Banner Corporation (NASDAQ GSM: BANR), the parent company of Banner
Bank and Islanders Bank, today reported that continued margin
expansion, coupled with strong loan and core deposit growth, along
with improved operating efficiency contributed to solid third
quarter financial results. Net income in the third quarter of
2018 increased 16% to $37.8 million, or $1.17 per diluted share,
compared to $32.4 million, or $1.00 per diluted share, in the
preceding quarter and increased 51% when compared to $25.1 million,
or $0.76 per diluted share, in the third quarter a year ago when
federal income tax rates were substantially higher. Third
quarter results include $1.0 million of acquisition-related
expense, compared to no acquisition expenses in the preceding or
year ago quarter.
In the first nine months of 2018, net income
increased 33% to $99.0 million, or $3.05 per diluted share,
compared to $74.3 million, or $2.25 per diluted share, in the first
nine months of 2017.
“Our third quarter 2018 performance clearly
demonstrates that execution of our strategic plan is effective and
continues to build shareholder value. Our focus on growing
new client relationships adds to our core funding position and
promotes client loyalty through our responsive service model,”
stated Mark J. Grescovich, President and Chief Executive
Officer. "In addition, we recently announced our agreement to
acquire Skagit Bancorp, Inc., the holding company for Skagit
Bank. This transaction will expand Banner’s presence and
density in the attractive North Sound markets of the Pacific
Northwest and will represent a complementary fit, both
strategically and culturally, with Banner’s business model.
We expect the combination of Banner and Skagit to enhance our
already strong core deposit base, provide the opportunity to create
operational efficiencies, and enhance the value of the combined
company while offering Skagit Bank customers a broader product
offering, increased lending limits and an expanded branch delivery
system that stretches throughout the four states of Washington,
Oregon, Idaho and California.”
At September 30, 2018, Banner Corporation had
$10.51 billion in assets, $7.73 billion in net loans and $8.69
billion in deposits. Banner operates 171 branch offices
located in eight of the top 20 largest western Metropolitan
Statistical Areas by population.
Third Quarter 2018
Highlights
- Net income increased 16% to $37.8 million, or $1.17 per diluted
share, compared to $32.4 million, or $1.00 per diluted share, in
the preceding quarter and increased 51% compared to $25.1 million,
or $0.76 per diluted share, in the third quarter a year ago.
- Net interest income, before the provision for loan losses,
increased 4% to $109.1 million, compared to $105.1 million in the
preceding quarter and increased 9% from $100.2 million in the third
quarter a year ago.
- Net interest margin was 4.48% for the current quarter, compared
to 4.39% in the preceding quarter and 4.22% in the third quarter a
year ago.
- Revenues were $129.5 million during the quarter ended September
30, 2018, $126.3 million during the preceding quarter and $118.3
million during the third quarter a year ago.
- Return on average assets was 1.43% in the current quarter,
compared to 1.25% in the preceding quarter and 0.97% in the third
quarter a year ago.
- Return on average equity was 11.78% in the current quarter,
compared to 10.25% in the preceding quarter and 7.49% in the third
quarter a year ago.
- Provision for loan losses remained steady at $2.0 million,
increasing the allowance for loan losses to $95.3 million or 1.22%
of total loans compared to an allowance for loan losses of $89.1
million or 1.15% of total loans as of September 30, 2017.
- Loans receivable increased 2% to $7.82 billion at September 30,
2018 compared to $7.68 billion at June 30, 2018.
- Core deposits increased 2% compared to June 30, 2018 and
represented 86% of total deposits at September 30, 2018.
- Quarterly dividends to shareholders for the current quarter
were $0.38 per share, an increase of 9% over the regular dividend
of $0.35 per share in the second quarter 2018.
- Tangible common shareholders' equity per share* was $31.20 at
September 30, 2018, compared to $30.57 at the preceding quarter end
and $31.79 a year ago.
- The ratio of tangible common shareholders' equity to tangible
assets* remained strong at 9.86% at September 30, 2018, compared to
9.79% at the preceding quarter end and 10.39% at the end of the
third quarter a year ago.
- Non-performing assets were $16.7 million, or 0.16% of total
assets, at September 30, 2018, and were $31.7 million, or 0.30% of
total assets at September 30, 2017.
*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
acquisition-related costs, fair value adjustments and gains and
losses on the sale of securities) and the 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 July 25, 2018, Banner and Skagit Bancorp,
Inc. (“Skagit”), the holding company for Skagit Bank, a Washington
state-chartered commercial bank, entered into a definitive merger
agreement pursuant to which Banner will acquire Skagit in an
all-stock transaction, subject to the terms and conditions set
forth therein. Under the merger agreement, Skagit will merge
with and into Banner, and immediately thereafter Skagit Bank will
merge with and into Banner Bank. The transaction is expected
to close on or about November 1, 2018, subject to customary closing
conditions.
Skagit Bank is a 60-year-old community bank
based in the North Sound region of the Pacific Northwest focused on
developing and serving long term consumer and business
clients. At September 30, 2018, Skagit Bank had assets of
$919 million, a diverse and high-quality loan portfolio of $604
million, and a low-cost deposit base of $819 million with 11 retail
branches along the I-5 corridor from Seattle to the Canadian
border. Banner expects the transaction to be immediately accretive
to earnings per share, excluding one-time transaction
expenses. The combined company will have approximately $11.4
billion in assets.
On October 2, 2018, Banner announced that it had
received all regulatory approvals required to consummate the
proposed transaction, including the written approval of the Federal
Deposit Insurance Corporation and the Washington Department of
Financial Institutions, and written confirmation from the Board of
Governors of the Federal Reserve System that no application was
required to be filed with that agency. On October 15, 2018,
the shareholders of Skagit approved the definitive merger
agreement.
Income Statement Review
“The rising interest rate environment
contributed to higher yields on loans and improved our net interest
margin again this quarter,” said Grescovich. Banner's net
interest margin was 4.48% for the third quarter of 2018, a nine
basis point improvement compared to 4.39% in the preceding quarter
and a 26 basis point improvement compared to 4.22% in the third
quarter a year ago. Acquisition accounting adjustments added
12 basis points to the net interest margin in the current quarter
compared to six basis points in the preceding quarter and ten basis
points in the third quarter a year ago. The total purchase
discount for acquired loans was $15.4 million at September 30,
2018, a decrease from $18.1 million at June 30, 2018 and a decrease
compared to $23.4 million at September 30, 2017. In the first
nine months of the year, Banner’s net interest margin expanded 14
basis points to 4.41% compared to 4.27% in the first nine months a
year ago.
Average interest-earning asset yields increased
13 basis points to 4.83% compared to 4.70% for the preceding
quarter and increased 40 basis points compared to 4.43% in the
third quarter a year ago. Average loan yields increased 16
basis points to 5.31% compared to 5.15% in the preceding quarter
and increased 43 basis points compared to 4.88% in the third
quarter a year ago. Loan discount accretion added 15 basis
points to loan yields in the third quarter of 2018, compared to
eight basis points in the preceding quarter and 12 basis points in
the third quarter a year ago. Deposit costs were 0.25% in the
third quarter of 2018, a five basis point increase compared to the
preceding quarter and a ten basis point increase compared to the
third quarter a year ago. The total cost of funds was 0.37%
during the third quarter of 2018, a four basis point increase
compared to the preceding quarter and a 14 basis point increase
compared to the third quarter a year ago largely reflecting
increased use of brokered deposits and the impacts of the rising
rate environment.
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 third quarter, the same as in
both the preceding and year ago quarters as credit quality metrics
remained strong.
Deposit fees and other service charges were
$12.3 million in the third quarter, compared to $12.0 million in
the preceding quarter and $11.1 million in the third quarter a year
ago. Mortgage banking revenues, including gains on one- to
four-family and multifamily loan sales and loan servicing fees,
increased to $5.8 million in the third quarter compared to $4.6
million in the preceding quarter and $4.5 million in the third
quarter of 2017. Home purchase activity accounted for 78% of
third quarter 2018 one- to four-family mortgage loan originations
compared to 81% in the prior quarter and 77% in the third quarter
of 2017. Death benefits accounted for an $759,000 increase in
Bank owned life insurance income during the quarter.
Banner’s third quarter 2018 results included a
$45,000 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.
In the preceding quarter, results included a $224,000 net gain for
fair value adjustments and a $44,000 net gain on the sale of
securities. In the third quarter a year ago, results included
a $493,000 net loss for fair value adjustments and a $270,000 net
gain on the sale of securities. Following the adoption of new
accounting guidance, beginning in the first quarter of 2018, 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 3% to $129.5 million
for the third quarter of 2018, compared to $126.3 million in the
preceding quarter and increased 9% compared to $118.3 million in
the third quarter a year ago. In the first nine months of
2018, total revenues increased 7% to $376.5 million, compared to
$352.3 million in the first nine 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 $129.4 million in the third quarter of
2018, compared to $126.0 million in the preceding quarter, and
$118.5 million in the third quarter of 2017. In the first
nine months of 2018, revenues from core operations* increased to
$372.9 million from $353.9 million in the first nine 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 $20.4
million in the third quarter of 2018, compared to $21.2 million in
the second quarter of 2018 and $18.1 million in the third quarter a
year ago. In the first nine months of 2018, total
non-interest income was $63.0 million, compared to $57.5 million in
the same period a year ago.
