Banner Corporation (NASDAQ GSM:BANR), the parent company of Banner
Bank and Islanders Bank, today reported that growth in earning
assets and improved net interest margin contributed to continuing
solid revenue growth. In addition, $2.1 million in
miscellaneous non-interest income from the sale of its Poulsbo
branch deposits and two former business locations contributed to
the substantial increase in second quarter 2018 earnings. Net
income in the second quarter of 2018 increased 13% to $32.4
million, or $1.00 per diluted share, compared to $28.8 million, or
$0.89 per diluted share, in the preceding quarter and increased 27%
when compared to $25.5 million, or $0.77 per diluted share, in the
second quarter a year ago when federal income tax rates were
substantially higher.
In the first six months of 2018, net income
increased 24% to $61.2 million, or $1.89 per diluted share,
compared to $49.2 million, or $1.49 per diluted share, in the first
six months of 2017.
“Banner’s second quarter 2018 performance
clearly demonstrates that our strategic plan continues to be
effective, as we complete the build-out of the company’s support
infrastructure and improve operating leverage,” stated Mark J.
Grescovich, President and Chief Executive Officer. “Due to the hard
work of our employees, we are successfully executing on our
strategies and priorities to deliver sustainable profitability and
revenue growth to shareholders. Our core operating
performance continues to reflect the success of our proven
client-acquisition strategies, which are producing strong core
revenue and a healthy net interest margin. These factors
contributed to a return on average assets of 1.25% for the
quarter. Additionally, our continuing strong earnings trends
allowed us to declare a special dividend of $0.50 per share in
addition to the regular quarterly dividend of $0.35 per share,
which were both paid on July 29, 2018, while effectively managing
and maintaining a solid capital position.”
At June 30, 2018, Banner Corporation had $10.38
billion in assets, $7.59 billion in net loans and $8.53 billion in
deposits. Banner operates 177 branch offices located in eight
of the top 20 largest western Metropolitan Statistical Areas by
population.
Second Quarter 2018
Highlights
- Net income increased 13% to $32.4 million, or $1.00 per diluted
share, compared to $28.8 million, or $0.89 per diluted share, in
the preceding quarter and increased 27% compared to $25.5 million,
or $0.77 per diluted share, in the second quarter a year ago.
- Net interest income, before the provision for loan losses,
increased 6% to $105.1 million, compared to $99.4 million in the
preceding quarter and increased 5% from $99.7 million in the second
quarter a year ago.
- Net interest margin was 4.39% for the current quarter, compared
to 4.35% in the preceding quarter and 4.33% in the second quarter a
year ago.
- Revenues were $126.3 million during the quarter ended June 30,
2018, $120.7 million during the preceding quarter and $120.1
million during the second quarter a year ago.
- Return on average assets was 1.25% in the current quarter,
compared to 1.16% in the preceding quarter and 1.01% in the second
quarter a year ago.
- Return on average equity was 10.25% in the current quarter,
compared to 9.14% in the preceding quarter and 7.60% in the second
quarter a year ago.
- Provision for loan losses remained steady at $2.0 million,
increasing the allowance for loan losses to $93.9 million or 1.22%
of total loans compared to an allowance for loan losses of $88.6
million or 1.17% of total loans as of June 30, 2017.
- Net loans receivable were $7.59 billion at June 30, 2018,
compared to $7.46 billion at both March 31, 2018, and June 30,
2017.
- Core deposits increased 1% compared to June 30, 2017, and
represented 87% of total deposits at June 30, 2018.
- Quarterly dividends to shareholders were $0.35 per share, and a
special cash dividend of $0.50 per share was also declared.
- Tangible common shareholders' equity per share* was $30.57 at
June 30, 2018, compared to $30.54 at the preceding quarter end and
$31.21 a year ago.
- The ratio of tangible common shareholders' equity to tangible
assets* remained strong at 9.79% at June 30, 2018, compared to
9.85% at the preceding quarter end and 10.46% a year ago.
- Non-performing assets declined by $7.0 million to $16.5 million
or 0.16% of total assets at June 30, 2018 and were $24.5 million or
0.24% of total assets a year ago.
*Tangible common shareholders' equity per share
and the ratio of tangible common equity to tangible assets (both of
which exclude goodwill and other intangible assets, net), and
references to revenues from core operations (which excludes fair
value adjustments and gains and losses on the sale of securities)
and adjusted efficiency ratio (which excludes fair value
adjustments and gains and losses on the sale of securities from
adjusted non-interest income and excludes amortization of core
deposit intangibles, real estate owned, gain (loss) and
state/municipal business and use taxes from adjusted non-interest
expense) represent non-GAAP (Generally Accepted Accounting
Principles) financial measures. Management has presented
these non-GAAP financial measures in this earnings release because
it believes that they provide useful and comparative information to
assess trends in Banner's core operations reflected in the current
quarter's results and facilitate the comparison of our performance
with the performance of our peers. Where applicable,
comparable earnings information using GAAP financial measures is
also presented. See also Non-GAAP Financial Measures
reconciliation tables on the last two pages of this press
release.
Certain reclassifications have been made to the
2017 Consolidated Financial Statements and/or schedules to conform
to the 2018 presentation. These reclassifications have
affected certain line items and ratios for the prior periods but
have not changed net income or shareholders’ equity for those
periods. The effect of these reclassifications is considered
immaterial.
Significant Recent Initiatives and
Events
On May 11, 2018, Banner Bank completed the sale of its Poulsbo,
Washington, branch deposits totaling $20.4 million to Liberty Bay
Bank, recording a deposit premium of $249,000. In addition,
during the second quarter of 2018 Banner Bank sold two former
business locations, recording a combined net gain of $1.9
million.
On October 6, 2017, Banner Bank completed the
sale of its seven branches and related assets and liabilities in
Utah to People’s Intermountain Bank, a banking subsidiary of
People’s Utah Bancorp (NASDAQ:PUB). Under the terms of the
purchase and assumption agreement, the sale included $253.8 million
in loans and $160.3 million in deposits.
During the fourth quarter of 2017, Banner
recorded a one-time net tax charge of $42.6 million, or $1.30 per
diluted share, related to the revaluation of deferred tax items as
a result of the Tax Cuts and Jobs Act. This increase in
income tax expense was reflected in operating results for the
fourth quarter of 2017 and was in addition to the normal provision
for income tax related to pre-tax net operating income.
In addition, during the fourth quarter Banner
implemented a number of strategic balance sheet initiatives
designed to keep its assets below $10 billion at December 31, 2017,
in order to postpone the adverse impact of certain enhanced
regulatory requirements and the Durbin Amendment to the Dodd-Frank
Act limits on, among other things, debit card interchange
fees. Based on current debit card transaction volumes, Banner
anticipates that the Durbin Amendment will have a $13 million
annualized negative impact on pre-tax revenues commencing in July
2019.
In December 2017, Banner sold approximately $470
million of investment securities in the available-for-sale
portfolio, using the proceeds to fund loan originations and to pay
down certain wholesale borrowings and maturing brokered
deposits. Banner incurred pre-tax net losses of $2.3 million
in connection with the sale of these investment securities, which
produced tax benefits based upon the 2017 marginal federal income
tax rate of 35%. Beginning in 2018 net interest income on
investment securities is subject to the new lower marginal
corporate federal income tax rate. In recent periods Banner
has incurred a blended effective federal and state tax rate of 33%
to 34%. As a result of the reduced marginal federal tax rate,
Banner anticipates that its blended effective federal and state tax
rate will be approximately 22% to 23% in 2018.
Income Statement Review
“We benefited from rising interest rates during
the quarter, which produced higher yields on loans and improved our
net interest margin,” said Grescovich. Banner's net interest
margin was 4.39% for the second quarter of 2018, a four basis point
improvement compared to 4.35% in the preceding quarter and a six
basis point improvement compared to 4.33% in the second quarter a
year ago. Acquisition accounting adjustments, principally
loan discount accretion, added six basis points to the net interest
margin in the current quarter compared to eight basis points in the
preceding quarter and 15 basis points in the second quarter a year
ago. The total purchase discount for acquired loans was $18.1
million at June 30, 2018, a decrease from $19.4 million at March
31, 2018 and $25.8 million a year ago, primarily as a result of
discount accretion. In the first six months of the year,
Banner’s net interest margin expanded eight basis points to 4.37%
compared to 4.29% in the first six months a year ago.
Average interest-earning asset yields increased
11 basis points to 4.70% compared to 4.59% for the preceding
quarter and increased 17 basis points compared to 4.53% in the
second quarter a year ago. Average loan yields increased 17
basis points to 5.15% compared to 4.98% for both the preceding
quarter and second quarter a year ago. Loan discount
accretion added eight basis points to loan yields in the second
quarter, compared to ten basis points in the preceding quarter and
18 basis points in the second quarter a year ago. Deposit
costs were 0.20% in the second quarter, a four basis point increase
compared to the preceding quarter and a five basis point increase
compared to the second quarter a year ago. The total cost of
funds was 0.33% during the second quarter, an eight basis point
increase compared to the preceding quarter and an 11 basis point
increase compared to the second quarter a year ago largely
reflecting increased borrowing costs.
Primarily as a result of the origination of new
loans, the renewal of acquired loans out of the discounted acquired
loan portfolio and net charge-offs, Banner recorded a $2.0 million
provision for loan losses during the second quarter, the same as in
both the preceding and year ago quarters as credit quality metrics
remained very strong.
Deposit fees and other service charges were
$12.0 million in the second quarter, compared to $11.3 million in
the preceding quarter and $11.2 million in the second quarter a
year ago. Mortgage banking revenues, including gains on one-
to four-family and multifamily loan sales and loan servicing fees,
decreased to $4.6 million in the second quarter compared to $4.9
million in the preceding quarter and $6.8 million in the second
quarter of 2017. Home purchase activity accounted for 81% of
second quarter 2018 one- to four-family mortgage loan
originations.
