Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent
company of Banner Bank, today reported net income of $46.9 million,
or $1.33 per diluted share, for the first quarter of 2021, a 20%
increase compared to $39.0 million, or $1.10 per diluted share, for
the preceding quarter and a 178% increase compared to $16.9
million, or $0.47 per diluted share, for the first quarter of 2020.
Banner’s first quarter 2021 results include $8.0 million in
recapture of provision for credit losses, compared to $21.7 million
in provision for credit losses in the first quarter of 2020. The
first quarter 2020 provision for credit losses was primarily the
result of the impact of the COVID-19 pandemic. First quarter 2021
results also include $571,000 of merger and acquisition-related
expenses, compared to $579,000 for the preceding quarter, and $1.1
million of merger and acquisition-related expenses for the first
quarter of 2020.
Banner announced that its Board of Directors
declared a regular quarterly cash dividend of $0.41 per share. The
dividend will be payable May 14, 2021, to common shareholders of
record on May 5, 2021.
“Banner’s core operating performance during the
first quarter reflects the continued execution of our super
community bank strategy, even with the challenges of the pandemic,”
said Mark Grescovich, President and CEO. “We benefited from
continued strong mortgage banking fee revenue, core deposit growth
and the branch consolidations we completed during the prior
quarter. Overall, we achieved a return on average assets of 1.24%
for the quarter. The unprecedented level of market liquidity along
with our continued focus on building client relationships
contributed to our core deposits increasing 36% compared to
March 31, 2020.”
“Due to an improvement in forecasted economic
conditions, a decline in loan balances other than guaranteed SBA
Paycheck Protection Program (PPP) loans, we recorded an $8.0
million recapture to our provision for credit losses during the
current quarter. This compares to a $601,000 recapture to our
provision for credit losses during the preceding quarter and a
$21.7 million provision for credit losses in the first quarter a
year ago. Our allowance for credit losses - loans remains strong at
1.57% of total loans and 426% of non-performing loans at
March 31, 2021, compared to 1.69% of total loans and 470% of
non-performing loans at December 31, 2020,” said Grescovich.
“Banner has provided PPP loans totaling nearly $1.56 billion to
13,210 businesses as of March 31, 2021. We continue to live by
our core values: doing the right thing for our clients,
communities, colleagues, company and shareholders, while providing
a consistent and reliable source of capital through all economic
cycles and changing events.”
At March 31, 2021, Banner Corporation had
$16.12 billion in assets, $9.79 billion in net loans and $13.55
billion in deposits. Banner operates 155 branch offices, including
branches located in eight of the top 20 largest western
Metropolitan Statistical Areas by population.
COVID-19 Pandemic Update
- SBA Paycheck Protection
Program. The U.S. Small Business Administration (SBA)
provides assistance to small businesses impacted by COVID-19
through the Paycheck Protection Program (PPP), which was designed
to provide near-term relief to help small businesses sustain
operations. Under the initial PPP program, Banner funded 9,103
applications totaling $1.15 billion of loans in its service
area. In January 2021, Banner began accepting and processing loan
applications under the second PPP program enacted in December 2020.
As of March 31, 2021, Banner had funded 4,107 applications
totaling $410.8 million of loans under the second PPP program.
As of March 31, 2021, Banner had received SBA forgiveness for
1,255 PPP loans totaling $259.9 million.
- Loan
Accommodations. Banner is continuing to offer payment and
financial relief programs for borrowers impacted by COVID-19. These
programs include initial loan payment deferrals or interest-only
payments for up to 90 days, waived late fees, and, on a more
limited basis, waived interest and temporarily suspended
foreclosure proceedings. Deferred loans are re-evaluated at the end
of the initial deferral period and will either return to the
original loan terms or may be eligible for an additional deferral
period for up to 90 days. In addition, Banner has entered into
payment forbearance agreements with other clients for periods of up
to six months. At March 31, 2021, Banner had 91 loans totaling
$33.9 million still on deferral. Of the loans still on
deferral, 79 loans totaling $25.7 million are mortgage loans
operating under forbearance agreements. Since these loans were
performing loans that were current on their payments prior to the
COVID-19 pandemic, these modifications are not considered to be
troubled debt restructurings pursuant to applicable accounting and
regulatory guidance.
