Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent
company of Banner Bank and Islanders Bank, today reported strong
organic loan growth exclusive of the Skagit Bancorp, Inc.
("Skagit") acquisition on November 1, 2018, combined with a stable
net interest margin, contributed to solid fourth quarter financial
results. Net income in the fourth quarter of 2018 was $37.5
million, or $1.09 per diluted share, compared to $37.8 million, or
$1.17 per diluted share, in the preceding quarter. Fourth
quarter results include $4.6 million of acquisition-related
expense, compared to $1.0 million of acquisition-related expense in
the preceding quarter. In the fourth quarter of 2017,
following a revaluation of deferred tax assets due to tax reforms
enacted in 2017, Banner recorded additional tax expense of $42.6
million, or $1.30 per diluted share. Consequently, the fourth
quarter 2017 net loss was $13.5 million, or $0.41 per diluted
share. There was no acquisition-related expense in the fourth
quarter of 2017. For the year ended December 31, 2018, net
income increased to $136.5 million, or $4.15 per diluted share,
compared to $60.8 million, or $1.84 per diluted share, in 2017.
“Banner’s fourth quarter and full year 2018
performance reflects continued execution of our super community
bank strategy, which is generating new client relationships, adding
to our core funding position by growing core deposits, and
promoting client loyalty through our responsive service model,
while augmenting our growth with opportunistic acquisitions,”
stated Mark J. Grescovich, President and Chief Executive
Officer. “During the fourth quarter, we announced the
completion of the merger with Skagit. This transaction
expanded Banner’s presence and density in the attractive North
Sound region in Northwest Washington State and represents a
complementary fit, both strategically and culturally, with Banner’s
business model. The combination of our two organizations
provides the opportunity to enhance operational efficiency 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 December 31, 2018, Banner Corporation had
$11.86 billion in assets, $8.59 billion in net loans and $9.48
billion in deposits. Banner operates 182 branch offices
located in eight of the top 20 largest western Metropolitan
Statistical Areas by population.
Fourth Quarter 2018
Highlights
- Revenues were $138.5 million during the quarter ended December
31, 2018, $129.5 million during the preceding quarter and $125.9
million during the fourth quarter a year ago.
- Net interest income, before the provision for loan losses,
increased 8% to $117.5 million, compared to $109.1 million in the
preceding quarter and increased 20% from $98.3 million in the
fourth quarter a year ago.
- Net interest margin was 4.47% for the current quarter, compared
to 4.48% in the preceding quarter and 4.18% in the fourth quarter a
year ago.
- Loans receivable increased $862.1 million, or 11%, to $8.68
billion at December 31, 2018, including $631.7 million of portfolio
loans from the acquisition of Skagit, compared to $7.82 billion at
September 30, 2018.
- Provision for loan losses increased to $2.5 million from $2.0
million in the preceding quarter, increasing the allowance for loan
losses to $96.5 million, or 1.11% of total loans, compared to an
allowance for loan losses of $89.0 million, or 1.17% of total
loans, as of December 31, 2017.
- Core deposits increased $651.6 million, or 9%, to $8.16
billion, including $696.3 million of core deposits acquired from
the Skagit acquisition, compared to September 30, 2018 and
represented 86% of total deposits at December 31, 2018.
- Quarterly dividends to shareholders for the current quarter
were $0.38 per share, an increase of 52% from the quarterly
dividend for the fourth quarter a year ago.
- Common shareholders’ equity per share increased to $41.79 at
December 31, 2018, compared to $39.26 at the preceding quarter end
and $38.89 a year ago.
- Tangible common shareholders' equity per share* increased to
$31.45 at December 31, 2018, compared to $31.20 at the preceding
quarter end and $30.78 a year ago.
- Non-performing assets improved to $18.9 million, or 0.16% of
total assets, at December 31, 2018, compared to $27.5 million, or
0.28% of total assets, at December 31, 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 fair
value adjustments, net loss on the sale of securities and in the
fourth quarter of 2017 gain on the sale of branches) and the
adjusted efficiency ratio (which excludes fair value adjustments,
net loss on the sale of securities and, in the fourth quarter of
2017, gain on the sale of branches from the total of net interest
income before provision for loan losses and non-interest income and
excludes acquisition-related costs, 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.
Recent Events
On November 1, 2018, Banner completed its
acquisition of Skagit and its wholly-owned subsidiary, Skagit Bank,
of Burlington, Washington. As of the closing of the
transaction, Skagit Bank had 11 retail branches along the I-5
corridor from Seattle to the Canadian border. Pursuant to the
previously announced terms of the acquisition, Skagit shareholders
received 5.6664 shares of Banner common stock in exchange for each
share of Skagit common stock, plus cash in lieu of any fractional
shares and cash to buyout Skagit stock options for a total
consideration paid of $171.8 million.
The Skagit merger was accounted for using the
acquisition method of accounting. Accordingly, the assets
(including identifiable intangible assets) and the liabilities of
Skagit were measured at their respective estimated fair values as
of the merger date. The excess of the purchase price over the fair
value of the net assets acquired was attributed to goodwill.
The fair value on the merger date represents management's best
estimates based on available information and facts and
circumstances in existence on the merger date. The
acquisition accounting is subject to adjustment within a
measurement period of one year from the acquisition date. The
acquisition provided $915.8 million of assets, $632.4 million of
loans, and $810.2 million of deposits to Banner.
Income Statement Review
“Our net interest margin remained strong despite
an increase in deposit costs,” said Grescovich. Banner's net
interest margin was 4.47% for the fourth quarter of 2018, a one
basis-point decrease compared to 4.48% in the preceding quarter and
a 29 basis-point improvement compared to 4.18% in the fourth
quarter a year ago. Acquisition accounting adjustments added
12 basis points to the net interest margin in both the current
quarter and preceding quarters compared to six basis points in the
fourth quarter a year ago. The total purchase discount for
acquired loans was $25.7 million at December 31, 2018, an increase
from $15.4 million at September 30, 2018 and $21.1 million at
December 31, 2017. For the year ended December 31, 2018,
Banner’s net interest margin expanded 19 basis points to 4.43%
compared to 4.24% in 2017. Acquisition accounting adjustments
added ten basis points to the net interest margin for both
years.
Average interest-earning asset yields increased
seven basis points to 4.90% compared to 4.83% for the preceding
quarter and increased 50 basis points compared to 4.40% in the
fourth quarter a year ago. Average loan yields increased six
basis points to 5.37% compared to 5.31% in the preceding quarter
and increased 55 basis points compared to 4.82% in the fourth
quarter a year ago. Loan discount accretion added 16 basis
points to loan yields in the fourth quarter of 2018, compared to 15
basis points in the preceding quarter and five basis points in the
fourth quarter a year ago. Deposit costs were 0.32% in the
fourth quarter of 2018, a seven basis-point increase compared to
the preceding quarter and a 17 basis-point increase compared to the
fourth quarter a year ago. The total cost of funds was 0.46%
during the fourth quarter of 2018, a nine basis-point increase
compared to the preceding quarter and a 23 basis-point increase
compared to the fourth quarter a year ago, largely reflecting
increased use of brokered deposits and the impact of the rising
interest 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 $2.5 million
provision for loan losses in the current quarter, compared to $2.0
million recorded in both the prior quarter and in the same quarter
a year ago.
Deposit fees and other service charges were
$12.5 million in the fourth quarter of 2018, compared to $12.3
million in the preceding quarter and $10.8 million in the fourth
quarter a year ago. Mortgage banking revenues, including
gains on one- to four-family and multifamily loan sales and loan
servicing fees, increased to $6.0 million in the fourth quarter,
compared to $5.8 million in the preceding quarter and $5.0 million
in the fourth quarter of 2017. Home purchase activity
accounted for 78% of one- to four-family mortgage loan originations
in the fourth quarter of 2018, compared to 78% in the prior quarter
and 71% in the fourth quarter of 2017.
Banner’s fourth quarter 2018 results included a
$198,000 net gain for fair value adjustments as a result of changes
in the valuation of financial instruments carried at fair value,
principally comprised of certain investment securities held for
trading and an $885,000 net loss on the sale of securities.
In the preceding quarter, results included a $45,000 net gain for
fair value adjustments. In the fourth quarter a year ago,
results included a $1.0 million net loss for fair value adjustments
and a $2.3 million net loss 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 7% to $138.5 million
for the fourth quarter of 2018, compared to $129.5 million in the
preceding quarter and increased 10% compared to $125.9 million in
the fourth quarter a year ago. For the year, total revenues
increased 8% to $515.0 million, compared to $478.2 million in
2017. Revenues from core operations* (revenues excluding
gains and losses on the sale of securities, the net change in
valuation of financial instruments and, in the fourth quarter of
2017, the gain on sale of the Utah branches) increased to $139.2
million in the fourth quarter of 2018, compared to $129.4 million
in the preceding quarter and $117.1 million in the fourth quarter
of 2017. For 2018, revenues from core operations* increased
9% to $512.0 million from $471.0 million in 2017.
Total non-interest income was $21.0 million in
the fourth quarter of 2018, compared to $20.4 million in the third
quarter of 2018 and $27.7 million in the fourth quarter a year
ago. For 2018, total non-interest income was $84.0 million,
compared to $85.2 million in 2017.