Banner’s total non-interest expense was $81.6
million in the third quarter of 2018, compared to $82.6 million in
the preceding quarter and $80.3 million in the third quarter of
2017. Acquisition-related expenses were $1.0 million for the
third quarter, compared to no acquisition expenses in the preceding
or year ago quarters. Other non-interest expense items of
significance for the third quarter of 2018 included $425,000 in
fixed asset write-offs from consolidating six branches in
July. Banner’s adjusted efficiency ratio* improved to 60.21%
for the current quarter, compared to 64.09% in the prior quarter
and 65.62% in the year ago quarter.
For the third quarter of 2018, Banner recorded
$8.1 million in state and federal income tax expense for an
effective tax rate of 17.6%, reflecting the new lower federal
corporate income tax rate beginning in 2018, as well as the
benefits from tax exempt income sources and a $1.2 million credit
to tax expense for its affordable housing lending activity.
Our normal, expected statutory income tax rate is 23.7%,
representing a blend of the statutory federal income tax rate of
21.0% and apportioned effects of the state income tax rates.
For the year ago quarter, Banner recorded $10.9 million in state
and federal income tax expense for an effective tax rate of
30.3%.
Balance Sheet Review
Banner’s total assets were $10.51 billion at
September 30, 2018, compared to $10.38 billion at June 30, 2018,
and $10.44 billion at September 30, 2017. The total of
securities and interest-bearing deposits held at other banks was
$1.76 billion at September 30, 2018, compared to $1.74 billion at
June 30, 2018, $1.26 billion at December 31, 2017 and $1.68 billion
at September 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
in order to postpone the adverse impact of the Durbin
Amendment. The average effective duration of Banner's
securities portfolio was approximately 4.2 years at September 30,
2018, compared to 3.6 years at September 30, 2017.
Net loans receivable increased 2% to $7.73
billion at September 30, 2018, compared to $7.59 billion at June
30, 2018 and increased modestly when compared to $7.69 billion at
September 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 $3.52 billion at September 30, 2018,
compared to $3.51 billion at June 30, 2018, but decreased compared
to $3.67 billion a year ago, reflecting significant payoffs of both
owner occupied and investment commercial real estate loans.
Commercial business loans increased 4% to $1.36 billion at
September 30, 2018, compared to $1.31 billion three months earlier
and increased 4% compared to $1.31 billion a year ago.
Reflecting normal seasonal trends, agricultural business loans
increased by 7% to $360.0 million at September 30, 2018, compared
to $336.7 million three months earlier and increased by 6% compared
to $339.9 million a year ago. Total construction, land and
land development loans increased 4% to $1.02 billion at September
30, 2018, compared to $980.4 million at June 30, 2018, and
increased 16% compared to $878.4 million a year earlier.
Consumer loans increased modestly to $710.5 million at September
30, 2018, compared to $706.8 million at June 30, 2018, and
increased compared to $701.2 million a year ago. One- to
four-family loans increased modestly to $849.9 million compared to
$840.5 million at June 30, 2018, but decreased compared to $869.6
million a year ago.
Loans held for sale decreased 8% to $72.9
million at September 30, 2018, compared to $78.8 million at June
30, 2018, but increased modestly compared to $71.9 million at
September 30, 2017. The volume of one- to four- family
residential mortgage loans sold remained relatively constant at
$134.1 million in the current quarter compared to $124.1 million in
the preceding quarter and was $141.0 million in the third quarter a
year ago. During the third quarter of 2018, Banner sold $94.0
million in multifamily loans, compared to $135.7 million in the
preceding quarter. Loans held for sale at September 30, 2018
included $39.2 million of multifamily loans and $33.6 million of
one- to four-family loans.
Total deposits were $8.69 billion at September
30, 2018, compared to $8.53 billion at June 30, 2018, and $8.54
billion a year ago, as strong core deposit growth over the last
year, coupled with the addition of brokered certificates of
deposits, was partially offset by continuing declines in retail, or
non-brokered, certificates of deposit. Compared to a year
earlier, total deposits at September 30, 2018 were negatively
impacted by the sale of $20.4 million of Poulsbo Branch deposits
during the second quarter of 2018, as well as the sale of the Utah
branches during the fourth quarter of 2017 which included $160.3
million of deposits. Non-interest-bearing account balances
increased 4% to $3.47 billion at September 30, 2018, compared
to $3.35 billion at June 30, 2018, and increased 3% compared to
$3.38 billion a year ago. Core deposits (non-interest-bearing
and interest-bearing transaction and savings accounts) increased 2%
from the prior quarter and increased modestly compared to September
30, 2017, despite the sale of the Utah branches. Core
deposits represented 86% of total deposits at September 30, 2018,
compared to 87% of total deposits at June 30, 2018, and 87% of
total deposits a year earlier. Certificates of deposit were
$1.18 billion at September 30, 2018, compared to $1.15 billion at
June 30, 2018, and $1.10 billion a year earlier. Brokered
deposits increased to $325.2 million at September 30, 2018,
compared to $280.1 million at June 30, 2018, and were $171.7
million a year earlier.
At September 30, 2018, total common
shareholders' equity was $1.27 billion, or $39.26 per share,
compared to $1.25 billion at June 30, 2018, and $1.33 billion a
year ago. At September 30, 2018, tangible common
shareholders' equity*, which excludes goodwill and other intangible
assets, was $1.01 billion, or 9.86% of tangible assets*, compared
to $990.5 million, or 9.79% of tangible assets, at June 30, 2018
and $1.06 billion, or 10.39% of tangible assets, a year ago.
Banner's tangible book value per share* was $31.20 at September 30,
2018, compared to $31.79 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 or third
quarters 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 September 30, 2018,
Banner Corporation's common equity Tier 1 capital ratio was 11.13%,
its Tier 1 leverage capital to average assets ratio was 11.04%, and
its total capital to risk-weighted assets ratio was 13.76%.
Credit Quality
The allowance for loan losses was $95.3 million
at September 30, 2018, or 1.22% of total loans outstanding and 603%
of non-performing loans compared to $93.9 million at June 30, 2018,
or 1.22% of total loans outstanding and 613% of non-performing
loans, and $89.1 million at September 30, 2017, or 1.15% of total
loans outstanding and 296% of non-performing loans. Net loan
charge-offs totaled $612,000 in the third quarter compared to
$332,000 in the preceding quarter and $1.5 million in the third
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 were $15.8 million at
September 30, 2018, compared to $15.3 million at June 30, 2018 and
decreased compared to $30.1 million a year ago. Real estate
owned and other repossessed assets were $937,000 at September 30,
2018, compared to $1.2 million at June 30, 2018 and $1.6 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. At
September 30, 2018, the total purchase discount for acquired loans
was $15.4 million.
Banner's non-performing assets were $16.7
million, or 0.16% of total assets, at September 30, 2018, compared
to $16.5 million, or 0.16% of total assets, at June 30, 2018 and
$31.7 million, or 0.30% of total assets, a year ago. In
addition to non-performing assets, purchased credit-impaired loans
decreased to $12.9 million at September 30, 2018, compared to $18.1
million at June 30, 2018 and $23.2 million at September 30,
2017.
Conference Call
Banner will host a conference call on Thursday,
October 25, 2018, at 8:00 a.m. PDT, to discuss its third 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
10124315, or at www.bannerbank.com.