- Allowance for Credit
Losses. Banner recorded a recapture of provision for
credit losses of $8.0 million for the first quarter of 2021. This
compares to a $601,000 recapture of provision for credit losses
recorded in the preceding quarter and a $21.7 million provision for
credit losses recorded in the first quarter a year ago. The
recapture of provision for credit losses for the current quarter
primarily reflects the decrease in loan balances, excluding the
increase in PPP loans, as well as improvement in the forecasted
economic indicators, while the recapture of the provision for
credit losses recorded in the preceding quarter primarily reflected
the decrease in loan balances. The provision for credit losses
recorded in the first quarter a year ago reflected the
deterioration in forecasted economic indicators and the economic
outlook that existed at March 31, 2020 as a result of the COVID-19
pandemic.
- Branch Operations, IT
Changes and One-Time Expenses. Banner has been taking
steps to resume more normal branch activities with specific
guidelines in place to help safeguard the safety of our clients and
personnel. To further the well-being of staff and clients, Banner
implemented measures to allow employees to work from home to the
extent practicable. To facilitate this approach, Banner allocated
additional computer equipment to staff and enhanced Banner’s
network capabilities with several upgrades. These expenses plus
other expenses incurred in response to the COVID-19 pandemic
resulted in $148,000 of related costs during the first quarter of
2021, compared to $333,000 of related costs in the preceding
quarter and $239,000 of related costs in the first quarter a year
ago.
- Capital
Management. At March 31, 2021, the tangible common
shareholders’ equity to tangible assets* ratio was 7.80% and
Banner’s capital was well in excess of all regulatory requirements.
On December 21, 2020, Banner announced that its Board of Directors
authorized the repurchase of up to 1,757,781 shares of Banner’s
common stock, which is equivalent to approximately 5% of its common
stock. During the current quarter, Banner repurchased 500,000
shares of its common stock at an average cost of $50.62 per
share.
First Quarter 2021
Highlights
- Revenues decreased to $141.9
million, compared to $144.9 million in the preceding quarter, and
increased 3% when compared to $138.4 million in the first quarter a
year ago.
- Net interest income, before the
recapture of provision for credit losses, decreased to $117.7
million in the first quarter of 2021, compared to $121.4 million in
the preceding quarter and $119.3 million in the first quarter a
year ago.
- Net interest margin on a tax
equivalent basis was 3.44%, compared to 3.64% in the preceding
quarter and 4.25% in the first quarter a year ago.
- Mortgage banking revenues increased
7% to $11.4 million, compared to $10.7 million in the preceding
quarter, and 12% compared to $10.2 million in the first quarter a
year ago.
- Return on average assets was 1.24%,
compared to 1.04% in the preceding quarter and 0.54% in the first
quarter a year ago.
- Net loans receivable increased to
$9.79 billion at March 31, 2021, compared to $9.70 billion at
December 31, 2020, and 7% when compared to $9.16 billion at
March 31, 2020.
- Non-performing assets increased
slightly to $37.0 million, or 0.23% of total assets, at
March 31, 2021, compared to $36.5 million, or 0.24% of total
assets in the preceding quarter, and decreased from $46.1 million,
or 0.36% of total assets, at March 31, 2020.
- The allowance for credit losses -
loans was $156.1 million, or 1.57% of total loans receivable, as of
March 31, 2021, compared to $167.3 million, or 1.69% of total
loans receivable as of December 31, 2020 and $130.5 million or
1.41% of total loans receivable as of March 31, 2020.
- A $1.2 million recapture of
provision for credit losses - unfunded loan commitments was
recorded and the allowance for credit losses - unfunded loan
commitments was $12.1 million as of March 31, 2021, compared
to $13.3 million as of December 31, 2020 and $11.5 million as of
March 31, 2020.
- Core deposits (non-interest-bearing
and interest-bearing transaction and savings accounts) increased 8%
to $12.64 billion at March 31, 2021, compared to $11.65
billion at December 31, 2020, and increased 36% compared to $9.28
billion a year ago. Core deposits represented 93% of total deposits
at March 31, 2021.
- Dividends to shareholders were
$0.41 per share in the quarter ended March 31, 2021.
- Common shareholders’ equity per
share decreased 2% to $46.60 at March 31, 2021, compared to
$47.39 at the preceding quarter end, and increased 2% from $45.63 a
year ago.
- Tangible common shareholders’
equity per share* decreased 2% to $35.29 at March 31, 2021,
compared to $36.17 at the preceding quarter end, and increased 3%
from $34.23 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 credit and
non-interest income) and the adjusted efficiency ratio (which
excludes merger and acquisition-related expenses, COVID-19
expenses, amortization of core deposit intangibles, real estate
owned gain (loss), Federal Home Loan Bank (FHLB) prepayment
penalties, state/municipal taxes and provision for credit losses -
unfunded loan commitments 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.
Significant Recent Initiatives and
Events
On February 5, 2021, Islanders Bank, a
wholly-owned subsidiary of Banner Corporation, was merged into
Banner Bank. As a result, Banner recorded expenses associated with
the merger of $571,000 during the quarter ended March 31,
2021.
