Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent
company of Banner Bank and Islanders Bank, today reported record
2019 net income, which increased 7% to $146.3 million, or $4.18 per
diluted share, compared to $136.5 million, or $4.15 per diluted
share, in 2018. In the fourth quarter of 2019, net income
totaled $33.7 million, or $0.95 per diluted share, compared to
$39.6 million, or $1.15 per diluted share, in the preceding quarter
and $37.5 million, or $1.09 per diluted share, in the fourth
quarter of 2018. Fourth quarter of 2019 results include $4.4
million of acquisition-related expenses, compared to $676,000 of
acquisition-related expenses in the preceding quarter and $4.6
million in the fourth quarter of 2018. The 2019 results
include $7.5 million of acquisition-related expenses compared to
$5.6 million of acquisition-related expenses for 2018.
“Banner’s record 2019 operating results reflect
the continued execution of our super community bank strategy.
We are generating new client relationships and adding to our core
funding position by growing core deposits while maintaining a
moderate risk profile,” stated Mark J. Grescovich, President and
Chief Executive Officer. “During the fourth quarter, we
announced the completion of the merger with AltaPacific
Bancorp. This combination is a complementary fit, both
strategically and culturally, and provides scale to our California
franchise with attractive core deposits and strong commercial
banking relationships.”
At December 31, 2019, Banner Corporation had
$12.61 billion in assets, $9.21 billion in net loans and $10.05
billion in deposits. Banner operates 178 branch offices,
including branches located in eight of the top 20 largest western
Metropolitan Statistical Areas by population.
Fourth Quarter 2019
Highlights
- Revenues increased 2% to $139.8 million, compared to $137.5
million in the preceding quarter and increased nominally compared
to $138.5 million in the fourth quarter a year ago.
- Net interest income, before the provision for loan losses, was
$119.5 million, compared to $116.6 million in the preceding quarter
and $117.5 million in the fourth quarter a year ago.
- Net interest margin was 4.20%, compared to 4.25% in the
preceding quarter and 4.47% in the fourth quarter a year ago.
- Mortgage banking revenues were $6.2 million, compared to $6.6
million in the preceding quarter and increased 4% compared to $6.0
million in the fourth quarter a year ago.
- Return on average assets was 1.07% compared to 1.31% in the
preceding quarter and 1.32% in the fourth quarter a year ago.
- Net loans receivable increased 5% to $9.20 billion at December
31, 2019, compared to $8.74 billion at September 30, 2019, and
increased 7% when compared to $8.59 billion at December 31,
2018.
- Non-performing assets increased to $40.5 million, or 0.32% of
total assets, at December 31, 2019, compared to $18.6 million, or
0.15% of total assets in the preceding quarter, and $18.9 million,
or 0.16% of total assets, at December 31, 2018.
- Provision for loan losses was $4.0 million, and the allowance
for loan losses was $100.6 million, or 1.08% of total loans
receivable, as of December 31, 2019.
- Core deposits increased 5% to $8.93 billion at December 31,
2019, compared to $8.51 billion at September 30, 2019 and increased
10% compared to $8.16 billion a year ago. Core deposits
represented 89% of total deposits at December 31, 2019.
- Dividends to shareholders were $1.41 per share in the quarter
ended December 31, 2019, including a $0.41 regular quarterly
dividend and a $1.00 special cash dividend.
- Common shareholders’ equity per share decreased slightly to
$44.59 at December 31, 2019, compared to $44.80 at the preceding
quarter end and increased 6% from $42.03 a year ago.
- Tangible common shareholders' equity per share* decreased 2% to
$33.33 at December 31, 2019, compared to $34.10 at the preceding
quarter end and increased 6% from $31.45 a year ago.
*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 adjusted revenue (which excludes fair value
adjustments and net gain (loss) on the sale of securities from the
total of net interest income before provision for loan losses and
non-interest income) and the adjusted efficiency ratio (which
excludes acquisition-related expenses, amortization of core deposit
intangibles, real estate owned gain (loss), FHLB prepayment
penalties and state/municipal taxes from non-interest expense
divided by adjusted revenue) 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
2018 Consolidated Financial Statements and/or schedules to conform
to the 2019 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 November 1, 2019, Banner completed the
acquisition of AltaPacific Bancorp (“AltaPacific”) and its
wholly-owned subsidiary, AltaPacific Bank, of Santa Rosa,
California. At closing AltaPacific Bank had six branch
locations, including one in Northern California, and five in
Southern California. Pursuant to the previously announced
terms, AltaPacific shareholders received 0.2712 shares of Banner
common stock in exchange for each share of AltaPacific common
stock, plus cash in lieu of any fractional shares and cash to
buyout AltaPacific stock options for a total consideration paid of
$87.6 million.
The AltaPacific merger was accounted for using
the acquisition method of accounting. Accordingly, the assets
(including identifiable intangible assets) and the liabilities of
AltaPacific 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 $426.6 million of assets, $332.4 million of
loans, and $313.4 million of deposits to Banner.
Adoption of New Accounting
Standard
In June 2016, Financial Accounting Standards
Board issued Accounting Standard Update No. 2016-13, Measurement of
Credit Losses on Financial Instruments (ASU 2016-13).
Currently GAAP requires an “incurred loss” methodology for
recognizing credit losses that delays recognition until it is
probable a loss has been incurred. The main objective of ASU
2016-13 is to provide financial statement users with more
decision-useful information about the expected credit losses on
financial instruments and other commitments to extend credit held
by a reporting entity at each reporting date. ASU 2016-13
became effective for Banner on January 1, 2020. Banner is in
the process of finalizing the adoption of ASU 2016-13.
Based on the initial December 31, 2019 model
results Banner estimates the adoption of ASU No. 2016-13 will
result in a combined increase to its Allowance for Credit Loss and
Reserve for Unfunded Commitments of 10% to 20%. The increase
will be recorded as an adjustment to equity as of the adoption
date.
Income Statement Review
Banner's net interest margin was 4.20% for the
fourth quarter of 2019, a five basis-point decrease compared to
4.25% in the preceding quarter and a 27 basis-point decrease
compared to 4.47% in the fourth quarter a year ago. The
decrease in net interest margin during the quarter primarily
reflects lower yields on average interest-earning assets largely as
a result of three 25 basis point decreases by the Federal Reserve
in the targeted Fed Funds Rate in the third and fourth quarter
coupled with a longer-term decline in the 10-year treasury
yield. Acquisition accounting adjustments added eight basis
points to the net interest margin in the current quarter compared
to six basis points in the preceding quarter and 12 basis points in
the fourth quarter a year ago. The total purchase discount
for acquired loans was $25.0 million at December 31, 2019, compared
to $21.3 million at September 30, 2019, and $25.7 million at
December 31, 2018. For the year ended December 31, 2019,
Banner’s net interest margin was 4.30% compared to 4.43% in
2018.
Average interest-earning asset yields decreased
ten basis points to 4.69% compared to 4.79% for the preceding
quarter and decreased 21 basis points compared to 4.90% in the
fourth quarter a year ago. Average loan yields decreased
seven basis points to 5.13% compared to 5.20% in the preceding
quarter and decreased 24 basis points compared to 5.37% in the
fourth quarter a year ago. Loan discount accretion added 11
basis points to loan yields in the fourth quarter of 2019, compared
to seven basis points in the preceding quarter, and 16 basis points
in the fourth quarter a year ago. Deposit costs were 0.40% in
the fourth quarter of 2019, a two basis-point decrease compared to
the preceding quarter and an eight basis-point increase compared to
the fourth quarter a year ago. The decrease in deposit costs
during the current quarter compared to the preceding quarter are
the result of recent decreases in market interest rates; however,
changes in the average rate paid on interest-bearing deposits tend
to lag changes in market interest rates. The total cost of
funds was 0.52% during the fourth quarter of 2019, a five
basis-point decrease compared to the preceding quarter and a six
basis-point increase compared to the fourth quarter a year ago.
Banner recorded a $4.0 million provision for
loan losses in the current quarter, compared to $2.0 million in the
prior quarter and $2.5 million in the same quarter a year
ago. The provision is primarily a result of new loan
originations, the increase in non-performing loans, the renewal of
acquired loans out of the discounted acquired loan portfolio and
net charge-offs.
Total non-interest income was $20.3 million in
the fourth quarter of 2019, compared to $20.9 million in the third
quarter of 2019 and $21.0 million in the fourth quarter a year
ago. Deposit fees and other service charges were $9.6 million
in the fourth quarter of 2019, compared to $10.3 million in the
preceding quarter and $12.5 million in the fourth quarter a year
ago. The decrease in deposit fees and other service charges
from the fourth quarter a year ago is primarily a result of Banner
becoming subject to the Durbin Amendment on July 1, 2019, which
reduced interchange fee income by approximately $7 million during
the second half of 2019. Mortgage banking revenues, including
gains on one- to four-family and multifamily loan sales and loan
servicing fees, were $6.2 million in the fourth quarter, compared
to $6.6 million in the preceding quarter and $6.0 million in the
fourth quarter of 2018. The higher mortgage banking revenue
year-over-year reflected an increase in residential mortgage
held-for-sale loan production. The increase in residential
held-for-sale loan production was primarily due to increased
refinance activity. Home purchase activity accounted for 56%
of one- to four-family mortgage loan originations in both the
fourth quarter of 2019 and in the prior quarter, compared to 78% in
the fourth quarter of 2018. For the year, total non-interest
income was $81.9 million, compared to $84.0 million in 2018.
Banner’s fourth quarter 2019 results included a
$36,000 net loss 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 a $62,000 net gain on the sale of securities. In
the preceding quarter, results included a $69,000 net loss for fair
value adjustments and a $2,000 net loss on the sale of
securities. In the fourth quarter a year ago, results
included a $198,000 net gain for fair value adjustments and a
$885,000 net loss on the sale of securities.