About the Company
Banner Corporation is a $10.51 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
"may," “believe,” “will,” “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimate,” “project,” “plans,”
"potential," or similar expressions are intended to identify
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. You are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date such statements are made and based
only on information then actually known to Banner. Banner
does not undertake and specifically disclaims any obligation to
revise any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date
of such statements. These statements may relate to future
financial performance, strategic plans or objectives, revenues or
earnings projections, or other financial information. By
their nature, these statements are subject to numerous
uncertainties that could cause actual results to differ materially
from those anticipated in the statements and could negatively
affect Banner's operating and stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1)
expected revenues, cost savings, synergies and other benefits from
the proposed merger of Banner and Skagit might not be realized
within the expected time frames or at all and costs or difficulties
relating to integration matters, including but not limited to
customer and employee retention, might be greater than expected;
(2) the remaining closing conditions to the merger may be delayed
or may not be obtained, or the merger agreement may be terminated;
(3) business disruption may occur following or in connection with
the proposed merger of Banner and Skagit; (4) Banner's or Skagit's
businesses may experience disruptions due to transaction-related
uncertainty or other factors making it more difficult to maintain
relationships with employees, customers, other business
partners or governmental entities; (5) the possibility that the
proposed merger is more expensive to complete than anticipated,
including as a result of unexpected factors or events; diversion of
managements' attention from ongoing business operations and
opportunities as a result of the proposed merger or otherwise; (6)
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; (7) 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; (8)
competitive pressures among depository institutions; (9) interest
rate movements and their impact on customer behavior and net
interest margin; (10) the impact of repricing and competitors'
pricing initiatives on loan and deposit products; (11) fluctuations
in real estate values; (12) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the market place; (13) the ability to access cost-effective
funding; (14) changes in financial markets; (15) changes in
economic conditions in general and in Washington, Idaho, Oregon and
California in particular; (16) the costs, effects and outcomes of
litigation; (17) 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; (18) changes in
accounting principles, policies or guidelines; (19) future
acquisitions by Banner of other depository institutions or lines of
business; (20) future goodwill impairment due to changes in
Banner's business, changes in market conditions, or other factors
and (21) 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 |
|
Nine months ended |
(in thousands except
shares and per share data) |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
Loans
receivable |
$ |
104,868 |
|
|
$ |
99,853 |
|
|
$ |
95,221 |
|
|
$ |
298,743 |
|
|
$ |
281,304 |
|
Mortgage-backed securities |
8,915 |
|
|
8,899 |
|
|
6,644 |
|
|
25,145 |
|
|
17,529 |
|
Securities and cash equivalents |
3,865 |
|
|
3,671 |
|
|
3,413 |
|
|
11,003 |
|
|
9,976 |
|
|
117,648 |
|
|
112,423 |
|
|
105,278 |
|
|
334,891 |
|
|
308,809 |
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
Deposits |
5,517 |
|
|
4,264 |
|
|
3,189 |
|
|
13,139 |
|
|
9,162 |
|
Federal
Home Loan Bank advances |
1,388 |
|
|
1,499 |
|
|
569 |
|
|
3,564 |
|
|
1,142 |
|
Other
borrowings |
60 |
|
|
49 |
|
|
84 |
|
|
179 |
|
|
241 |
|
Junior
subordinated debentures |
1,605 |
|
|
1,548 |
|
|
1,226 |
|
|
4,495 |
|
|
3,494 |
|
|
8,570 |
|
|
7,360 |
|
|
5,068 |
|
|
21,377 |
|
|
14,039 |
|
Net
interest income before provision for loan losses |
109,078 |
|
|
105,063 |
|
|
100,210 |
|
|
313,514 |
|
|
294,770 |
|
PROVISION FOR
LOAN LOSSES |
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
6,000 |
|
|
6,000 |
|
Net
interest income |
107,078 |
|
|
103,063 |
|
|
98,210 |
|
|
307,514 |
|
|
288,770 |
|
NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
Deposit
fees and other service charges |
12,255 |
|
|
11,985 |
|
|
11,058 |
|
|
35,535 |
|
|
32,611 |
|
Mortgage
banking operations |
5,816 |
|
|
4,643 |
|
|
4,498 |
|
|
15,324 |
|
|
15,854 |
|
Bank
owned life insurance |
1,726 |
|
|
933 |
|
|
1,043 |
|
|
3,511 |
|
|
3,599 |
|
Miscellaneous |
569 |
|
|
3,388 |
|
|
1,705 |
|
|
4,995 |
|
|
7,062 |
|
|
20,366 |
|
|
20,949 |
|
|
18,304 |
|
|
59,365 |
|
|
59,126 |
|
Net gain
on sale of securities |
— |
|
|
44 |
|
|
270 |
|
|
48 |
|
|
230 |
|
Net
change in valuation of financial instruments carried at fair
value |
45 |
|
|
224 |
|
|
(493 |
) |
|
3,577 |
|
|
(1,831 |
) |
Total
non-interest income |
20,411 |
|
|
21,217 |
|
|
18,081 |
|
|
62,990 |
|
|
57,525 |
|
NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
Salary
and employee benefits |
48,930 |
|
|
51,494 |
|
|
48,931 |
|
|
150,491 |
|
|
144,014 |
|
Less
capitalized loan origination costs |
(4,318 |
) |
|
(4,733 |
) |
|
(4,331 |
) |
|
(13,062 |
) |
|
(13,245 |
) |
Occupancy
and equipment |
12,385 |
|
|
11,574 |
|
|
11,737 |
|
|
35,725 |
|
|
35,778 |
|
Information / computer data services |
4,766 |
|
|
4,564 |
|
|
4,420 |
|
|
13,711 |
|
|
12,513 |
|
Payment
and card processing services |
3,748 |
|
|
3,731 |
|
|
3,581 |
|
|
11,179 |
|
|
10,523 |
|
Professional services |
3,010 |
|
|
3,838 |
|
|
3,349 |
|
|
11,276 |
|
|
12,233 |
|
Advertising and marketing |
1,786 |
|
|
2,141 |
|
|
2,130 |
|
|
5,758 |
|
|
5,225 |
|
Deposit
insurance |
991 |
|
|
1,021 |
|
|
1,101 |
|
|
3,353 |
|
|
3,438 |
|
State/municipal business and use taxes |
902 |
|
|
816 |
|
|
780 |
|
|
2,430 |
|
|
1,857 |
|
Real
estate operations |
433 |
|
|
(319 |
) |
|
240 |
|
|
553 |
|
|
(1,089 |
) |
Amortization of core deposit intangibles |
1,348 |
|
|
1,382 |
|
|
1,542 |
|
|
4,112 |
|
|
4,790 |
|
Miscellaneous |
6,646 |
|
|
7,128 |
|
|
6,851 |
|
|
19,444 |
|
|
20,432 |
|
|
80,627 |
|
|
82,637 |
|
|
80,331 |
|
|
244,970 |
|
|
236,469 |
|
Acquisition related expenses |
1,005 |
|
|
— |
|
|
— |
|
|
1,005 |
|
|
— |
|
Total
non-interest expense |
81,632 |
|
|
82,637 |
|
|
80,331 |
|
|
245,975 |
|
|
236,469 |
|