On December 11, 2020, Banner Bank completed the
consolidation of 15 branches and on September 25, 2020, Banner Bank
completed the consolidation of six branches. As a result, Banner
recorded expenses associated with these branch consolidations of
$257,000 and $1.7 million, during the quarters ended March 31,
2021 and December 31, 2020, respectively. Client adoption of mobile
and digital banking accelerated beginning in the second quarter of
2020 and has continued since, while physical branch transaction
volume declined. Banner anticipates this shift in client service
delivery channel preference will continue after the COVID-19
pandemic social distancing related restrictions have ended.
Income Statement Review
Net interest income, before the recapture of
provision for credit losses, was $117.7 million in the first
quarter of 2021, compared to $121.4 million in the preceding
quarter and $119.3 million in the first quarter a year ago.
Banner’s net interest margin on a tax equivalent
basis was 3.44% for the first quarter of 2021, a 20 basis-point
decrease compared to 3.64% in the preceding quarter and an 81
basis-point decrease compared to 4.25% in the first quarter a year
ago.
“Higher core deposit balances, resulting in a
significant increase in low yielding short term investments,
adversely affected our net interest margin during the quarter,”
said Grescovich. “Additionally, the on-going low interest rate
environment continues to put pressure on loan yields.” Acquisition
accounting adjustments added five basis points to the net interest
margin in both the current and preceding quarter and ten basis
points in the first quarter a year ago. The total purchase discount
for acquired loans was $13.9 million at March 31, 2021,
compared to $16.1 million at December 31, 2020, and $22.2 million
at March 31, 2020.
Average interest-earning asset yields decreased
23 basis points to 3.64% in the first quarter compared to 3.87% for
the preceding quarter and decreased 105 basis points compared to
4.69% in the first quarter a year ago. Average loan yields
decreased ten basis points to 4.43% compared to 4.53% in the
preceding quarter and decreased 65 basis points compared to 5.08%
in the first quarter a year ago. The decrease in average loan
yields during the current quarter compared to the preceding quarter
was primarily the result of lower rates on new originations and
adjustable rate loans resetting lower as well as a decrease in
interest recoveries and prepayment penalties. Loan discount
accretion added seven basis points to average loan yields in both
the first quarter of 2021 and in the preceding quarter and added 12
basis points in the first quarter a year ago. Deposit costs were
0.11% in the first quarter of 2021, a three basis-point decrease
compared to the preceding quarter and a 24 basis-point decrease
compared to the first quarter a year ago. The year-over-year
decrease in quarterly deposit costs was primarily the result of
decreases in market interest rates during 2020. The total cost of
funds was 0.21% during the first quarter of 2021, a three
basis-point decrease compared to the preceding quarter and a 25
basis-point decrease compared to the first quarter a year ago.
Banner recorded an $8.0 million recapture to its
provision for credit losses in the current quarter, compared to a
$601,000 recapture to its provision for credit losses in the prior
quarter and a $21.7 million provision for credit losses in the
first quarter a year ago. The recapture of provision for credit
losses for the current quarter primarily reflects the decrease in
loan balances, excluding the increase in PPP loans, as well as
improvement in the forecasted economic indicators, while the
recapture of the provision for credit losses recorded in the
preceding quarter primarily reflected the decrease in loan balances
other than PPP loans. The provision for credit losses recorded in
the first quarter a year ago reflected the deterioration in
forecasted economic indicators and the economic outlook that
existed at March 31, 2020 as a result of the COVID-19 pandemic.
Total non-interest income was $24.3 million in
the first quarter of 2021, compared to $23.5 million in the
preceding quarter and $19.2 million in the first quarter a year
ago. Deposit fees and other service charges were $8.9 million in
the first quarter of 2021, compared to $8.3 million in the
preceding quarter and $9.8 million in the first quarter a year ago.
The decrease in deposit fees and other service charges from the
first quarter a year ago is primarily a result of fee waivers and
reduced transaction deposit account activity since the start of the
COVID-19 pandemic. Mortgage banking revenues, including gains on
one- to four-family and multifamily loan sales and loan servicing
fees, increased to $11.4 million in the first quarter, compared to
$10.7 million in the preceding quarter and $10.2 million in the
first quarter of 2020. The higher mortgage banking revenue
quarter-over-quarter primarily reflects higher gains on the sale of
multifamily held-for-sale loans, partially offset by a decrease in
the gain on sale margin on one- to four-family held-for-sale loans.