Total revenue increased 2% to $139.8 million for
the fourth quarter of 2019, compared to $137.5 million in the
preceding quarter and increased nominally compared to $138.5
million in the fourth quarter a year ago. For the year, total
revenue increased 7% to $550.9 million compared to $515.0 million
in 2018. Adjusted revenue* (the total of net interest income
before provision for loan losses and total non-interest income
excluding the net gain and loss on the sale of securities and the
net change in valuation of financial instruments) was $139.7
million in the fourth quarter of 2019, compared to $137.6 million
in the preceding quarter and $139.2 million in the fourth quarter
of 2018. For the year, adjusted revenue* was $551.0 million,
compared to $512.0 million in 2018.
Banner’s total non-interest expense was $93.7
million in the fourth quarter of 2019, compared to $87.3 million in
the preceding quarter and $95.4 million in the fourth quarter of
2018. Acquisition-related expenses were $4.4 million for the
fourth quarter of 2019, compared to $676,000 for the preceding
quarter, and $4.6 million in the fourth quarter of 2018. The
fourth quarter of 2019 non-interest expenses include two months of
expenses associated with the operations acquired in the AltaPacific
acquisition. In addition, the fourth quarter of 2019
miscellaneous non-interest expense included $735,000 of expense
related to the prepayment of $150 million of FHLB advances.
For the year, total non-interest expense was $357.7 million,
compared to $341.4 million in 2018. Banner’s efficiency ratio
was 67.03% for the current quarter, compared to 63.50% in the
preceding quarter and 68.89% in the year ago quarter.
Banner’s adjusted efficiency ratio* was 61.19% for the current
quarter, compared to 60.71% in the preceding quarter and 63.06% in
the year ago quarter.
For the fourth quarter of 2019, Banner had $8.4
million in state and federal income tax expense for an effective
tax rate of 20.0%, reflecting the benefits from tax exempt
income. Banner’s statutory income tax rate is 23.5%,
representing a blend of the statutory federal income tax rate of
21.0% and apportioned effects of the state income tax rates.
Balance Sheet Review
Total assets increased 4% to $12.60 billion at
December 31, 2019, compared to $12.10 billion at September 30,
2019, and increased 6% when compared to $11.87 billion at December
31, 2018. The total of securities and interest-bearing
deposits held at other banks was $1.89 billion at December 31,
2019, compared to $1.87 billion at September 30, 2019 and $1.94
billion at December 31, 2018. The average effective duration
of Banner's securities portfolio was approximately 3.5 years at
both December 31, 2019 and December 31, 2018.
Net loans receivable increased 5% to $9.20
billion at December 31, 2019, compared to $8.74 billion at
September 30, 2019, and increased 7% when compared to $8.59 billion
at December 31, 2018. The year-over-year increase in net
loans included $332.4 million of portfolio loans acquired in the
AltaPacific acquisition during the fourth quarter of 2019.
Commercial real estate and multifamily real estate loans increased
9% to $4.36 billion at December 31, 2019, compared to $4.01 billion
at September 30, 2019, and increased 11% compared to $3.93 billion
a year ago. Commercial business loans increased 5% to $1.69
billion at December 31, 2019, compared to $1.62 billion at
September 30, 2019, and increased 14% compared to $1.48 billion a
year ago. Agricultural business loans decreased to $370.5
million at December 31, 2019, compared to $390.5 million three
months earlier and $404.9 million a year ago. Total
construction, land and land development loans were $1.17 billion at
December 31, 2019, an 8% increase from $1.08 billion at September
30, 2019, and a 6% increase compared to $1.11 billion a year
earlier. Consumer loans decreased to $762.8 million at
December 31, 2019, compared to $779.6 million at September 30,
2019, and $785.0 million a year ago. One- to four-family
loans decreased modestly to $945.6 million at December 31, 2019,
compared to $947.5 million at September 30, 2019, and $973.6
million a year ago.
Loans held for sale were $210.4 million at
December 31, 2019, compared to $244.9 million at September 30,
2019, and $171.0 million at December 31, 2018. The volume of
one- to four- family residential mortgage loans sold was $268.1
million in the current quarter, compared to $204.6 million in the
preceding quarter and $130.1 million in the fourth quarter a year
ago. During the fourth quarter of 2019, Banner sold $103.4
million in multifamily loans. Banner sold $79.4 million in
multifamily loans in the preceding quarter and sold $26.8 million
in the fourth quarter a year ago.
Total deposits increased 3% to $10.05 billion at
December 31, 2019, compared to $9.73 billion at September 30, 2019,
and increased 6% when compared to $9.48 billion a year ago.
The increase in deposits included $313.4 million in deposits
acquired in the AltaPacific acquisition during the fourth quarter
of 2019. Non-interest-bearing account balances increased 2%
to $3.95 billion at December 31, 2019, compared to $3.89
billion at September 30, 2019, and increased 8% compared to $3.66
billion a year ago. Core deposits (non-interest-bearing and
interest-bearing transaction and savings accounts) increased 5%
from the prior quarter and increased 9% compared to a year
ago. Core deposits represented 89% of total deposits at
December 31, 2019, compared to 87% of total deposits at September
30, 2019, and 86% of total deposits a year earlier.
Certificates of deposit decreased 8% to $1.12 billion at December
31, 2019, compared to $1.22 billion at September 30, 2019, and
decreased 15% compared to $1.32 billion a year earlier. The
decrease in certificates of deposit primarily reflects the decrease
in brokered deposits to $202.9 million at December 31, 2019,
compared to $299.5 million at September 30, 2019 and $377.3 million
a year ago. FHLB borrowings totaled $450.0 million at
December 31, 2019 compared to $382.0 million at September 30, 2019
and $540.2 million a year earlier.
At December 31, 2019, total common shareholders'
equity was $1.59 billion, or 12.65% of assets, compared to $1.53
billion or 12.65% of assets at September 30, 2019, and $1.48
billion or 12.46% of assets a year ago. At December 31, 2019,
tangible common shareholders' equity*, which excludes goodwill and
other intangible assets, net, was $1.19 billion, or 9.77% of
tangible assets*, compared to $1.17 billion, or 9.93% of tangible
assets, at September 30, 2019, and $1.11 billion, or 9.62% of
tangible assets, a year ago. Banner's tangible book value per
share* increased to $33.33 at December 31, 2019, compared to $31.45
per share a year ago.
Banner and its subsidiary banks continue to
maintain capital levels in excess of the requirements to be
categorized as “well-capitalized.” At December 31,
2019, Banner's common equity Tier 1 capital ratio was 10.63%, its
Tier 1 leverage capital to average assets ratio was 10.71%, and its
total capital to risk-weighted assets ratio was 12.93%.
Credit Quality
The allowance for loan losses was $100.6 million
at December 31, 2019, or 1.08% of total loans receivable
outstanding and 254% of non-performing loans compared to $97.8
million at September 30, 2019, or 1.11% of total loans receivable
outstanding and 536% of non-performing loans, and $96.5 million at
December 31, 2018, or 1.11% of total loans receivable outstanding
and 616% of non-performing loans. Net loan charge-offs
totaled $1.2 million in the fourth quarter, compared to net loan
charge-offs of $2.5 million in the preceding quarter and net loan
charge-offs of $1.3 million in the fourth quarter a year ago.
Banner recorded a $4.0 million provision for loan losses in the
current quarter primarily as a result of the origination of new
loans, the increase in non-performing loans, the renewal of
acquired loans out of the discounted acquired loan portfolio and
net charge-offs, compared to $2.0 million in the prior quarter and
$2.5 million in the year ago quarter. Non-performing loans
were $39.6 million at December 31, 2019, compared to $18.3 million
at September 30, 2019, and $15.7 million a year ago. The
increase in non-performing loans during the quarter was largely due
to one commercial banking relationship moving to nonaccrual.
Real estate owned and other repossessed assets were $936,000 at
December 31, 2019, compared to $343,000 at September 30, 2019, and
$3.2 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 losses is
recorded for acquired loans at the acquisition date. At
December 31, 2019, the total purchase discount for acquired loans
was $25.0 million.
Banner's total non-performing assets were $40.5
million, or 0.32% of total assets, at December 31, 2019, compared
to $18.6 million, or 0.15% of total assets, at September 30, 2019,
and $18.9 million, or 0.16% of total assets, a year ago. In
addition to non-performing assets, there were $15.9 million of
purchased credit-impaired loans at December 31, 2019, compared to
$12.6 million at September 30, 2019 and $14.4 million at December
31, 2018.
Conference Call
Banner will host a conference call on Friday,
January 24, 2020, at 8:00 a.m. PST, to discuss its fourth 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
10137616, or at www.bannerbank.com.