Second quarter 2018 results included a $224,000
net gain for fair value adjustments as a result of changes in the
valuation of financial instruments carried at fair value,
principally certain investment securities held for trading, and
$44,000 net gain on the sale of securities. In the preceding
quarter, results included a $3.3 million net gain for fair value
adjustments. In the second quarter a year ago, results included a
$650,000 net loss for fair value adjustments and a $54,000 net loss
on the sale of securities. Following the adoption of new
accounting guidance, beginning in the preceding quarter, Banner no
longer reflects changes in the fair value of its junior
subordinated debentures related to instrument-specific credit risk
in the Consolidated Statements of Operations, but rather reports
those changes in the Consolidated Statements of Comprehensive
Income and includes them in total shareholders’ equity in the
Consolidated Statements of Financial Condition.
Total revenues increased 5% to $126.3 million
for the second quarter of 2018, compared to $120.7 million in the
preceding quarter and $120.1 million in the second quarter a year
ago. In the first six months of 2018, total revenues
increased 6% to $247.0 million, compared to $234.0 million in the
first six months of 2017. Revenues from core operations*
(revenues excluding gains and losses on the sale of securities and
the net change in valuation of financial instruments) increased to
$126.0 million in the second quarter of 2018, compared to $117.4
million in the preceding quarter, and $120.8 million in the second
quarter of 2017. In the first six months of 2018, revenues
from core operations* increased to $243.4 million from $235.4
million in the first six months a year ago.
Total non-interest income, which includes the
changes in the valuation of financial instruments carried at fair
value and gains and losses on the sale of securities, was $21.2
million in the second quarter of 2018, compared to $21.4 million in
the first quarter of 2018 and $20.4 million in the second quarter a
year ago. In the first six months of 2018, total non-interest
income was $42.6 million, compared to $39.4 million in the same
period a year ago.
Banner’s total non-interest expense was $82.6
million in the second quarter of 2018, compared to $81.7 million in
the preceding quarter and $79.9 million in the second quarter of
2017. In addition to normal wage increases, the current and
preceding quarter's non-interest expenses included increased salary
and employee benefits as compared to the second quarter a year ago
largely due to enhanced regulatory requirements attributable to
compliance and risk management infrastructure build-out.
Banner’s adjusted efficiency ratio* improved to 64.09% for the
current quarter, compared to 67.42% in the prior quarter and 64.83%
in the year ago quarter.
For the second quarter of 2018, Banner recorded
$9.2 million in state and federal income tax expense for an
effective tax rate of 22.1%, reflecting the new lower federal
corporate income tax rate beginning in 2018, and for the year ago
quarter, Banner recorded $12.8 million in state and federal income
tax expense for an effective tax rate of 33.4%.
Balance Sheet Review
Banner’s total assets were $10.38 billion at
June 30, 2018, compared to $10.32 billion at March 31, 2018, and
$10.20 billion at June 30, 2017. The total of securities and
interest-bearing deposits held at other banks was $1.74 billion at
June 30, 2018, compared to $1.75 billion at March 31, 2018 and
$1.66 billion at June 30, 2017. The increase in the
securities portfolio during both the current quarter and preceding
quarter compared to December 31, 2017, reflects Banner's renewed
leveraging strategy as it crossed the $10 billion in total assets
threshold. In the fourth quarter of 2017, Banner reduced its
holdings of securities and use of wholesale funding to ensure that
it remained below $10 billion in total assets at December 31, 2017,
to postpone the adverse impact of the Durbin Amendment. The
average effective duration of Banner's securities portfolio was
approximately 4.0 years at June 30, 2018, compared to 3.5 years at
June 30, 2017.
Net loans receivable increased 2% to $7.59
billion at June 30, 2018, compared to $7.46 billion at both March
31, 2018 and June 30, 2017. The sale of our Utah branches in
the fourth quarter of 2017 included the sale of $253.8 million of
loans. Commercial real estate and multifamily real estate
loans increased slightly to $3.51 billion at June 30, 2018,
compared to $3.48 billion at March 31, 2018, but decreased compared
to $3.62 billion a year ago, reflecting significant payoffs of both
owner occupied and investment commercial real estate loans,
partially offset by growth in multifamily real estate loans.
Commercial business loans increased modestly to $1.31 billion at
June 30, 2018, compared to $1.30 billion three months earlier and
increased 2% compared to $1.29 billion a year ago. Reflecting
normal seasonal trends, agricultural business loans increased by
10% to $336.7 million at June 30, 2018, compared to $307.2 million
three months earlier and were $344.4 million a year ago.
Total construction, land and land development loans increased 3% to
$980.4 million at June 30, 2018, compared to $948.7 million at
March 31, 2018, and increased 21% compared to $811.5 million a year
earlier. Consumer loans increased 2% to $706.8 million at
June 30, 2018, compared to $693.0 million at March 31, 2018, and
increased 3% compared to $687.8 million a year ago. One- to
four-family loans increased modestly to $840.5 million compared to
$833.6 million at March 31, 2018, and increased 5% compared to
$800.0 million a year ago.
Loans held for sale decreased 44% to $78.8
million at June 30, 2018, compared to $141.8 million at March 31,
2018, but increased 19% compared to $66.2 million at June 30,
2017. The volume of one- to four- family residential mortgage
loans sold remained relatively constant at $124.1 million in the
current quarter compared to $124.5 million in the preceding quarter
and was $131.1 million in the second quarter a year ago.
During the current quarter Banner sold $135.7 million in
multifamily loans compared to none during the quarter ended March
31, 2018, and $114.8 million in multifamily loans sold during the
second quarter a year ago. Loans held for sale at June 30,
2018 included $51.3 million of multifamily loans and $27.6 million
of one- to four-family loans.
Total deposits were $8.53 billion at June 30,
2018, compared to $8.54 billion at March 31, 2018, and increased
modestly compared to $8.48 billion a year ago, as strong core
deposit growth over the last year was partially offset by
continuing declines in retail or non-brokered certificates of
deposit. The sale of $20.4 million of Poulsbo Branch deposits
during the current quarter contributed to the slight decline in
deposits compared to the prior quarter. Compared to a year
earlier, total deposits at June 30, 2018, were negatively impacted
by the sale of the Utah branches during the fourth quarter of 2017
which included $160.3 million of deposits.
Non-interest-bearing account balances decreased slightly to $3.35
billion at June 30, 2018, compared to $3.38 billion at March
31, 2018, and increased 3% compared to $3.25 billion a year
ago. Core deposits (non-interest-bearing and interest-bearing
transaction and savings accounts) decreased 2% from the prior
quarter and increased 1% compared to June 30, 2017, despite the
sale of the Utah branches. Core deposits represented 87% of
total deposits at June 30, 2018, compared to 88% of total deposits
at March 31, 2018, and 86% of total deposits a year earlier.
Certificates of deposit were $1.15 billion at June 30, 2018,
compared to $1.02 million at March 31, 2018, and $1.21 billion a
year earlier. Brokered deposits increased to $280.1 million
at June 30, 2018, compared to $169.5 million at March 31, 2018, and
were $250.0 million a year earlier. The average cost of
deposits was 0.20% for the quarter ended June 30, 2018, compared to
0.16% in the preceding quarter and 0.15% in the quarter ended June
30, 2017.
At June 30, 2018, total common shareholders'
equity was $1.25 billion, or $38.67 per share, compared to $1.25
billion at March 31, 2018, and $1.31 billion a year ago. At
June 30, 2018, tangible common shareholders' equity*, which
excludes goodwill and other intangible assets, was $990.5 million,
or 9.79% of tangible assets*, compared to $990.2 million, or 9.85%
of tangible assets, at March 31, 2018 and $1.04 billion, or 10.46%
of tangible assets, a year ago. Banner's tangible book value
per share* was $30.57 at June 30, 2018, compared to $31.21 per
share a year ago.
During the first quarter of 2018, Banner
repurchased 269,711 shares of its common stock at an average price
per share of $56.93 for a total purchase price of $15.4
million. There were no repurchases during the second quarter
of 2018. Banner Corporation and its subsidiary banks continue
to maintain capital levels in excess of the requirements to be
categorized as “well-capitalized” under the Basel III and Dodd
Frank regulatory standards. At June 30, 2018, Banner
Corporation's common equity Tier 1 capital ratio was 11.05%, its
Tier 1 leverage capital to average assets ratio was 10.80%, and its
total capital to risk-weighted assets ratio was 13.73%.
Credit Quality
“Credit quality remained strong again during the
quarter, which further solidifies the moderate risk profile of our
loan portfolio and positions us well for the future,” said
Grescovich. The allowance for loan losses was $93.9 million
at June 30, 2018, or 1.22% of total loans outstanding and 613% of
non-performing loans compared to $92.2 million at March 31, 2018,
or 1.22% of total loans outstanding and 410% of non-performing
loans, and $88.6 million at June 30, 2017, or 1.17% of total loans
outstanding and 405% of non-performing loans. Net loan
charge-offs totaled $332,000 in the second quarter compared to net
loan recoveries of $1.2 million in the preceding quarter and
$59,000 in the second quarter a year ago. Primarily as a
result of the origination of new loans, the renewal of acquired
loans out of the discounted acquired loan portfolio and net
charge-offs, Banner recorded a $2.0 million provision for loan
losses in the current quarter which was the same amount as recorded
in the prior quarter and in the year ago quarter.
Non-performing loans declined to $15.3 million at June 30, 2018,
compared to $22.5 million at March 31, 2018 and $21.9 million a
year ago. Real estate owned and other repossessed assets were
$1.2 million at June 30, 2018, compared to $1.0 million at March
31, 2018 and $2.6 million a year ago.
In accordance with acquisition accounting, loans
acquired from acquisitions were recorded at their estimated fair
value, which resulted in a net discount to the loans’ contractual
amounts, a portion of which reflects a discount for possible credit
losses. Credit discounts are included in the determination of
fair value, and as a result, no allowance for loan and lease losses
is recorded for acquired loans at the acquisition date.
Although the discount recorded on the acquired loans is not
reflected in the allowance for loan losses or related allowance
coverage ratios. At June 30, 2018, the total purchase
discount for acquired loans was $18.1 million.