The increases compared to the first quarter of 2020 were primarily
due to increased production of one- to four-family held-for-sale
loans, primarily due to increased refinance activity along with
higher gains on the sale of multifamily held-for-sale loans. Home
purchase activity accounted for 54% of one- to four-family mortgage
loan originations in the first quarter of 2021, compared to 51% in
the prior quarter and 54% in the first quarter of 2020.
Banner’s first quarter 2021 results included a
$59,000 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 a $485,000 net gain on the sale of securities. In the
preceding quarter, results included a $1.7 million net gain for
fair value adjustments and a $197,000 net gain on the sale of
securities. In the first quarter a year ago, results included a
$4.6 million net loss for fair value adjustments and a $78,000 net
gain on the sale of securities.
Banner’s total revenue decreased 2% to $141.9
million for the first quarter of 2021, compared to $144.9 million
in the preceding quarter, and increased 3% compared to $138.4
million in the first quarter a year ago. Adjusted revenue* (the
total of net interest income before recapture of provision for
credit 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 $141.4 million in the first quarter
of 2021, compared to $143.0 million in the preceding quarter and
$142.9 million in the first quarter of 2020.
Total non-interest expense was $92.3 million in
the first quarter of 2021, compared to $96.8 million in the
preceding quarter and $95.2 million in the first quarter of 2020.
The decrease in non-interest expense in the current quarter
includes a $1.2 million recapture of provision for credit losses -
unfunded loan commitments as compared to a $1.2 million provision
for the prior quarter and a $1.7 million provision in the first
quarter a year ago. The decrease in non-interest expense for the
current quarter compared to the prior quarter also reflects a $2.5
million accrual recorded in the prior quarter related to pending
litigation as well as a $1.6 million decrease in advertising and
marketing expenses and a $1.3 million decrease in occupancy and
equipment expense due to branch consolidations expenses recorded in
the prior quarter. The year-over-year quarterly decrease in
non-interest expense also reflects increased capitalized loan
origination costs, primarily related to the origination of PPP
loans during the current quarter. The decreases in non-interest
expense for both the current quarter compared to the prior quarter
and the first quarter a year ago were partially offset by increased
salary and employee benefits expense. These increases include
$1.3 million of severance expense related to a reduction in
staffing and a $1.2 million adjustment recorded in the current
quarter to increase the liability related to deferred compensation
plans. Merger and acquisition-related expenses were $571,000 for
the first quarter of 2021, compared to $579,000 for the preceding
quarter and $1.1 million in the first quarter a year ago. Banner’s
efficiency ratio was 65.04% for the current quarter, compared to
66.76% in the preceding quarter and 68.76% in the year ago quarter.
Banner’s adjusted efficiency ratio* was 63.85% for the current
quarter, compared to 64.31% in the preceding quarter and 62.26% in
the year ago quarter.
For the first quarter of 2021, Banner had $10.8
million in state and federal income tax expense for an effective
tax rate of 18.7%, reflecting the benefits from tax exempt income.
Banner’s 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.
Balance Sheet Review
Total assets increased 7% to $16.12 billion at
March 31, 2021, compared to $15.03 billion at December 31,
2020, and increased 26% when compared to $12.78 billion at
March 31, 2020. The total of securities and interest-bearing
deposits held at other banks was $4.81 billion at March 31,
2021, compared to $3.69 billion at December 31, 2020 and $2.15
billion at March 31, 2020. The average effective duration of
Banner's securities portfolio was approximately 5.2 years at
March 31, 2021, compared to 2.9 years at March 31,
2020.
Net loans receivable increased 1% to $9.79
billion at March 31, 2021, compared to $9.70 billion at
December 31, 2020, and increased 7% when compared to $9.16 billion
at March 31, 2020. The increase in net loans reflects the
origination of SBA PPP loans, primarily during the second quarter
of 2020 and the first quarter of 2021, partially offset by
decreased loan demand and lower line usage as a result of the
COVID-19 pandemic. Commercial real estate and multifamily real
estate loans increased slightly to $4.05 billion at March 31,
2021, compared to $4.03 billion at December 31, 2020, and increased
1% compared to $4.02 billion a year ago. Commercial business loans
increased 6% to $3.09 billion at March 31, 2021 compared to
$2.92 billion at December 31, 2020, and increased 43% compared to
$2.17 billion a year ago, primarily due to SBA PPP loans.
Agricultural business loans decreased to $262.4 million at
March 31, 2021, compared to $299.9 million three months
earlier and $330.3 million a year ago. Total construction, land and
land development loans were $1.31 billion at March 31, 2021, a
2% increase from $1.29 billion at December 31, 2020, and a 7%
increase compared to $1.22 billion a year earlier. Consumer loans
decreased to $570.7 million at March 31, 2021, compared to
$605.8 million at December 31, 2020, and $661.8 million a year ago.
