruments
carried at fair value
|
36
|
69
|
(198
|
)
|
208
|
(3,775
|
)
|
|||||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
139,747
|
$
|
137,558
|
$
|
139,164
|
$
|
551,035
|
$
|
512,043
|
||||||||||
|
ADJUSTED EARNINGS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
|
Net income (GAAP)
|
$
|
33,655
|
$
|
39,577
|
$
|
37,528
|
$
|
146,278
|
$
|
136,515
|
||||||||||
|
Exclude net (gain) loss on sale of securities
|
(62
|
)
|
2
|
885
|
(33
|
)
|
837
|
|||||||||||||
|
Exclude net change in valuation of financial instruments carried at fair value
|
36
|
69
|
(198
|
)
|
208
|
(3,775
|
)
|
|||||||||||||
|
Exclude acquisition-related expenses
|
4,419
|
676
|
4,602
|
7,544
|
5,607
|
|||||||||||||||
|
Exclude related tax (benefit) expense
|
(1,074
|
)
|
(49
|
)
|
(1,159
|
)
|
(1,741
|
)
|
(426
|
)
|
||||||||||
|
Exclude FHLB prepayment penalties
|
735
|
—
|
—
|
735
|
—
|
|||||||||||||||
|
Exclude tax adjustments related to tax reform and valuation reserves
|
—
|
—
|
(4,207
|
)
|
—
|
(4,207
|
)
|
|||||||||||||
|
Total adjusted earnings (non-GAAP)
|
$
|
37,709
|
$
|
40,275
|
$
|
37,451
|
$
|
152,991
|
$
|
134,551
|
||||||||||
|
Diluted earnings per share (GAAP)
|
$
|
0.95
|
$
|
1.15
|
$
|
1.09
|
$
|
4.18
|
$
|
4.15
|
||||||||||
|
Diluted adjusted earnings per share (non-GAAP)
|
$
|
1.07
|
$
|
1.17
|
$
|
1.09
|
$
|
4.38
|
$
|
4.09
|
||||||||||
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
ADJUSTED EFFICIENCY RATIO
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
Dec 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
|
Non-interest expense (GAAP)
|
$
|
93,690
|
$
|
87,308
|
$
|
95,396
|
$
|
357,728
|
$
|
341,371
|
||||||||||
|
Exclude acquisition-related expenses
|
(4,419
|
)
|
(676
|
)
|
(4,602
|
)
|
(7,544
|
)
|
(5,607
|
)
|
||||||||||
|
Exclude CDI amortization
|
(2,061
|
)
|
(1,985
|
)
|
(1,935
|
)
|
(8,151
|
)
|
(6,047
|
)
|
||||||||||
|
Exclude state/municipal tax expense
|
(917
|
)
|
(1,011
|
)
|
(854
|
)
|
(3,880
|
)
|
(3,284
|
)
|
||||||||||
|
Exclude REO loss
|
(40
|
)
|
(126
|
)
|
(251
|
)
|
(303
|
)
|
(804
|
)
|
||||||||||
|
Exclude FHLB prepayment penalties
|
(735
|
)
|
—
|
—
|
(735
|
)
|
$
|
—
|
||||||||||||
|
Adjusted non-interest expense (non-GAAP)
|
$
|
85,518
|
$
|
83,510
|
$
|
87,754
|
$
|
337,115
|
$
|
325,629
|
||||||||||
|
Net interest income before provision for loan losses (GAAP)
|
$
|
119,491
|
$
|
116,621
|
$
|
117,459
|
$
|
468,911
|
$
|
430,973
|
||||||||||
|
Non-interest income (GAAP)
|
20,282
|
20,866
|
21,018
|
81,949
|
84,008
|
|||||||||||||||
|
Total revenue
|
139,773
|
137,487
|
138,477
|
550,860
|
514,981
|
|||||||||||||||
|
Exclude net (gain) loss on sale of securities
|
(62
|
)
|
2
|
885
|
(33
|
)
|
837
|
|||||||||||||
|
Exclude net change in valuation of financial instruments carried at fair value
|
36
|
69
|
(198
|
)
|
208
|
(3,775
|
)
|
|||||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
139,747
|
$
|
137,558
|
$
|
139,164
|
$
|
551,035
|
$
|
512,043
|
||||||||||
|
Efficiency ratio (GAAP)
|
67.03
|
%
|
63.50
|
%
|
68.89
|
%
|
64.94
|
%
|
66.29
|
%
|
||||||||||
|
Adjusted efficiency ratio (non-GAAP)
|
61.19
|
%
|
60.71
|
%
|
63.06
|
%
|
61.18
|
%
|
63.59
|
%
|
||||||||||
|
TANGIBLE COMMON SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS
|
Dec 31, 2019
|
Sep 30, 2019
|
Dec 31, 2018
|
|||||||||
|
Shareholders' equity (GAAP)
|
$
|
1,594,034
|
$
|
1,530,935
|
$
|
1,478,595
|
||||||
|
Exclude goodwill and other intangible assets, net
|
402,279
|
365,764
|
372,078
|
|||||||||
|
Tangible common shareholders' equity (non-GAAP)
|
$
|
1,191,755
|
$
|
1,165,171
|
$
|
1,106,517
|
||||||
|
Total assets (GAAP)
|
$
|
12,604,031
|
$
|
12,097,842
|
$
|
11,871,317
|
||||||
|
Exclude goodwill and other intangible assets, net
|
402,279
|
365,764
|
372,078
|
|||||||||
|
Total tangible assets (non-GAAP)
|
$
|
12,201,752
|
$
|
11,732,078
|
$
|
11,499,239
|
||||||
|
Common shareholders' equity to total assets (GAAP)
|
12.65
|
%
|
12.65
|
%
|
12.46
|
%
|
||||||
|
Tangible common shareholders' equity to tangible assets (non-GAAP)
|
9.77
|
%
|
9.93
|
%
|
9.62
|
%
|
||||||
|
TANGIBLE COMMON SHAREHOLDERS' EQUITY PER SHARE
|
||||||||||||
|
Tangible common shareholders' equity (non-GAAP)
|
$
|
1,191,755
|
$
|
1,165,171
|
$
|
1,106,517
|
||||||
|
Common shares outstanding at end of period
|
35,751,576
|
34,173,357
|
35,182,772
|
|||||||||
|
Common shareholders' equity (book value) per share (GAAP)
|
$
|
44.59
|
$
|
44.80
|
$
|
42.03
|
||||||
|
Tangible common shareholders' equity (tangible book value) per share (non-GAAP)
|
$
|
33.33
|
$
|
34.10
|
$
|
31.45
|
||||||