Income
before provision for income taxes |
45,857 |
|
|
41,643 |
|
|
35,960 |
|
|
124,529 |
|
|
109,826 |
|
PROVISION
FOR INCOME TAXES |
8,084 |
|
|
9,219 |
|
|
10,883 |
|
|
25,542 |
|
|
35,502 |
|
NET
INCOME |
$ |
37,773 |
|
|
$ |
32,424 |
|
|
$ |
25,077 |
|
|
$ |
98,987 |
|
|
$ |
74,324 |
|
Earnings per share
available to common shareholders: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
1.17 |
|
|
$ |
1.01 |
|
|
$ |
0.76 |
|
|
$ |
3.06 |
|
|
$ |
2.25 |
|
Diluted |
$ |
1.17 |
|
|
$ |
1.00 |
|
|
$ |
0.76 |
|
|
$ |
3.05 |
|
|
$ |
2.25 |
|
Cumulative dividends
declared per common share |
$ |
0.38 |
|
|
$ |
0.85 |
|
|
$ |
0.25 |
|
|
$ |
1.58 |
|
|
$ |
1.75 |
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
32,256,789 |
|
|
32,250,514 |
|
|
32,982,532 |
|
|
32,300,688 |
|
|
32,966,214 |
|
Diluted |
32,376,623 |
|
|
32,331,609 |
|
|
33,079,099 |
|
|
32,406,414 |
|
|
33,061,172 |
|
(Decrease) increase in
common shares outstanding |
(2,939 |
) |
|
(17,977 |
) |
|
(23,247 |
) |
|
(323,728 |
) |
|
61,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION |
|
|
|
|
|
|
|
|
Percentage Change |
(in thousands except
shares and per share data) |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks |
$ |
184,417 |
|
|
$ |
195,652 |
|
|
$ |
199,624 |
|
|
$ |
192,278 |
|
|
(5.7 |
)% |
|
(4.1 |
)% |
Interest-bearing
deposits |
64,244 |
|
|
53,773 |
|
|
61,576 |
|
|
49,488 |
|
|
19.5 |
% |
|
29.8 |
% |
Total
cash and cash equivalents |
248,661 |
|
|
249,425 |
|
|
261,200 |
|
|
241,766 |
|
|
(0.3 |
)% |
|
2.9 |
% |
Securities -
trading |
25,764 |
|
|
25,640 |
|
|
22,318 |
|
|
23,466 |
|
|
0.5 |
% |
|
9.8 |
% |
Securities - available
for sale |
1,412,273 |
|
|
1,400,312 |
|
|
919,485 |
|
|
1,339,057 |
|
|
0.9 |
% |
|
5.5 |
% |
Securities - held to
maturity |
258,699 |
|
|
263,176 |
|
|
260,271 |
|
|
264,752 |
|
|
(1.7 |
)% |
|
(2.3 |
)% |
Total
securities |
1,696,736 |
|
|
1,689,128 |
|
|
1,202,074 |
|
|
1,627,275 |
|
|
0.5 |
% |
|
4.3 |
% |
Federal Home Loan Bank
stock |
19,196 |
|
|
19,916 |
|
|
10,334 |
|
|
20,854 |
|
|
(3.6 |
)% |
|
(8.0 |
)% |
Loans held for
sale |
72,850 |
|
|
78,833 |
|
|
40,725 |
|
|
71,905 |
|
|
(7.6 |
)% |
|
1.3 |
% |
Loans receivable |
7,822,519 |
|
|
7,684,732 |
|
|
7,598,884 |
|
|
7,774,449 |
|
|
1.8 |
% |
|
0.6 |
% |
Allowance for loan
losses |
(95,263 |
) |
|
(93,875 |
) |
|
(89,028 |
) |
|
(89,100 |
) |
|
1.5 |
% |
|
6.9 |
% |
Net loans
receivable |
7,727,256 |
|
|
7,590,857 |
|
|
7,509,856 |
|
|
7,685,349 |
|
|
1.8 |
% |
|
0.5 |
% |
Accrued interest
receivable |
37,676 |
|
|
34,004 |
|
|
31,259 |
|
|
33,837 |
|
|
10.8 |
% |
|
11.3 |
% |
Real estate owned held
for sale, net |
364 |
|
|
473 |
|
|
360 |
|
|
1,496 |
|
|
(23.0 |
)% |
|
(75.7 |
)% |
Property and equipment,
net |
151,212 |
|
|
153,224 |
|
|
154,815 |
|
|
159,893 |
|
|
(1.3 |
)% |
|
(5.4 |
)% |
Goodwill |
242,659 |
|
|
242,659 |
|
|
242,659 |
|
|
244,583 |
|
|
— |
% |
|
(0.8 |
)% |
Other intangibles,
net |
18,499 |
|
|
19,858 |
|
|
22,655 |
|
|
25,219 |
|
|
(6.8 |
)% |
|
(26.6 |
)% |
Bank-owned life
insurance |
163,265 |
|
|
164,225 |
|
|
162,668 |
|
|
161,648 |
|
|
(0.6 |
)% |
|
1.0 |
% |
Other assets |
135,929 |
|
|
136,592 |
|
|
124,604 |
|
|
169,261 |
|
|
(0.5 |
)% |
|
(19.7 |
)% |
Total
assets |
$ |
10,514,303 |
|
|
$ |
10,379,194 |
|
|
$ |
9,763,209 |
|
|
$ |
10,443,086 |
|
|
1.3 |
% |
|
0.7 |
% |
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
$ |
3,469,294 |
|
|
$ |
3,346,777 |
|
|
$ |
3,265,544 |
|
|
$ |
3,379,841 |
|
|
3.7 |
% |
|
2.6 |
% |
Interest-bearing transaction and savings accounts |
4,035,856 |
|
|
4,032,283 |
|
|
3,950,950 |
|
|
4,058,435 |
|
|
0.1 |
% |
|
(0.6 |
)% |
Interest-bearing certificates |
1,180,674 |
|
|
1,148,607 |
|
|
966,937 |
|
|
1,100,574 |
|
|
2.8 |
% |
|
7.3 |
% |
Total
deposits |
8,685,824 |
|
|
8,527,667 |
|
|
8,183,431 |
|
|
8,538,850 |
|
|
1.9 |
% |
|
1.7 |
% |
Advances from Federal
Home Loan Bank at fair value |
221,184 |
|
|
239,190 |
|
|
202 |
|
|
263,349 |
|
|
(7.5 |
)% |
|
(16.0 |
)% |
Customer repurchase
agreements and other borrowings |
98,979 |
|
|
112,458 |
|
|
95,860 |
|
|
103,713 |
|
|
(12.0 |
)% |
|
(4.6 |
)% |
Junior subordinated
debentures at fair value |
113,110 |
|
|
112,774 |
|
|
98,707 |
|
|
97,280 |
|
|
0.3 |
% |
|
16.3 |
% |
Accrued expenses and
other liabilities |
82,530 |
|
|
93,281 |
|
|
71,344 |
|
|
72,604 |
|
|
(11.5 |
)% |
|
13.7 |
% |
Deferred
compensation |
40,478 |
|
|
40,814 |
|
|
41,039 |
|
|
40,279 |
|
|
(0.8 |
)% |
|
0.5 |
% |
Total
liabilities |
9,242,105 |
|
|
9,126,184 |
|
|
8,490,583 |
|
|
9,116,075 |
|
|
1.3 |
% |
|
1.4 |
% |
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Common stock |
1,175,250 |
|
|
1,173,656 |
|
|
1,187,127 |
|
|
1,215,482 |
|
|
0.1 |
% |
|
(3.3 |
)% |
Retained earnings |
109,942 |
|
|
84,485 |
|
|
90,535 |
|
|
111,405 |
|
|
30.1 |
% |
|
(1.3 |
)% |
Other components of
shareholders' equity |
(12,994 |
) |
|
(5,131 |
) |
|
(5,036 |
) |
|
124 |
|
|
nm |
|
|
nm |
|
Total
shareholders' equity |
1,272,198 |
|
|
1,253,010 |
|
|
1,272,626 |
|
|
1,327,011 |
|
|
1.5 |
% |
|
(4.1 |
)% |
Total
liabilities and shareholders' equity |
$ |
10,514,303 |
|
|
$ |
10,379,194 |
|
|
$ |
9,763,209 |
|
|
$ |
10,443,086 |
|
|
1.3 |
% |
|
0.7 |
% |
Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at
end of period |
32,402,757 |
|
|
32,405,696 |
|
|
32,726,485 |
|
|
33,254,784 |
|
|
|
|
|
Common shareholders'
equity per share (1) |
$ |
39.26 |
|
|
$ |
38.67 |
|
|
$ |
38.89 |
|
|
$ |
39.90 |
|
|
|
|
|
Common shareholders'
tangible equity per share (1) (2) |
$ |
31.20 |
|
|
$ |
30.57 |
|
|
$ |
30.78 |
|
|
$ |
31.79 |
|
|
|
|
|
Common shareholders'
tangible equity to tangible assets (2) |
9.86 |
% |
|
9.79 |
% |
|
10.61 |
% |
|
10.39 |
% |
|
|
|
|
Consolidated Tier 1
leverage capital ratio |
11.04 |
% |
|
10.80 |
% |
|
11.33 |
% |
|
11.49 |
% |
|
|
|
|
(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 |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
|
Owner
occupied |
$ |
1,271,363 |
|
|
$ |
1,256,730 |
|
|
$ |
1,284,363 |
|
|
$ |
1,369,130 |
|
|
1.2 |
% |
|
(7.1 |
)% |
Investment properties |
1,943,793 |
|
|
1,920,790 |
|
|
1,937,423 |
|
|
1,993,144 |
|
|
1.2 |
% |
|
(2.5 |
)% |
Multifamily real
estate |
309,809 |
|
|
330,384 |
|
|
314,188 |
|
|
311,706 |
|
|
(6.2 |
)% |
|
(0.6 |
)% |
Commercial
construction |
154,071 |
|
|
166,089 |
|
|
148,435 |
|
|
157,041 |
|
|
(7.2 |
)% |
|
(1.9 |
)% |
Multifamily
construction |
172,433 |
|
|
147,576 |
|
|
154,662 |
|
|
136,532 |
|
|
16.8 |
% |
|
26.3 |
% |
One- to four-family
construction |
498,549 |
|
|
480,591 |
|
|
415,327 |
|
|
399,361 |
|
|
3.7 |
% |
|
24.8 |
% |
Land and land
development: |
|
|
|
|
|
|
|
|
|
|
|
Residential |