Banner’s total non-interest expense was $95.4
million in the fourth quarter of 2018, compared to $81.6 million in
the preceding quarter and $82.5 million in the fourth quarter of
2017. Acquisition-related expenses were $4.6 million for the
fourth quarter of 2018, compared to $1.0 million for the preceding
quarter and no acquisition expenses for the year ago quarter.
The increase in non-interest expense during the quarter also
reflects the expenses associated with operating the branches
acquired in the Skagit acquisition. Other non-interest
expense items of significance for the fourth quarter of 2018
included a $4.0 million accrual for pending litigation.
Banner’s efficiency ratio was 68.89% for the current quarter,
compared to 63.04% in the preceding quarter and 65.51% in the year
ago quarter. Banner’s adjusted efficiency ratio*, which is
calculated by dividing core non-interest expense by core revenue,
was 63.06% for the current quarter, compared to 60.21% in the
preceding quarter and 69.40% in the year ago quarter.
For the fourth quarter of 2018, Banner recorded
$3.1 million in state and federal income tax expense for an
effective tax rate of 7.5%, reflecting the new lower federal
corporate income tax rate beginning in 2018, as well as the
benefits from tax exempt income sources. In addition, Banner
recorded $5.5 million of tax benefit adjustments, which included
the release of a $4.2 million valuation reserve previously recorded
in the fourth quarter of 2017 as a provisional amount related to
the enactment of the Tax Cuts and Jobs Act. 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 $55.0 million in state and federal income
tax expense primarily due to a $42.6 million charge for the
revaluation of its deferred tax assets as a result of the passage
of the Tax Cuts and Jobs Act.
Balance Sheet Review
Largely as a result of the Skagit acquisition,
but also as a result of organic growth, Banner’s total assets
increased to $11.86 billion at December 31, 2018, compared to
$10.51 billion at September 30, 2018 and $9.76 billion at December
31, 2017. The total of securities and interest-bearing
deposits held at other banks was $1.94 billion at December 31,
2018, compared to $1.76 billion at September 30, 2018 and $1.26
billion at December 31, 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. During 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 3.5 years at December 31,
2018, compared to 4.1 years at December 31, 2017.
Net loans receivable increased 11% to $8.59
billion at December 31, 2018, compared to $7.73 billion at
September 30, 2018 and increased 14% when compared to $7.51 billion
at December 31, 2017. The $860.9 million increase in net
loans during the current quarter included $631.7 million of
portfolio loans acquired in the Skagit acquisition as well as
$230.4 million of organic loan growth. Organic loan growth
was 12% on an annualized basis during the quarter. Commercial
real estate and multifamily real estate loans increased 11% to
$3.93 billion at December 31, 2018, compared to $3.52 billion at
September 30, 2018, and $3.54 billion a year ago. Commercial
business loans increased 9% to $1.48 billion at December 31, 2018,
compared to $1.36 billion three months earlier and increased 16%
compared to $1.28 billion a year ago. Reflecting normal
seasonal trends, agricultural business loans increased by 12% to
$404.9 million at December 31, 2018, compared to $360.0 million
three months earlier and increased by 20% compared to $338.4
million a year ago. Total construction, land and land
development loans increased 9% to $1.11 billion at December 31,
2018, compared to $1.02 billion at September 30, 2018 and increased
22% compared to $907.5 million a year earlier. Consumer loans
increased 10% to $785.0 million at December 31, 2018, compared to
$710.5 million at September 30, 2018 and increased 14% compared to
$688.8 million a year ago. One- to four-family loans
increased 15% to $973.6 million, compared to both $849.9 million at
September 30, 2018 and $848.3 million a year ago.
Loans held for sale increased substantially to
$171.0 million at December 31, 2018, compared to $72.9 million at
September 30, 2018 and $40.7 million at December 31, 2017.
The volume of one- to four- family residential mortgage loans sold
was $130.1 million in the current quarter, compared to $134.1
million in the preceding quarter and was $141.1 million in the
fourth quarter a year ago. During the fourth quarter of 2018,
Banner sold $26.8 million in multifamily loans, compared to $94.0
million in the preceding quarter. Loans held for sale at
December 31, 2018 included $130.7 million of multifamily loans and
$40.3 million of one- to four-family loans.
Total deposits increased 9% to $9.48 billion at
December 31, 2018, compared to $8.69 billion at September 30, 2018
and increased 16% when compared to $8.18 billion a year ago, as
core deposit growth over the last year, coupled with the addition
of both deposits from the Skagit acquisition and brokered
certificates of deposit, was partially offset by continuing
declines in retail, or non-brokered, certificates of deposit.
Total deposits at December 31, 2018 were negatively impacted by the
sale of $20.4 million of Poulsbo Branch deposits during the second
quarter of 2018. Non-interest-bearing account balances
increased 5% to $3.66 billion at December 31, 2018, compared
to $3.47 billion at September 30, 2018 and increased 12% compared
to $3.27 billion a year ago. Core deposits
(non-interest-bearing and interest-bearing transaction and savings
accounts) increased $651.6 million, or 9%, from the prior quarter
and increased 13% compared to a year ago. The core deposit
balance at December 31, 2018 was positively impacted by $696.3
million of core deposits acquired in the Skagit acquisition.
Core deposits represented 86% of total deposits at December 31,
2018, the same as three months earlier, and were 88% of total
deposits a year earlier. Certificates of deposit increased
12% to $1.32 billion at December 31, 2018, compared to $1.18
billion at September 30, 2018 and increased 37% compared to $966.9
million a year earlier. Brokered deposits increased to $377.3
million at December 31, 2018, compared to $325.2 million at
September 30, 2018 and $40.7 million a year earlier.
At December 31, 2018, total common shareholders'
equity was $1.47 billion, or 12.39% of assets, compared to $1.27
billion or 12.10% of assets at September 30, 2018 and $1.27 billion
or 13.03% of assets a year ago. At December 31, 2018,
tangible common shareholders' equity*, which excludes goodwill and
other intangible assets, was $1.11 billion, or 9.62% of tangible
assets*, compared to $1.01 billion, or 9.86% of tangible assets, at
September 30, 2018 and $1.01 billion, or 10.61% of tangible assets,
a year ago. Banner's tangible book value per share* increased
to $31.45 at December 31, 2018, compared to $30.78 per share a year
ago.
During the first quarter of 2018, Banner
repurchased 269,711 shares of its common stock and during the
fourth quarter of 2018, Banner repurchased 325,000 shares of its
common stock. There were no repurchases of common stock
during the second or third quarters of 2018. Banner 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 December
31, 2018, Banner's common equity Tier 1 capital ratio was 10.75%,
its Tier 1 leverage capital to average assets ratio was 10.98%, and
its total capital to risk-weighted assets ratio was 13.12%.
Credit Quality
The allowance for loan losses was $96.5 million
at December 31, 2018, or 1.11% of total loans outstanding and 616%
of non-performing loans compared to $95.3 million at September 30,
2018, or 1.22% of total loans outstanding and 603% of
non-performing loans, and $89.0 million at December 31, 2017, or
1.17% of total loans outstanding and 329% of non-performing
loans. Net loan charge-offs totaled $1.3 million in the
fourth quarter, compared to $612,000 in the preceding quarter and
$2.1 million in the fourth 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 $2.5 million provision for loan
losses in the current quarter, compared to $2.0 million recorded in
both the prior quarter and in the year ago quarter.
Non-performing loans decreased to $15.7 million at December 31,
2018, compared to $15.8 million at September 30, 2018 and $27.0
million a year ago. Real estate owned and other repossessed
assets were $3.2 million at December 31, 2018, compared to $937,000
at September 30, 2018 and $467,000 a year ago. The increase
in the current quarter primarily reflects $2.6 million of real
estate owned acquired in the Skagit acquisition.
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
December 31, 2018, the total purchase discount for acquired loans
was $25.7 million.
Banner's non-performing assets were $18.9
million, or 0.16% of total assets, at December 31, 2018, compared
to $16.7 million, or 0.16% of total assets, at September 30, 2018
and $27.5 million, or 0.28% of total assets, a year ago. In
addition to non-performing assets, purchased credit-impaired loans
increased due to the Skagit acquisition to $14.4 million at
December 31, 2018, compared to $12.9 million at September 30, 2018
and decreased when compared to $21.3 million at December 31,
2017.
Conference Call
Banner will host a conference call on Thursday,
January 24, 2019, at 8:00 a.m. PST, to discuss its fourth quarter
and year end 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
10127071, or at www.bannerbank.com.