Banner's non-performing assets were $16.5
million, or 0.16% of total assets, at June 30, 2018, compared to
$23.5 million, or 0.23% of total assets, at March 31, 2018 and
$24.5 million, or 0.24% of total assets, a year ago. In
addition to non-performing assets, purchased credit-impaired loans
decreased to $18.1 million at June 30, 2018, compared to $19.3
million at March 31, 2018 and $26.3 million a year ago.
Conference Call
Banner will host a conference call on Thursday,
July 26, 2018, at 8:00 a.m. PDT, to discuss its second quarter
results. To listen to the call on-line, go to
www.bannerbank.com. Investment professionals are invited to
dial (866) 235-9915 to participate in the call. A replay will
be available for one week at (877) 344-7529 using access code
10121440, or at www.bannerbank.com.
About the Company
Banner Corporation is a $10.38 billion bank
holding company operating two commercial banks in four Western
states through a network of branches offering a full range of
deposit services and business, commercial real estate,
construction, residential, agricultural and consumer loans.
Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”), in press releases or other public
stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases
“believe,” “will,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “plans,” or
similar expressions are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of
the date such statements are made and based only on information
then actually known to Banner. Banner does not undertake and
specifically disclaims any obligation to revise any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements. These statements may relate to future financial
performance, strategic plans or objectives, revenues or earnings
projections, or other financial information. By their nature,
these statements are subject to numerous uncertainties that could
cause actual results to differ materially from those anticipated in
the statements and could negatively affect Banner's operating and
stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1) the
credit risks of lending activities, including changes in the level
and direction of loan delinquencies and write-offs and changes in
estimates of the adequacy of the allowance for loan losses, which
could necessitate additional provisions for loan losses, resulting
both from loans originated and loans acquired from other financial
institutions; (2) results of examinations by regulatory
authorities, including the possibility that any such regulatory
authority may, among other things, require increases in the
allowance for loan losses or writing down of assets or impose
restrictions or penalties with respect to Banner's activities; (3)
competitive pressures among depository institutions; (4) interest
rate movements and their impact on customer behavior and net
interest margin; (5) the impact of repricing and competitors'
pricing initiatives on loan and deposit products; (6) fluctuations
in real estate values; (7) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the market place; (8) the ability to access cost-effective funding;
(9) changes in financial markets; (10) changes in economic
conditions in general and in Washington, Idaho, Oregon and
California in particular; (11) the costs, effects and outcomes of
litigation; (12) new legislation or regulatory changes, including
but not limited to the Dodd-Frank Act and regulations adopted
thereunder, changes in capital requirements pursuant to the
Dodd-Frank Act and the implementation of the Basel III capital
standards, other governmental initiatives affecting the financial
services industry and changes in federal and/or state tax laws or
interpretations thereof by taxing authorities; (13) changes in
accounting principles, policies or guidelines; (14) future
acquisitions by Banner of other depository institutions or lines of
business; (15) future goodwill impairment due to changes in
Banner's business, changes in market conditions, or other factors
and (16) other economic, competitive, governmental, regulatory, and
technological factors affecting our operations, pricing, products
and services; and other risks detailed from time to time in our
filings with the Securities and Exchange Commission including our
Quarterly Reports on Form 10-Q and our Annual Reports on Form
10-K.
| |
|
|
|
|
| RESULTS OF
OPERATIONS |
|
Quarters Ended |
|
Six months ended |
| (in thousands except
shares and per share data) |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| |
|
|
|
|
|
|
|
|
|
|
| INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
| Loans
receivable |
|
$ |
99,853 |
|
|
$ |
94,022 |
|
|
$ |
94,795 |
|
|
$ |
193,875 |
|
|
$ |
186,083 |
|
|
Mortgage-backed securities |
|
8,899 |
|
|
7,331 |
|
|
6,239 |
|
|
16,230 |
|
|
10,886 |
|
|
Securities and cash equivalents |
|
3,671 |
|
|
3,467 |
|
|
3,402 |
|
|
7,138 |
|
|
6,563 |
|
| |
|
112,423 |
|
|
104,820 |
|
|
104,436 |
|
|
217,243 |
|
|
203,532 |
|
| INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
4,264 |
|
|
3,358 |
|
|
3,182 |
|
|
7,622 |
|
|
5,973 |
|
| Federal
Home Loan Bank advances |
|
1,499 |
|
|
677 |
|
|
301 |
|
|
2,177 |
|
|
574 |
|
| Other
borrowings |
|
49 |
|
|
70 |
|
|
83 |
|
|
119 |
|
|
157 |
|
| Junior
subordinated debentures |
|
1,548 |
|
|
1,342 |
|
|
1,164 |
|
|
2,889 |
|
|
2,268 |
|
| |
|
7,360 |
|
|
5,447 |
|
|
4,730 |
|
|
12,807 |
|
|
8,972 |
|
| Net
interest income before provision for loan losses |
|
105,063 |
|
|
99,373 |
|
|
99,706 |
|
|
204,436 |
|
|
194,560 |
|
| PROVISION FOR
LOAN LOSSES |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
4,000 |
|
|
4,000 |
|
| Net
interest income |
|
103,063 |
|
|
97,373 |
|
|
97,706 |
|
|
200,436 |
|
|
190,560 |
|
| NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
| Deposit
fees and other service charges |
|
11,985 |
|
|
11,296 |
|
|
11,165 |
|
|
23,281 |
|
|
21,553 |
|
| Mortgage
banking operations |
|
4,643 |
|
|
4,864 |
|
|
6,754 |
|
|
9,507 |
|
|
11,357 |
|
| Bank
owned life insurance |
|
933 |
|
|
853 |
|
|
1,461 |
|
|
1,785 |
|
|
2,556 |
|
|
Miscellaneous |
|
3,388 |
|
|
1,037 |
|
|
1,720 |
|
|
4,426 |
|
|
5,356 |
|
| |
|
20,949 |
|
|
18,050 |
|
|
21,100 |
|
|
38,999 |
|
|
40,822 |
|
| Net gain
(loss) on sale of securities |
|
44 |
|
|
4 |
|
|
(54 |
) |
|
48 |
|
|
(41 |
) |
| Net
change in valuation of financial instruments carried at fair
value |
|
224 |
|
|
3,308 |
|
|
(650 |
) |
|
3,532 |
|
|
(1,338 |
) |
| Total
non-interest income |
|
21,217 |
|
|
21,362 |
|
|
20,396 |
|
|
42,579 |
|
|
39,443 |
|
| NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
| Salary
and employee benefits |
|
51,494 |
|
|
50,067 |
|
|
49,019 |
|
|
101,561 |
|
|
95,083 |
|
| Less
capitalized loan origination costs |
|
(4,733 |
) |
|
(4,011 |
) |
|
(4,598 |
) |
|
(8,744 |
) |
|
(8,914 |
) |
| Occupancy
and equipment |
|
11,574 |
|
|
11,766 |
|
|
12,045 |
|
|
23,340 |
|
|
24,041 |
|
|
Information / computer data services |
|
4,564 |
|
|
4,381 |
|
|
4,100 |
|
|
8,945 |
|
|
8,094 |
|
| Payment
and card processing services |
|
3,731 |
|
|
3,700 |
|
|
3,719 |
|
|
7,431 |
|
|
6,942 |
|
|
Professional services |
|
3,838 |
|
|
4,428 |
|
|
3,732 |
|
|
8,266 |
|
|
8,885 |
|
|
Advertising and marketing |
|
2,141 |
|
|
1,830 |
|
|
1,766 |
|
|
3,971 |
|
|
3,095 |
|
| Deposit
insurance |
|
1,021 |
|
|
1,341 |
|
|
1,071 |
|
|
2,362 |
|
|
2,337 |
|
|
State/municipal business and use taxes |
|
816 |
|
|
713 |
|
|
279 |
|
|
1,529 |
|
|
1,078 |
|
| Real
estate operations |
|