171,610 |
|
|
163,335 |
|
|
164,516 |
|
|
158,384 |
|
|
5.1 |
% |
|
8.4 |
% |
Commercial |
22,382 |
|
|
22,849 |
|
|
24,583 |
|
|
27,095 |
|
|
(2.0 |
)% |
|
(17.4 |
)% |
Commercial
business |
1,358,149 |
|
|
1,312,424 |
|
|
1,279,894 |
|
|
1,311,409 |
|
|
3.5 |
% |
|
3.6 |
% |
Agricultural business
including secured by farmland |
359,966 |
|
|
336,709 |
|
|
338,388 |
|
|
339,932 |
|
|
6.9 |
% |
|
5.9 |
% |
One- to four-family
real estate |
849,928 |
|
|
840,470 |
|
|
848,289 |
|
|
869,556 |
|
|
1.1 |
% |
|
(2.3 |
)% |
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
Consumer
secured by one- to four-family real estate |
539,143 |
|
|
536,007 |
|
|
522,931 |
|
|
535,300 |
|
|
0.6 |
% |
|
0.7 |
% |
Consumer-other |
171,323 |
|
|
170,778 |
|
|
165,885 |
|
|
165,859 |
|
|
0.3 |
% |
|
3.3 |
% |
Total
loans receivable |
$ |
7,822,519 |
|
|
$ |
7,684,732 |
|
|
$ |
7,598,884 |
|
|
$ |
7,774,449 |
|
|
1.8 |
% |
|
0.6 |
% |
Restructured loans
performing under their restructured terms |
$ |
13,328 |
|
|
$ |
13,793 |
|
|
$ |
16,115 |
|
|
$ |
12,744 |
|
|
|
|
|
Loans 30 - 89 days past
due and on accrual (1) |
$ |
8,688 |
|
|
$ |
8,040 |
|
|
$ |
29,278 |
|
|
$ |
9,619 |
|
|
|
|
|
Total delinquent loans
(including loans on non-accrual), net (2) |
$ |
21,191 |
|
|
$ |
22,620 |
|
|
$ |
50,503 |
|
|
$ |
34,792 |
|
|
|
|
|
Total delinquent
loans / Total loans receivable |
0.27 |
% |
|
0.29 |
% |
|
0.66 |
% |
|
0.45 |
% |
|
|
|
|
(1) |
|
Includes $5,000 of
purchased credit-impaired loans at September 30, 2018 compared to
$6,000 at June 30, 2018, $943,000 at December 31, 2017, and $1.0
million at September 30, 2017. |
(2) |
|
Delinquent loans include $568,000 of delinquent purchased
credit-impaired loans at September 30, 2018 compared to $1.0
million at June 30, 2018, $2.2 million at December 31, 2017, and
$2.9 million at September 30, 2017. |
|
|
|
LOANS BY GEOGRAPHIC LOCATION |
|
|
|
|
|
|
|
|
|
|
|
Percentage
Change |
|
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
|
Prior Qtr |
|
Prior Yr
Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington |
|
$ |
3,640,209 |
|
|
46.5 |
% |
|
$ |
3,550,945 |
|
|
$ |
3,508,542 |
|
|
$ |
3,515,881 |
|
|
2.5 |
% |
|
3.5 |
% |
Oregon |
|
1,628,703 |
|
|
20.9 |
% |
|
1,601,939 |
|
|
1,590,233 |
|
|
1,561,723 |
|
|
1.7 |
% |
|
4.3 |
% |
California |
|
1,496,817 |
|
|
19.1 |
% |
|
1,477,293 |
|
|
1,415,076 |
|
|
1,381,572 |
|
|
1.3 |
% |
|
8.3 |
% |
Idaho |
|
504,297 |
|
|
6.4 |
% |
|
500,201 |
|
|
492,603 |
|
|
495,041 |
|
|
0.8 |
% |
|
1.9 |
% |
Utah |
|
63,053 |
|
|
0.8 |
% |
|
76,414 |
|
|
73,382 |
|
|
304,740 |
|
|
(17.5 |
)% |
|
(79.3 |
)% |
Other |
|
489,440 |
|
|
6.3 |
% |
|
477,940 |
|
|
519,048 |
|
|
515,492 |
|
|
2.4 |
% |
|
(5.1 |
)% |
Total loans receivable |
|
$ |
7,822,519 |
|
|
100.0 |
% |
|
$ |
7,684,732 |
|
|
$ |
7,598,884 |
|
|
$ |
7,774,449 |
|
|
1.8 |
% |
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Nine months ended |
CHANGE IN
THE |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
ALLOWANCE FOR
LOAN LOSSES |
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
$ |
93,875 |
|
|
$ |
92,207 |
|
|
$ |
88,586 |
|
|
$ |
89,028 |
|
|
$ |
85,997 |
|
Provision for loan
losses |
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
6,000 |
|
|
6,000 |
|
Recoveries of loans
previously charged off: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
12 |
|
|
216 |
|
|
19 |
|
|
1,580 |
|
|
353 |
|
Multifamily real estate |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11 |
|
Construction and land |
5 |
|
|
11 |
|
|
73 |
|
|
190 |
|
|
1,180 |
|
One- to
four-family real estate |
86 |
|
|
356 |
|
|
8 |
|
|
732 |
|
|
262 |
|
Commercial business |
586 |
|
|
100 |
|
|
577 |
|
|
856 |
|
|
921 |
|
Agricultural business, including secured by farmland |
— |
|
|
41 |
|
|
1 |
|
|
41 |
|
|
133 |
|
Consumer |
46 |
|
|
106 |
|
|
98 |
|
|
264 |
|
|
293 |
|
|
735 |
|
|
830 |
|
|
776 |
|
|
3,663 |
|
|
3,153 |
|
Loans charged off: |
|
|
|
|
|
|
|
|
|
Commercial real estate |
(102 |
) |
|
(299 |
) |
|
(584 |
) |
|
(401 |
) |
|
(631 |
) |
Construction and land |
(479 |
) |
|
— |
|
|
— |
|
|
(479 |
) |
|
— |
|
One- to
four-family real estate |
(27 |
) |
|
— |
|
|
— |
|
|
(43 |
) |
|
— |
|
Commercial business |
(473 |
) |
|
(375 |
) |
|
(491 |
) |
|
(1,367 |
) |
|
(3,286 |
) |
Agricultural business, including secured by farmland |
(5 |
) |
|
(329 |
) |
|
(1,001 |
) |
|
(341 |
) |
|
(1,264 |
) |
Consumer |
(261 |
) |
|
(159 |
) |
|
(186 |
) |
|
(797 |
) |
|
(869 |
) |
|
(1,347 |
) |
|
(1,162 |
) |
|
(2,262 |
) |
|
(3,428 |
) |
|
(6,050 |
) |
Net
(charge-offs) recoveries |
(612 |
) |
|
(332 |
) |
|
(1,486 |
) |
|
235 |
|
|
(2,897 |
) |
Balance, end of
period |
$ |
95,263 |
|
|
$ |
93,875 |
|
|
$ |
89,100 |
|
|
$ |
95,263 |
|
|
$ |
89,100 |
|
Net (charge-offs)
recoveries / Average loans receivable |
(0.008 |
)% |
|
(0.004 |
)% |
|
(0.019 |
)% |
|
0.003 |
% |
|
(0.038 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOCATION
OF |
|
|
|
|
|
|
|
ALLOWANCE FOR
LOAN LOSSES |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
Specific or allocated
loss allowance: |
|
|
|
|
|
|
|
Commercial real estate |
$ |
25,147 |
|
|
$ |
24,413 |
|
|
$ |
22,824 |
|
|
$ |
23,431 |
|
Multifamily real estate |
3,745 |
|
|
3,718 |
|
|
1,633 |
|
|
1,625 |
|
Construction and land |
24,564 |
|
|
27,034 |
|
|
27,568 |
|
|
29,422 |
|
One- to
four-family real estate |
4,423 |
|
|
3,932 |
|
|
2,055 |
|
|
2,040 |
|
Commercial business |
17,948 |
|
|
19,141 |
|
|
18,311 |
|
|
18,657 |
|
Agricultural business, including secured by farmland |
3,505 |
|
|
3,162 |
|
|
4,053 |
|
|
3,949 |
|
Consumer |
8,110 |
|
|
5,725 |
|
|
3,866 |
|
|
4,016 |
|
Total
allocated |
87,442 |
|
|
87,125 |
|
|
80,310 |
|
|
83,140 |
|
Unallocated |
7,821 |
|
|
6,750 |
|
|
8,718 |
|
|
5,960 |
|
Total allowance for loan losses |
$ |
95,263 |
|
|
$ |
93,875 |
|
|
$ |
89,028 |
|
|
$ |
89,100 |
|
Allowance for loan
losses / Total loans receivable |
1.22 |
% |
|
1.22 |
% |
|
1.17 |
% |
|
1.15 |
% |
Allowance for loan
losses / Non-performing loans |
603 |
% |
|
613 |
% |
|
329 |
% |
|
296 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
NON-PERFORMING
ASSETS |
|
|
|
|
|
|
|
Loans on non-accrual
status: |
|
|
|
|
|
|
|
Secured
by real estate: |
|
|
|
|
|
|
|
Commercial |
$ |
3,728 |
|
|
$ |
4,341 |
|
|
$ |
10,646 |
|
|
$ |
11,632 |
|
Construction and land |
2,095 |
|
|
1,176 |
|
|
798 |
|
|
1,726 |
|
One- to
four-family |
1,827 |
|
|
2,281 |
|
|
3,264 |
|
|
2,878 |
|
Commercial business |
2,921 |
|
|
2,673 |
|
|
3,406 |
|
|
7,144 |
|
Agricultural business, including secured by farmland |
1,645 |
|
|
1,712 |
|
|
6,132 |
|
|
4,285 |
|
Consumer |
1,703 |
|
|
1,176 |
|
|