About the Company
Banner Corporation is a $11.86 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 Skagit acquisition 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 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; (3) 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; (4)
competitive pressures among depository institutions; (5) interest
rate movements and their impact on customer behavior and net
interest margin; (6) the impact of repricing and competitors'
pricing initiatives on loan and deposit products; (7) fluctuations
in real estate values; (8) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the market place; (9) the ability to access cost-effective funding;
(10) changes in financial markets; (11) changes in economic
conditions in general and in Washington, Idaho, Oregon and
California in particular; (12) the costs, effects and outcomes of
litigation; (13) 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; (14) changes in
accounting principles, policies or guidelines; (15) future
acquisitions by Banner of other depository institutions or lines of
business; (16) future goodwill impairment due to changes in
Banner's business, changes in market conditions, or other factors
and (17) 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 |
|
Twelve months ended |
(in thousands except
shares and per share data) |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
Loans
receivable |
|
$ |
114,627 |
|
|
$ |
104,868 |
|
|
$ |
93,145 |
|
|
$ |
413,370 |
|
|
$ |
374,449 |
|
Mortgage-backed securities |
|
9,931 |
|
|
8,915 |
|
|
7,006 |
|
|
35,076 |
|
|
24,535 |
|
Securities and cash equivalents |
|
4,183 |
|
|
3,865 |
|
|
3,324 |
|
|
15,186 |
|
|
13,300 |
|
|
|
128,741 |
|
|
117,648 |
|
|
103,475 |
|
|
463,632 |
|
|
412,284 |
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
7,503 |
|
|
5,517 |
|
|
3,111 |
|
|
20,642 |
|
|
12,273 |
|
Federal
Home Loan Bank advances |
|
2,072 |
|
|
1,388 |
|
|
766 |
|
|
5,636 |
|
|
1,908 |
|
Other
borrowings |
|
66 |
|
|
60 |
|
|
77 |
|
|
245 |
|
|
317 |
|
Junior
subordinated debentures |
|
1,641 |
|
|
1,605 |
|
|
1,257 |
|
|
6,136 |
|
|
4,752 |
|
|
|
11,282 |
|
|
8,570 |
|
|
5,211 |
|
|
32,659 |
|
|
19,250 |
|
Net
interest income before provision for loan losses |
|
117,459 |
|
|
109,078 |
|
|
98,264 |
|
|
430,973 |
|
|
393,034 |
|
PROVISION FOR
LOAN LOSSES |
|
2,500 |
|
|
2,000 |
|
|
2,000 |
|
|
8,500 |
|
|
8,000 |
|
Net
interest income |
|
114,959 |
|
|
107,078 |
|
|
96,264 |
|
|
422,473 |
|
|
385,034 |
|
NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
Deposit
fees and other service charges |
|
12,539 |
|
|
12,255 |
|
|
10,840 |
|
|
48,074 |
|
|
43,452 |
|
Mortgage
banking operations |
|
6,019 |
|
|
5,816 |
|
|
5,025 |
|
|
21,343 |
|
|
20,880 |
|
Bank
owned life insurance |
|
994 |
|
|
1,726 |
|
|
1,020 |
|
|
4,505 |
|
|
4,618 |
|
Miscellaneous |
|
2,153 |
|
|
569 |
|
|
1,923 |
|
|
7,148 |
|
|
8,985 |
|
|
|
21,705 |
|
|
20,366 |
|
|
18,808 |
|
|
81,070 |
|
|
77,935 |
|
Net loss
on sale of securities |
|
(885 |
) |
|
— |
|
|
(2,310 |
) |
|
(837 |
) |
|
(2,080 |
) |
Net
change in valuation of financial instruments carried at fair
value |
|
198 |
|
|
45 |
|
|
(1,013 |
) |
|
3,775 |
|
|
(2,844 |
) |
Gain on
sale of branches, including related loans and deposits |
|
— |
|
|
— |
|
|
12,189 |
|
|
— |
|
|
12,189 |
|
Total
non-interest income |
|
21,018 |
|
|
20,411 |
|
|
27,674 |
|
|
84,008 |
|
|
85,200 |
|
NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
Salary
and employee benefits |
|
52,122 |
|
|
48,930 |
|
|
48,082 |
|
|
202,613 |
|
|
192,096 |
|
Less
capitalized loan origination costs |
|
(4,863 |
) |
|
(4,318 |
) |
|
(4,134 |
) |
|
(17,925 |
) |
|
(17,379 |
) |
Occupancy
and equipment |
|
13,490 |
|
|
12,385 |
|
|
12,088 |
|
|
49,215 |
|
|
47,866 |
|
Information / computer data services |
|
5,112 |
|
|
4,766 |
|
|
4,731 |
|
|
18,823 |
|
|
17,245 |
|
Payment
and card processing services |
|
4,233 |
|
|
3,748 |
|
|
3,807 |
|
|
15,412 |
|
|
14,330 |
|
Professional and legal expenses |
|
6,669 |
|
|
3,010 |
|
|
5,301 |
|
|
17,945 |
|
|
17,534 |
|
Advertising and marketing |
|
2,588 |
|
|
1,786 |
|
|
3,412 |
|
|
8,346 |
|
|
8,637 |
|
Deposit
insurance |
|
1,093 |
|
|
991 |
|
|
1,251 |
|
|
4,446 |
|
|
4,689 |
|
State/municipal business and use taxes |
|
854 |
|
|
902 |
|
|
737 |
|
|
3,284 |
|
|
2,594 |
|
Real
estate operations |
|
251 |
|
|
433 |
|
|
(941 |
) |
|
804 |
|
|
(2,030 |
) |
Amortization of core deposit intangibles |
|
1,935 |
|
|
1,348 |
|
|
1,457 |
|
|
6,047 |
|
|
6,246 |
|
Miscellaneous |
|
7,310 |
|
|
6,646 |
|
|
6,710 |
|
|
26,754 |
|
|
27,142 |
|
|
|
90,794 |
|
|
80,627 |
|
|
82,501 |
|
|
335,764 |
|
|
318,970 |
|
Acquisition related expenses |
|
4,602 |
|
|
1,005 |
|
|
— |
|
|
5,607 |
|
|
— |
|
Total
non-interest expense |
|
95,396 |
|
|
81,632 |
|
|
82,501 |
|
|
341,371 |
|
|
318,970 |
|
Income
before provision for income taxes |
|
40,581 |
|
|
45,857 |
|
|
41,437 |
|
|
165,110 |
|
|
151,264 |
|
PROVISION
FOR INCOME TAXES |
|
3,053 |
|
|
8,084 |
|
|
54,985 |
|
|
28,595 |
|
|
90,488 |
|
NET
INCOME |
|
$ |
37,528 |
|
|
$ |
37,773 |
|
|
$ |
(13,548 |
) |
|
$ |
136,515 |
|
|
$ |
60,776 |
|
Earnings (loss) per
share available to common shareholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.10 |
|
|
$ |
1.17 |
|
|
$ |
(0.41 |
) |
|
$ |
4.16 |
|
|
$ |
1.85 |
|
Diluted |
|
$ |
1.09 |
|
|
$ |
1.17 |
|
|
$ |
(0.41 |
) |
|
$ |
4.15 |
|
|
$ |
1.84 |
|
Cumulative dividends
declared per common share |
|
$ |
0.38 |
|
|
$ |
0.38 |
|
|
$ |
0.25 |
|
|
$ |
1.96 |
|
|
$ |
2.00 |
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
34,221,048 |
|
|
32,256,789 |
|
|
32,655,973 |
|
|
32,784,724 |
|
|
32,888,007 |
|
Diluted |
|
34,342,641 |
|
|
32,376,623 |
|
|
32,766,335 |
|
|
32,894,425 |
|
|
32,986,707 |
|
Increase (decrease) in
common shares outstanding |
|
2,780,015 |
|
|
(2,939 |
) |
|
(528,299 |
) |
|
2,456,287 |
|
|
(466,902 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION |
|
|
|
|
|
|
|
Percentage Change |
(in thousands except
shares and per share data) |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks |
|
$ |
231,029 |
|
|
$ |
184,417 |
|
|
$ |
199,624 |
|
|
25.3 |
% |
|
15.7 |
% |
Interest-bearing
deposits |
|
41,167 |
|
|
64,244 |
|
|
61,576 |
|
|
(35.9 |
)% |
|
(33.1 |
)% |
Total
cash and cash equivalents |
|
272,196 |
|
|
248,661 |
|
|
261,200 |
|
|
9.5 |
% |
|
4.2 |
% |
Securities -
trading |
|
25,896 |
|
|
25,764 |
|
|
22,318 |
|
|
0.5 |
% |
|
16.0 |
% |
Securities - available
for sale |
|
1,636,223 |
|
|
1,412,273 |
|
|
919,485 |
|
|
15.9 |
% |
|
77.9 |
% |