One- to four-family loans decreased to $655.6 million at
March 31, 2021, reflecting held for investment loans being
refinanced and sold as held for sale loans, compared to $717.9
million at December 31, 2020, and $881.4 million a year ago.
Loans held for sale were $135.3 million at
March 31, 2021, compared to $243.8 million at December 31,
2020, and $182.4 million at March 31, 2020. The volume of one-
to four- family residential mortgage loans sold was
$300.3 million in the current quarter, compared to
$356.6 million in the preceding quarter and
$204.0 million in the first quarter a year ago. During the
first quarter of 2021, Banner sold $107.7 million in
multifamily loans compared to $10.4 million in the preceding
quarter and $119.7 million in the first quarter a year
ago.
Total deposits increased 8% to $13.55 billion at
March 31, 2021, compared to $12.57 billion at December 31,
2020, and increased 30% when compared to $10.45 billion a year ago.
The year-over-year increase in total deposits was due primarily to
SBA PPP loan funds deposited into client accounts and an increase
in general client liquidity due to reduced business investment and
consumer spending during the COVID-19 pandemic.
Non-interest-bearing account balances increased 9% to $5.99 billion
at March 31, 2021, compared to $5.49 billion at December 31,
2020, and increased 46% compared to $4.11 billion a year ago. Core
deposits increased 8% from the prior quarter and increased 36%
compared to a year ago and represented 93% of total deposits at
both March 31, 2021 and December 31, 2020. Certificates of
deposit decreased to $907.0 million at March 31, 2021,
compared to $915.3 million at December 31, 2020, and decreased 22%
compared to $1.17 billion a year earlier. Banner had no brokered
deposits at March 31, 2021 or December 31, 2020, compared to
$251.0 million a year ago. FHLB borrowings totaled $100.0 million
at March 31, 2021, $150.0 million at December 31, 2020, and
$247.0 million a year ago.
At March 31, 2021, total common
shareholders’ equity was $1.62 billion, or 10.04% of assets,
compared to $1.67 billion or 11.09% of assets at December 31, 2020,
and $1.60 billion or 12.53% of assets a year ago. The decrease in
total common shareholders’ equity from the prior quarter reflects
the stock repurchased during the current quarter as discussed
above. At March 31, 2021, tangible common shareholders’
equity*, which excludes goodwill and other intangible assets, net,
was $1.23 billion, or 7.80% of tangible assets*, compared to $1.27
billion, or 8.69% of tangible assets, at December 31, 2020, and
$1.20 billion, or 9.70% of tangible assets, a year ago. Banner’s
tangible book value per share* increased to $35.29 at
March 31, 2021, compared to $34.23 per share a year ago.
Banner and its subsidiary bank continue to
maintain capital levels in excess of the requirements to be
categorized as “well-capitalized.” At March 31, 2021, Banner's
common equity Tier 1 capital ratio was 11.24%, its Tier 1 leverage
capital to average assets ratio was 9.10%, and its total capital to
risk-weighted assets ratio was 14.74%.
Credit Quality
The allowance for credit losses - loans was
$156.1 million at March 31, 2021, or 1.57% of total loans
receivable outstanding and 426% of non-performing loans, compared
to $167.3 million at December 31, 2020, or 1.69% of total loans
receivable outstanding and 470% of non-performing loans, and $130.5
million at March 31, 2020, or 1.41% of total loans receivable
outstanding and 299% of non-performing loans. In addition to the
allowance for credit losses - loans, Banner maintains an allowance
for credit losses - unfunded loan commitments, which was $12.1
million at March 31, 2021, compared to $13.3 million at
December 31, 2020 and $11.5 million at March 31, 2020. Net
loan charge-offs totaled $3.2 million in the first quarter of 2021,
compared to net loan charge-offs of $93,000 in the preceding
quarter and $404,000 of net loan recoveries in the first quarter a
year ago. Banner recorded an $8.0 million recapture of provision
for credit losses in the current quarter, compared to a $601,000
recapture of provision for credit losses in the prior quarter and a
$21.7 million provision for loan losses in the year ago quarter.