About the Company
Banner Corporation is a $12.61 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 AltaPacific 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) legislation or regulatory changes, including but
not limited to the impact of the Dodd-Frank Act and regulations
adopted thereunder, changes in regulatory capital requirements
pursuant to 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, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| |
|
|
|
|
|
|
|
|
|
|
| INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
Loans receivable |
|
$ |
120,915 |
|
|
$ |
118,096 |
|
|
$ |
114,627 |
|
|
$ |
471,473 |
|
|
$ |
413,370 |
|
|
Mortgage-backed securities |
|
8,924 |
|
|
9,415 |
|
|
9,931 |
|
|
38,640 |
|
|
35,076 |
|
|
Securities and cash equivalents |
|
3,570 |
|
|
3,925 |
|
|
4,183 |
|
|
15,566 |
|
|
15,186 |
|
| |
|
133,409 |
|
|
131,436 |
|
|
128,741 |
|
|
525,679 |
|
|
463,632 |
|
| INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
9,950 |
|
|
10,014 |
|
|
7,503 |
|
|
37,630 |
|
|
20,642 |
|
|
Federal Home Loan Bank advances |
|
2,281 |
|
|
3,107 |
|
|
2,072 |
|
|
12,234 |
|
|
5,636 |
|
|
Other borrowings |
|
121 |
|
|
82 |
|
|
66 |
|
|
330 |
|
|
245 |
|
|
Junior subordinated debentures |
|
1,566 |
|
|
1,612 |
|
|
1,641 |
|
|
6,574 |
|
|
6,136 |
|
| |
|
13,918 |
|
|
14,815 |
|
|
11,282 |
|
|
56,768 |
|
|
32,659 |
|
|
Net interest income before provision for loan losses |
|
119,491 |
|
|
116,621 |
|
|
117,459 |
|
|
468,911 |
|
|
430,973 |
|
| PROVISION FOR LOAN
LOSSES |
|
4,000 |
|
|
2,000 |
|
|
2,500 |
|
|
10,000 |
|
|
8,500 |
|
|
Net interest income |
|
115,491 |
|
|
114,621 |
|
|
114,959 |
|
|
458,911 |
|
|
422,473 |
|
| NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
|
Deposit fees and other service charges |
|
9,637 |
|
|
10,331 |
|
|
12,539 |
|
|
46,632 |
|
|
48,074 |
|
|
Mortgage banking operations |
|
6,248 |
|
|
6,616 |
|
|
6,019 |
|
|
22,215 |
|
|
21,343 |
|
|
Bank-owned life insurance |
|
1,170 |
|
|
1,076 |
|
|
994 |
|
|
4,645 |
|
|
4,505 |
|
|
Miscellaneous |
|
3,201 |
|
|
2,914 |
|
|
2,153 |
|
|
8,632 |
|
|
7,148 |
|
| |
|
20,256 |
|
|
20,937 |
|
|
21,705 |
|
|
82,124 |
|
|
81,070 |
|
|
Net gain (loss) on sale of securities |
|
62 |
|
|
(2 |
) |
|
(885 |
) |
|
33 |
|
|
(837 |
) |
|
Net change in valuation of financial instruments carried at fair
value |
|
(36 |
) |
|
(69 |
) |
|
198 |
|
|
(208 |
) |
|
3,775 |
|
|
Total non-interest income |
|
20,282 |
|
|
20,866 |
|
|
21,018 |
|
|
81,949 |
|
|
84,008 |
|
| NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
|
Salary and employee benefits |
|
57,050 |
|
|
59,090 |
|
|
52,122 |
|
|
226,409 |
|
|
202,613 |
|
|
Less capitalized loan origination costs |
|
(8,797 |
) |
|
(7,889 |
) |
|
(4,863 |
) |
|
(28,934 |
) |
|
(17,925 |
) |
|
Occupancy and equipment |
|
13,377 |
|
|
12,566 |
|
|
13,490 |
|
|
52,390 |
|
|
49,215 |
|
|
Information / computer data services |
|
6,202 |
|
|
5,657 |
|
|
5,112 |
|
|
22,458 |
|
|
18,823 |
|
|
Payment and card processing services |
|
4,638 |
|
|
4,330 |
|
|
4,233 |
|
|
16,993 |
|
|
15,412 |
|
|
Professional and legal expenses |
|
2,262 |
|
|
2,704 |
|
|
6,669 |
|
|
9,736 |
|
|
17,945 |
|
|
Advertising and marketing |
|
2,021 |
|
|
2,221 |
|
|
2,588 |
|
|
7,836 |
|
|
8,346 |
|
|
Deposit insurance expense (benefit) |
|
1,608 |
|
|
(1,604 |
) |
|
1,093 |
|
|
2,840 |
|
|
4,446 |
|
|
State/municipal business and use taxes |
|
917 |
|
|
1,011 |
|
|
854 |
|
|
3,880 |
|
|
3,284 |
|
|
Real estate operations |
|
40 |
|
|
126 |
|
|
251 |
|
|
303 |
|
|
804 |
|
|
Amortization of core deposit intangibles |
|
2,061 |
|
|
1,985 |
|
|
1,935 |
|
|
8,151 |
|
|
6,047 |
|
|
Miscellaneous |
|
7,892 |
|
|
6,435 |
|
|
7,310 |
|
|
28,122 |
|
|
26,754 |
|
|
|
|
89,271 |
|
|
86,632 |
|
|
90,794 |
|
|
350,184 |
|
|
335,764 |
|
|
Acquisition-related expenses |
|
4,419 |
|
|
676 |
|
|
4,602 |
|
|
7,544 |
|
|
5,607 |
|
|
Total non-interest expense |
|
93,690 |
|
|
87,308 |
|
|
95,396 |
|
|
357,728 |
|
|
341,371 |
|
|
Income before provision for income taxes |
|
42,083 |
|
|
48,179 |
|
|
40,581 |
|
|
183,132 |
|
|
165,110 |
|
| PROVISION
FOR INCOME TAXES |
|
8,428 |
|
|
8,602 |
|
|
3,053 |
|
|
36,854 |
|
|
28,595 |
|
| NET
INCOME |
|
$ |
33,655 |
|
|
$ |
39,577 |
|
|
$ |
37,528 |
|
|
$ |
146,278 |
|
|
$ |
136,515 |
|
| Earnings per share available
to common shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.96 |
|
|
$ |
1.15 |
|
|
$ |
1.10 |
|
|
$ |
4.20 |
|
|
$ |
4.16 |
|
|
Diluted |
|
$ |
0.95 |
|
|
$ |
1.15 |
|
|
$ |
1.09 |
|
|
$ |
4.18 |
|
|
$ |
4.15 |
|
| Cumulative dividends declared
per common share |
|
$ |
1.41 |
|
|
$ |
0.41 |
|
|
$ |
0.38 |
|
|
$ |
2.64 |
|
|
$ |
1.96 |
|
| Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
35,188,399 |
|
|
34,407,462 |
|
|
34,221,048 |
|
|
34,868,434 |
|
|
32,784,724 |
|
|
Diluted |
|
35,316,736 |
|
|
34,497,994 |
|
|
34,342,641 |
|
|
34,967,684 |
|
|
32,894,425 |
|
| Increase (decrease) in common
shares outstanding |
|
1,578,219 |
|
|
(400,286 |
) |
|
2,780,015 |
|
|
568,804 |
|
|
2,456,287 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL CONDITION |
|
|
|
|
|
|
|
Percentage Change |
| (in thousands except shares and
per share data) |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
| Cash and due from banks |
|
$ |
234,359 |
|
|
$ |
250,671 |
|
|
$ |
231,029 |
|
|
(6.5 |
)% |
|
1.4 |
% |
| Interest-bearing deposits |
|
73,376 |
|
|
73,785 |
|
|
41,167 |
|
|
(0.6 |
)% |
|
78.2 |
% |
|
Total cash and cash equivalents |
|
307,735 |
|
|
324,456 |
|
|
272,196 |
|
|
(5.2 |
)% |
|
13.1 |
% |
| Securities - trading |
|
25,636 |
|
|
25,672 |
|
|
25,896 |
|
|
(0.1 |
)% |
|
(1.0 |
)% |
| Securities - available for
sale |
|
1,551,557 |
|
|
1,539,908 |
|
|
1,636,223 |
|
|
0.8 |
% |
|
(5.2 |
)% |
| Securities - held to
maturity |
|
236,094 |
|
|
230,056 |
|
|
234,220 |
|
|
2.6 |
% |
|
0.8 |
% |
|
Total securities |
|
1,813,287 |
|
|
1,795,636 |
|
|
1,896,339 |
|
|
1.0 |
% |
|
(4.4 |
)% |
| Federal Home Loan Bank
stock |
|
28,342 |
|
|
25,623 |
|
|
31,955 |
|
|
10.6 |
% |
|
(11.3 |
)% |
| Loans held for sale |
|
210,447 |
|
|
244,889 |
|
|
171,031 |
|
|
(14.1 |
)% |
|
23.0 |
% |
| Loans receivable |
|
9,305,357 |
|
|
8,835,368 |
|
|
8,684,595 |
|
|
5.3 |
% |
|
7.1 |
% |
| Allowance for loan losses |
|
(100,559 |
) |
|
(97,801 |
) |
|
(96,485 |
) |
|
2.8 |
% |
|
4.2 |
% |
|
Net loans receivable |
|
9,204,798 |
|
|
8,737,567 |
|
|
8,588,110 |
|
|
5.3 |
% |
|
7.2 |
% |
| Accrued interest
receivable |
|
37,962 |
|
|
40,033 |
|
|
38,593 |
|
|
(5.2 |
)% |
|
(1.6 |
)% |
| Real estate owned held for
sale, net |
|
814 |
|
|
228 |
|
|
2,611 |
|
|
257.0 |
% |
|
(68.8 |
)% |
| Property and equipment,
net |
|
178,008 |
|
|
171,279 |
|
|
171,809 |
|
|
3.9 |
% |
|
3.6 |
% |
| Goodwill |
|
373,121 |
|
|
339,154 |
|
|
339,154 |
|
|
10.0 |
% |
|
10.0 |
% |
| Other intangibles, net |
|
29,158 |
|
|
26,610 |
|
|
32,924 |
|
|
9.6 |
% |
|
(11.4 |
)% |
| Bank-owned life insurance |
|
192,088 |
|
|
179,076 |
|
|
177,467 |
|
|
7.3 |
% |
|
8.2 |
% |
| Other assets |
|
228,271 |
|
|
213,291 |
|
|
149,128 |
|
|
7.0 |
% |
|
53.1 |
% |
|
Total assets |
|
$ |
12,604,031 |
|
|
$ |
12,097,842 |
|
|
$ |
11,871,317 |
|
|
4.2 |
% |
|
6.2 |
% |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,945,000 |
|
|
$ |
3,885,210 |
|
|
$ |
3,657,817 |
|
|
1.5 |
% |
|
7.9 |
% |
|
Interest-bearing transaction and savings accounts |
|
4,983,238 |
|
|
4,624,970 |
|
|
4,498,966 |
|
|
7.7 |
% |
|
10.8 |
% |
|
Interest-bearing certificates |
|
1,120,403 |
|
|
1,218,591 |
|
|
1,320,265 |
|
|
(8.1 |
)% |
|
(15.1 |
)% |
|
Total deposits |
|
10,048,641 |
|
|
9,728,771 |
|
|
9,477,048 |
|
|
3.3 |
% |
|
6.0 |
% |
| Advances from Federal Home
Loan Bank |
|
450,000 |
|
|
382,000 |
|
|
540,189 |
|
|
17.8 |
% |
|
(16.7 |
)% |
| Customer repurchase agreements