Securities - held to
maturity |
|
234,220 |
|
|
258,699 |
|
|
260,271 |
|
|
(9.5 |
)% |
|
(10.0 |
)% |
Total
securities |
|
1,896,339 |
|
|
1,696,736 |
|
|
1,202,074 |
|
|
11.8 |
% |
|
57.8 |
% |
Federal Home Loan Bank
stock |
|
31,955 |
|
|
19,196 |
|
|
10,334 |
|
|
66.5 |
% |
|
209.2 |
% |
Loans held for
sale |
|
171,031 |
|
|
72,850 |
|
|
40,725 |
|
|
134.8 |
% |
|
320.0 |
% |
Loans receivable |
|
8,684,595 |
|
|
7,822,519 |
|
|
7,598,884 |
|
|
11.0 |
% |
|
14.3 |
% |
Allowance for loan
losses |
|
(96,485 |
) |
|
(95,263 |
) |
|
(89,028 |
) |
|
1.3 |
% |
|
8.4 |
% |
Net loans
receivable |
|
8,588,110 |
|
|
7,727,256 |
|
|
7,509,856 |
|
|
11.1 |
% |
|
14.4 |
% |
Accrued interest
receivable |
|
38,593 |
|
|
37,676 |
|
|
31,259 |
|
|
2.4 |
% |
|
23.5 |
% |
Real estate owned held
for sale, net |
|
2,611 |
|
|
364 |
|
|
360 |
|
|
617.3 |
% |
|
625.3 |
% |
Property and equipment,
net |
|
171,809 |
|
|
151,212 |
|
|
154,815 |
|
|
13.6 |
% |
|
11.0 |
% |
Goodwill |
|
330,874 |
|
|
242,659 |
|
|
242,659 |
|
|
36.4 |
% |
|
36.4 |
% |
Other intangibles,
net |
|
32,924 |
|
|
18,499 |
|
|
22,655 |
|
|
78.0 |
% |
|
45.3 |
% |
Bank-owned life
insurance |
|
177,467 |
|
|
163,265 |
|
|
162,668 |
|
|
8.7 |
% |
|
9.1 |
% |
Other assets |
|
149,128 |
|
|
135,929 |
|
|
124,604 |
|
|
9.7 |
% |
|
19.7 |
% |
Total
assets |
|
$ |
11,863,037 |
|
|
$ |
10,514,303 |
|
|
$ |
9,763,209 |
|
|
12.8 |
% |
|
21.5 |
% |
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,657,817 |
|
|
$ |
3,469,294 |
|
|
$ |
3,265,544 |
|
|
5.4 |
% |
|
12.0 |
% |
Interest-bearing transaction and savings accounts |
|
4,498,966 |
|
|
4,035,856 |
|
|
3,950,950 |
|
|
11.5 |
% |
|
13.9 |
% |
Interest-bearing certificates |
|
1,320,265 |
|
|
1,180,674 |
|
|
966,937 |
|
|
11.8 |
% |
|
36.5 |
% |
Total
deposits |
|
9,477,048 |
|
|
8,685,824 |
|
|
8,183,431 |
|
|
9.1 |
% |
|
15.8 |
% |
Advances from Federal
Home Loan Bank at fair value |
|
540,189 |
|
|
221,184 |
|
|
202 |
|
|
144.2 |
% |
|
nm |
|
Customer repurchase
agreements and other borrowings |
|
118,995 |
|
|
98,979 |
|
|
95,860 |
|
|
20.2 |
% |
|
24.1 |
% |
Junior subordinated
debentures at fair value |
|
114,091 |
|
|
113,110 |
|
|
98,707 |
|
|
0.9 |
% |
|
15.6 |
% |
Accrued expenses and
other liabilities |
|
102,061 |
|
|
82,530 |
|
|
71,344 |
|
|
23.7 |
% |
|
43.1 |
% |
Deferred
compensation |
|
40,338 |
|
|
40,478 |
|
|
41,039 |
|
|
(0.3 |
)% |
|
(1.7 |
)% |
Total
liabilities |
|
10,392,722 |
|
|
9,242,105 |
|
|
8,490,583 |
|
|
12.4 |
% |
|
22.4 |
% |
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1,329,156 |
|
|
1,175,250 |
|
|
1,187,127 |
|
|
13.1 |
% |
|
12.0 |
% |
Retained earnings |
|
134,055 |
|
|
109,942 |
|
|
90,535 |
|
|
21.9 |
% |
|
48.1 |
% |
Other components of
shareholders' equity |
|
7,104 |
|
|
(12,994 |
) |
|
(5,036 |
) |
|
nm |
|
|
nm |
|
Total
shareholders' equity |
|
1,470,315 |
|
|
1,272,198 |
|
|
1,272,626 |
|
|
15.6 |
% |
|
15.5 |
% |
Total
liabilities and shareholders' equity |
|
$ |
11,863,037 |
|
|
$ |
10,514,303 |
|
|
$ |
9,763,209 |
|
|
12.8 |
% |
|
21.5 |
% |
Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
Shares outstanding at
end of period |
|
35,182,772 |
|
|
32,402,757 |
|
|
32,726,485 |
|
|
|
|
|
Common shareholders'
equity per share (1) |
|
$ |
41.79 |
|
|
$ |
39.26 |
|
|
$ |
38.89 |
|
|
|
|
|
Common shareholders'
tangible equity per share (1) (2) |
|
$ |
31.45 |
|
|
$ |
31.20 |
|
|
$ |
30.78 |
|
|
|
|
|
Common shareholders'
tangible equity to tangible assets (2) |
|
9.62 |
% |
|
9.86 |
% |
|
10.61 |
% |
|
|
|
|
Consolidated Tier 1
leverage capital ratio |
|
10.98 |
% |
|
11.04 |
% |
|
11.33 |
% |
|
|
|
|
(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 |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
Owner
occupied |
|
$ |
1,430,097 |
|
|
$ |
1,271,363 |
|
|
$ |
1,284,363 |
|
|
12.5 |
% |
|
11.3 |
% |
Investment properties |
|
2,131,059 |
|
|
1,943,793 |
|
|
1,937,423 |
|
|
9.6 |
% |
|
10.0 |
% |
Multifamily real
estate |
|
368,836 |
|
|
309,809 |
|
|
314,188 |
|
|
19.1 |
% |
|
17.4 |
% |
Commercial
construction |
|
172,410 |
|
|
154,071 |
|
|
148,435 |
|
|
11.9 |
% |
|
16.2 |
% |
Multifamily
construction |
|
184,630 |
|
|
172,433 |
|
|
154,662 |
|
|
7.1 |
% |
|
19.4 |
% |
One- to four-family
construction |
|
534,678 |
|
|
498,549 |
|
|
415,327 |
|
|
7.2 |
% |
|
28.7 |
% |
Land and land
development: |
|
|
|
|
|
|
|
|
|
|
Residential |
|
188,508 |
|
|
171,610 |
|
|
164,516 |
|
|
9.8 |
% |
|
14.6 |
% |
Commercial |
|
27,278 |
|
|
22,382 |
|
|
24,583 |
|
|
21.9 |
% |
|
11.0 |
% |
Commercial
business |
|
1,483,614 |
|
|
1,358,149 |
|
|
1,279,894 |
|
|
9.2 |
% |
|
15.9 |
% |
Agricultural business
including secured by farmland |
|
404,873 |
|
|
359,966 |
|
|
338,388 |
|
|
12.5 |
% |
|
19.6 |
% |
One- to four-family
real estate |
|
973,616 |
|
|
849,928 |
|
|
848,289 |
|
|
14.6 |
% |
|
14.8 |
% |
Consumer: |
|
|
|
|
|
|
|
|
|
|
Consumer
secured by one- to four-family real estate |
|
568,979 |
|
|
539,143 |
|
|
522,931 |
|
|
5.5 |
% |
|
8.8 |
% |
Consumer-other |
|
216,017 |
|
|
171,323 |
|
|
165,885 |
|
|
26.1 |
% |
|
30.2 |
% |
Total
loans receivable |
|
$ |
8,684,595 |
|
|
$ |
7,822,519 |
|
|
$ |
7,598,884 |
|
|
11.0 |
% |
|
14.3 |
% |
Restructured loans
performing under their restructured terms |
|
$ |
13,422 |
|
|
$ |
13,328 |
|
|
$ |
16,115 |
|
|
|
|
|
Loans 30 - 89 days past
due and on accrual (1) |
|
$ |
25,108 |
|
|
$ |
8,688 |
|
|
$ |
29,278 |
|
|
|
|
|
Total delinquent loans
(including loans on non-accrual), net (2) |
|
$ |
38,721 |
|
|
$ |
21,191 |
|
|
$ |
50,503 |
|
|
|
|
|
Total delinquent
loans / Total loans receivable |
|
0.45 |
% |
|
0.27 |
% |
|
0.66 |
% |
|
|
|
|
(1) |
|
Includes $3,000 of
purchased credit-impaired loans at December 31, 2018 compared to
$5,000 at September 30, 2018 and $943,000 at December 31,
2017. |
(2) |
|
Delinquent loans
include $519,000 of delinquent purchased credit-impaired loans at
December 31, 2018 compared to $568,000 at September 30, 2018 and
$2.2 million at December 31, 2017. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOANS BY
GEOGRAPHIC LOCATION |
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington |
|
$ |
4,324,588 |
|
|
49.8 |
% |
|
$ |
3,640,209 |
|
|
$ |
3,508,542 |
|
|
18.8 |
% |
|
23.3 |
% |
Oregon |
|
1,636,152 |
|
|
18.8 |
% |
|
1,628,703 |
|
|
1,590,233 |
|
|
0.5 |
% |
|
2.9 |
% |
California |
|
1,596,604 |
|
|
18.4 |
% |
|
1,496,817 |
|
|
1,415,076 |
|
|
6.7 |
% |
|
12.8 |
% |
Idaho |
|
521,026 |
|
|
6.0 |
% |
|
504,297 |
|
|
492,603 |
|
|
3.3 |
% |
|
5.8 |
% |
Utah |
|
57,318 |
|
|
0.7 |
% |
|
63,053 |
|
|
73,382 |
|
|
(9.1 |
)% |
|
(21.9 |