1,297 |
|
|
1,462 |
|
|
13,919 |
|
|
13,359 |
|
|
25,543 |
|
|
29,127 |
|
Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
|
|
Secured
by real estate: |
|
|
|
|
|
|
|
Commercial |
428 |
|
|
— |
|
|
— |
|
|
53 |
|
Construction and land |
— |
|
|
784 |
|
|
298 |
|
|
— |
|
One- to
four-family |
1,076 |
|
|
905 |
|
|
1,085 |
|
|
722 |
|
Commercial business |
87 |
|
|
1 |
|
|
18 |
|
|
51 |
|
Consumer |
296 |
|
|
253 |
|
|
85 |
|
|
101 |
|
|
1,887 |
|
|
1,943 |
|
|
1,486 |
|
|
927 |
|
Total non-performing
loans |
15,806 |
|
|
15,302 |
|
|
27,029 |
|
|
30,054 |
|
Real estate owned
(REO) |
364 |
|
|
473 |
|
|
360 |
|
|
1,496 |
|
Other repossessed
assets |
573 |
|
|
733 |
|
|
107 |
|
|
145 |
|
Total
non-performing assets |
$ |
16,743 |
|
|
$ |
16,508 |
|
|
$ |
27,496 |
|
|
$ |
31,695 |
|
Total non-performing
assets to total assets |
0.16 |
% |
|
0.16 |
% |
|
0.28 |
% |
|
0.30 |
% |
Purchased
credit-impaired loans, net |
$ |
12,944 |
|
|
$ |
18,063 |
|
|
$ |
21,310 |
|
|
$ |
23,221 |
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Nine months ended |
REAL ESTATE
OWNED |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
Balance, beginning of
period |
$ |
473 |
|
|
$ |
328 |
|
|
$ |
2,427 |
|
|
$ |
360 |
|
|
$ |
11,081 |
|
Additions
from loan foreclosures |
— |
|
|
393 |
|
|
— |
|
|
502 |
|
|
46 |
|
Additions
from capitalized costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
54 |
|
Proceeds
from dispositions of REO |
(90 |
) |
|
(314 |
) |
|
(961 |
) |
|
(385 |
) |
|
(11,382 |
) |
Gain on
sale of REO |
8 |
|
|
66 |
|
|
30 |
|
|
74 |
|
|
1,953 |
|
Valuation
adjustments in the period |
(27 |
) |
|
— |
|
|
— |
|
|
(187 |
) |
|
(256 |
) |
Balance, end of
period |
$ |
364 |
|
|
$ |
473 |
|
|
$ |
1,496 |
|
|
$ |
364 |
|
|
$ |
1,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
|
Percentage Change |
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
$ |
3,469,294 |
|
$ |
3,346,777 |
|
$ |
3,265,544 |
|
$ |
3,379,841 |
|
3.7 |
% |
|
2.6 |
% |
Interest-bearing
checking |
1,034,678 |
|
1,012,519 |
|
971,137 |
|
955,486 |
|
2.2 |
% |
|
8.3 |
% |
Regular savings
accounts |
1,627,560 |
|
1,635,080 |
|
1,557,500 |
|
1,577,292 |
|
(0.5 |
)% |
|
3.2 |
% |
Money market
accounts |
1,373,618 |
|
1,384,684 |
|
1,422,313 |
|
1,525,657 |
|
(0.8 |
)% |
|
(10.0 |
)% |
Total
interest-bearing transaction and savings accounts |
4,035,856 |
|
4,032,283 |
|
3,950,950 |
|
4,058,435 |
|
0.1 |
% |
|
(0.6 |
)% |
Total
core deposits |
7,505,150 |
|
7,379,060 |
|
7,216,494 |
|
7,438,276 |
|
1.7 |
% |
|
0.9 |
% |
Interest-bearing
certificates |
1,180,674 |
|
1,148,607 |
|
966,937 |
|
1,100,574 |
|
2.8 |
% |
|
7.3 |
% |
Total
deposits |
$ |
8,685,824 |
|
$ |
8,527,667 |
|
$ |
8,183,431 |
|
$ |
8,538,850 |
|
1.9 |
% |
|
1.7 |
% |
|
|
GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
|
Percentage Change |
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
Washington |
$ |
4,849,807 |
|
55.8 |
% |
|
$ |
4,735,357 |
|
$ |
4,506,249 |
|
$ |
4,654,406 |
|
2.4 |
% |
|
4.2 |
% |
Oregon |
1,916,183 |
|
22.1 |
% |
|
1,886,435 |
|
1,797,147 |
|
1,811,459 |
|
1.6 |
% |
|
5.8 |
% |
California |
1,462,417 |
|
16.8 |
% |
|
1,444,413 |
|
1,432,819 |
|
1,442,727 |
|
1.2 |
% |
|
1.4 |
% |
Idaho |
457,417 |
|
5.3 |
% |
|
461,462 |
|
447,216 |
|
465,104 |
|
(0.9 |
)% |
|
(1.7 |
)% |
Utah |
— |
|
— |
% |
|
— |
|
— |
|
165,154 |
|
nm |
|
|
nm |
|
Total deposits |
$ |
8,685,824 |
|
100.0 |
% |
|
$ |
8,527,667 |
|
$ |
8,183,431 |
|
$ |
8,538,850 |
|
1.9 |
% |
|
1.7 |
% |
|
|
|
INCLUDED IN
TOTAL DEPOSITS |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
Public
non-interest-bearing accounts |
$ |
76,957 |
|
$ |
86,040 |
|
$ |
86,987 |
|
$ |
86,262 |
Public interest-bearing
transaction & savings accounts |
110,802 |
|
114,457 |
|
111,732 |
|
108,257 |
Public interest-bearing
certificates |
25,367 |
|
24,390 |
|
23,685 |
|
26,543 |
Total
public deposits |
$ |
213,126 |
|
$ |
224,887 |
|
$ |
222,404 |
|
$ |
221,062 |
Total brokered
deposits |
$ |
325,154 |
|
$ |
280,055 |
|
$ |
57,228 |
|
$ |
171,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Actual |
|
Minimum to be categorized as "Adequately
Capitalized" |
|
Minimum to becategorized
as"Well Capitalized" |
REGULATORY
CAPITAL RATIOS AS OF SEPTEMBER 30, 2018 |
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
Total
capital to risk-weighted assets |
$ |
1,223,107 |
|
13.76 |
% |
|
$ |
711,305 |
|
8.00 |
% |
|
$ |
889,131 |
|
10.00 |
% |
Tier 1
capital to risk-weighted assets |
1,125,395 |
|
12.66 |
% |
|
533,479 |
|
6.00 |
% |
|
533,479 |
|
6.00 |
% |
Tier 1
leverage capital to average assets |
1,125,395 |
|
11.04 |
% |
|
407,660 |
|
4.00 |
% |
|
n/a |
|
n/a |
|
Common
equity tier 1 capital to risk-weighted assets |
989,395 |
|
11.13 |
% |
|
400,109 |
|
4.50 |
% |
|
n/a |
|
n/a |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
Total
capital to risk-weighted assets |
1,133,724 |
|
13.03 |
% |
|
696,147 |
|
8.00 |
% |
|
870,184 |
|
10.00 |
% |
Tier 1
capital to risk-weighted assets |
1,038,456 |
|
11.93 |
% |
|
522,110 |
|
6.00 |
% |
|
696,147 |
|
8.00 |
% |
Tier 1
leverage capital to average assets |
1,038,453 |
|
10.49 |
% |
|
395,837 |
|
4.00 |
% |
|
494,796 |
|
5.00 |
% |
Common
equity tier 1 capital to risk-weighted assets |
1,038,456 |
|
11.93 |
% |
|
391,583 |
|
4.50 |
% |
|
565,619 |
|
6.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
Total
capital to risk-weighted assets |
33,866 |
|
17.98 |
% |
|
15,066 |
|
8.00 |
% |
|
18,833 |
|
10.00 |
% |
Tier 1
capital to risk-weighted assets |
31,511 |
|
16.73 |
% |
|
11,300 |
|
6.00 |
% |
|
15,066 |
|
8.00 |
% |
Tier 1
leverage capital to average assets |
31,511 |
|
10.69 |
% |
|
11,796 |
|
4.00 |
% |
|
14,745 |
|
5.00 |
% |
Common
equity tier 1 capital to risk-weighted assets |
31,511 |
|
16.73 |
% |
|
8,475 |
|
4.50 |
% |
|
12,241 |
|
6.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
|
September 30, 2018 |
|
June 30, 2018 |
|
September 30, 2017 |
|
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 |
$ |
72,249 |
|
$ |
895 |
|
4.91 |
% |
|
$ |
112,664 |
|
$ |
1,295 |
|
4.61 |
% |
|
$ |
89,888 |
|
$ |
983 |
|
4.34 |
% |
Mortgage
loans |
6,117,299 |
81,130 |
|
5.26 |
% |
|
6,050,560 |
76,908 |
|
5.10 |
% |
|
5,996,666 |
|
74,037 |
|
4.90 |
% |
Commercial/agricultural loans |
1,511,077 |
20,545 |
|
5.39 |
% |
|
1,479,148 |
19,381 |
|
5.26 |
% |
|
1,520,946 |
|
17,992 |
|
4.69 |
% |
Consumer
and other loans |
141,503 |
2,298 |
|
6.44 |
% |
|
141,401 |
2,269 |
|
6.44 |
% |
|
140,758 |
|
2,209 |
|
6.23 |
% |
Total
loans(1) |
7,842,128 |
104,868 |
|
5.31 |
% |
|
7,783,773 |
99,853 |
|
5.15 |
% |
|
7,748,258 |
|
95,221 |
|
4.88 |
% |
Mortgage-backed securities |