(319 |
) |
|
439 |
|
|
(363 |
) |
|
121 |
|
|
(1,329 |
) |
|
Amortization of core deposit intangibles |
|
1,382 |
|
|
1,382 |
|
|
1,624 |
|
|
2,764 |
|
|
3,248 |
|
|
Miscellaneous |
|
7,128 |
|
|
5,670 |
|
|
7,463 |
|
|
12,797 |
|
|
13,577 |
|
| Total
non-interest expense |
|
82,637 |
|
|
81,706 |
|
|
79,857 |
|
|
164,343 |
|
|
156,137 |
|
| Income
before provision for income taxes |
|
41,643 |
|
|
37,029 |
|
|
38,245 |
|
|
78,672 |
|
|
73,866 |
|
| PROVISION
FOR INCOME TAXES |
|
9,219 |
|
|
8,239 |
|
|
12,791 |
|
|
17,458 |
|
|
24,619 |
|
| NET
INCOME |
|
$ |
32,424 |
|
|
$ |
28,790 |
|
|
$ |
25,454 |
|
|
$ |
61,214 |
|
|
$ |
49,247 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Earnings per share
available to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.01 |
|
|
$ |
0.89 |
|
|
$ |
0.77 |
|
|
$ |
1.89 |
|
|
$ |
1.49 |
|
|
Diluted |
|
$ |
1.00 |
|
|
$ |
0.89 |
|
|
$ |
0.77 |
|
|
$ |
1.89 |
|
|
$ |
1.49 |
|
| Cumulative dividends
declared per common share |
|
$ |
0.85 |
|
|
$ |
0.35 |
|
|
$ |
1.25 |
|
|
$ |
1.20 |
|
|
$ |
1.50 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
32,250,514 |
|
|
32,397,568 |
|
|
32,982,126 |
|
|
32,323,635 |
|
|
32,957,920 |
|
|
Diluted |
|
32,331,609 |
|
|
32,516,456 |
|
|
33,051,527 |
|
|
32,422,287 |
|
|
33,052,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Decrease) increase in
common shares outstanding |
|
(17,977 |
) |
|
(302,812 |
) |
|
125,167 |
|
|
(320,789 |
) |
|
84,644 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
| (in thousands except
shares and per share data) |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
|
PriorQtr |
|
PriorYr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and due from
banks |
|
$ |
195,652 |
|
|
$ |
188,418 |
|
|
$ |
199,624 |
|
|
$ |
196,178 |
|
|
3.8 |
% |
|
(0.3 |
)% |
| Interest-bearing
deposits |
|
53,773 |
|
|
53,630 |
|
|
61,576 |
|
|
77,370 |
|
|
0.3 |
% |
|
(30.5 |
)% |
| Total
cash and cash equivalents |
|
249,425 |
|
|
242,048 |
|
|
261,200 |
|
|
273,548 |
|
|
3.0 |
% |
|
(8.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities -
trading |
|
25,640 |
|
|
25,574 |
|
|
22,318 |
|
|
24,950 |
|
|
0.3 |
% |
|
2.8 |
% |
| Securities - available
for sale |
|
1,400,312 |
|
|
1,406,505 |
|
|
919,485 |
|
|
1,290,159 |
|
|
(0.4 |
)% |
|
8.5 |
% |
| Securities - held to
maturity |
|
263,176 |
|
|
262,645 |
|
|
260,271 |
|
|
268,050 |
|
|
0.2 |
% |
|
(1.8 |
)% |
| Federal Home Loan Bank
stock |
|
19,916 |
|
|
18,036 |
|
|
10,334 |
|
|
12,334 |
|
|
10.4 |
% |
|
61.5 |
% |
| Loans held for
sale |
|
78,833 |
|
|
141,808 |
|
|
40,725 |
|
|
66,164 |
|
|
(44.4 |
)% |
|
19.1 |
% |
| Loans receivable |
|
7,684,732 |
|
|
7,556,046 |
|
|
7,598,884 |
|
|
7,551,563 |
|
|
1.7 |
% |
|
1.8 |
% |
| Allowance for loan
losses |
|
(93,875 |
) |
|
(92,207 |
) |
|
(89,028 |
) |
|
(88,586 |
) |
|
1.8 |
% |
|
6.0 |
% |
| Net loans
receivable |
|
7,590,857 |
|
|
7,463,839 |
|
|
7,509,856 |
|
|
7,462,977 |
|
|
1.7 |
% |
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accrued interest
receivable |
|
34,004 |
|
|
32,824 |
|
|
31,259 |
|
|
30,722 |
|
|
3.6 |
% |
|
10.7 |
% |
| Real estate owned held
for sale, net |
|
473 |
|
|
328 |
|
|
360 |
|
|
2,427 |
|
|
44.2 |
% |
|
(80.5 |
)% |
| Property and equipment,
net |
|
153,224 |
|
|
156,005 |
|
|
154,815 |
|
|
161,095 |
|
|
(1.8 |
)% |
|
(4.9 |
)% |
| Goodwill |
|
242,659 |
|
|
242,659 |
|
|
242,659 |
|
|
244,583 |
|
|
— |
% |
|
(0.8 |
)% |
| Other intangibles,
net |
|
19,858 |
|
|
21,251 |
|
|
22,655 |
|
|
26,813 |
|
|
(6.6 |
)% |
|
(25.9 |
)% |
| Bank-owned life
insurance |
|
164,225 |
|
|
163,519 |
|
|
162,668 |
|
|
160,609 |
|
|
0.4 |
% |
|
2.3 |
% |
| Other assets |
|
136,592 |
|
|
140,223 |
|
|
124,604 |
|
|
175,389 |
|
|
(2.6 |
)% |
|
(22.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
assets |
|
$ |
10,379,194 |
|
|
$ |
10,317,264 |
|
|
$ |
9,763,209 |
|
|
$ |
10,199,820 |
|
|
0.6 |
% |
|
1.8 |
% |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,346,777 |
|
|
$ |
3,383,439 |
|
|
$ |
3,265,544 |
|
|
$ |
3,254,581 |
|
|
(1.1 |
)% |
|
2.8 |
% |
|
Interest-bearing transaction and savings accounts |
|
4,032,283 |
|
|
4,141,268 |
|
|
3,950,950 |
|
|
4,022,909 |
|
|
(2.6 |
)% |
|
0.2 |
% |
|
Interest-bearing certificates |
|
1,148,607 |
|
|
1,018,355 |
|
|
966,937 |
|
|
1,206,241 |
|
|
12.8 |
% |
|
(4.8 |
)% |
| Total
deposits |
|
8,527,667 |
|
|
8,543,062 |
|
|
8,183,431 |
|
|
8,483,731 |
|
|
(0.2 |
)% |
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advances from Federal
Home Loan Bank at fair value |
|
239,190 |
|
|
192,195 |
|
|
202 |
|
|
50,212 |
|
|
24.5 |
% |
|
nm |
|
| Customer repurchase
agreements and other borrowings |
|
112,458 |
|
|
101,844 |
|
|
95,860 |
|
|
116,455 |
|
|
10.4 |
% |
|
(3.4 |
)% |
| Junior subordinated
debentures at fair value |
|
112,774 |
|
|
112,516 |
|
|
98,707 |
|
|
96,852 |
|
|
0.2 |
% |
|
16.4 |
% |
| Accrued expenses and
other liabilities |
|
93,281 |
|
|
72,497 |
|
|
71,344 |
|
|
102,511 |
|
|
28.7 |
% |
|
(9.0 |
)% |
| Deferred
compensation |
|
40,814 |
|
|
41,027 |
|
|
41,039 |
|
|
40,208 |
|
|
(0.5 |
)% |
|
1.5 |
% |
| Total
liabilities |
|
9,126,184 |
|
|
9,063,141 |
|
|
8,490,583 |
|
|
8,889,969 |
|
|
0.7 |
% |
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
1,173,656 |
|
|
1,172,960 |
|
|
1,187,127 |
|
|
1,215,316 |
|
|
0.1 |
% |
|
(3.4 |
)% |
| Retained earnings |
|
84,485 |
|
|
79,773 |
|
|
90,535 |
|
|
94,541 |
|
|
5.9 |
% |
|
(10.6 |
)% |
| Other components of
shareholders' equity |
|
(5,131 |
) |
|
1,390 |
|
|
(5,036 |
) |
|
(6 |
) |
|
nm |
|
|
nm |
|
| Total
shareholders' equity |
|
1,253,010 |
|
|
1,254,123 |
|
|
1,272,626 |
|
|
1,309,851 |
|
|
(0.1 |
)% |
|
(4.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
liabilities and shareholders' equity |
|
$ |
10,379,194 |
|
|
$ |
10,317,264 |
|
|
$ |
9,763,209 |
|
|
$ |
10,199,820 |
|
|
0.6 |
% |
|
1.8 |
% |
| Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares outstanding at
end of period |
|
32,405,696 |
|
|
32,423,673 |
|
|
32,726,485 |
|
|
33,278,031 |
|
|
|
|
|
| Common shareholders'
equity per share (1) |
|
$ |
38.67 |
|
|
$ |
38.68 |
|
|
$ |
38.89 |
|
|
$ |
39.36 |
|
|
|
|
|
| Common shareholders'
tangible equity per share (1) (2) |
|
$ |
30.57 |
|
|
$ |
30.54 |
|
|
$ |
30.78 |
|
|
$ |
31.21 |
|
|
|
|
|
| Common shareholders'
tangible equity to tangible assets (2) |
|
9.79 |
% |
|
9.85 |
% |
|
10.61 |
% |
|
10.46 |
% |
|
|
|
|
| Consolidated Tier 1
leverage capital ratio |
|
10.80 |
% |
|
11.06 |
% |
|
11.33 |
% |
|
11.51 |
% |
|
|
|
|
|
(1) |
|
Calculation
is based on number of common shares outstanding at the end of the
period rather than weighted average shares outstanding. |
|
(2) |
|
Common
shareholders' tangible equity excludes goodwill and other
intangible assets. Tangible assets exclude goodwill and other
intangible assets. These ratios represent non-GAAP financial
measures. See also Non-GAAP Financial Measures reconciliation
tables on the last two pages of the press release tables. |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Percentage Change |
|
LOANS |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
|
PriorQtr |
|
PriorYr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
|
|
| Owner
occupied |
|
$ |
1,256,730 |
|
|
$ |
1,278,814 |
|
|
$ |
1,284,363 |
|
|
$ |
1,358,094 |
|
|
(1.7 |
)% |
|
(7.5 |
)% |
|
Investment properties |
|
1,920,790 |
|
|
1,876,937 |
|
|
1,937,423 |
|
|
1,975,075 |
|
|
2.3 |
% |
|
(2.7 |
)% |
| Multifamily real
estate |
|
330,384 |
|
|
321,039 |
|