)% |
Other |
|
548,907 |
|
|
6.3 |
% |
|
489,440 |
|
|
519,048 |
|
|
12.2 |
% |
|
5.8 |
% |
Total loans
receivable |
|
$ |
8,684,595 |
|
|
100.0 |
% |
|
$ |
7,822,519 |
|
|
$ |
7,598,884 |
|
|
11.0 |
% |
|
14.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL FINANCIAL INFORMATION(dollars in
thousands)
The following table shows loan originations (excluding loans
held for sale) activity for the three months ending December 31,
2018, September 30, 2018, and December 31, 2017 and for the twelve
months ending December 31, 2018 and 2017 (in thousands):
LOAN
ORIGINATIONS |
Three Months Ended |
|
Twelve Months Ended |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Commercial real
estate |
$ |
172,885 |
|
$ |
142,393 |
|
$ |
105,313 |
|
$ |
536,784 |
|
$ |
537,825 |
Multifamily real
estate |
16,731 |
|
2,215 |
|
6,033 |
|
25,771 |
|
77,409 |
Construction and
land |
397,702 |
|
370,484 |
|
303,414 |
|
1,460,536 |
|
1,216,227 |
Commercial
business |
206,922 |
|
303,472 |
|
148,004 |
|
839,290 |
|
647,079 |
Agricultural
business |
18,901 |
|
36,747 |
|
36,947 |
|
123,702 |
|
117,186 |
One-to four-family
residential |
81,522 |
|
51,459 |
|
69,541 |
|
177,332 |
|
249,558 |
Consumer |
72,500 |
|
74,339 |
|
64,104 |
|
331,661 |
|
344,407 |
Total loan originations
(excluding loans held for sale) |
$ |
967,163 |
|
$ |
981,109 |
|
$ |
733,356 |
|
$ |
3,495,076 |
|
$ |
3,189,691 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Twelve months ended |
CHANGE IN
THE |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
ALLOWANCE FOR
LOAN LOSSES |
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
|
$ |
95,263 |
|
|
$ |
93,875 |
|
|
$ |
89,100 |
|
|
$ |
89,028 |
|
|
$ |
85,997 |
|
Provision for loan
losses |
|
2,500 |
|
|
2,000 |
|
|
2,000 |
|
|
8,500 |
|
|
8,000 |
|
Recoveries of loans
previously charged off: |
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
66 |
|
|
12 |
|
|
19 |
|
|
1,646 |
|
|
372 |
|
Multifamily real estate |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11 |
|
Construction and land |
|
23 |
|
|
5 |
|
|
57 |
|
|
213 |
|
|
1,237 |
|
One- to
four-family real estate |
|
18 |
|
|
86 |
|
|
8 |
|
|
750 |
|
|
270 |
|
Commercial business |
|
193 |
|
|
586 |
|
|
305 |
|
|
1,049 |
|
|
1,226 |
|
Agricultural business, including secured by farmland |
|
23 |
|
|
— |
|
|
1 |
|
|
64 |
|
|
134 |
|
Consumer |
|
102 |
|
|
46 |
|
|
188 |
|
|
366 |
|
|
481 |
|
|
|
425 |
|
|
735 |
|
|
578 |
|
|
4,088 |
|
|
3,731 |
|
Loans charged off: |
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
— |
|
|
(102 |
) |
|
(549 |
) |
|
(401 |
) |
|
(1,180 |
) |
Construction and land |
|
— |
|
|
(479 |
) |
|
— |
|
|
(479 |
) |
|
— |
|
One- to
four-family real estate |
|
— |
|
|
(27 |
) |
|
(38 |
) |
|
(43 |
) |
|
(38 |
) |
Commercial business |
|
(684 |
) |
|
(473 |
) |
|
(517 |
) |
|
(2,051 |
) |
|
(3,803 |
) |
Agricultural business, including secured by farmland |
|
(415 |
) |
|
(5 |
) |
|
(1,110 |
) |
|
(756 |
) |
|
(2,374 |
) |
Consumer |
|
(604 |
) |
|
(261 |
) |
|
(436 |
) |
|
(1,401 |
) |
|
(1,305 |
) |
|
|
(1,703 |
) |
|
(1,347 |
) |
|
(2,650 |
) |
|
(5,131 |
) |
|
(8,700 |
) |
Net
charge-offs |
|
(1,278 |
) |
|
(612 |
) |
|
(2,072 |
) |
|
(1,043 |
) |
|
(4,969 |
) |
Balance, end of
period |
|
$ |
96,485 |
|
|
$ |
95,263 |
|
|
$ |
89,028 |
|
|
$ |
96,485 |
|
|
$ |
89,028 |
|
Net charge-offs /
Average loans receivable |
|
(0.015 |
)% |
|
(0.008 |
)% |
|
(0.027 |
)% |
|
(0.013 |
)% |
|
(0.065 |
)% |
ALLOCATION
OF |
|
|
|
|
|
|
ALLOWANCE FOR
LOAN LOSSES |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
Specific or allocated
loss allowance: |
|
|
|
|
|
|
Commercial real estate |
|
$ |
27,132 |
|
|
$ |
25,147 |
|
|
$ |
22,824 |
|
Multifamily real estate |
|
3,818 |
|
|
3,745 |
|
|
1,633 |
|
Construction and land |
|
24,442 |
|
|
24,564 |
|
|
27,568 |
|
One- to
four-family real estate |
|
4,714 |
|
|
4,423 |
|
|
2,055 |
|
Commercial business |
|
19,438 |
|
|
17,948 |
|
|
18,311 |
|
Agricultural business, including secured by farmland |
|
3,778 |
|
|
3,505 |
|
|
4,053 |
|
Consumer |
|
7,972 |
|
|
8,110 |
|
|
3,866 |
|
Total
allocated |
|
91,294 |
|
|
87,442 |
|
|
80,310 |
|
Unallocated |
|
5,191 |
|
|
7,821 |
|
|
8,718 |
|
Total
allowance for loan losses |
|
$ |
96,485 |
|
|
$ |
95,263 |
|
|
$ |
89,028 |
|
Allowance for loan
losses / Total loans receivable |
|
1.11 |
% |
|
1.22 |
% |
|
1.17 |
% |
Allowance for loan
losses / Non-performing loans |
|
616 |
% |
|
603 |
% |
|
329 |
% |
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
NON-PERFORMING
ASSETS |
|
|
|
|
|
Loans on non-accrual
status: |
|
|
|
|
|
Secured
by real estate: |
|
|
|
|
|
Commercial |
$ |
4,088 |
|
|
$ |
3,728 |
|
|
$ |
10,646 |
|
Construction and land |
3,188 |
|
|
2,095 |
|
|
798 |
|
One- to
four-family |
1,544 |
|
|
1,827 |
|
|
3,264 |
|
Commercial business |
2,936 |
|
|
2,921 |
|
|
3,406 |
|
Agricultural business, including secured by farmland |
1,751 |
|
|
1,645 |
|
|
6,132 |
|
Consumer |
1,241 |
|
|
1,703 |
|
|
1,297 |
|
|
14,748 |
|
|
13,919 |
|
|
25,543 |
|
Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
Secured
by real estate: |
|
|
|
|
|
Commercial |
— |
|
|
428 |
|
|
— |
|
Construction and land |
— |
|
|
— |
|
|
298 |
|
One- to
four-family |
658 |
|
|
1,076 |
|
|
1,085 |
|
Commercial business |
1 |
|
|
87 |
|
|
18 |
|
Consumer |
247 |
|
|
296 |
|
|
85 |
|
|
906 |
|
|
1,887 |
|
|
1,486 |
|
Total non-performing
loans |
15,654 |
|
|
15,806 |
|
|
27,029 |
|
Real estate owned
(REO) |
2,611 |
|
|
364 |
|
|
360 |
|
Other repossessed
assets |
592 |
|
|
573 |
|
|
107 |
|
Total
non-performing assets |
$ |
18,857 |
|
|
$ |
16,743 |
|
|
$ |
27,496 |
|
Total non-performing
assets to total assets |
0.16 |
% |
|
0.16 |
% |
|
0.28 |
% |
Purchased
credit-impaired loans, net |
$ |
14,413 |
|
|
$ |
12,944 |
|
|
$ |
21,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Twelve months ended |
REAL ESTATE
OWNED |
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Balance, beginning of
period |
$ |
364 |
|
|
$ |
473 |
|
|
$ |
1,496 |
|
|
$ |
360 |
|
|
$ |
11,081 |
|
Additions
from loan foreclosures |
139 |
|
|
— |
|
|
— |
|
|
641 |
|
|
46 |
|
Additions
from acquisitions |
2,593 |
|
|
— |
|
|
— |
|
|
2,593 |
|
|
— |
|
Additions
from capitalized costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
54 |
|
Proceeds
from dispositions of REO |
(453 |
) |
|
(90 |
) |
|
(2,092 |
) |
|
(838 |
) |
|
(13,474 |
) |
Gain on
sale of REO |
168 |
|
|
8 |
|
|
956 |
|
|
242 |
|
|
2,909 |
|
Valuation
adjustments in the period |
(200 |
) |
|
(27 |
) |
|
— |
|
|
(387 |
) |
|
(256 |
) |
Balance, end of
period |
$ |