and other borrowings |
|
118,474 |
|
|
120,014 |
|
|
118,995 |
|
|
(1.3 |
)% |
|
(0.4 |
)% |
| Junior subordinated debentures
at fair value |
|
119,304 |
|
|
113,417 |
|
|
114,091 |
|
|
5.2 |
% |
|
4.6 |
% |
| Accrued expenses and other
liabilities |
|
227,889 |
|
|
181,351 |
|
|
102,061 |
|
|
25.7 |
% |
|
123.3 |
% |
| Deferred compensation |
|
45,689 |
|
|
41,354 |
|
|
40,338 |
|
|
10.5 |
% |
|
13.3 |
% |
|
Total liabilities |
|
11,009,997 |
|
|
10,566,907 |
|
|
10,392,722 |
|
|
4.2 |
% |
|
5.9 |
% |
| SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
1,373,940 |
|
|
1,286,711 |
|
|
1,337,436 |
|
|
6.8 |
% |
|
2.7 |
% |
| Retained earnings |
|
186,838 |
|
|
203,704 |
|
|
134,055 |
|
|
(8.3 |
)% |
|
39.4 |
% |
| Other components of
shareholders' equity |
|
33,256 |
|
|
40,520 |
|
|
7,104 |
|
|
(17.9 |
)% |
|
nm |
|
|
Total shareholders' equity |
|
1,594,034 |
|
|
1,530,935 |
|
|
1,478,595 |
|
|
4.1 |
% |
|
7.8 |
% |
|
Total liabilities and shareholders' equity |
|
$ |
12,604,031 |
|
|
$ |
12,097,842 |
|
|
$ |
11,871,317 |
|
|
4.2 |
% |
|
6.2 |
% |
| Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
| Shares outstanding at end of
period |
|
35,751,576 |
|
|
34,173,357 |
|
|
35,182,772 |
|
|
|
|
|
| Common shareholders' equity
per share (1) |
|
$ |
44.59 |
|
|
$ |
44.80 |
|
|
$ |
42.03 |
|
|
|
|
|
| Common shareholders' tangible
equity per share (1) (2) |
|
$ |
33.33 |
|
|
$ |
34.10 |
|
|
$ |
31.45 |
|
|
|
|
|
| Common shareholders' tangible
equity to tangible assets (2) |
|
9.77 |
% |
|
9.93 |
% |
|
9.62 |
% |
|
|
|
|
| Consolidated Tier 1 leverage
capital ratio |
|
10.71 |
% |
|
10.70 |
% |
|
10.98 |
% |
|
|
|
|
|
(1 |
) |
Calculation is based on number of
common shares outstanding at the end of the period rather than
weighted average shares outstanding. |
|
(2 |
) |
Common shareholders' tangible
equity excludes goodwill and other intangible assets. Tangible
assets exclude goodwill and other intangible assets. These
ratios represent non-GAAP financial measures. See also
Non-GAAP Financial Measures reconciliation tables on the final two
pages of the press release tables. |
| |
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Percentage Change |
| LOANS |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
| Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
|
$ |
1,580,650 |
|
|
$ |
1,463,303 |
|
|
$ |
1,430,097 |
|
|
8.0 |
% |
|
10.5 |
% |
|
Investment properties |
|
2,309,221 |
|
|
2,150,938 |
|
|
2,131,059 |
|
|
7.4 |
% |
|
8.4 |
% |
| Multifamily real estate |
|
473,152 |
|
|
399,814 |
|
|
368,836 |
|
|
18.3 |
% |
|
28.3 |
% |
| Commercial construction |
|
210,668 |
|
|
190,532 |
|
|
172,410 |
|
|
10.6 |
% |
|
22.2 |
% |
| Multifamily construction |
|
233,610 |
|
|
214,878 |
|
|
184,630 |
|
|
8.7 |
% |
|
26.5 |
% |
| One- to four-family
construction |
|
544,308 |
|
|
488,945 |
|
|
534,678 |
|
|
11.3 |
% |
|
1.8 |
% |
| Land and land
development: |
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
154,688 |
|
|
163,829 |
|
|
188,508 |
|
|
(5.6 |
)% |
|
(17.9 |
)% |
|
Commercial |
|
26,290 |
|
|
26,119 |
|
|
27,278 |
|
|
0.7 |
% |
|
(3.6 |
)% |
| Commercial business |
|
1,693,824 |
|
|
1,619,391 |
|
|
1,483,614 |
|
|
4.6 |
% |
|
14.2 |
% |
| Agricultural business
including secured by farmland |
|
370,549 |
|
|
390,505 |
|
|
404,873 |
|
|
(5.1 |
)% |
|
(8.5 |
)% |
| One- to four-family real
estate |
|
945,622 |
|
|
947,475 |
|
|
973,616 |
|
|
(0.2 |
)% |
|
(2.9 |
)% |
| Consumer: |
|
|
|
|
|
|
|
|
|
|
|
Consumer secured by one- to four-family real estate |
|
550,960 |
|
|
566,792 |
|
|
568,979 |
|
|
(2.8 |
)% |
|
(3.2 |
)% |
|
Consumer-other |
|
211,815 |
|
|
212,847 |
|
|
216,017 |
|
|
(0.5 |
)% |
|
(1.9 |
)% |
|
Total loans receivable |
|
$ |
9,305,357 |
|
|
$ |
8,835,368 |
|
|
$ |
8,684,595 |
|
|
5.3 |
% |
|
7.1 |
% |
| Restructured loans performing
under their restructured terms |
|
$ |
6,466 |
|
|
$ |
6,721 |
|
|
$ |
13,422 |
|
|
|
|
|
| Loans 30 - 89 days past due
and on accrual (1) |
|
$ |
20,178 |
|
|
$ |
11,496 |
|
|
$ |
25,108 |
|
|
|
|
|
| Total delinquent loans
(including loans on non-accrual), net (2) |
|
$ |
38,322 |
|
|
$ |
26,830 |
|
|
$ |
38,721 |
|
|
|
|
|
| Total delinquent
loans / Total loans receivable |
|
0.41 |
% |
|
0.30 |
% |
|
0.45 |
% |
|
|
|
|
(1) Includes $2.5 million of purchased
credit-impaired loans at December 31, 2019 compared to $112,000 at
September 30, 2019 and $3,000 at December 31, 2018.(2) Delinquent
loans include $2.8 million of delinquent purchased credit-impaired
loans at December 31, 2019 compared to $412,000 at September 30,
2019 and $519,000 at December 31, 2018.
| |
| LOANS BY GEOGRAPHIC
LOCATION |
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Washington |
|
$ |
4,364,764 |
|
|
46.9 |
% |
|
$ |
4,313,972 |
|
|
$ |
4,324,588 |
|
|
1.2 |
% |
|
0.9 |
% |
| Oregon |
|
1,650,704 |
|
|
17.7 |
% |
|
1,615,192 |
|
|
1,636,152 |
|
|
2.2 |
% |
|
0.9 |
% |
| California |
|
2,129,789 |
|
|
22.9 |
% |
|
1,729,208 |
|
|
1,596,604 |
|
|
23.2 |
% |
|
33.4 |
% |
| Idaho |
|
530,016 |
|
|
5.7 |
% |
|
552,523 |
|
|
521,026 |
|
|
(4.1 |
)% |
|
1.7 |
% |
| Utah |
|
60,958 |
|
|
0.7 |
% |
|
62,197 |
|
|
57,318 |
|
|
(2.0 |
)% |
|
6.4 |
% |
| Other |
|
569,126 |
|
|
6.1 |
% |
|
562,276 |
|
|
548,907 |
|
|
1.2 |
% |
|
3.7 |
% |
| Total loans receivable |
|
$ |
9,305,357 |
|
|
100.0 |
% |
|
$ |
8,835,368 |
|
|
$ |
8,684,595 |
|
|
5.3 |
% |
|
7.1 |
% |
| |
ADDITIONAL FINANCIAL INFORMATION(dollars in
thousands)
The following table shows loan originations
(excluding loans held for sale) activity for the quarters ending
December 31, 2019, September 30, 2019, and December 31, 2018 and
the twelve months ending December 31, 2019 and December 31, 2018
(in thousands):
| LOAN
ORIGINATIONS |
Quarters Ended |
|
Twelve Months Ended |
| |
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| Commercial real estate |
$ |
190,584 |
|
|
$ |
114,528 |
|
|
$ |
172,885 |
|
|
$ |
480,669 |
|
|
$ |
536,784 |
|
| Multifamily real estate |
21,848 |
|
|
29,645 |
|
|
16,731 |
|
|
80,761 |
|
|
25,771 |
|
| Construction and land |
530,632 |
|
|
303,151 |
|
|
397,702 |
|
|
1,435,501 |
|
|
1,460,536 |
|
| Commercial business |
196,069 |
|
|
194,606 |
|
|
206,922 |
|
|
757,721 |
|
|
839,290 |
|
| Agricultural business |
27,926 |
|
|
12,363 |
|
|
18,901 |
|
|
93,050 |
|
|
123,702 |
|
| One-to four-family
residential |
31,564 |
|
|
27,734 |
|
|
81,522 |
|
|
117,297 |
|
|
177,332 |
|
| Consumer |
71,683 |
|
|
101,613 |
|
|
72,500 |
|
|
357,040 |
|
|
331,661 |
|
| Total loan originations
(excluding loans held for sale) |
$ |
1,070,306 |
|
|
$ |
783,640 |
|
|
$ |
967,163 |
|
|
$ |
3,322,039 |
|
|
$ |
3,495,076 |
|
| |
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
Quarters Ended |
|
Twelve Months Ended |
| CHANGE IN
THE |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| ALLOWANCE FOR LOAN
LOSSES |
|
|
|
|
|
|
|
|
|
|
| Balance, beginning of
period |
|
$ |
97,801 |
|
|
$ |
98,254 |
|
|
$ |
95,263 |
|
|
$ |
96,485 |
|
|
$ |
89,028 |
|
| Provision for loan losses |
|
4,000 |
|
|
2,000 |
|
|
2,500 |
|
|
10,000 |
|
|
8,500 |
|
| Recoveries of loans previously
charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
199 |
|
|
107 |
|
|
66 |
|
|
476 |
|
|
1,646 |
|
|
Construction and land |
|
— |
|
|
156 |
|
|
23 |
|
|
208 |
|
|
213 |
|
|
One- to four-family real estate |
|
159 |
|
|
129 |
|
|
18 |
|
|
561 |
|
|
750 |
|
|
Commercial business |
|
225 |
|
|
162 |
|
|
193 |
|
|
625 |
|
|
1,049 |
|
|
Agricultural business, including secured by farmland |
|
10 |
|
|
2 |
|
|
23 |
|
|
47 |
|
|
64 |
|
|
Consumer |
|
61 |
|
|
154 |
|
|
102 |
|
|
548 |
|
|
366 |
|
| |
|
654 |
|
|
710 |
|
|
425 |
|
|
2,465 |
|
|
4,088 |
|
| Loans charged off: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
— |
|
|
(314 |
) |
|
— |
|
|