|
314,188 |
|
|
288,442 |
|
|
2.9 |
% |
|
14.5 |
% |
| Commercial
construction |
|
166,089 |
|
|
163,314 |
|
|
148,435 |
|
|
144,092 |
|
|
1.7 |
% |
|
15.3 |
% |
| Multifamily
construction |
|
147,576 |
|
|
159,108 |
|
|
154,662 |
|
|
111,562 |
|
|
(7.2 |
)% |
|
32.3 |
% |
| One- to four-family
construction |
|
480,591 |
|
|
434,204 |
|
|
415,327 |
|
|
380,782 |
|
|
10.7 |
% |
|
26.2 |
% |
| Land and land
development: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
163,335 |
|
|
167,783 |
|
|
164,516 |
|
|
147,149 |
|
|
(2.7 |
)% |
|
11.0 |
% |
|
Commercial |
|
22,849 |
|
|
24,331 |
|
|
24,583 |
|
|
27,917 |
|
|
(6.1 |
)% |
|
(18.2 |
)% |
| Commercial
business |
|
1,312,424 |
|
|
1,296,691 |
|
|
1,279,894 |
|
|
1,286,204 |
|
|
1.2 |
% |
|
2.0 |
% |
| Agricultural business
including secured by farmland |
|
336,709 |
|
|
307,243 |
|
|
338,388 |
|
|
344,412 |
|
|
9.6 |
% |
|
(2.2 |
)% |
| One- to four-family
real estate |
|
840,470 |
|
|
833,598 |
|
|
848,289 |
|
|
800,008 |
|
|
0.8 |
% |
|
5.1 |
% |
| Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
| Consumer
secured by one- to four-family real estate |
|
536,007 |
|
|
522,826 |
|
|
522,931 |
|
|
527,623 |
|
|
2.5 |
% |
|
1.6 |
% |
|
Consumer-other |
|
170,778 |
|
|
170,158 |
|
|
165,885 |
|
|
160,203 |
|
|
0.4 |
% |
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
loans receivable |
|
$ |
7,684,732 |
|
|
$ |
7,556,046 |
|
|
$ |
7,598,884 |
|
|
$ |
7,551,563 |
|
|
1.7 |
% |
|
1.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restructured loans
performing under their restructured terms |
|
$ |
13,793 |
|
|
$ |
14,264 |
|
|
$ |
16,115 |
|
|
$ |
13,531 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans 30 - 89 days past
due and on accrual (1) |
|
$ |
8,040 |
|
|
$ |
23,557 |
|
|
$ |
29,278 |
|
|
$ |
15,564 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total delinquent loans
(including loans on non-accrual), net (2) |
|
$ |
22,620 |
|
|
$ |
42,186 |
|
|
$ |
50,503 |
|
|
$ |
32,961 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total delinquent
loans / Total loans receivable |
|
0.29 |
% |
|
0.56 |
% |
|
0.66 |
% |
|
0.44 |
% |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Includes $6,000 of
purchased credit-impaired loans at June 30, 2018 compared to $1.5
million at March 31, 2018, $943,000 at December 31, 2017, and
$835,000 at June 30, 2017. |
| (2) |
|
Delinquent loans
include $1.0 million of delinquent purchased credit-impaired loans
at June 30, 2018 compared to $2.3 million at March 31, 2018, $2.2
million at December 31, 2017, and $2.5 million at June 30,
2017. |
| |
|
|
| |
|
|
|
|
|
|
|
|
| LOANS BY
GEOGRAPHIC LOCATION |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Washington |
|
$ |
3,550,945 |
|
|
46.2 |
% |
|
$ |
3,490,646 |
|
|
46.2 |
% |
|
$ |
3,508,542 |
|
|
46.2 |
% |
|
$ |
3,425,627 |
|
|
45.3 |
% |
| Oregon |
|
1,601,939 |
|
|
20.9 |
% |
|
1,580,278 |
|
|
20.9 |
% |
|
1,590,233 |
|
|
20.9 |
% |
|
1,532,460 |
|
|
20.3 |
% |
| California |
|
1,477,293 |
|
|
19.2 |
% |
|
1,405,411 |
|
|
18.6 |
% |
|
1,415,076 |
|
|
18.6 |
% |
|
1,304,194 |
|
|
17.3 |
% |
| Idaho |
|
500,201 |
|
|
6.5 |
% |
|
481,972 |
|
|
6.4 |
% |
|
492,603 |
|
|
6.5 |
% |
|
487,378 |
|
|
6.5 |
% |
| Utah |
|
76,414 |
|
|
1.0 |
% |
|
83,637 |
|
|
1.1 |
% |
|
73,382 |
|
|
1.0 |
% |
|
294,467 |
|
|
3.9 |
% |
| Other |
|
477,940 |
|
|
6.2 |
% |
|
514,102 |
|
|
6.8 |
% |
|
519,048 |
|
|
6.8 |
% |
|
507,437 |
|
|
6.7 |
% |
| Total loans
receivable |
|
$ |
7,684,732 |
|
|
100.0 |
% |
|
$ |
7,556,046 |
|
|
100.0 |
% |
|
$ |
7,598,884 |
|
|
100.0 |
% |
|
$ |
7,551,563 |
|
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
Quarters Ended |
|
Six months ended |
| CHANGE IN
THE |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| ALLOWANCE FOR
LOAN LOSSES |
|
|
|
|
|
|
|
|
|
|
| Balance, beginning of
period |
|
$ |
92,207 |
|
|
$ |
89,028 |
|
|
$ |
86,527 |
|
|
$ |
89,028 |
|
|
$ |
85,997 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for loan
losses |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
4,000 |
|
|
4,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Recoveries of loans
previously charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
216 |
|
|
1,352 |
|
|
264 |
|
|
1,568 |
|
|
334 |
|
|
Multifamily real estate |
|
— |
|
|
— |
|
|
11 |
|
|
— |
|
|
11 |
|
|
Construction and land |
|
11 |
|
|
174 |
|
|
1,024 |
|
|
185 |
|
|
1,107 |
|
| One- to
four-family real estate |
|
356 |
|
|
290 |
|
|
109 |
|
|
646 |
|
|
254 |
|
|
Commercial business |
|
100 |
|
|
170 |
|
|
171 |
|
|
270 |
|
|
344 |
|
|
Agricultural business, including secured by farmland |
|
41 |
|
|
— |
|
|
19 |
|
|
41 |
|
|
132 |
|
|
Consumer |
|
106 |
|
|
112 |
|
|
101 |
|
|
218 |
|
|
195 |
|
| |
|
830 |
|
|
2,098 |
|
|
1,699 |
|
|
2,928 |
|
|
2,377 |
|
| Loans charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
(299 |
) |
|
— |
|
|
(47 |
) |
|
(299 |
) |
|
(47 |
) |
| One- to
four-family real estate |
|
— |
|
|
(16 |
) |
|
— |
|
|
(16 |
) |
|
— |
|
|
Commercial business |
|
(375 |
) |
|
(519 |
) |
|
(1,169 |
) |
|
(894 |
) |
|
(2,795 |
) |
|
Agricultural business, including secured by farmland |
|
(329 |
) |
|
(7 |
) |
|
(104 |
) |
|
(336 |
) |
|
(263 |
) |
|
Consumer |
|
(159 |
) |
|
(377 |
) |
|
(320 |
) |
|
(536 |
) |
|
(683 |
) |
| |
|
(1,162 |
) |
|
(919 |
) |
|
(1,640 |
) |
|
(2,081 |
) |
|
(3,788 |
) |
| Net
(charge-offs) recoveries |
|
(332 |
) |
|
1,179 |
|
|
59 |
|
|
847 |
|
|
(1,411 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, end of
period |
|
$ |
93,875 |
|
|
$ |
92,207 |
|
|
$ |
88,586 |
|
|
$ |
93,875 |
|
|
$ |
88,586 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net (charge-offs)
recoveries / Average loans receivable |
|
(0.004 |
)% |
|
0.015 |
% |
|
0.001 |
% |
|
0.011 |
% |
|
(0.018 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| ALLOCATION
OF |
|
|
|
|
|
|
|
|
| ALLOWANCE FOR
LOAN LOSSES |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| Specific or allocated
loss allowance: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
24,413 |
|
|
$ |
23,461 |
|
|
$ |
22,824 |
|
|
$ |
24,232 |
|
|
Multifamily real estate |
|
3,718 |
|
|
2,592 |
|
|
1,633 |
|
|
1,562 |
|
|
Construction and land |
|
27,034 |
|
|
28,766 |
|
|
27,568 |
|
|
27,312 |
|
| One- to
four-family real estate |
|
3,932 |
|
|
3,779 |
|
|
2,055 |
|
|
2,010 |
|
|
Commercial business |
|
19,141 |
|
|
19,885 |
|
|
18,311 |
|
|
19,126 |
|
|
Agricultural business, including secured by farmland |
|
3,162 |
|
|
2,999 |
|
|
4,053 |
|
|
3,808 |
|
|
Consumer |
|
5,725 |
|
|
5,514 |
|
|
3,866 |
|
|
3,987 |
|
| Total
allocated |
|
87,125 |
|
|
86,996 |
|
|
80,310 |
|
|
82,037 |
|
| Unallocated |
|
6,750 |
|
|
5,211 |
|
|
8,718 |
|
|
6,549 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
allowance for loan losses |
|
$ |
93,875 |
|
|
$ |
92,207 |
|
|
$ |
89,028 |
|
|
$ |
88,586 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan
losses / Total loans receivable |
|
1.22 |
% |
|
1.22 |
% |
|
1.17 |
% |
|
1.17 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan
losses / Non-performing loans |
|
613 |
% |
|
410 |
% |
|
329 |
% |
|
405 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
| |
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| NON-PERFORMING
ASSETS |
|
|
|
|
|
|
|
| Loans on non-accrual
status: |
|
|
|
|
|
|
|
| Secured
by real estate: |
|
|
|
|
|
|
|
|
Commercial |
$ |
4,341 |
|
|
$ |
6,877 |
|
|
$ |
10,646 |
|
|
$ |
6,267 |
|
|
Construction and land |
1,176 |
|
|
984 |
|
|
798 |
|
|