1,266,862 |
8,915 |
|
2.79 |
% |
|
1,261,809 |
8,899 |
|
2.83 |
% |
|
1,129,256 |
|
6,644 |
|
2.33 |
% |
Other
securities |
462,048 |
3,279 |
|
2.82 |
% |
|
473,953 |
3,331 |
|
2.82 |
% |
|
473,808 |
|
3,192 |
|
2.67 |
% |
Interest-bearing deposits with banks |
65,191 |
332 |
|
2.02 |
% |
|
51,886 |
211 |
|
1.63 |
% |
|
51,607 |
|
159 |
|
1.22 |
% |
FHLB
stock |
20,345 |
254 |
|
4.95 |
% |
|
22,231 |
129 |
|
2.33 |
% |
|
16,961 |
|
62 |
|
1.45 |
% |
Total
investment securities |
1,814,446 |
12,780 |
|
2.79 |
% |
|
1,809,879 |
12,570 |
|
2.79 |
% |
|
1,671,632 |
|
10,057 |
|
2.39 |
% |
Total
interest-earning assets |
9,656,574 |
117,648 |
|
4.83 |
% |
|
9,593,652 |
112,423 |
|
4.70 |
% |
|
9,419,890 |
|
105,278 |
|
4.43 |
% |
Non-interest-earning
assets |
799,083 |
|
|
|
804,229 |
|
|
|
888,388 |
|
|
|
Total
assets |
$ |
10,455,657 |
|
|
|
$ |
10,397,881 |
|
|
|
$ |
10,308,278 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,006,010 |
270 |
|
0.11 |
% |
|
$ |
1,051,409 |
281 |
|
0.11 |
% |
|
$ |
946,585 |
|
218 |
|
0.09 |
% |
Savings
accounts |
1,631,158 |
1,002 |
|
0.24 |
% |
|
1,648,739 |
811 |
|
0.20 |
% |
|
1,557,475 |
|
538 |
|
0.14 |
% |
Money
market accounts |
1,381,943 |
1,011 |
|
0.29 |
% |
|
1,419,578 |
792 |
|
0.22 |
% |
|
1,534,867 |
|
653 |
|
0.17 |
% |
Certificates of deposit |
1,153,403 |
3,234 |
|
1.11 |
% |
|
1,067,742 |
2,380 |
|
0.89 |
% |
|
1,151,725 |
|
1,780 |
|
0.61 |
% |
Total
interest-bearing deposits |
5,172,514 |
5,517 |
|
0.42 |
% |
|
5,187,468 |
4,264 |
|
0.33 |
% |
|
5,190,652 |
|
3,189 |
|
0.24 |
% |
Non-interest-bearing deposits |
3,424,587 |
— |
|
— |
% |
|
3,324,104 |
— |
|
— |
% |
|
3,300,185 |
|
— |
|
— |
% |
Total
deposits |
8,597,101 |
5,517 |
|
0.25 |
% |
|
8,511,572 |
4,264 |
|
0.20 |
% |
|
8,490,837 |
|
3,189 |
|
0.15 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
FHLB
advances |
249,896 |
1,388 |
|
2.20 |
% |
|
296,495 |
1,499 |
|
2.03 |
% |
|
165,586 |
|
569 |
|
1.36 |
% |
Other
borrowings |
110,868 |
60 |
|
0.21 |
% |
|
105,013 |
49 |
|
0.19 |
% |
|
116,297 |
|
84 |
|
0.29 |
% |
Junior
subordinated debentures |
140,212 |
1,605 |
|
4.54 |
% |
|
140,212 |
1,548 |
|
4.43 |
% |
|
140,212 |
|
1,226 |
|
3.47 |
% |
Total
borrowings |
500,976 |
3,053 |
|
2.42 |
% |
|
541,720 |
3,096 |
|
2.29 |
% |
|
422,095 |
|
1,879 |
|
1.77 |
% |
Total
funding liabilities |
9,098,077 |
8,570 |
|
0.37 |
% |
|
9,053,292 |
7,360 |
|
0.33 |
% |
|
8,912,932 |
|
5,068 |
|
0.23 |
% |
Other
non-interest-bearing liabilities(2) |
85,485 |
|
|
|
75,784 |
|
|
|
67,918 |
|
|
|
Total
liabilities |
9,183,562 |
|
|
|
9,129,076 |
|
|
|
8,980,850 |
|
|
|
Shareholders'
equity |
1,272,095 |
|
|
|
1,268,805 |
|
|
|
1,327,428 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
10,455,657 |
|
|
|
$ |
10,397,881 |
|
|
|
$ |
10,308,278 |
|
|
|
Net interest
income/rate spread |
|
|
$ |
109,078 |
|
4.46 |
% |
|
|
|
$ |
105,063 |
|
4.37 |
% |
|
|
$ |
100,210 |
|
4.20 |
% |
Net interest
margin |
|
|
|
4.48 |
% |
|
|
|
|
4.39 |
% |
|
|
|
4.22 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
|
|
1.43 |
% |
|
|
|
|
1.25 |
% |
|
|
|
0.97 |
% |
Return on average
equity |
|
|
|
11.78 |
% |
|
|
|
|
10.25 |
% |
|
|
|
7.49 |
% |
Average equity/average
assets |
|
|
|
12.17 |
% |
|
|
|
|
12.20 |
% |
|
|
|
12.88 |
% |
Average
interest-earning assets/average interest-bearing liabilities |
|
|
|
170.21 |
% |
|
|
|
|
167.45 |
% |
|
|
|
167.83 |
% |
Average
interest-earning assets/average funding liabilities |
|
|
|
106.14 |
% |
|
|
|
|
105.97 |
% |
|
|
|
105.69 |
% |
Non-interest
income/average assets |
|
|
|
0.77 |
% |
|
|
|
|
0.82 |
% |
|
|
|
0.70 |
% |
Non-interest
expense/average assets |
|
|
|
3.10 |
% |
|
|
|
|
3.19 |
% |
|
|
|
3.09 |
% |
Efficiency
ratio(4) |
|
|
|
63.04 |
% |
|
|
|
|
65.44 |
% |
|
|
|
67.91 |
% |
Adjusted efficiency
ratio(5) |
|
|
|
60.21 |
% |
|
|
|
|
64.09 |
% |
|
|
|
65.62 |
% |
(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 this press release. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Nine months ended |
|
September 30, 2018 |
|
September 30, 2017 |
|
Average Balance |
|
Interest and Dividends |
|
Yield/Cost(3) |
|
Average Balance |
|
Interest and Dividends |
|
Yield/Cost(3) |
Interest-earning
assets: |
|
|
|
|
|
|
|
Held for
sale loans |
$ |
81,244 |
|
$ |
2,871 |
|
4.72 |
% |
|
$ |
146,382 |
|
$ |
4,423 |
|
4.04 |
% |
Mortgage
loans |
6,058,535 |
|
231,703 |
|
5.11 |
% |
|
5,913,094 |
|
217,605 |
|
4.92 |
% |
Commercial/agricultural loans |
1,482,377 |
|
57,348 |
|
5.17 |
% |
|
1,496,549 |
|
52,717 |
|
4.71 |
% |
Consumer
and other loans |
141,180 |
|
6,821 |
|
6.46 |
% |
|
139,181 |
|
6,559 |
|
6.30 |
% |
Total
loans(1) |
7,763,336 |
|
298,743 |
|
5.14 |
% |
|
7,695,206 |
|
281,304 |
|
4.89 |
% |
Mortgage-backed securities |
1,196,282 |
|
25,145 |
|
2.81 |
% |
|
1,013,913 |
|
17,529 |
|
2.31 |
% |
Other
securities |
466,313 |
|
9,699 |
|
2.78 |
% |
|
466,572 |
|
9,420 |
|
2.70 |
% |
Interest-bearing deposits with banks |
60,532 |
|
775 |
|
1.71 |
% |
|
46,022 |
|
392 |
|
1.14 |
% |
FHLB
stock |
19,722 |
|
529 |
|
3.59 |
% |
|
15,666 |
|
164 |
|
1.40 |
% |
Total
investment securities |
1,742,849 |
|
36,148 |
|
2.77 |
% |
|
1,542,173 |
|
27,505 |
|
2.38 |
% |
Total
interest-earning assets |
9,506,185 |
|
334,891 |
|
4.71 |
% |
|
9,237,379 |
|
308,809 |
|
4.47 |
% |
Non-interest-earning
assets |
802,915 |
|
|
|
|
|
902,435 |
|
|
|
|
Total
assets |
$ |
10,309,100 |
|
|
|
|
|
$ |
10,139,814 |
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,020,457 |
|
797 |
|
0.10 |
% |
|
$ |
923,757 |
|
627 |
|
0.09 |
% |
Savings
accounts |
1,627,297 |
|
2,440 |
|
0.20 |
% |
|
1,556,075 |
|
1,588 |
|
0.14 |
% |
Money
market accounts |
1,414,513 |
|
2,469 |
|
0.23 |
% |
|
1,530,675 |
|
1,994 |
|
0.17 |
% |
Certificates of deposit |
1,073,861 |
|
7,433 |
|
0.93 |
% |
|
1,147,387 |
|
4,953 |
|
0.58 |
% |
Total
interest-bearing deposits |
5,136,128 |
|
13,139 |
|
0.34 |
% |
|
5,157,894 |
|
9,162 |
|
0.24 |
% |
Non-interest-bearing deposits |
3,344,312 |
|
— |
|
— |
% |
|
3,203,033 |
|
— |
|
— |
% |
Total
deposits |
8,480,440 |
|
13,139 |
|
0.21 |
% |
|
8,360,927 |
|
9,162 |
|
0.15 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB
advances |
234,323 |
|
3,564 |
|
2.03 |
% |
|
133,365 |
|
1,142 |
|
1.14 |
% |
Other
borrowings |
105,700 |
|
179 |
|
0.23 |
% |
|
113,664 |
|
241 |
|
0.28 |
% |
Junior
subordinated debentures |
140,212 |
|
4,495 |
|
4.29 |
% |
|
140,212 |
|
3,494 |
|
3.33 |
% |
Total
borrowings |
480,235 |
|
8,238 |
|
2.29 |
% |
|
387,241 |
|
4,877 |
|
1.68 |
% |
Total
funding liabilities |
8,960,675 |
|
21,377 |
|
0.32 |
% |
|
8,748,168 |
|
14,039 |
|
0.21 |
% |
Other
non-interest-bearing liabilities(2) |
75,821 |