2,611 |
|
|
$ |
364 |
|
|
$ |
360 |
|
|
$ |
2,611 |
|
|
$ |
360 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
Percentage Change |
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,657,817 |
|
|
$ |
3,469,294 |
|
|
$ |
3,265,544 |
|
|
5.4 |
% |
|
12.0 |
% |
Interest-bearing
checking |
|
1,191,016 |
|
|
1,034,678 |
|
|
971,137 |
|
|
15.1 |
% |
|
22.6 |
% |
Regular savings
accounts |
|
1,842,581 |
|
|
1,627,560 |
|
|
1,557,500 |
|
|
13.2 |
% |
|
18.3 |
% |
Money market
accounts |
|
1,465,369 |
|
|
1,373,618 |
|
|
1,422,313 |
|
|
6.7 |
% |
|
3.0 |
% |
Total
interest-bearing transaction and savings accounts |
|
4,498,966 |
|
|
4,035,856 |
|
|
3,950,950 |
|
|
11.5 |
% |
|
13.9 |
% |
Total
core deposits |
|
8,156,783 |
|
|
7,505,150 |
|
|
7,216,494 |
|
|
8.7 |
% |
|
13.0 |
% |
Interest-bearing
certificates |
|
1,320,265 |
|
|
1,180,674 |
|
|
966,937 |
|
|
11.8 |
% |
|
36.5 |
% |
Total
deposits |
|
$ |
9,477,048 |
|
|
$ |
8,685,824 |
|
|
$ |
8,183,431 |
|
|
9.1 |
% |
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
|
|
|
Washington |
|
$ |
5,674,328 |
|
|
59.9 |
% |
|
$ |
4,849,807 |
|
|
$ |
4,506,249 |
|
|
17.0 |
% |
|
25.9 |
% |
Oregon |
|
1,891,145 |
|
|
20.0 |
% |
|
1,916,183 |
|
|
1,797,147 |
|
|
(1.3 |
)% |
|
5.2 |
% |
California |
|
1,434,033 |
|
|
15.1 |
% |
|
1,462,417 |
|
|
1,432,819 |
|
|
(1.9 |
)% |
|
0.1 |
% |
Idaho |
|
477,542 |
|
|
5.0 |
% |
|
457,417 |
|
|
447,216 |
|
|
4.4 |
% |
|
6.8 |
% |
Total deposits |
|
$ |
9,477,048 |
|
|
100.0 |
% |
|
$ |
8,685,824 |
|
|
$ |
8,183,431 |
|
|
9.1 |
% |
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCLUDED IN
TOTAL DEPOSITS |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
Public
non-interest-bearing accounts |
|
$ |
96,009 |
|
|
$ |
76,957 |
|
|
$ |
86,987 |
|
Public interest-bearing
transaction & savings accounts |
|
121,392 |
|
|
110,802 |
|
|
111,732 |
|
Public interest-bearing
certificates |
|
30,089 |
|
|
25,367 |
|
|
23,685 |
|
Total
public deposits |
|
$ |
247,490 |
|
|
$ |
213,126 |
|
|
$ |
222,404 |
|
Total brokered
deposits |
|
$ |
377,347 |
|
|
$ |
325,154 |
|
|
$ |
40,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
(in thousands) |
|
|
|
|
|
ACQUISITION OF
SKAGIT BANCORP, INC. |
|
|
The following table
provides the estimated fair value of the assets acquired and
liabilities assumed in the Skagit acquisition at November 1, 2018
(in thousands): |
|
|
|
November 1, 2018 |
|
|
|
Cash paid |
|
329 |
Fair value of common
shares issued |
|
171,429 |
Total
consideration |
|
171,758 |
|
|
|
Fair value of assets
acquired: |
|
|
Cash and
cash equivalents |
19,167 |
|
Securities |
210,326 |
|
Loans
receivable |
632,374 |
|
Real
estate owned held for sale |
2,594 |
|
Property
and equipment |
15,788 |
|
Core
deposit intangible |
16,368 |
|
Deferred
tax asset |
95 |
|
Other
assets |
19,109 |
|
Total
assets acquired |
915,821 |
|
|
|
|
Fair value of
liabilities assumed: |
|
|
Deposits |
810,209 |
|
Other
liabilities |
22,070 |
|
Total
liabilities assumed |
832,279 |
|
|
|
|
Net
assets acquired |
|
83,542 |
|
|
|
Goodwill |
|
$ |
88,216 |
|
|
|
* Amounts
recorded in this table are preliminary estimates of fair
value. Additional adjustments to the acquisition accounting
may be required with a measurement period of one-year from the
acquisition date. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual |
|
Minimum to be categorized as "Adequately
Capitalized" |
|
Minimum to becategorized
as"Well Capitalized" |
REGULATORY
CAPITAL RATIOS AS OF DECEMBER 31, 2018 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
$ |
1,302,239 |
|
|
13.12 |
% |
|
$ |
794,072 |
|
8.00 |
% |
|
$ |
992,590 |
|
10.00 |
% |
Tier 1 capital
to risk-weighted assets |
|
1,203,155 |
|
|
12.12 |
% |
|
595,554 |
|
6.00 |
% |
|
595,554 |
|
6.00 |
% |
Tier 1 leverage
capital to average assets |
|
1,203,155 |
|
|
10.98 |
% |
|
438,379 |
|
4.00 |
% |
|
n/a |
|
n/a |
|
Common equity
tier 1 capital to risk-weighted assets |
|
1,067,155 |
|
|
10.75 |
% |
|
446,665 |
|
4.50 |
% |
|
n/a |
|
n/a |
|
Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
1,217,173 |
|
|
12.50 |
% |
|
778,766 |
|
8.00 |
% |
|
973,457 |
|
10.00 |
% |
Tier 1 capital
to risk-weighted assets |
|
1,120,523 |
|
|
11.51 |
% |
|
584,074 |
|
6.00 |
% |
|
778,766 |
|
8.00 |
% |
Tier 1 leverage
capital to average assets |
|
1,120,523 |
|
|
10.50 |
% |
|
426,799 |
|
4.00 |
% |
|
533,498 |
|
5.00 |
% |
Common equity
tier 1 capital to risk-weighted assets |
|
1,120,523 |
|
|
11.51 |
% |
|
438,056 |
|
4.50 |
% |
|
632,747 |
|
6.50 |
% |
Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
34,567 |
|
|
18.26 |
% |
|
15,142 |
|
8.00 |
% |
|
18,928 |
|
10.00 |
% |
Tier 1 capital
to risk-weighted assets |
|
32,200 |
|
|
17.01 |
% |
|
11,357 |
|
6.00 |
% |
|
15,142 |
|
8.00 |
% |
Tier 1 leverage
capital to average assets |
|
32,200 |
|
|
11.16 |
% |
|
11,543 |
|
4.00 |
% |
|
14,428 |
|
5.00 |
% |
Common equity
tier 1 capital to risk-weighted assets |
|
32,200 |
|
|
17.01 |
% |
|
8,518 |
|
4.50 |
% |
|
12,303 |
|
6.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
|
December 31, 2018 |
|
September 30, 2018 |
|
December 31, 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 |
$ |
83,741 |
|
$ |
1,056 |
|
5.00 |
% |
|
$ |
72,249 |
|
$ |
895 |
|
4.91 |
% |
|
$ |
75,359 |
|
$ |
822 |
|
4.33 |
% |
Mortgage
loans |
6,573,278 |
|
88,560 |
|
5.35 |
% |
|
6,117,299 |
|
81,130 |
|
5.26 |
% |
|
5,989,291 |
|
72,527 |
|
4.80 |
% |
Commercial/agricultural loans |
1,631,133 |
|
22,257 |
|
5.41 |
% |
|
1,511,077 |
|
20,545 |
|
5.39 |
% |
|
1,454,639 |
|
17,549 |
|
4.79 |
% |
Consumer
and other loans |
172,934 |
|
2,754 |
|
6.32 |
% |
|
141,503 |
|
2,298 |
|
6.44 |
% |
|
144,412 |
|
2,247 |
|
6.17 |
% |
Total
loans(1) |
8,461,086 |
|
114,627 |
|
5.37 |
% |
|
7,842,128 |
|
104,868 |
|
5.31 |
% |
|
7,663,701 |
|
93,145 |
|
4.82 |
% |
Mortgage-backed securities |
1,400,508 |
|
9,931 |
|
2.81 |
% |
|
1,266,862 |
|
8,915 |
|
2.79 |
% |
|
1,131,692 |
|
7,006 |
|
2.46 |
% |
Other
securities |
474,659 |
|
3,633 |
|
3.04 |
% |
|
462,048 |
|
3,279 |
|
2.82 |
% |
|
459,065 |
|
3,028 |
|
2.62 |
% |
Interest-bearing deposits with banks |
54,577 |
|
305 |
|
2.22 |
% |
|
65,191 |
|
332 |
|
2.02 |
% |
|
60,109 |
|
191 |
|
1.26 |
% |
FHLB
stock |
22,791 |
|
245 |
|
4.26 |
% |
|
20,345 |
|
254 |
|
4.95 |
% |
|
18,496 |
|
105 |
|
2.25 |
% |
Total
investment securities |
1,952,535 |
|
14,114 |
|
2.87 |
% |
|
1,814,446 |
|
12,780 |
|
2.79 |
% |
|
1,669,362 |
|
10,330 |
|
2.46 |
% |
Total
interest-earning assets |
10,413,621 |
|
128,741 |
|
4.90 |
% |
|
9,656,574 |
|
117,648 |
|
4.83 |
% |
|
9,333,063 |