1,726 |
|
| One- to
four-family |
2,281 |
|
|
2,815 |
|
|
3,264 |
|
|
2,955 |
|
|
Commercial business |
2,673 |
|
|
3,037 |
|
|
3,406 |
|
|
7,037 |
|
|
Agricultural business, including secured by farmland |
1,712 |
|
|
6,120 |
|
|
6,132 |
|
|
1,456 |
|
|
Consumer |
1,176 |
|
|
1,237 |
|
|
1,297 |
|
|
1,494 |
|
| |
13,359 |
|
|
21,070 |
|
|
25,543 |
|
|
20,935 |
|
| Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
|
|
| Secured
by real estate: |
|
|
|
|
|
|
|
|
Construction and land |
784 |
|
|
— |
|
|
298 |
|
|
— |
|
| One- to
four-family |
905 |
|
|
591 |
|
|
1,085 |
|
|
754 |
|
|
Commercial business |
1 |
|
|
1 |
|
|
18 |
|
|
77 |
|
|
Agricultural business, including secured by farmland |
— |
|
|
820 |
|
|
— |
|
|
— |
|
|
Consumer |
253 |
|
|
7 |
|
|
85 |
|
|
108 |
|
| |
1,943 |
|
|
1,419 |
|
|
1,486 |
|
|
939 |
|
| Total non-performing
loans |
15,302 |
|
|
22,489 |
|
|
27,029 |
|
|
21,874 |
|
| Real estate owned
(REO) |
473 |
|
|
328 |
|
|
360 |
|
|
2,427 |
|
| Other repossessed
assets |
733 |
|
|
694 |
|
|
107 |
|
|
181 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Total
non-performing assets |
$ |
16,508 |
|
|
$ |
23,511 |
|
|
$ |
27,496 |
|
|
$ |
24,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total non-performing
assets to total assets |
0.16 |
% |
|
0.23 |
% |
|
0.28 |
% |
|
0.24 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchased
credit-impaired loans, net |
$ |
18,063 |
|
|
$ |
19,316 |
|
|
$ |
21,310 |
|
|
$ |
26,267 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
Quarters Ended |
|
Six months ended |
| REAL ESTATE
OWNED |
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| Balance, beginning of
period |
$ |
328 |
|
|
$ |
360 |
|
|
$ |
3,040 |
|
|
$ |
360 |
|
|
$ |
11,081 |
|
| Additions
from loan foreclosures |
393 |
|
|
128 |
|
|
46 |
|
|
521 |
|
|
46 |
|
| Additions
from capitalized costs |
— |
|
|
— |
|
|
54 |
|
|
— |
|
|
54 |
|
| Proceeds
from dispositions of REO |
(314 |
) |
|
— |
|
|
(1,228 |
) |
|
(314 |
) |
|
(10,421 |
) |
| Gain on
sale of REO |
66 |
|
|
— |
|
|
721 |
|
|
66 |
|
|
1,923 |
|
| Valuation
adjustments in the period |
— |
|
|
(160 |
) |
|
(206 |
) |
|
(160 |
) |
|
(256 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, end of
period |
$ |
473 |
|
|
$ |
328 |
|
|
$ |
2,427 |
|
|
$ |
473 |
|
|
$ |
2,427 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
|
Prior Qtr |
|
Prior Yr |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,346,777 |
|
|
$ |
3,383,439 |
|
|
$ |
3,265,544 |
|
|
$ |
3,254,581 |
|
|
(1.1 |
)% |
|
2.8 |
% |
| Interest-bearing
checking |
|
1,012,519 |
|
|
1,043,840 |
|
|
971,137 |
|
|
953,227 |
|
|
(3.0 |
)% |
|
6.2 |
% |
| Regular savings
accounts |
|
1,635,080 |
|
|
1,637,814 |
|
|
1,557,500 |
|
|
1,530,517 |
|
|
(0.2 |
)% |
|
6.8 |
% |
| Money market
accounts |
|
1,384,684 |
|
|
1,459,614 |
|
|
1,422,313 |
|
|
1,539,165 |
|
|
(5.1 |
)% |
|
(10.0 |
)% |
| Total
interest-bearing transaction and savings accounts |
|
4,032,283 |
|
|
4,141,268 |
|
|
3,950,950 |
|
|
4,022,909 |
|
|
(2.6 |
)% |
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing
certificates |
|
1,148,607 |
|
|
1,018,355 |
|
|
966,937 |
|
|
1,206,241 |
|
|
12.8 |
% |
|
(4.8 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
deposits |
|
$ |
8,527,667 |
|
|
$ |
8,543,062 |
|
|
$ |
8,183,431 |
|
|
$ |
8,483,731 |
|
|
(0.2 |
)% |
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
|
Amount |
|
Percentage |
| Washington |
|
$ |
4,735,357 |
|
|
55.6 |
% |
|
$ |
4,766,646 |
|
|
55.8 |
% |
|
$ |
4,506,249 |
|
|
55.0 |
% |
|
$ |
4,615,284 |
|
|
54.4 |
% |
| Oregon |
|
1,886,435 |
|
|
22.1 |
% |
|
1,868,043 |
|
|
21.9 |
% |
|
1,797,147 |
|
|
22.0 |
% |
|
1,806,639 |
|
|
21.3 |
% |
| California |
|
1,444,413 |
|
|
16.9 |
% |
|
1,454,421 |
|
|
17.0 |
% |
|
1,432,819 |
|
|
17.5 |
% |
|
1,445,621 |
|
|
17.0 |
% |
| Idaho |
|
461,462 |
|
|
5.4 |
% |
|
453,952 |
|
|
5.3 |
% |
|
447,216 |
|
|
5.5 |
% |
|
416,933 |
|
|
4.9 |
% |
| Utah |
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
— |
|
|
— |
% |
|
199,254 |
|
|
2.3 |
% |
| Total deposits |
|
$ |
8,527,667 |
|
|
100.0 |
% |
|
$ |
8,543,062 |
|
|
100.0 |
% |
|
$ |
8,183,431 |
|
|
100.0 |
% |
|
$ |
8,483,731 |
|
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| INCLUDED IN
TOTAL DEPOSITS |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| Public
non-interest-bearing accounts |
|
$ |
86,040 |
|
|
$ |
78,714 |
|
|
$ |
86,987 |
|
|
$ |
85,760 |
|
| Public interest-bearing
transaction & savings accounts |
|
114,457 |
|
|
111,597 |
|
|
111,732 |
|
|
124,075 |
|
| Public interest-bearing
certificates |
|
24,390 |
|
|
24,928 |
|
|
23,685 |
|
|
30,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
public deposits |
|
$ |
224,887 |
|
|
$ |
215,239 |
|
|
$ |
222,404 |
|
|
$ |
240,331 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total brokered
deposits |
|
$ |
280,055 |
|
|
$ |
169,523 |
|
|
$ |
57,228 |
|
|
$ |
250,001 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Actual |
|
Minimum to becategorized as"Adequately
Capitalized" |
|
Minimum to becategorized
as"Well Capitalized" |
| REGULATORY
CAPITAL RATIOS AS OF JUNE 30, 2018 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
$ |
1,190,024 |
|
|
13.73 |
% |
|
$ |
693,399 |
|
|
8.00 |
% |
|
$ |
866,749 |
|
10.00 |
% |
| Tier 1 capital
to risk-weighted assets |
|
1,093,700 |
|
|
12.62 |
% |
|
520,049 |
|
|
6.00 |
% |
|
520,049 |
|
6.00 |
% |
| Tier 1 leverage
capital to average assets |
|
1,093,700 |
|
|
10.80 |
% |
|
404,968 |
|
|
4.00 |
% |
|
n/a |
|
n/a |
|
| Common equity
tier 1 capital to risk-weighted assets |
|
957,700 |
|
|
11.05 |
% |
|
390,037 |
|
|
4.50 |
% |
|
n/a |
|
n/a |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
1,108,529 |
|
|
13.08 |
% |
|
677,868 |
|
|
8.00 |
% |
|
847,335 |
|
10.00 |
% |
| Tier 1 capital
to risk-weighted assets |
|
1,014,649 |
|
|
11.97 |
% |
|
508,401 |
|
|
6.00 |
% |
|
677,868 |
|
8.00 |
% |
| Tier 1 leverage
capital to average assets |
|
1,014,649 |
|
|
10.31 |
% |
|
393,726 |
|
|
4.00 |
% |
|
492,157 |
|
5.00 |
% |
| Common equity
tier 1 capital to risk-weighted assets |
|
1,014,649 |
|
|
11.97 |
% |
|
381,301 |
|
|
4.50 |
% |
|
550,768 |
|
6.50 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
33,330 |
|
|
16.98 |
% |
|
15,701 |
|
|
8.00 |
% |
|
19,627 |
|
10.00 |
% |
| Tier 1 capital
to risk-weighted assets |
|
30,886 |
|
|
15.74 |
% |
|
11,776 |
|
|
6.00 |
% |
|
15,701 |
|
8.00 |
% |
| Tier 1 leverage
capital to average assets |
|
30,886 |
|
|
11.03 |
% |
|
11,202 |
|
|
4.00 |
% |
|
14,002 |
|
5.00 |
% |
| Common equity
tier 1 capital to risk-weighted assets |
|
30,886 |
|
|
15.74 |
% |
|
8,832 |
|
|
4.50 |
% |
|
12,757 |
|
6.50 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
| (rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
| |
June 30, 2018 |
|
March 31, 2018 |
|
June 30, 2017 |
| |
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
|
AverageBalance |
Interest and Dividends |
Yield / Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
| Interest-earning
assets: |
|
|
|
|
|
|
|
|
|
|
|
| Mortgage
loans |
$ |
6,163,224 |
|
$ |
78,203 |
|
5.09 |
% |
|
$ |
6,065,199 |
|
$ |
74,346 |
|
4.97 |
% |
|
$ |
5,987,295 |
|
$ |
74,459 |
|
4.99 |
% |
|
Commercial/agricultural loans |
1,479,148 |
|
19,381 |
|
5.26 |
% |
|
1,456,303 |
|
17,423 |
|
4.85 |
% |
|
1,503,548 |
|
18,179 |
|
4.85 |
% |
| Consumer
and other loans |
141,401 |
|
2,269 |
|
6.44 |
% |
|
140,627 |
|
2,253 |
|
6.50 |
% |
|
138,724 |
|
2,157 |
|
6.24 |
% |
| Total