The recapture of provision for credit losses for the current
quarter primarily reflects the decrease in loan balances, excluding
the increase in PPP loans, as well as improvement in the forecasted
economic indicators, while the recapture of the provision for
credit losses recorded in the preceding quarter primarily reflected
the decrease in loan balances other than PPP loans. The provision
for credit losses recorded in the first quarter a year ago
reflected the deterioration in forecasted economic indicators and
the economic outlook that existed at March 31, 2020 as a result of
the COVID-19 pandemic. Non-performing loans were $36.6 million at
March 31, 2021, compared to $35.6 million at December 31,
2020, and $43.7 million a year ago. Real estate owned and other
repossessed assets were $377,000 at March 31, 2021, compared
to $867,000 at December 31, 2020, and $2.4 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 purchase discount to the loans’
contractual amounts, a portion of which reflects a discount for
possible credit losses. Credit discounts were included in the
determination of fair value, and as a result, no allowance for
credit losses was recorded for loans acquired from acquisitions
prior to January 1, 2020. At March 31, 2021, the total
purchase discount for acquired loans was $13.9 million.
Banner’s total substandard loans were $311.6
million at March 31, 2021, compared to $340.2 million at
December 31, 2020, and $126.1 million a year ago. The quarter over
quarter decrease reflects the payoff of substandard loans as well
as risk rating upgrades as certain industries impacted by the
COVID-19 pandemic have begun to stabilize.
Banner’s total non-performing assets were $37.0
million, or 0.23% of total assets, at March 31, 2021, compared
to $36.5 million, or 0.24% of total assets, at December 31, 2020,
and $46.1 million, or 0.36% of total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday,
April 22, 2021, at 8:00 a.m. PDT, to discuss its first 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 10153346, or at
www.bannerbank.com.
About the Company
Banner Corporation is a $16.12 billion bank
holding company operating one commercial bank 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.
The COVID-19, pandemic is adversely affecting
us, our clients, counterparties, employees, and third-party service
providers, and the ultimate extent of the impacts on our business,
financial position, results of operations, liquidity, and prospects
is uncertain. Deterioration in general business and economic
conditions, including increases in unemployment rates, or
turbulence in domestic or global financial markets could adversely
affect our revenues and the values of our assets and liabilities,
reduce the availability of funding, lead to a tightening of credit,
and increase stock price volatility. In addition, changes to
statutes, regulations, or regulatory policies or practices as a
result of, or in response to COVID-19, could affect us in
substantial and unpredictable ways. Other factors that could cause
actual results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1) the
credit risks of lending activities, including changes in the level
and direction of loan delinquencies and write-offs and changes in
estimates of the adequacy of the allowance for credit losses, which
could necessitate additional provisions for credit losses,
resulting both from loans originated and loans acquired from other
financial institutions; (2) results of examinations by regulatory
authorities, including the possibility that any such regulatory
authority may, among other things, require increases in the
allowance for credit losses or writing down of assets or impose
restrictions or penalties with respect to Banner’s activities; (3)
competitive pressures among depository institutions; (4) interest
rate movements and their impact on client behavior and net interest
margin; (5) the impact of repricing and competitors’ pricing
initiatives on loan and deposit products; (6) fluctuations in real
estate values; (7) the ability to adapt successfully to
technological changes to meet clients’ needs and developments in
the market place; (8) the ability to access cost-effective funding;
(9) changes in financial markets; (10) changes in economic
conditions in general and in Washington, Idaho, Oregon and
California in particular; (11) the costs, effects and outcomes of
litigation; (12) 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; (13) changes in
accounting principles, policies or guidelines; (14) future
acquisitions by Banner of other depository institutions or lines of
business; (15) future goodwill impairment due to changes in
Banner’s business, changes in market conditions, including as a
result of the COVID-19 pandemic or other factors; and (16) other
economic, competitive, governmental, regulatory, and technological
factors affecting our operations, pricing, products and services;
and other risks detailed from time to time in our filings with the
Securities and Exchange Commission including our Quarterly Reports
on Form 10-Q and our Annual Reports on Form 10-K.