|
103,475 |
|
4.40 |
% |
Non-interest-earning
assets |
903,165 |
|
|
|
|
799,083 |
|
|
|
|
861,232 |
|
|
|
Total
assets |
$ |
11,316,786 |
|
|
|
|
$ |
10,455,657 |
|
|
|
|
$ |
10,194,295 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,131,030 |
|
403 |
|
0.14 |
% |
|
$ |
1,006,010 |
|
270 |
|
0.11 |
% |
|
$ |
964,306 |
|
222 |
|
0.09 |
% |
Savings
accounts |
1,779,288 |
|
1,505 |
|
0.34 |
% |
|
1,631,158 |
|
1,002 |
|
0.24 |
% |
|
1,567,845 |
|
550 |
|
0.14 |
% |
Money
market accounts |
1,440,889 |
|
1,638 |
|
0.45 |
% |
|
1,381,943 |
|
1,011 |
|
0.29 |
% |
|
1,471,875 |
|
645 |
|
0.17 |
% |
Certificates of deposit |
1,287,114 |
|
3,957 |
|
1.22 |
% |
|
1,153,403 |
|
3,234 |
|
1.11 |
% |
|
1,024,069 |
|
1,694 |
|
0.66 |
% |
Total
interest-bearing deposits |
5,638,321 |
|
7,503 |
|
0.53 |
% |
|
5,172,514 |
|
5,517 |
|
0.42 |
% |
|
5,028,095 |
|
3,111 |
|
0.25 |
% |
Non-interest-bearing deposits |
3,608,930 |
|
— |
|
— |
% |
|
3,424,587 |
|
— |
|
— |
% |
|
3,325,452 |
|
— |
|
— |
% |
Total
deposits |
9,247,251 |
|
7,503 |
|
0.32 |
% |
|
8,597,101 |
|
5,517 |
|
0.25 |
% |
|
8,353,547 |
|
3,111 |
|
0.15 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
FHLB
advances |
311,046 |
|
2,072 |
|
2.64 |
% |
|
249,896 |
|
1,388 |
|
2.20 |
% |
|
204,502 |
|
766 |
|
1.49 |
% |
Other
borrowings |
117,724 |
|
66 |
|
0.22 |
% |
|
110,868 |
|
60 |
|
0.21 |
% |
|
106,678 |
|
77 |
|
0.29 |
% |
Junior
subordinated debentures |
140,212 |
|
1,641 |
|
4.64 |
% |
|
140,212 |
|
1,605 |
|
4.54 |
% |
|
140,212 |
|
1,257 |
|
3.56 |
% |
Total
borrowings |
568,982 |
|
3,779 |
|
2.64 |
% |
|
500,976 |
|
3,053 |
|
2.42 |
% |
|
451,392 |
|
2,100 |
|
1.85 |
% |
Total
funding liabilities |
9,816,233 |
|
11,282 |
|
0.46 |
% |
|
9,098,077 |
|
8,570 |
|
0.37 |
% |
|
8,804,939 |
|
5,211 |
|
0.23 |
% |
Other
non-interest-bearing liabilities(2) |
92,003 |
|
|
|
|
85,485 |
|
|
|
|
63,654 |
|
|
|
Total
liabilities |
9,908,236 |
|
|
|
|
9,183,562 |
|
|
|
|
8,868,593 |
|
|
|
Shareholders'
equity |
1,408,550 |
|
|
|
|
1,272,095 |
|
|
|
|
1,325,702 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
11,316,786 |
|
|
|
|
$ |
10,455,657 |
|
|
|
|
$ |
10,194,295 |
|
|
|
Net interest
income/rate spread |
|
$ |
117,459 |
|
4.44 |
% |
|
|
$ |
109,078 |
|
4.46 |
% |
|
|
$ |
98,264 |
|
4.17 |
% |
Net interest
margin |
|
|
4.47 |
% |
|
|
|
4.48 |
% |
|
|
|
4.18 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
|
|
1.32 |
% |
|
|
|
1.43 |
% |
|
|
|
(0.53 |
)% |
Return on average
equity |
|
|
10.57 |
% |
|
|
|
11.78 |
% |
|
|
|
(4.05 |
)% |
Average equity/average
assets |
|
|
12.45 |
% |
|
|
|
12.17 |
% |
|
|
|
13.00 |
% |
Average
interest-earning assets/average interest-bearing liabilities |
|
|
167.76 |
% |
|
|
|
170.21 |
% |
|
|
|
170.33 |
% |
Average
interest-earning assets/average funding liabilities |
|
|
106.09 |
% |
|
|
|
106.14 |
% |
|
|
|
106.00 |
% |
Non-interest
income/average assets |
|
|
0.74 |
% |
|
|
|
0.77 |
% |
|
|
|
1.08 |
% |
Non-interest
expense/average assets |
|
|
3.34 |
% |
|
|
|
3.10 |
% |
|
|
|
3.21 |
% |
Efficiency
ratio(4) |
|
|
68.89 |
% |
|
|
|
63.04 |
% |
|
|
|
65.51 |
% |
Adjusted efficiency
ratio(5) |
|
|
63.06 |
% |
|
|
|
60.21 |
% |
|
|
|
69.40 |
% |
(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 |
Twelve months ended |
|
December 31, 2018 |
|
December 31, 2017 |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
Interest-earning
assets: |
|
|
|
|
|
|
|
Held for
sale loans |
$ |
81,873 |
|
$ |
3,926 |
|
4.80 |
% |
|
$ |
128,480 |
|
$ |
5,245 |
|
4.08 |
% |
Mortgage
loans |
6,188,279 |
|
320,264 |
|
5.18 |
% |
|
5,932,300 |
|
290,132 |
|
4.89 |
% |
Commercial/agricultural loans |
1,519,871 |
|
79,605 |
|
5.24 |
% |
|
1,485,985 |
|
70,266 |
|
4.73 |
% |
Consumer
and other loans |
149,184 |
|
9,575 |
|
6.42 |
% |
|
140,500 |
|
8,806 |
|
6.27 |
% |
Total
loans(1) |
7,939,207 |
|
413,370 |
|
5.21 |
% |
|
7,687,265 |
|
374,449 |
|
4.87 |
% |
Mortgage-backed securities |
1,247,758 |
|
35,076 |
|
2.81 |
% |
|
1,043,599 |
|
24,535 |
|
2.35 |
% |
Other
securities |
468,416 |
|
13,332 |
|
2.85 |
% |
|
464,680 |
|
12,448 |
|
2.68 |
% |
Interest-bearing deposits with banks |
59,031 |
|
1,080 |
|
1.83 |
% |
|
49,573 |
|
583 |
|
1.18 |
% |
FHLB
stock |
20,496 |
|
774 |
|
3.78 |
% |
|
16,379 |
|
269 |
|
1.64 |
% |
Total
investment securities |
1,795,701 |
|
50,262 |
|
2.80 |
% |
|
1,574,231 |
|
37,835 |
|
2.40 |
% |
Total
interest-earning assets |
9,734,908 |
|
463,632 |
|
4.76 |
% |
|
9,261,496 |
|
412,284 |
|
4.45 |
% |
Non-interest-earning
assets |
828,184 |
|
|
|
|
892,052 |
|
|
|
Total
assets |
$ |
10,563,092 |
|
|
|
|
$ |
10,153,548 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,048,327 |
|
1,200 |
|
0.11 |
% |
|
$ |
933,978 |
|
850 |
|
0.09 |
% |
Savings
accounts |
1,665,608 |
|
3,944 |
|
0.24 |
% |
|
1,559,042 |
|
2,138 |
|
0.14 |
% |
Money
market accounts |
1,421,161 |
|
4,107 |
|
0.29 |
% |
|
1,515,854 |
|
2,638 |
|
0.17 |
% |
Certificates of deposit |
1,127,612 |
|
11,391 |
|
1.01 |
% |
|
1,116,304 |
|
6,647 |
|
0.60 |
% |
Total
interest-bearing deposits |
5,262,708 |
|
20,642 |
|
0.39 |
% |
|
5,125,178 |
|
12,273 |
|
0.24 |
% |
Non-interest-bearing deposits |
3,411,010 |
|
— |
|
— |
% |
|
3,233,889 |
|
— |
|
— |
% |
Total
deposits |
8,673,718 |
|
20,642 |
|
0.24 |
% |
|
8,359,067 |
|
12,273 |
|
0.15 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
FHLB
advances |
253,661 |
|
5,636 |
|
2.22 |
% |
|
151,295 |
|
1,908 |
|
1.26 |
% |
Other
borrowings |
108,730 |
|
245 |
|
0.23 |
% |
|
111,903 |
|
317 |
|
0.28 |
% |
Junior
subordinated debentures |
140,212 |
|
6,136 |
|
4.38 |
% |
|
140,212 |
|
4,752 |
|
3.39 |
% |
Total
borrowings |
502,603 |
|
12,017 |
|
2.39 |
% |
|
403,410 |
|
6,977 |
|
1.73 |
% |
Total
funding liabilities |
9,176,321 |
|
32,659 |
|
0.36 |
% |
|
8,762,477 |
|
19,250 |
|
0.22 |
% |
Other
non-interest-bearing liabilities(2) |
79,901 |
|
|
|
|
61,592 |
|
|
|
Total
liabilities |
9,256,222 |
|
|
|
|
8,824,069 |
|
|
|
Shareholders'
equity |
1,306,870 |
|
|
|
|
1,329,479 |
|
|
|
Total
liabilities and shareholders' equity |
$ |
10,563,092 |
|
|
|
|
$ |
10,153,548 |
|
|
|
Net interest
income/rate spread |
|
$ |
430,973 |
|
4.40 |
% |
|
|
$ |
393,034 |
|
4.23 |
% |
Net interest
margin |
|
|
4.43 |
% |
|
|
|
4.24 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
Return on average
assets |
|
|
1.29 |
% |
|
|
|
0.60 |
% |
Return on average
equity |
|
|
10.45 |
% |
|
|
|
4.57 |
% |
Average equity/average
assets |
|
|
12.37 |
% |
|
|
|
13.09 |
% |
Average
interest-earning assets/average interest-bearing liabilities |
|
|
168.85 |
% |
|
|
|
167.52 |
% |