(1,138 |
) |
|
(401 |
) |
|
Construction and land |
|
(45 |
) |
|
— |
|
|
— |
|
|
(45 |
) |
|
(479 |
) |
|
One- to four-family real estate |
|
— |
|
|
(86 |
) |
|
— |
|
|
(86 |
) |
|
(43 |
) |
|
Commercial business |
|
(1,180 |
) |
|
(1,599 |
) |
|
(684 |
) |
|
(4,171 |
) |
|
(2,051 |
) |
|
Agricultural business, including secured by farmland |
|
(4 |
) |
|
(741 |
) |
|
(415 |
) |
|
(911 |
) |
|
(756 |
) |
|
Consumer |
|
(667 |
) |
|
(423 |
) |
|
(604 |
) |
|
(2,040 |
) |
|
(1,401 |
) |
| |
|
(1,896 |
) |
|
(3,163 |
) |
|
(1,703 |
) |
|
(8,391 |
) |
|
(5,131 |
) |
|
Net charge-offs |
|
(1,242 |
) |
|
(2,453 |
) |
|
(1,278 |
) |
|
(5,926 |
) |
|
(1,043 |
) |
| Balance, end of period |
|
$ |
100,559 |
|
|
$ |
97,801 |
|
|
$ |
96,485 |
|
|
$ |
100,559 |
|
|
$ |
96,485 |
|
| Net charge-offs / Average
loans receivable |
|
(0.013 |
)% |
|
(0.027 |
)% |
|
(0.015 |
)% |
|
(0.066 |
)% |
|
(0.013 |
)% |
| |
|
|
|
|
|
|
| ALLOCATION
OF |
|
|
|
|
|
|
| ALLOWANCE FOR LOAN
LOSSES |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
| Specific or allocated loss
allowance: |
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
30,591 |
|
|
$ |
28,515 |
|
|
$ |
27,132 |
|
|
Multifamily real estate |
|
4,754 |
|
|
4,283 |
|
|
3,818 |
|
|
Construction and land |
|
22,994 |
|
|
22,569 |
|
|
24,442 |
|
|
One- to four-family real estate |
|
4,136 |
|
|
4,569 |
|
|
4,714 |
|
|
Commercial business |
|
23,370 |
|
|
21,147 |
|
|
19,438 |
|
|
Agricultural business, including secured by farmland |
|
4,120 |
|
|
3,895 |
|
|
3,778 |
|
|
Consumer |
|
8,202 |
|
|
8,441 |
|
|
7,972 |
|
|
Total allocated |
|
98,167 |
|
|
93,419 |
|
|
91,294 |
|
| Unallocated |
|
2,392 |
|
|
4,382 |
|
|
5,191 |
|
|
Total allowance for loan losses |
|
$ |
100,559 |
|
|
$ |
97,801 |
|
|
$ |
96,485 |
|
| Allowance for loan losses /
Total loans receivable |
|
1.08 |
% |
|
1.11 |
% |
|
1.11 |
% |
| Allowance for loan losses /
Non-performing loans |
|
254 |
% |
|
536 |
% |
|
616 |
% |
| |
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
| |
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
| NON-PERFORMING
ASSETS |
|
|
|
|
|
| Loans on non-accrual
status: |
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
Commercial |
$ |
5,952 |
|
|
$ |
5,092 |
|
|
$ |
4,088 |
|
|
Multifamily |
85 |
|
|
87 |
|
|
— |
|
|
Construction and land |
1,905 |
|
|
1,318 |
|
|
3,188 |
|
|
One- to four-family |
3,410 |
|
|
3,007 |
|
|
1,544 |
|
|
Commercial business |
23,015 |
|
|
3,035 |
|
|
2,936 |
|
|
Agricultural business, including secured by farmland |
661 |
|
|
757 |
|
|
1,751 |
|
|
Consumer |
2,473 |
|
|
2,473 |
|
|
1,241 |
|
| |
37,501 |
|
|
15,769 |
|
|
14,748 |
|
| Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
Commercial |
89 |
|
|
89 |
|
|
— |
|
|
Construction and land |
332 |
|
|
1,141 |
|
|
— |
|
|
One- to four-family |
877 |
|
|
652 |
|
|
658 |
|
|
Commercial business |
401 |
|
|
358 |
|
|
1 |
|
|
Consumer |
398 |
|
|
247 |
|
|
247 |
|
| |
2,097 |
|
|
2,487 |
|
|
906 |
|
| Total non-performing
loans |
39,598 |
|
|
18,256 |
|
|
15,654 |
|
| Real estate owned (REO) |
814 |
|
|
228 |
|
|
2,611 |
|
| Other repossessed assets |
122 |
|
|
115 |
|
|
592 |
|
|
Total non-performing assets |
$ |
40,534 |
|
|
$ |
18,599 |
|
|
$ |
18,857 |
|
| Total non-performing
assets to total assets |
0.32 |
% |
|
0.15 |
% |
|
0.16 |
% |
| Purchased credit-impaired
loans, net |
$ |
15,938 |
|
|
$ |
12,575 |
|
|
$ |
14,413 |
|
| |
|
|
|
| |
Quarters Ended |
|
Twelve Months Ended |
| REAL ESTATE
OWNED |
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| Balance, beginning of
period |
$ |
228 |
|
|
$ |
2,513 |
|
|
$ |
364 |
|
|
$ |
2,611 |
|
|
$ |
360 |
|
|
Additions from loan foreclosures |
— |
|
|
48 |
|
|
139 |
|
|
109 |
|
|
641 |
|
|
Additions from acquisitions |
650 |
|
|
— |
|
|
2,593 |
|
|
650 |
|
|
2,593 |
|
|
Proceeds from dispositions of REO |
(105 |
) |
|
(2,333 |
) |
|
(453 |
) |
|
(2,588 |
) |
|
(838 |
) |
|
Gain on sale of REO |
41 |
|
|
— |
|
|
168 |
|
|
32 |
|
|
242 |
|
|
Valuation adjustments in the period |
— |
|
|
— |
|
|
(200 |
) |
|
— |
|
|
(387 |
) |
| Balance, end of period |
$ |
814 |
|
|
$ |
228 |
|
|
$ |
2,611 |
|
|
$ |
814 |
|
|
$ |
2,611 |
|
| |
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
Percentage Change |
| |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
|
|
|
|
|
|
|
|
|
| Non-interest-bearing |
|
$ |
3,945,000 |
|
|
$ |
3,885,210 |
|
|
$ |
3,657,817 |
|
|
1.5 |
% |
|
7.9 |
% |
| Interest-bearing checking |
|
1,280,003 |
|
|
1,209,826 |
|
|
1,191,016 |
|
|
5.8 |
% |
|
7.5 |
% |
| Regular savings accounts |
|
1,934,041 |
|
|
1,863,839 |
|
|
1,842,581 |
|
|
3.8 |
% |
|
5.0 |
% |
| Money market accounts |
|
1,769,194 |
|
|
1,551,305 |
|
|
1,465,369 |
|
|
14.0 |
% |
|
20.7 |
% |
|
Total interest-bearing transaction and savings accounts |
|
4,983,238 |
|
|
4,624,970 |
|
|
4,498,966 |
|
|
7.7 |
% |
|
10.8 |
% |
|
Total core deposits |
|
8,928,238 |
|
|
8,510,180 |
|
|
8,156,783 |
|
|
4.9 |
% |
|
9.5 |
% |
| Interest-bearing
certificates |
|
1,120,403 |
|
|
1,218,591 |
|
|
1,320,265 |
|
|
(8.1 |
)% |
|
(15.1 |
)% |
|
Total deposits |
|
$ |
10,048,641 |
|
|
$ |
9,728,771 |
|
|
$ |
9,477,048 |
|
|
3.3 |
% |
|
6.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
Percentage Change |
| |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
| |
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
|
|
|
| Washington |
|
$ |
5,861,809 |
|
|
58.3 |
% |
|
$ |
5,833,547 |
|
|
$ |
5,674,328 |
|
|
0.5 |
% |
|
3.3 |
% |
| Oregon |
|
2,006,163 |
|
|
20.0 |
% |
|
1,990,155 |
|
|
1,891,145 |
|
|
0.8 |
% |
|
6.1 |
% |
| California |
|
1,698,289 |
|
|
16.9 |
% |
|
1,429,939 |
|
|
1,434,033 |
|
|
18.8 |
% |
|
18.4 |
% |
| Idaho |
|
482,380 |
|
|
4.8 |
% |
|
475,130 |
|
|
477,542 |
|
|
1.5 |
% |
|
1.0 |
% |
| Total deposits |
|
$ |
10,048,641 |
|
|
100.0 |
% |
|
$ |
9,728,771 |
|
|
$ |
9,477,048 |
|
|
3.3 |
% |
|
6.0 |
% |
| |
| INCLUDED IN TOTAL
DEPOSITS |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
| Public non-interest-bearing
accounts |
|
$ |
111,015 |
|
|
$ |
114,879 |
|
|
$ |
96,009 |
|
| Public interest-bearing
transaction & savings accounts |
|
133,403 |
|
|
119,729 |
|
|
121,392 |
|
| Public interest-bearing
certificates |
|
35,184 |
|
|
26,609 |
|
|
30,089 |
|
|
Total public deposits |
|
$ |
279,602 |
|
|
$ |
261,217 |
|
|
$ |
247,490 |
|
| Total brokered deposits |
|
$ |
202,884 |
|
|
$ |
299,496 |
|
|
$ |
377,347 |
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
| (in thousands) |
|
|
| |
|
|
| |
|
|
| ACQUISITION OF
ALTAPACIFIC BANCORP |
|
|
| The following table* provides
the estimated fair value of the assets acquired and liabilities
assumed in the AltaPacific acquisition at November 1, 2019 (in
thousands): |
|
|
| |
November 1, 2019 |
| |
|
|
| Cash paid |
|
$ |
2,360 |
|
| Fair value of common shares
issued |
|
85,200 |
|
|
Total consideration |
|
87,560 |
|
| |
|
|
| Fair value of assets
acquired: |
|
|
|
Cash and cash equivalents |
39,686 |
|
|
|
Securities |
20,348 |
|
|
|
Federal Home Loan Bank stock |
2,005 |
|
|
|
Loans receivable |
332,355 |
|
|
|
Real estate owned held for sale |
650 |
|
|
|
Property and equipment |
3,809 |
|
|
|
Core deposit intangible |
4,610 |
|
|
|
Bank-owned life insurance |
11,890 |
|
|
|
Deferred tax asset |
166 |
|
|
|
Other assets |
11,090 |
|
|
|
Total assets acquired |
426,609 |
|
|
| |
|
|
| Fair value of liabilities
assumed: |
|
|
|
Deposits |
313,374 |
|
|
|
Advances from FHLB |
40,226 |
|
|
|
Junior subordinated debentures |
5,814 |
|
|
|
Deferred compensation |
4,508 |
|
|
|
Other liabilities |
9,094 |
|
|
|
Total liabilities assumed |
373,016 |
|
|
| |
|
|
|
Net assets acquired |
|
53,593 |
|
| |
|
|
|
Goodwill |
|
$ |
33,967 |
|
| |
|
|
| * Amounts recorded
in this table are preliminary estimates of fair value.