loans(1) |
7,783,773 |
|
99,853 |
|
5.15 |
% |
|
7,662,129 |
|
94,022 |
|
4.98 |
% |
|
7,629,567 |
|
94,795 |
|
4.98 |
% |
|
Mortgage-backed securities |
1,261,809 |
|
8,899 |
|
2.83 |
% |
|
1,057,878 |
|
7,331 |
|
2.81 |
% |
|
1,067,255 |
|
6,239 |
|
2.34 |
% |
| Other
securities |
473,953 |
|
3,331 |
|
2.82 |
% |
|
462,947 |
|
3,090 |
|
2.71 |
% |
|
471,894 |
|
3,192 |
|
2.71 |
% |
|
Interest-bearing deposits with banks |
51,886 |
|
211 |
|
1.63 |
% |
|
64,512 |
|
231 |
|
1.45 |
% |
|
54,051 |
|
139 |
|
1.03 |
% |
| FHLB
stock |
22,231 |
|
129 |
|
2.33 |
% |
|
16,549 |
|
146 |
|
3.58 |
% |
|
14,472 |
|
71 |
|
1.97 |
% |
| Total
investment securities |
1,809,879 |
|
12,570 |
|
2.79 |
% |
|
1,601,886 |
|
10,798 |
|
2.73 |
% |
|
1,607,672 |
|
9,641 |
|
2.41 |
% |
| Total
interest-earning assets |
9,593,652 |
|
112,423 |
|
4.70 |
% |
|
9,264,015 |
|
104,820 |
|
4.59 |
% |
|
9,237,239 |
|
104,436 |
|
4.53 |
% |
| Non-interest-earning
assets |
804,229 |
|
|
|
|
805,503 |
|
|
|
|
896,136 |
|
|
|
| Total
assets |
$ |
10,397,881 |
|
|
|
|
$ |
10,069,518 |
|
|
|
|
$ |
10,133,375 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,051,409 |
|
281 |
|
0.11 |
% |
|
$ |
1,003,929 |
|
246 |
|
0.10 |
% |
|
$ |
927,375 |
|
210 |
|
0.09 |
% |
| Savings
accounts |
1,648,739 |
|
811 |
|
0.20 |
% |
|
1,601,671 |
|
627 |
|
0.16 |
% |
|
1,553,019 |
|
527 |
|
0.14 |
% |
| Money
market accounts |
1,419,578 |
|
792 |
|
0.22 |
% |
|
1,442,685 |
|
666 |
|
0.19 |
% |
|
1,534,551 |
|
689 |
|
0.18 |
% |
|
Certificates of deposit |
1,067,742 |
|
2,380 |
|
0.89 |
% |
|
998,738 |
|
1,819 |
|
0.74 |
% |
|
1,200,435 |
|
1,756 |
|
0.59 |
% |
| Total
interest-bearing deposits |
5,187,468 |
|
4,264 |
|
0.33 |
% |
|
5,047,023 |
|
3,358 |
|
0.27 |
% |
|
5,215,380 |
|
3,182 |
|
0.24 |
% |
|
Non-interest-bearing deposits |
3,324,104 |
|
— |
|
— |
% |
|
3,282,686 |
|
— |
|
— |
% |
|
3,158,727 |
|
— |
|
— |
% |
| Total
deposits |
8,511,572 |
|
4,264 |
|
0.20 |
% |
|
8,329,709 |
|
3,358 |
|
0.16 |
% |
|
8,374,107 |
|
3,182 |
|
0.15 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| FHLB
advances |
296,495 |
|
1,499 |
|
2.03 |
% |
|
155,540 |
|
677 |
|
1.77 |
% |
|
103,848 |
|
301 |
|
1.16 |
% |
| Other
borrowings |
105,013 |
|
49 |
|
0.19 |
% |
|
101,111 |
|
70 |
|
0.28 |
% |
|
116,513 |
|
83 |
|
0.29 |
% |
| Junior
subordinated debentures |
140,212 |
|
1,548 |
|
4.43 |
% |
|
140,212 |
|
1,342 |
|
3.88 |
% |
|
140,212 |
|
1,164 |
|
3.33 |
% |
| Total
borrowings |
541,720 |
|
3,096 |
|
2.29 |
% |
|
396,863 |
|
2,089 |
|
2.13 |
% |
|
360,573 |
|
1,548 |
|
1.72 |
% |
| Total
funding liabilities |
9,053,292 |
|
7,360 |
|
0.33 |
% |
|
8,726,572 |
|
5,447 |
|
0.25 |
% |
|
8,734,680 |
|
4,730 |
|
0.22 |
% |
| Other
non-interest-bearing liabilities(2) |
75,784 |
|
|
|
|
65,978 |
|
|
|
|
56,175 |
|
|
|
| Total
liabilities |
9,129,076 |
|
|
|
|
8,792,550 |
|
|
|
|
8,790,855 |
|
|
|
| Shareholders'
equity |
1,268,805 |
|
|
|
|
1,276,968 |
|
|
|
|
1,342,520 |
|
|
|
| Total
liabilities and shareholders' equity |
$ |
10,397,881 |
|
|
|
|
$ |
10,069,518 |
|
|
|
|
$ |
10,133,375 |
|
|
|
| Net interest
income/rate spread |
|
$ |
105,063 |
|
4.37 |
% |
|
|
$ |
99,373 |
|
4.34 |
% |
|
|
$ |
99,706 |
|
4.31 |
% |
| Net interest
margin |
|
|
4.39 |
% |
|
|
|
4.35 |
% |
|
|
|
4.33 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
| Return on average
assets |
|
|
1.25 |
% |
|
|
|
1.16 |
% |
|
|
|
1.01 |
% |
| Return on average
equity |
|
|
10.25 |
% |
|
|
|
9.14 |
% |
|
|
|
7.60 |
% |
| Average equity/average
assets |
|
|
12.20 |
% |
|
|
|
12.68 |
% |
|
|
|
13.25 |
% |
| Average
interest-earning assets/average interest-bearing liabilities |
|
|
167.45 |
% |
|
|
|
170.17 |
% |
|
|
|
165.66 |
% |
| Average
interest-earning assets/average funding liabilities |
|
|
105.97 |
% |
|
|
|
106.16 |
% |
|
|
|
105.75 |
% |
| Non-interest
income/average assets |
|
|
0.82 |
% |
|
|
|
0.86 |
% |
|
|
|
0.81 |
% |
| Non-interest
expense/average assets |
|
|
3.19 |
% |
|
|
|
3.29 |
% |
|
|
|
3.16 |
% |
| Efficiency
ratio(4) |
|
|
65.44 |
% |
|
|
|
67.67 |
% |
|
|
|
66.49 |
% |
| Adjusted efficiency
ratio(5) |
|
|
64.09 |
% |
|
|
|
67.42 |
% |
|
|
|
64.83 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Average
balances include loans accounted for on a nonaccrual basis and
loans 90 days or more past due. Amortization of net deferred
loan fees/costs is included with interest on loans. |
|
(2) |
|
Average
other non-interest-bearing liabilities include fair value
adjustments related to FHLB advances and junior subordinated
debentures. |
|
(3) |
|
Yields
and costs have not been adjusted for the effect of tax-exempt
interest. |
|
(4) |
|
Non-interest expense divided by the total of net interest income
(before provision for loan losses) and non-interest income. |
|
(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
amortization of core deposit intangibles (CDI), REO gain (loss),
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 the press
release tables. |
|
|
|
|
| |
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
| (rates / ratios
annualized) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Six months ended |
| |
June 30, 2018 |
|
June 30, 2017 |
| |
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
| Interest-earning
assets: |
|
|
|
|
|
|
|
| Mortgage
loans |
$ |
6,114,482 |
|
$ |
152,549 |
|
5.03 |
% |
|
$ |
6,045,712 |
|
$ |
147,008 |
|
4.90 |
% |
|
Commercial/agricultural loans |
1,467,789 |
|
36,803 |
|
5.06 |
% |
|
1,484,148 |
|
34,725 |
|
4.72 |
% |
| Consumer
and other loans |
141,016 |
|
4,523 |
|
6.47 |
% |
|
138,380 |
|
4,350 |
|
6.34 |
% |
| Total
loans(1) |
7,723,287 |
|
193,875 |
|
5.06 |
% |
|
7,668,240 |
|
186,083 |
|
4.89 |
% |
|
Mortgage-backed securities |
1,160,407 |
|
16,230 |
|
2.82 |
% |
|
955,285 |
|
10,886 |
|
2.30 |
% |
| Other
securities |
468,480 |
|
6,420 |
|
2.76 |
% |
|
462,894 |
|
6,229 |
|
2.71 |
% |
|
Interest-bearing deposits with banks |
58,164 |
|
442 |
|
1.53 |
% |
|
43,183 |
|
232 |
|
1.08 |
% |
| FHLB
stock |
19,406 |
|
276 |
|
2.87 |
% |
|
15,008 |
|
102 |
|
1.37 |
% |
| Total
investment securities |
1,706,457 |
|
23,368 |
|
2.76 |
% |
|
1,476,370 |
|
17,449 |
|
2.38 |
% |
| Total
interest-earning assets |
9,429,744 |
|
217,243 |
|
4.65 |
% |
|
9,144,610 |
|
203,532 |
|
4.49 |
% |
| Non-interest-earning
assets |
804,862 |
|
|
|
|
909,576 |
|
|
|
| Total
assets |
$ |
10,234,606 |
|
|
|
|
$ |
10,054,186 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,027,800 |
|
527 |
|
0.10 |
% |
|
$ |
912,154 |
|
410 |
|
0.09 |
% |
| Savings
accounts |
1,625,335 |
|
1,438 |
|
0.18 |
% |
|
1,555,363 |
|
1,050 |
|
0.14 |
% |
| Money
market accounts |
1,431,068 |
|
1,458 |
|
0.21 |
% |
|
1,528,545 |
|
1,340 |
|
0.18 |
% |
|
Certificates of deposit |
1,033,431 |
|
4,199 |
|
0.82 |
% |
|
1,145,182 |
|
3,173 |
|
0.56 |
% |
| Total
interest-bearing deposits |
5,117,634 |
|
7,622 |
|
0.30 |
% |
|
5,141,244 |
|
5,973 |
|
0.23 |
% |
|
Non-interest-bearing deposits |
3,303,509 |
|
— |
|
— |
% |
|
3,153,652 |
|
— |
|
— |
% |
| Total
deposits |
8,421,143 |
|
7,622 |
|
0.18 |
% |
|
8,294,896 |
|
5,973 |
|
0.15 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
| FHLB
advances |
226,407 |
|
2,177 |
|
1.94 |
% |
|
116,988 |
|
574 |
|
0.99 |
% |
| Other
borrowings |
103,073 |
|
119 |
|
0.23 |
% |
|
112,325 |
|
157 |
|
0.28 |
% |
| Junior
subordinated debentures |
140,212 |
|
2,889 |
|
4.16 |
% |
|
140,212 |
|
2,268 |
|
3.26 |
% |
| Total
borrowings |
469,692 |
|
5,185 |
|
2.23 |
% |
|
369,525 |
|
2,999 |
|
1.64 |