CONTACT: |
MARK J. GRESCOVICH, |
|
PRESIDENT & CEO |
|
PETER J. CONNER, CFO |
|
(509) 527-3636 |
RESULTS OF
OPERATIONS |
|
Quarters Ended |
(in thousands except shares
and per share data) |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
|
|
|
|
|
|
INTEREST
INCOME: |
|
|
|
|
|
|
Loans receivable |
|
$ |
108,924 |
|
|
$ |
115,545 |
|
|
$ |
118,926 |
|
Mortgage-backed securities |
|
9,371 |
|
|
7,438 |
|
|
9,137 |
|
Securities and cash equivalents |
|
6,226 |
|
|
6,170 |
|
|
3,602 |
|
|
|
124,521 |
|
|
129,153 |
|
|
131,665 |
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
Deposits |
|
3,609 |
|
|
4,392 |
|
|
8,750 |
|
Federal Home Loan Bank advances |
|
934 |
|
|
987 |
|
|
2,064 |
|
Other borrowings |
|
109 |
|
|
121 |
|
|
116 |
|
Junior subordinated debentures and subordinated notes |
|
2,208 |
|
|
2,216 |
|
|
1,477 |
|
|
|
6,860 |
|
|
7,716 |
|
|
12,407 |
|
Net interest income before (recapture)/provision for credit
losses |
|
117,661 |
|
|
121,437 |
|
|
119,258 |
|
(RECAPTURE)/PROVISION
FOR CREDIT LOSSES |
|
(8,031 |
) |
|
(601 |
) |
|
21,748 |
|
Net interest income |
|
125,692 |
|
|
122,038 |
|
|
97,510 |
|
NON-INTEREST
INCOME: |
|
|
|
|
|
|
Deposit fees and other service charges |
|
8,939 |
|
|
8,293 |
|
|
9,803 |
|
Mortgage banking operations |
|
11,440 |
|
|
10,690 |
|
|
10,191 |
|
Bank-owned life insurance |
|
1,307 |
|
|
1,319 |
|
|
1,050 |
|
Miscellaneous |
|
2,042 |
|
|
1,306 |
|
|
2,639 |
|
|
|
23,728 |
|
|
21,608 |
|
|
23,683 |
|
Net gain on sale of securities |
|
485 |
|
|
197 |
|
|
78 |
|
Net change in valuation of financial instruments carried at fair
value |
|
59 |
|
|
1,704 |
|
|
(4,596 |
) |
Total non-interest income |
|
24,272 |
|
|
23,509 |
|
|
19,165 |
|
NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
Salary and employee benefits |
|
64,819 |
|
|
60,906 |
|
|
59,908 |
|
Less capitalized loan origination costs |
|
(9,696 |
) |
|
(9,415 |
) |
|
(5,806 |
) |
Occupancy and equipment |
|
12,989 |
|
|
14,248 |
|
|
13,107 |
|
Information / computer data services |
|
6,203 |
|
|
6,402 |
|
|
5,810 |
|
Payment and card processing services |
|
4,326 |
|
|
3,960 |
|
|
4,240 |
|
Professional and legal expenses |
|
3,328 |
|
|
5,643 |
|
|
1,919 |
|
Advertising and marketing |
|
1,263 |
|
|
2,828 |
|
|
1,827 |
|
Deposit insurance expense |
|
1,533 |
|
|
1,548 |
|
|
1,635 |
|
State/municipal business and use taxes |
|
1,065 |
|
|
1,071 |
|
|
984 |
|
Real estate operations |
|
(242 |
) |
|
(283 |
) |
|
100 |
|
Amortization of core deposit intangibles |
|
1,711 |
|
|
1,865 |
|
|
2,001 |
|
(Recapture)/provision for credit losses - unfunded loan
commitments |
|
(1,220 |
) |
|
1,203 |
|
|
1,722 |
|
Miscellaneous |
|
5,509 |
|
|
5,871 |
|
|
6,357 |
|
|
|
91,588 |
|
|
95,847 |
|
|
93,804 |
|
COVID-19 expenses |
|
148 |
|
|
333 |
|
|
239 |
|
Merger and acquisition-related expenses |
|
571 |
|
|
579 |
|
|
1,142 |
|
Total non-interest expense |
|
92,307 |
|
|
96,759 |
|
|
95,185 |
|
Income before provision for income taxes |
|
57,657 |
|
|
48,788 |
|
|
21,490 |
|
PROVISION
FOR INCOME TAXES |
|
10,802 |
|
|
9,831 |
|
|
4,608 |
|
NET
INCOME |
|
$ |
46,855 |
|
|
$ |
38,957 |
|
|
$ |
16,882 |
|
Earnings per share available
to common shareholders: |
|
|
|
|
|
|
Basic |
|
$ |
1.34 |
|
|
$ |
1.11 |
|
|
$ |
0.48 |
|
Diluted |
|
$ |
1.33 |
|