Additional adjustments to the acquisition accounting may be
required with a measurement period of one-year from the acquisition
date. |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Actual |
|
Minimum to be categorized as "Adequately
Capitalized" |
|
Minimum to becategorized
as"Well Capitalized" |
| REGULATORY CAPITAL
RATIOS AS OF DECEMBER 31, 2019 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
$ |
1,386,483 |
|
|
12.93 |
% |
|
$ |
857,555 |
|
|
8.00 |
% |
|
$ |
1,071,943 |
|
|
10.00 |
% |
| Tier 1 capital to
risk-weighted assets |
|
1,283,208 |
|
|
11.97 |
% |
|
643,166 |
|
|
6.00 |
% |
|
643,166 |
|
|
6.00 |
% |
| Tier 1 leverage capital
to average assets |
|
1,283,208 |
|
|
10.71 |
% |
|
479,458 |
|
|
4.00 |
% |
|
|
n/a |
|
|
n/a |
|
| Common equity tier 1
capital to risk-weighted assets |
|
1,139,708 |
|
|
10.63 |
% |
|
482,375 |
|
|
4.50 |
% |
|
|
n/a |
|
|
n/a |
|
| Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
1,321,580 |
|
|
12.55 |
% |
|
842,227 |
|
|
8.00 |
% |
|
1,052,784 |
|
|
10.00 |
% |
| Tier 1 capital to
risk-weighted assets |
|
1,220,811 |
|
|
11.60 |
% |
|
631,670 |
|
|
6.00 |
% |
|
842,227 |
|
|
8.00 |
% |
| Tier 1 leverage capital
to average assets |
|
1,220,811 |
|
|
10.45 |
% |
|
467,330 |
|
|
4.00 |
% |
|
584,163 |
|
|
5.00 |
% |
| Common equity tier 1
capital to risk-weighted assets |
|
1,220,811 |
|
|
11.60 |
% |
|
473,753 |
|
|
4.50 |
% |
|
684,310 |
|
|
6.50 |
% |
| Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
| Total capital to
risk-weighted assets |
|
37,044 |
|
|
19.42 |
% |
|
15,258 |
|
|
8.00 |
% |
|
19,073 |
|
|
10.00 |
% |
| Tier 1 capital to
risk-weighted assets |
|
34,658 |
|
|
18.17 |
% |
|
11,444 |
|
|
6.00 |
% |
|
15,258 |
|
|
8.00 |
% |
| Tier 1 leverage capital
to average assets |
|
34,658 |
|
|
11.66 |
% |
|
11,887 |
|
|
4.00 |
% |
|
14,859 |
|
|
5.00 |
% |
| Common equity tier 1
capital to risk-weighted assets |
|
34,658 |
|
|
18.17 |
% |
|
8,583 |
|
|
4.50 |
% |
|
12,397 |
|
|
6.50 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL FINANCIAL INFORMATION |
| (dollars in
thousands) |
| (rates / ratios
annualized) |
| |
|
|
|
|
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
| |
December 31, 2019 |
|
September 30, 2019 |
|
December 31, 2018 |
| |
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield / Cost(3) |
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Held for sale loans |
$ |
202,686 |
|
$ |
2,048 |
|
4.01 |
% |
|
$ |
154,529 |
|
$ |
1,607 |
|
4.13 |
% |
|
$ |
83,741 |
|
$ |
1,055 |
|
5.00 |
% |
|
Mortgage loans |
7,134,231 |
|
92,926 |
|
5.17 |
% |
|
6,872,426 |
|
89,948 |
|
5.19 |
% |
|
6,573,278 |
|
88,561 |
|
5.35 |
% |
|
Commercial/agricultural loans |
1,853,447 |
|
23,256 |
|
4.98 |
% |
|
1,809,397 |
|
23,750 |
|
5.21 |
% |
|
1,631,133 |
|
22,257 |
|
5.41 |
% |
|
Consumer and other loans |
169,197 |
|
2,685 |
|
6.30 |
% |
|
173,342 |
|
2,791 |
|
6.39 |
% |
|
172,934 |
|
2,754 |
|
6.32 |
% |
|
Total loans(1) |
9,359,561 |
|
120,915 |
|
5.13 |
% |
|
9,009,694 |
|
118,096 |
|
5.20 |
% |
|
8,461,086 |
|
114,627 |
|
5.37 |
% |
|
Mortgage-backed securities |
1,371,438 |
|
8,924 |
|
2.58 |
% |
|
1,358,448 |
|
9,415 |
|
2.75 |
% |
|
1,400,508 |
|
9,931 |
|
2.81 |
% |
|
Other securities |
418,767 |
|
2,663 |
|
2.52 |
% |
|
414,994 |
|
3,058 |
|
2.92 |
% |
|
474,659 |
|
3,633 |
|
3.04 |
% |
|
Interest-bearing deposits with banks |
107,959 |
|
531 |
|
1.95 |
% |
|
82,836 |
|
489 |
|
2.34 |
% |
|
54,577 |
|
305 |
|
2.22 |
% |
|
FHLB stock |
26,036 |
|
376 |
|
5.73 |
% |
|
29,400 |
|
378 |
|
5.10 |
% |
|
22,791 |
|
245 |
|
4.26 |
% |
|
Total investment securities |
1,924,200 |
|
12,494 |
|
2.58 |
% |
|
1,885,678 |
|
13,340 |
|
2.81 |
% |
|
1,952,535 |
|
14,114 |
|
2.87 |
% |
|
Total interest-earning assets |
11,283,761 |
|
133,409 |
|
4.69 |
% |
|
10,895,372 |
|
131,436 |
|
4.79 |
% |
|
10,413,621 |
|
128,741 |
|
4.90 |
% |
| Non-interest-earning
assets |
1,152,751 |
|
|
|
|
1,078,277 |
|
|
|
|
903,165 |
|
|
|
|
Total assets |
$ |
12,436,512 |
|
|
|
|
$ |
11,973,649 |
|
|
|
|
$ |
11,316,786 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,228,936 |
|
564 |
|
0.18 |
% |
|
$ |
1,194,633 |
|
621 |
|
0.21 |
% |
|
$ |
1,131,030 |
|
403 |
|
0.14 |
% |
|
Savings accounts |
1,999,656 |
|
2,027 |
|
0.40 |
% |
|
1,854,967 |
|
2,244 |
|
0.48 |
% |
|
1,779,288 |
|
1,505 |
|
0.34 |
% |
|
Money market accounts |
1,607,954 |
|
2,842 |
|
0.70 |
% |
|
1,542,264 |
|
2,944 |
|
0.76 |
% |
|
1,440,889 |
|
1,638 |
|
0.45 |
% |
|
Certificates of deposit |
1,189,530 |
|
4,517 |
|
1.51 |
% |
|
1,155,710 |
|
4,205 |
|
1.44 |
% |
|
1,287,114 |
|
3,957 |
|
1.22 |
% |
|
Total interest-bearing deposits |
6,026,076 |
|
9,950 |
|
0.66 |
% |
|
5,747,574 |
|
10,014 |
|
0.69 |
% |
|
5,638,321 |
|
7,503 |
|
0.53 |
% |
|
Non-interest-bearing deposits |
3,959,097 |
|
— |
|
— |
% |
|
3,786,143 |
|
— |
|
— |
% |
|
3,608,930 |
|
— |
|
— |
% |
|
Total deposits |
9,985,173 |
|
9,950 |
|
0.40 |
% |
|
9,533,717 |
|
10,014 |
|
0.42 |
% |
|
9,247,251 |
|
7,503 |
|
0.32 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
387,435 |
|
2,281 |
|
2.34 |
% |
|
476,435 |
|
3,107 |
|
2.59 |
% |
|
311,046 |
|
2,072 |
|
2.64 |
% |
|
Other borrowings |
126,782 |
|
121 |
|
0.38 |
% |
|
122,035 |
|
82 |
|
0.27 |
% |
|
117,724 |
|
66 |
|
0.22 |
% |
|
Junior subordinated debentures |
145,339 |
|
1,566 |
|
4.27 |
% |
|
140,212 |
|
1,612 |
|
4.56 |
% |
|
140,212 |
|
1,641 |
|
4.64 |
% |
|
Total borrowings |
659,556 |
|
3,968 |
|
2.39 |
% |
|
738,682 |
|
4,801 |
|
2.58 |
% |
|
568,982 |
|
3,779 |
|
2.64 |
% |
|
Total funding liabilities |
10,644,729 |
|
13,918 |
|
0.52 |
% |
|
10,272,399 |
|
14,815 |
|
0.57 |
% |
|
9,816,233 |
|
11,282 |
|
0.46 |
% |
| Other non-interest-bearing
liabilities(2) |
189,682 |
|
|
|
|
163,809 |
|
|
|
|
92,003 |
|
|
|
|
Total liabilities |
10,834,411 |
|
|
|
|
10,436,208 |
|
|
|
|
9,908,236 |
|
|
|
| Shareholders' equity |
1,602,101 |
|
|
|
|
1,537,785 |
|
|
|
|
1,408,550 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
12,436,512 |
|
|
|
|
$ |
11,973,993 |
|
|
|
|
$ |
11,316,786 |
|
|
|
| Net interest income/rate
spread |
|
$ |
119,491 |
|
4.17 |
% |
|
|
$ |
116,621 |
|
4.22 |
% |
|
|
$ |
117,459 |
|
4.44 |
% |
| Net interest margin |
|
|
4.20 |
% |
|
|
|
4.25 |
% |
|
|
|
4.47 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
|
1.07 |
% |
|
|
|
1.31 |
% |
|
|
|
1.32 |
% |
| Return on average equity |
|
|
8.33 |
% |
|
|
|
10.21 |
% |
|
|
|
10.57 |
% |