% |
| Total
funding liabilities |
8,890,835 |
|
12,807 |
|
0.29 |
% |
|
8,664,421 |
|
8,972 |
|
0.21 |
% |
| Other
non-interest-bearing liabilities(2) |
70,908 |
|
|
|
|
57,325 |
|
|
|
| Total
liabilities |
8,961,743 |
|
|
|
|
8,721,746 |
|
|
|
| Shareholders'
equity |
1,272,863 |
|
|
|
|
1,332,440 |
|
|
|
| Total
liabilities and shareholders' equity |
$ |
10,234,606 |
|
|
|
|
$ |
10,054,186 |
|
|
|
| Net interest
income/rate spread |
|
$ |
204,436 |
|
4.36 |
% |
|
|
$ |
194,560 |
|
4.28 |
% |
| Net interest
margin |
|
|
4.37 |
% |
|
|
|
4.29 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
| Return on average
assets |
|
|
1.21 |
% |
|
|
|
0.99 |
% |
| Return on average
equity |
|
|
9.70 |
% |
|
|
|
7.45 |
% |
| Average equity/average
assets |
|
|
12.44 |
% |
|
|
|
13.25 |
% |
| Average
interest-earning assets/average interest-bearing liabilities |
|
|
168.77 |
% |
|
|
|
165.94 |
% |
| Average
interest-earning assets/average funding liabilities |
|
|
106.06 |
% |
|
|
|
105.54 |
% |
| Non-interest
income/average assets |
|
|
0.84 |
% |
|
|
|
0.79 |
% |
| Non-interest
expense/average assets |
|
|
3.24 |
% |
|
|
|
3.13 |
% |
| Efficiency
ratio(4) |
|
|
66.53 |
% |
|
|
|
66.72 |
% |
| Adjusted efficiency
ratio(5) |
|
|
65.70 |
% |
|
|
|
65.06 |
% |
| |
|
|
|
|
|
|
|
|
|
|
(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 FHLB advances and junior subordinated
debentures. |
|
(3) |
|
Yields
and costs have not been adjusted for the effect of tax-exempt
interest. |
|
(4) |
|
Non-interest expense divided by the total of net interest income
(before provision for loan losses) and non-interest income. |
|
(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 costs, amortization of CDI, real estate
operations expense, 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 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. Where applicable,
comparable earnings information using GAAP financial measures is
also presented. |
| |
|
|
|
|
|
|
|
|
|
| REVENUE FROM
CORE OPERATIONS |
Quarters Ended |
|
Six months ended |
| |
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| Net interest income
before provision for loan losses |
$ |
105,063 |
|
|
$ |
99,373 |
|
|
$ |
99,706 |
|
|
$ |
204,436 |
|
|
$ |
194,560 |
|
| Total non-interest
income |
21,217 |
|
|
21,362 |
|
|
20,396 |
|
|
42,579 |
|
|
39,443 |
|
| Total GAAP revenue |
126,280 |
|
|
120,735 |
|
|
120,102 |
|
|
247,015 |
|
|
234,003 |
|
| Exclude
net (gain) loss on sale of securities |
(44 |
) |
|
(4 |
) |
|
54 |
|
|
(48 |
) |
|
41 |
|
| Exclude
change in valuation of financial instruments carried at fair
value |
(224 |
) |
|
(3,308 |
) |
|
650 |
|
|
(3,532 |
) |
|
1,338 |
|
| Revenue from core
operations (non-GAAP) |
$ |
126,012 |
|
|
$ |
117,423 |
|
|
$ |
120,806 |
|
|
$ |
243,435 |
|
|
$ |
235,382 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EARNINGS FROM
CORE OPERATIONS |
|
Quarters Ended |
|
Six months ended |
| |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| Net income (GAAP) |
|
$ |
32,424 |
|
|
$ |
28,790 |
|
|
$ |
25,454 |
|
|
$ |
61,214 |
|
|
$ |
49,247 |
|
| Exclude
net (gain) loss on sale of securities |
|
(44 |
) |
|
(4 |
) |
|
54 |
|
|
(48 |
) |
|
41 |
|
| Exclude
change in valuation of financial instruments carried at fair
value |
|
(224 |
) |
|
(3,308 |
) |
|
650 |
|
|
(3,532 |
) |
|
1,338 |
|
| Exclude
related tax expense (benefit) |
|
64 |
|
|
795 |
|
|
(253 |
) |
|
859 |
|
|
(496 |
) |
| Total earnings from
core operations (non-GAAP) |
|
$ |
32,220 |
|
|
$ |
26,273 |
|
|
$ |
25,905 |
|
|
$ |
58,493 |
|
|
$ |
50,130 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per
share (GAAP) |
|
$ |
1.00 |
|
|
$ |
0.89 |
|
|
$ |
0.77 |
|
|
$ |
1.89 |
|
|
$ |
1.49 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted core earnings
per share (non-GAAP) |
|
$ |
1.00 |
|
|
$ |
0.81 |
|
|
$ |
0.78 |
|
|
$ |
1.80 |
|
|
$ |
1.52 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| ADJUSTED
EFFICIENCY RATIO |
|
Quarters Ended |
|
Six months ended |
| |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Jun 30, 2017 |
|
Jun 30, 2018 |
|
Jun 30, 2017 |
| Non-interest expense
(GAAP) |
|
$ |
82,637 |
|
|
$ |
81,706 |
|
|
$ |
79,857 |
|
|
$ |
164,343 |
|
|
$ |
156,137 |
|
| Exclude
CDI amortization |
|
(1,382 |
) |
|
(1,382 |
) |
|
(1,624 |
) |
|
(2,764 |
) |
|
(3,248 |
) |
| Exclude
state/municipal tax expense |
|
(816 |
) |
|
(713 |
) |
|
(279 |
) |
|
(1,529 |
) |
|
(1,078 |
) |
| Exclude
REO gain (loss) |
|
319 |
|
|
(439 |
) |
|
363 |
|
|
(121 |
) |
|
1,329 |
|
| Adjusted non-interest
expense (non-GAAP) |
|
$ |
80,758 |
|
|
$ |
79,172 |
|
|
$ |
78,317 |
|
|
$ |
159,929 |
|
|
$ |
153,140 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Net interest income
before provision for loan losses (GAAP) |
|
$ |
105,063 |
|
|
$ |
99,373 |
|
|
$ |
99,706 |
|
|
$ |
204,436 |
|
|
$ |
194,560 |
|
| Non-interest income
(GAAP) |
|
21,217 |
|
|
21,362 |
|
|
20,396 |
|
|
42,579 |
|
|
39,443 |
|
| Total revenue |
|
126,280 |
|
|
120,735 |
|
|
120,102 |
|
|
247,015 |
|
|
234,003 |
|
| Exclude
net (gain) loss on sale of securities |
|
(44 |
) |
|
(4 |
) |
|
54 |
|
|
(48 |
) |
|
41 |
|
| Exclude
net change in valuation of financial instruments carried at fair
value |
|
(224 |
) |
|
(3,308 |
) |
|
650 |
|
|
(3,532 |
) |
|
1,338 |
|
| Adjusted revenue
(non-GAAP) |
|
$ |
126,012 |
|
|
$ |
117,423 |
|
|
$ |
120,806 |
|
|
$ |
243,435 |
|
|
$ |
235,382 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio
(GAAP) |
|
65.44 |
% |
|
67.67 |
% |
|
66.49 |
% |
|
66.53 |
% |
|
66.72 |
% |
| Adjusted efficiency
ratio (non-GAAP) |
|
64.09 |
% |
|
67.42 |
% |
|
64.83 |
% |
|
65.70 |
% |
|
65.06 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
|
Jun 30, 2018 |
|
Mar 31, 2018 |
|
Dec 31, 2017 |
|
Jun 30, 2017 |
| Shareholders' equity
(GAAP) |
|
$ |
1,253,010 |
|
|
$ |
1,254,123 |
|
|
$ |
1,272,626 |
|
|
$ |
1,309,851 |
|
| Exclude
goodwill and other intangible assets, net |
|
262,517 |
|
|
263,910 |
|
|
265,314 |
|
|
271,396 |
|
| Tangible common
shareholders' equity (non-GAAP) |
|
$ |
990,493 |
|
|
$ |
990,213 |
|
|
$ |
1,007,312 |
|
|
$ |
1,038,455 |
|
| |
|
|
|
|
|
|
|
|
| Total assets
(GAAP) |
|
$ |
10,379,194 |
|
|
$ |
10,317,264 |
|
|
$ |
9,763,209 |
|
|
$ |
10,199,820 |
|
| Exclude
goodwill and other intangible assets, net |
|
262,517 |
|
|
263,910 |
|
|
265,314 |
|
|
271,396 |
|
| Total tangible assets
(non-GAAP) |
|
$ |
10,116,677 |
|
|
$ |
10,053,354 |
|
|
$ |
9,497,895 |
|
|
$ |
9,928,424 |
|
| Common shareholders'
equity to total assets (GAAP) |
|
12.07 |
% |
|
12.16 |
% |
|
13.03 |
% |
|
12.84 |
% |
| Tangible common
shareholders' equity to tangible assets (non-GAAP) |
|
9.79 |
% |
|
9.85 |
% |
|
10.61 |
% |
|
10.46 |
% |
| |
|
|
|
|
|
|
|
|
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
|
|
| Tangible common
shareholders' equity |
|
$ |
990,493 |
|
|
$ |
990,213 |
|
|
$ |
1,007,312 |
|
|
$ |
1,038,455 |
|
| Common shares
outstanding at end of period |
|
32,405,696 |
|
|
32,423,673 |
|
|
32,726,485 |
|
|
33,278,031 |
|
| Common shareholders'
equity (book value) per share (GAAP) |
|
$ |
38.67 |
|
|
$ |
38.68 |
|
|
$ |
38.89 |
|
|
$ |
39.36 |
|
| Tangible common
shareholders' equity (tangible book value) per share
(non-GAAP) |
|
$ |
30.57 |
|
|
$ |
30.54 |
|
|
$ |
30.78 |
|
|
$ |
31.21 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CONTACT: |
MARK J.
GRESCOVICH, |
|
| |
PRESIDENT &
CEO |
|
| |
PETER J. CONNER,
CFO |
|
| |
(509) 527-3636 |
|
| |
|
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