Average
interest-earning assets/average funding liabilities |
|
|
106.09 |
% |
|
|
|
105.69 |
% |
Non-interest
income/average assets |
|
|
0.80 |
% |
|
|
|
0.84 |
% |
Non-interest
expense/average assets |
|
|
3.23 |
% |
|
|
|
3.14 |
% |
Efficiency
ratio(4) |
|
|
66.29 |
% |
|
|
|
66.70 |
% |
Adjusted efficiency
ratio(5) |
|
|
63.59 |
% |
|
|
|
66.28 |
% |
(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. However, these non-GAAP
financial measures are supplemental and are not a substitute for
any analysis based on GAAP. Where applicable, comparable
earnings information using GAAP financial measures is also
presented. Because not all companies use the same
calculations, our presentation may not be comparable to other
similarly titled measures as calculated by other companies. For a
reconciliation of these non-GAAP financial measures, see the tables
below: |
|
|
|
|
|
|
|
|
|
|
REVENUE FROM
CORE OPERATIONS |
Quarters Ended |
|
Twelve months ended |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Net interest income
before provision for loan losses |
$ |
117,459 |
|
|
$ |
109,078 |
|
|
$ |
98,264 |
|
|
$ |
430,973 |
|
|
$ |
393,034 |
|
Total non-interest
income |
21,018 |
|
|
20,411 |
|
|
27,674 |
|
|
84,008 |
|
|
85,200 |
|
Total GAAP revenue |
138,477 |
|
|
129,489 |
|
|
125,938 |
|
|
514,981 |
|
|
478,234 |
|
Exclude
net loss on sale of securities |
885 |
|
|
— |
|
|
2,310 |
|
|
837 |
|
|
2,080 |
|
Exclude
change in valuation of financial instruments carried at fair
value |
(198 |
) |
|
(45 |
) |
|
1,013 |
|
|
(3,775 |
) |
|
2,844 |
|
Exclude
gain on sale of branches |
— |
|
|
— |
|
|
(12,189 |
) |
|
— |
|
|
(12,189 |
) |
Revenue from core
operations (non-GAAP) |
$ |
139,164 |
|
|
$ |
129,444 |
|
|
$ |
117,072 |
|
|
$ |
512,043 |
|
|
$ |
470,969 |
|
EARNINGS FROM
CORE OPERATIONS |
|
Quarters Ended |
|
Twelve months ended |
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Net income (GAAP) |
|
$ |
37,528 |
|
|
$ |
37,773 |
|
|
$ |
(13,548 |
) |
|
$ |
136,515 |
|
|
$ |
60,776 |
|
Exclude net loss on sale of securities |
|
885 |
|
|
— |
|
|
2,310 |
|
|
837 |
|
|
2,080 |
|
Exclude
change in valuation of financial instruments carried at fair
value |
|
(198 |
) |
|
(45 |
) |
|
1,013 |
|
|
(3,775 |
) |
|
2,844 |
|
Exclude
acquisition-related costs |
|
4,602 |
|
|
1,005 |
|
|
— |
|
|
5,607 |
|
|
— |
|
Exclude gain on sale of branches |
|
— |
|
|
— |
|
|
(12,189 |
) |
|
— |
|
|
(12,189 |
) |
Exclude
related tax (benefit) expense |
|
(1,159 |
) |
|
(126 |
) |
|
3,192 |
|
|
(426 |
) |
|
2,615 |
|
Exclude
tax adjustments related to tax reform and valuation reserves |
|
(4,207 |
) |
|
— |
|
|
42,630 |
|
|
(4,207 |
) |
|
42,630 |
|
Total earnings from
core operations (non-GAAP) |
|
$ |
37,451 |
|
|
$ |
38,607 |
|
|
$ |
23,408 |
|
|
$ |
134,551 |
|
|
$ |
98,756 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss)
per share (GAAP) |
|
$ |
1.09 |
|
|
$ |
1.17 |
|
|
$ |
(0.41 |
) |
|
$ |
4.15 |
|
|
$ |
1.84 |
|
Diluted core earnings
per share (non-GAAP) |
|
$ |
1.09 |
|
|
$ |
1.19 |
|
|
$ |
0.71 |
|
|
$ |
4.09 |
|
|
$ |
2.99 |
|
ADDITIONAL
FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
ADJUSTED
EFFICIENCY RATIO |
|
Quarters Ended |
|
Twelve months ended |
|
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
|
Dec 31, 2018 |
|
Dec 31, 2017 |
Non-interest expense
(GAAP) |
|
$ |
95,396 |
|
|
$ |
81,632 |
|
|
$ |
82,501 |
|
|
$ |
341,371 |
|
|
$ |
318,970 |
|
Exclude
acquisition-related costs |
|
(4,602 |
) |
|
(1,005 |
) |
|
— |
|
|
(5,607 |
) |
|
— |
|
Exclude
CDI amortization |
|
(1,935 |
) |
|
(1,348 |
) |
|
(1,457 |
) |
|
(6,047 |
) |
|
(6,246 |
) |
Exclude
state/municipal tax expense |
|
(854 |
) |
|
(902 |
) |
|
(737 |
) |
|
(3,284 |
) |
|
(2,594 |
) |
Exclude
REO (loss) gain |
|
(251 |
) |
|
(433 |
) |
|
941 |
|
|
(804 |
) |
|
2,030 |
|
Adjusted non-interest
expense (non-GAAP) |
|
$ |
87,754 |
|
|
$ |
77,944 |
|
|
$ |
81,248 |
|
|
$ |
325,629 |
|
|
$ |
312,160 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
before provision for loan losses (GAAP) |
|
$ |
117,459 |
|
|
$ |
109,078 |
|
|
$ |
98,264 |
|
|
$ |
430,973 |
|
|
$ |
393,034 |
|
Non-interest income
(GAAP) |
|
21,018 |
|
|
20,411 |
|
|
27,674 |
|
|
84,008 |
|
|
85,200 |
|
Total revenue |
|
138,477 |
|
|
129,489 |
|
|
125,938 |
|
|
514,981 |
|
|
478,234 |
|
Exclude
net loss on sale of securities |
|
885 |
|
|
— |
|
|
2,310 |
|
|
837 |
|
|
2,080 |
|
Exclude
net change in valuation of financial instruments carried at fair
value |
|
(198 |
) |
|
(45 |
) |
|
1,013 |
|
|
(3,775 |
) |
|
2,844 |
|
Exclude
gain on sale of branches |
|
— |
|
|
— |
|
|
(12,189 |
) |
|
— |
|
|
(12,189 |
) |
Adjusted revenue
(non-GAAP) |
|
$ |
139,164 |
|
|
$ |
129,444 |
|
|
$ |
117,072 |
|
|
$ |
512,043 |
|
|
$ |
470,969 |
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio
(GAAP) |
|
68.89 |
% |
|
63.04 |
% |
|
65.51 |
% |
|
66.29 |
% |
|
66.70 |
% |
Adjusted efficiency
ratio (non-GAAP) |
|
63.06 |
% |
|
60.21 |
% |
|
69.40 |
% |
|
63.59 |
% |
|
66.28 |
% |
TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
|
Dec 31, 2018 |
|
Sep 30, 2018 |
|
Dec 31, 2017 |
Shareholders' equity
(GAAP) |
|
$ |
1,470,315 |
|
|
$ |
1,272,198 |
|
|
$ |
1,272,626 |
|
Exclude
goodwill and other intangible assets, net |
|
363,798 |
|
|
261,158 |
|
|
265,314 |
|
Tangible common
shareholders' equity (non-GAAP) |
|
$ |
1,106,517 |
|
|
$ |
1,011,040 |
|
|
$ |
1,007,312 |
|
|
|
|
|
|
|
|
Total assets
(GAAP) |
|
$ |
11,863,037 |
|
|
$ |
10,514,303 |
|
|
$ |
9,763,209 |
|
Exclude
goodwill and other intangible assets, net |
|
363,798 |
|
|
261,158 |
|
|
265,314 |
|
Total tangible assets
(non-GAAP) |
|
$ |
11,499,239 |
|
|
$ |
10,253,145 |
|
|
$ |
9,497,895 |
|
Common shareholders'
equity to total assets (GAAP) |
|
12.39 |
% |
|
12.10 |
% |
|
13.03 |
% |
Tangible common
shareholders' equity to tangible assets (non-GAAP) |
|
9.62 |
% |
|
9.86 |
% |
|
10.61 |
% |
|
|
|
|
|
|
|
TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
Tangible common
shareholders' equity |
|
$ |
1,106,517 |
|
|
$ |
1,011,040 |
|
|
$ |
1,007,312 |
|
Common shares
outstanding at end of period |
|
35,182,772 |
|
|
32,402,757 |
|
|
32,726,485 |
|
Common shareholders'
equity (book value) per share (GAAP) |
|
$ |
41.79 |
|
|
$ |
39.26 |
|
|
$ |
38.89 |
|
Tangible common
shareholders' equity (tangible book value) per share
(non-GAAP) |
|
$ |
31.45 |
|
|
$ |
31.20 |
|
|
$ |
30.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTACT: |
MARK J.
GRESCOVICH, |
|
PRESIDENT &
CEO |
|
PETER J. CONNER,
CFO |
|
(509) 527-3636 |
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