|
|
|
|
60,895 |
|
|
|
Total
liabilities |
9,036,496 |
|
|
|
|
8,809,063 |
|
|
|
Shareholders'
equity |
1,272,604 |
|
|
|
|
1,330,751 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
10,309,100 |
|
|
|
|
$ |
10,139,814 |
|
|
|
Net interest
income/rate spread |
|
$ |
313,514 |
|
4.39 |
% |
|
|
$ |
294,770 |
|
4.26 |
% |
Net interest
margin |
|
|
4.41 |
% |
|
|
|
4.27 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
|
1.28 |
% |
|
|
|
0.98 |
% |
Return on average
equity |
|
|
10.40 |
% |
|
|
|
7.47 |
% |
Average equity/average
assets |
|
|
12.34 |
% |
|
|
|
13.12 |
% |
Average
interest-earning assets/average interest-bearing liabilities |
|
|
169.26 |
% |
|
|
|
166.59 |
% |
Average
interest-earning assets/average funding liabilities |
|
|
106.09 |
% |
|
|
|
105.59 |
% |
Non-interest
income/average assets |
|
|
0.82 |
% |
|
|
|
0.76 |
% |
Non-interest
expense/average assets |
|
|
3.19 |
% |
|
|
|
3.12 |
% |
Efficiency
ratio(4) |
|
|
65.33 |
% |
|
|
|
67.12 |
% |
Adjusted efficiency
ratio(5) |
|
|
63.79 |
% |
|
|
|
65.25 |
% |
(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 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. Where applicable,
comparable earnings information using GAAP financial measures is
also presented. |
|
|
|
|
|
|
|
|
|
|
REVENUE FROM
CORE OPERATIONS |
Quarters Ended |
|
Nine months ended |
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
Net interest income
before provision for loan losses |
$ |
109,078 |
|
|
$ |
105,063 |
|
|
$ |
100,210 |
|
|
$ |
313,514 |
|
|
$ |
294,770 |
|
Total non-interest
income |
20,411 |
|
|
21,217 |
|
|
18,081 |
|
|
62,990 |
|
|
57,525 |
|
Total GAAP revenue |
129,489 |
|
|
126,280 |
|
|
118,291 |
|
|
376,504 |
|
|
352,295 |
|
Exclude
net gain on sale of securities |
— |
|
|
(44 |
) |
|
(270 |
) |
|
(48 |
) |
|
(230 |
) |
Exclude
change in valuation of financial instruments carried at fair
value |
(45 |
) |
|
(224 |
) |
|
493 |
|
|
(3,577 |
) |
|
1,831 |
|
Revenue from core
operations (non-GAAP) |
$ |
129,444 |
|
|
$ |
126,012 |
|
|
$ |
118,514 |
|
|
$ |
372,879 |
|
|
$ |
353,896 |
|
|
|
|
|
|
|
|
|
EARNINGS FROM
CORE OPERATIONS |
Quarters
Ended |
|
Nine months
ended |
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
Net income (GAAP) |
$ |
37,773 |
|
|
$ |
32,424 |
|
|
$ |
25,077 |
|
|
$ |
98,987 |
|
|
$ |
74,324 |
|
Exclude net gain on sale of securities |
— |
|
|
(44 |
) |
|
(270 |
) |
|
(48 |
) |
|
(230 |
) |
Exclude change in valuation of financial
instruments carried at fair value |
(45 |
) |
|
(224 |
) |
|
493 |
|
|
(3,577 |
) |
|
1,831 |
|
Exclude acquisition-related costs |
1,005 |
|
|
— |
|
|
— |
|
|
1,005 |
|
|
— |
|
Exclude related tax (benefit) expense |
(126 |
) |
|
64 |
|
|
(80 |
) |
|
733 |
|
|
(576 |
) |
Total earnings from core operations (non-GAAP) |
$ |
38,607 |
|
|
$ |
32,220 |
|
|
$ |
25,220 |
|
|
$ |
97,100 |
|
|
$ |
75,349 |
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share (GAAP) |
$ |
1.17 |
|
|
$ |
1.00 |
|
|
$ |
0.76 |
|
|
$ |
3.05 |
|
|
$ |
2.25 |
|
Diluted core earnings per share (non-GAAP) |
$ |
1.19 |
|
|
$ |
1.00 |
|
|
$ |
0.76 |
|
|
$ |
3.00 |
|
|
$ |
2.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
ADJUSTED
EFFICIENCY RATIO |
Quarters Ended |
|
Nine months ended |
|
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Sep 30, 2017 |
|
Sep 30, 2018 |
|
Sep 30, 2017 |
Non-interest expense
(GAAP) |
$ |
81,632 |
|
|
$ |
82,637 |
|
|
$ |
80,331 |
|
|
$ |
245,975 |
|
|
$ |
236,469 |
|
Exclude
acquisition-related costs |
(1,005 |
) |
|
— |
|
|
— |
|
|
(1,005 |
) |
|
— |
|
Exclude
CDI amortization |
(1,348 |
) |
|
(1,382 |
) |
|
(1,542 |
) |
|
(4,112 |
) |
|
(4,790 |
) |
Exclude
state/municipal tax expense |
(902 |
) |
|
(816 |
) |
|
(780 |
) |
|
(2,430 |
) |
|
(1,857 |
) |
Exclude
REO (loss) gain |
(433 |
) |
|
319 |
|
|
(240 |
) |
|
(553 |
) |
|
1,089 |
|
Adjusted non-interest
expense (non-GAAP) |
$ |
77,944 |
|
|
$ |
80,758 |
|
|
$ |
77,769 |
|
|
$ |
237,875 |
|
|
$ |
230,911 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income
before provision for loan losses (GAAP) |
$ |
109,078 |
|
|
$ |
105,063 |
|
|
$ |
100,210 |
|
|
$ |
313,514 |
|
|
$ |
294,770 |
|
Non-interest income
(GAAP) |
20,411 |
|
|
21,217 |
|
|
18,081 |
|
|
62,990 |
|
|
57,525 |
|
Total revenue |
129,489 |
|
|
126,280 |
|
|
118,291 |
|
|
376,504 |
|
|
352,295 |
|
Exclude
net gain on sale of securities |
— |
|
|
(44 |
) |
|
(270 |
) |
|
(48 |
) |
|
(230 |
) |
Exclude
net change in valuation of financial instruments carried at fair
value |
(45 |
) |
|
(224 |
) |
|
493 |
|
|
(3,577 |
) |
|
1,831 |
|
Adjusted revenue
(non-GAAP) |
$ |
129,444 |
|
|
$ |
126,012 |
|
|
$ |
118,514 |
|
|
$ |
372,879 |
|
|
$ |
353,896 |
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
(GAAP) |
63.04 |
% |
|
65.44 |
% |
|
67.91 |
% |
|
65.33 |
% |
|
67.12 |
% |
Adjusted efficiency
ratio (non-GAAP) |
60.21 |
% |
|
64.09 |
% |
|
65.62 |
% |
|
63.79 |
% |
|
65.25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
Sep 30, 2018 |
|
Jun 30, 2018 |
|
Dec 31, 2017 |
|
Sep 30, 2017 |
Shareholders' equity
(GAAP) |
$ |
1,272,198 |
|
|
$ |
1,253,010 |
|
|
$ |
1,272,626 |
|
|
$ |
1,327,011 |
|
Exclude
goodwill and other intangible assets, net |
261,158 |
|
|
262,517 |
|
|
265,314 |
|
|
269,802 |
|
Tangible common
shareholders' equity (non-GAAP) |
$ |
1,011,040 |
|
|
$ |
990,493 |
|
|
$ |
1,007,312 |
|
|
$ |
1,057,209 |
|
|
|
|
|
|
|
|
|
Total assets
(GAAP) |
$ |
10,514,303 |
|
|
$ |
10,379,194 |
|
|
$ |
9,763,209 |
|
|
$ |
10,443,086 |
|
Exclude
goodwill and other intangible assets, net |
261,158 |
|
|
262,517 |
|
|
265,314 |
|
|
269,802 |
|
Total tangible assets
(non-GAAP) |
$ |
10,253,145 |
|
|
$ |
10,116,677 |
|
|
$ |
9,497,895 |
|
|
$ |
10,173,284 |
|
Common shareholders'
equity to total assets (GAAP) |
12.10 |
% |
|
12.07 |
% |
|
13.03 |
% |
|
12.71 |
% |
Tangible common
shareholders' equity to tangible assets (non-GAAP) |
9.86 |
% |
|
9.79 |
% |
|
10.61 |
% |
|
10.39 |
% |
|
|
|
|
|
|
|
|
TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
|
Tangible common
shareholders' equity |
$ |
1,011,040 |
|
|
$ |
990,493 |
|
|
$ |
1,007,312 |
|
|
$ |
1,057,209 |
|
Common shares
outstanding at end of period |
32,402,757 |
|
|
32,405,696 |
|
|
32,726,485 |
|
|
33,254,784 |
|
Common shareholders'
equity (book value) per share (GAAP) |
$ |
39.26 |
|
|
$ |
38.67 |
|
|
$ |
38.89 |
|
|
$ |
39.90 |
|
Tangible common
shareholders' equity (tangible book value) per share
(non-GAAP) |
$ |
31.20 |
|
|
$ |
30.57 |
|
|
$ |
30.78 |
|
|
$ |
31.79 |
|
CONTACT:
|
MARK J. GRESCOVICH, |
|
|
PRESIDENT &
CEO |
|
|
PETER J. CONNER,
CFO |
|
|
(509) 527-3636 |
|
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