| Average equity/average
assets |
|
|
12.88 |
% |
|
|
|
12.84 |
% |
|
|
|
12.45 |
% |
| Average interest-earning
assets/average interest-bearing liabilities |
|
|
168.78 |
% |
|
|
|
167.98 |
% |
|
|
|
167.76 |
% |
| Average interest-earning
assets/average funding liabilities |
|
|
106.00 |
% |
|
|
|
106.06 |
% |
|
|
|
106.09 |
% |
| Non-interest income/average
assets |
|
|
0.65 |
% |
|
|
|
0.69 |
% |
|
|
|
0.74 |
% |
| Non-interest expense/average
assets |
|
|
2.99 |
% |
|
|
|
2.89 |
% |
|
|
|
3.34 |
% |
| Efficiency ratio(4) |
|
|
67.03 |
% |
|
|
|
63.50 |
% |
|
|
|
68.89 |
% |
| Adjusted efficiency
ratio(5) |
|
|
61.19 |
% |
|
|
|
60.71 |
% |
|
|
|
63.06 |
% |
|
(1 |
) |
Average balances include loans
accounted for on a nonaccrual basis and loans 90 days or more past
due. Amortization of net deferred loan fees/costs is included
with interest on loans. |
|
(2 |
) |
Average other
non-interest-bearing liabilities include fair value adjustments
related to junior subordinated debentures. |
|
(3 |
) |
Yields and costs have not been
adjusted for the effect of tax-exempt interest. |
|
(4 |
) |
Non-interest expense divided
by the total of net interest income (before provision for loan
losses) and non-interest income. |
|
(5 |
) |
Adjusted non-interest expense
divided by adjusted revenue. Adjusted revenue excludes net
gain (loss) on sale of securities and fair value adjustments.
Adjusted non-interest expense excludes acquisition-related
expenses, amortization of core deposit intangibles (CDI), REO gain
(loss), FHLB prepayment penalties and state/municipal business and
use taxes. These represent non-GAAP financial measures.
See also Non-GAAP Financial Measures reconciliation tables on the
last two pages of this press release. |
| |
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
| (rates / ratios
annualized) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| ANALYSIS OF NET
INTEREST SPREAD |
Twelve Months Ended |
| |
December 31, 2019 |
|
December 31, 2018 |
| |
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
| Interest-earning assets: |
|
|
|
|
|
|
|
|
Held for sale loans |
$ |
126,086 |
|
$ |
5,343 |
|
4.24 |
% |
|
$ |
81,873 |
|
$ |
3,926 |
|
4.80 |
% |
|
Mortgage loans |
6,911,067 |
|
361,158 |
|
5.23 |
% |
|
6,188,279 |
|
320,264 |
|
5.18 |
% |
|
Commercial/agricultural loans |
1,784,468 |
|
93,742 |
|
5.25 |
% |
|
1,519,871 |
|
79,605 |
|
5.24 |
% |
|
Consumer and other loans |
176,373 |
|
11,230 |
|
6.37 |
% |
|
149,184 |
|
9,575 |
|
6.42 |
% |
|
Total loans(1) |
8,997,994 |
|
471,473 |
|
5.24 |
% |
|
7,939,207 |
|
413,370 |
|
5.21 |
% |
|
Mortgage-backed securities |
1,368,927 |
|
38,640 |
|
2.82 |
% |
|
1,247,758 |
|
35,076 |
|
2.81 |
% |
|
Other securities |
441,402 |
|
12,510 |
|
2.83 |
% |
|
468,416 |
|
13,332 |
|
2.85 |
% |
|
Interest-bearing deposits with banks |
72,579 |
|
1,649 |
|
2.27 |
% |
|
59,031 |
|
1,080 |
|
1.83 |
% |
|
FHLB stock |
29,509 |
|
1,407 |
|
4.77 |
% |
|
20,496 |
|
774 |
|
3.78 |
% |
|
Total investment securities |
1,912,417 |
|
54,206 |
|
2.83 |
% |
|
1,795,701 |
|
50,262 |
|
2.80 |
% |
|
Total interest-earning assets |
10,910,411 |
|
525,679 |
|
4.82 |
% |
|
9,734,908 |
|
463,632 |
|
4.76 |
% |
| Non-interest-earning
assets |
1,078,277 |
|
|
|
|
828,184 |
|
|
|
|
Total assets |
$ |
11,988,688 |
|
|
|
|
$ |
10,563,092 |
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,188,985 |
|
2,224 |
|
0.19 |
% |
|
$ |
1,048,327 |
|
1,200 |
|
0.11 |
% |
|
Savings accounts |
1,890,467 |
|
8,310 |
|
0.44 |
% |
|
1,665,608 |
|
3,944 |
|
0.24 |
% |
|
Money market accounts |
1,534,909 |
|
10,693 |
|
0.70 |
% |
|
1,421,161 |
|
4,107 |
|
0.29 |
% |
|
Certificates of deposit |
1,175,942 |
|
16,403 |
|
1.39 |
% |
|
1,127,612 |
|
11,391 |
|
1.01 |
% |
|
Total interest-bearing deposits |
5,790,303 |
|
37,630 |
|
0.65 |
% |
|
5,262,708 |
|
20,642 |
|
0.39 |
% |
|
Non-interest-bearing deposits |
3,751,878 |
|
— |
|
— |
% |
|
3,411,010 |
|
— |
|
— |
% |
|
Total deposits |
9,542,181 |
|
37,630 |
|
0.39 |
% |
|
8,673,718 |
|
20,642 |
|
0.24 |
% |
| Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
FHLB advances |
477,796 |
|
12,234 |
|
2.56 |
% |
|
253,661 |
|
5,636 |
|
2.22 |
% |
|
Other borrowings |
122,343 |
|
330 |
|
0.27 |
% |
|
108,730 |
|
245 |
|
0.23 |
% |
|
Junior subordinated debentures |
141,504 |
|
6,574 |
|
4.65 |
% |
|
140,212 |
|
6,136 |
|
4.38 |
% |
|
Total borrowings |
741,643 |
|
19,138 |
|
2.58 |
% |
|
502,603 |
|
12,017 |
|
2.39 |
% |
|
Total funding liabilities |
10,283,824 |
|
56,768 |
|
0.55 |
% |
|
9,176,321 |
|
32,659 |
|
0.36 |
% |
| Other non-interest-bearing
liabilities(2) |
164,318 |
|
|
|
|
79,901 |
|
|
|
|
Total liabilities |
10,448,142 |
|
|
|
|
9,256,222 |
|
|
|
| Shareholders' equity |
1,540,546 |
|
|
|
|
1,306,870 |
|
|
|
|
Total liabilities and shareholders' equity |
$ |
11,988,688 |
|
|
|
|
$ |
10,563,092 |
|
|
|
| Net interest income/rate
spread |
|
$ |
468,911 |
|
4.27 |
% |
|
|
$ |
430,973 |
|
4.40 |
% |
| Net interest margin |
|
|
4.30 |
% |
|
|
|
4.43 |
% |
| Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
| Return on average assets |
|
|
1.22 |
% |
|
|
|
1.29 |
% |
| Return on average equity |
|
|
9.50 |
% |
|
|
|
10.45 |
% |
| Average equity/average
assets |
|
|
12.85 |
% |
|
|
|
12.37 |
% |
| Average interest-earning
assets/average interest-bearing liabilities |
|
|
167.03 |
% |
|
|
|
168.85 |
% |
| Average interest-earning
assets/average funding liabilities |
|
|
106.09 |
% |
|
|
|
106.09 |
% |
| Non-interest income/average
assets |
|
|
0.68 |
% |
|
|
|
0.80 |
% |
| Non-interest expense/average
assets |
|
|
2.98 |
% |
|
|
|
3.23 |
% |
| Efficiency ratio(4) |
|
|
64.94 |
% |
|
|
|
66.29 |
% |
| Adjusted efficiency
ratio(5) |
|
|
61.18 |
% |
|
|
|
63.59 |
% |
|
(1) |
|
Average balances include loans
accounted for on a nonaccrual basis and loans 90 days or more past
due. Amortization of net deferred loan fees/costs is included
with interest on loans. |
|
(2) |
|
Average other
non-interest-bearing liabilities include fair value adjustments
related to junior subordinated debentures. |
|
(3) |
|
Yields and costs have not been
adjusted for the effect of tax-exempt interest. |
|
(4) |
|
Non-interest expense divided
by the total of net interest income (before provision for loan
losses) and non-interest income. |
|
(5) |
|
Adjusted non-interest expense
divided by adjusted revenue. Adjusted revenue excludes net
gain (loss) on sale of securities and fair value adjustments.
Adjusted non-interest expense excludes acquisition-related
expenses, amortization of CDI, REO gain (loss), FHLB prepayment
penalties and state/municipal business and use taxes. These
represent non-GAAP financial measures. See also Non-GAAP
Financial Measures reconciliation tables on the last two pages of
this press release. |
| |
|
|
|
|
|
|
|
|
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| * Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
In addition to results presented in accordance with generally
accepted accounting principles in the United States of America
(GAAP), this press release contains certain non-GAAP financial
measures. Management has presented these non-GAAP financial
measures in this earnings release because it believes that they
provide useful and comparative information to assess trends in
Banner's core operations reflected in the current quarter's results
and facilitate the comparison of our performance with the
performance of our peers. However, these non-GAAP financial
measures are supplemental and are not a substitute for any analysis
based on GAAP. Where applicable, comparable earnings
information using GAAP financial measures is also presented.
Because not all companies use the same calculations, our
presentation may not be comparable to other similarly titled
measures as calculated by other companies. For a reconciliation of
these non-GAAP financial measures, see the tables below: |
| |
|
|
|
|
|
|
|
|
|
| ADJUSTED
REVENUE |
Quarters Ended |
|
Twelve Months Ended |
| |
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| Net interest income before
provision for loan losses |
$ |
119,491 |
|
|
$ |
116,621 |
|
|
$ |
117,459 |
|
|
$ |
468,911 |
|
|
$ |
430,973 |
|
| Total non-interest income |
20,282 |
|
|
20,866 |
|
|
21,018 |
|
|
81,949 |
|
|
84,008 |
|
| Total GAAP revenue |
139,773 |
|
|
137,487 |
|
|
138,477 |
|
|
550,860 |
|
|
514,981 |
|
|
Exclude net (gain) loss on sale of securities |
(62 |
) |
|
2 |
|
|
885 |
|
|
(33 |
) |
|
837 |
|
|
Exclude net change in valuation of financial instruments carried at
fair value |
36 |
|
|
69 |
|
|
(198 |
) |
|
208 |
|
|
(3,775 |
) |
| Adjusted revenue
(non-GAAP) |
$ |
139,747 |
|
|
$ |
137,558 |
|
|
$ |
139,164 |
|
|
$ |
551,035 |
|
|
$ |
512,043 |
|
| ADJUSTED
EARNINGS |
|
Quarters Ended |
|
Twelve Months Ended |
| |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| Net income (GAAP) |
|
$ |
33,655 |
|
|
$ |
39,577 |
|
|
$ |
37,528 |
|
|
$ |
146,278 |
|
|
$ |
136,515 |
|
|
Exclude net (gain) loss on sale of securities |
|
(62 |
) |
|
2 |
|
|
885 |
|
|
(33 |
) |
|
837 |
|
|
Exclude net change in valuation of financial instruments carried at
fair value |
|
36 |
|
|
69 |
|
|
(198 |
) |
|
208 |
|
|
(3,775 |
) |
|
Exclude acquisition-related expenses |
|
4,419 |
|
|
676 |
|
|
4,602 |
|
|
7,544 |
|
|
5,607 |
|
|
Exclude related tax (benefit) expense |
|
(1,074 |
) |
|
(49 |
) |
|
(1,159 |
) |
|
(1,741 |
) |
|
(426 |
) |
|
Exclude FHLB prepayment penalties |
|
735 |
|
|
— |
|
|
— |
|
|
735 |
|
|
— |
|
|
Exclude tax adjustments related to tax reform and valuation
reserves |
|
— |
|
|
— |
|
|
(4,207 |
) |
|
— |
|
|
(4,207 |
) |
| Total adjusted earnings
(non-GAAP) |
|
$ |
37,709 |
|
|
$ |
40,275 |
|
|
$ |
37,451 |
|
|
$ |
152,991 |
|
|
$ |
134,551 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share
(GAAP) |
|
$ |
0.95 |
|
|
$ |
1.15 |
|
|
$ |
1.09 |
|
|
$ |
4.18 |
|
|
$ |
4.15 |
|
| Diluted adjusted earnings per
share (non-GAAP) |
|
$ |
1.07 |
|
|
$ |
1.17 |
|
|
$ |
1.09 |
|
|
$ |
4.38 |
|
|
$ |
4.09 |
|
| ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
| ADJUSTED EFFICIENCY
RATIO |
|
Quarters Ended |
|
Twelve Months Ended |
| |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
|
Dec 31, 2019 |
|
Dec 31, 2018 |
| Non-interest expense
(GAAP) |
|
$ |
93,690 |
|
|
$ |
87,308 |
|
|
$ |
95,396 |
|
|
$ |
357,728 |
|
|
$ |
341,371 |
|
|
Exclude acquisition-related expenses |
|
(4,419 |
) |
|
(676 |
) |
|
(4,602 |
) |
|
(7,544 |
) |
|
(5,607 |
) |
|
Exclude CDI amortization |
|
(2,061 |
) |
|
(1,985 |
) |
|
(1,935 |
) |
|
(8,151 |
) |
|
(6,047 |
) |
|
Exclude state/municipal tax expense |
|
(917 |
) |
|
(1,011 |
) |
|
(854 |
) |
|
(3,880 |
) |
|
(3,284 |
) |
|
Exclude REO loss |
|
(40 |
) |
|
(126 |
) |
|
(251 |
) |
|
(303 |
) |
|
(804 |
) |
|
Exclude FHLB prepayment penalties |
|
(735 |
) |
|
— |
|
|
— |
|
|
(735 |
) |
|
$ |
— |
|
| Adjusted non-interest expense
(non-GAAP) |
|
$ |
85,518 |
|
|
$ |
83,510 |
|
|
$ |
87,754 |
|
|
$ |
337,115 |
|
|
$ |
325,629 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Net interest income before
provision for loan losses (GAAP) |
|
$ |
119,491 |
|
|
$ |
116,621 |
|
|
$ |
117,459 |
|
|
$ |
468,911 |
|
|
$ |
430,973 |
|
| Non-interest income
(GAAP) |
|
20,282 |
|
|
20,866 |
|
|
21,018 |
|
|
81,949 |
|
|
84,008 |
|
| Total revenue |
|
139,773 |
|
|
137,487 |
|
|
138,477 |
|
|
550,860 |
|
|
514,981 |
|
|
Exclude net (gain) loss on sale of securities |
|
(62 |
) |
|
2 |
|
|
885 |
|
|
(33 |
) |
|
837 |
|
|
Exclude net change in valuation of financial instruments carried at
fair value |
|
36 |
|
|
69 |
|
|
(198 |
) |
|
208 |
|
|
(3,775 |
) |
| Adjusted revenue
(non-GAAP) |
|
$ |
139,747 |
|
|
$ |
137,558 |
|
|
$ |
139,164 |
|
|
$ |
551,035 |
|
|
$ |
512,043 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio (GAAP) |
|
67.03 |
% |
|
63.50 |
% |
|
68.89 |
% |
|
64.94 |
% |
|
66.29 |
% |
| Adjusted efficiency ratio
(non-GAAP) |
|
61.19 |
% |
|
60.71 |
% |
|
63.06 |
% |
|
61.18 |
% |
|
63.59 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
|
Dec 31, 2019 |
|
Sep 30, 2019 |
|
Dec 31, 2018 |
| Shareholders' equity
(GAAP) |
|
$ |
1,594,034 |
|
|
$ |
1,530,935 |
|
|
$ |
1,478,595 |
|
|
Exclude goodwill and other intangible assets, net |
|
402,279 |
|
|
365,764 |
|
|
372,078 |
|
| Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,191,755 |
|
|
$ |
1,165,171 |
|
|
$ |
1,106,517 |
|
| |
|
|
|
|
|
|
| Total assets (GAAP) |
|
$ |
12,604,031 |
|
|
$ |
12,097,842 |
|
|
$ |
11,871,317 |
|
|
Exclude goodwill and other intangible assets, net |
|
402,279 |
|
|
365,764 |
|
|
372,078 |
|
| Total tangible assets
(non-GAAP) |
|
$ |
12,201,752 |
|
|
$ |
11,732,078 |
|
|
$ |
11,499,239 |
|
| Common shareholders' equity to
total assets (GAAP) |
|
12.65 |
% |
|
12.65 |
% |
|
12.46 |
% |
| Tangible common shareholders'
equity to tangible assets (non-GAAP) |
|
9.77 |
% |
|
9.93 |
% |
|
9.62 |
% |
| |
|
|
|
|
|
|
| TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
| Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,191,755 |
|
|
$ |
1,165,171 |
|
|
$ |
1,106,517 |
|
| Common shares outstanding at
end of period |
|
35,751,576 |
|
|
34,173,357 |
|
|
35,182,772 |
|
| Common shareholders' equity
(book value) per share (GAAP) |
|
$ |
44.59 |
|
|
$ |
44.80 |
|
|
$ |
42.03 |
|
| Tangible common shareholders'
equity (tangible book value) per share (non-GAAP) |
|
$ |
33.33 |
|
|
$ |
34.10 |
|
|
$ |
31.45 |
|
| CONTACT: |
|
MARK J.
GRESCOVICH, |
| |
|
PRESIDENT & CEO |
| |
|
PETER J. CONNER, CFO |
| |
|
(509) 527-3636 |
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