|
$ |
1.10 |
|
|
$ |
0.47 |
|
Cumulative dividends declared
per common share |
|
$ |
0.41 |
|
|
$ |
0.41 |
|
|
$ |
0.41 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
Basic |
|
34,973,383 |
|
|
35,200,769 |
|
|
35,463,541 |
|
Diluted |
|
35,303,483 |
|
|
35,425,810 |
|
|
35,640,463 |
|
(Decrease) increase in common
shares outstanding |
|
(423,857 |
) |
|
632 |
|
|
(649,117 |
) |
FINANCIAL CONDITION |
|
|
|
|
|
|
|
Percentage Change |
(in thousands except shares
and per share data) |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
296,184 |
|
|
$ |
311,899 |
|
|
$ |
211,013 |
|
|
(5.0 |
)% |
|
40.4 |
% |
Interest-bearing deposits |
|
1,353,743 |
|
|
922,284 |
|
|
83,988 |
|
|
46.8 |
% |
|
nm |
|
Total cash and cash equivalents |
|
1,649,927 |
|
|
1,234,183 |
|
|
295,001 |
|
|
33.7 |
% |
|
459.3 |
% |
Securities - trading |
|
25,039 |
|
|
24,980 |
|
|
21,040 |
|
|
0.2 |
% |
|
19.0 |
% |
Securities - available for
sale |
|
2,989,760 |
|
|
2,322,593 |
|
|
1,608,224 |
|
|
28.7 |
% |
|
85.9 |
% |
Securities - held to
maturity |
|
441,857 |
|
|
421,713 |
|
|
437,846 |
|
|
4.8 |
% |
|
0.9 |
% |
Total securities |
|
3,456,656 |
|
|
2,769,286 |
|
|
2,067,110 |
|
|
24.8 |
% |
|
67.2 |
% |
Federal Home Loan Bank
stock |
|
14,001 |
|
|
16,358 |
|
|
20,247 |
|
|
(14.4 |
)% |
|
(30.8 |
)% |
Loans held for sale |
|
135,263 |
|
|
243,795 |
|
|
182,428 |
|
|
(44.5 |
)% |
|
(25.9 |
)% |
Loans receivable |
|
9,947,697 |
|
|
9,870,982 |
|
|
9,285,744 |
|
|
0.8 |
% |
|
7.1 |
% |
Allowance for credit losses -
loans |
|
(156,054 |
) |
|
(167,279 |
) |
|
(130,488 |
) |
|
(6.7 |
)% |
|
19.6 |
% |
Net loans receivable |
|
9,791,643 |
|
|
9,703,703 |
|
|
9,155,256 |
|
|
0.9 |
% |
|
7.0 |
% |
Accrued interest
receivable |
|
49,214 |
|
|
46,617 |
|
|
40,732 |
|
|
5.6 |
% |
|
20.8 |
% |
Real estate owned held for
sale, net |
|
340 |
|
|
816 |
|
|
2,402 |
|
|
(58.3 |
)% |
|
(85.8 |
)% |
Property and equipment,
net |
|
161,268 |
|
|
164,556 |
|
|
175,235 |
|
|
(2.0 |
)% |
|
(8.0 |
)% |
Goodwill |
|
373,121 |
|
|
373,121 |
|
|
373,121 |
|
|
— |
% |
|
— |
% |
Other intangibles, net |
|
19,715 |
|
|
21,426 |
|
|
27,157 |
|
|
(8.0 |
)% |
|
(27.4 |
)% |
Bank-owned life insurance |
|
191,388 |
|
|
191,830 |
|
|
193,140 |
|
|
(0.2 |
)% |
|
(0.9 |
)% |
Other assets |
|
277,256 |
|
|
265,932 |
|
|
249,121 |
|
|
4.3 |
% |
|
11.3 |
% |
Total assets |
|
$ |
16,119,792 |
|
|
$ |
15,031,623 |
|
|
$ |
12,780,950 |
|
|
7.2 |
% |
|
26.1 |
% |
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
5,994,693 |
|
|
$ |
5,492,924 |
|
|
$ |
4,107,262 |
|
|
9.1 |
% |
|
46.0 |
% |
Interest-bearing transaction and savings accounts |
|
6,647,196 |
|
|
6,159,052 |
|
|
5,175,969 |
|
|
7.9 |
% |
|
28.4 |
% |
Interest-bearing certificates |
|
906,978 |
|
|
915,320 |
|
|
1,166,306 |
|
|
(0.9 |
)% |
|
(22.2 |
)% |
Total deposits |
|
13,548,867 |
|
|
12,567,296 |
|
|
10,449,537 |
|
|
7.8 |
% |
|
29.7 |
% |
Advances from Federal Home
Loan Bank |
|
100,000 |
|
|
150,000 |
|
|
247,000 |
|
|
(33.3 |
)% |
|
(59.5 |
)% |
Customer repurchase agreements
and other borrowings |
|
216,260 |
|
|
184,785 |
|
|
128,764 |
|
|
17.0 |
% |
|
68.0 |
% |
Subordinated notes, net |
|
98,290 |
|
|
98,201 |
|
|
— |
|
|
0.1 |
% |
|
nm |
|
Junior subordinated debentures
at fair value |
|
117,248 |
|
|
116,974 |
|
|
99,795 |
|
|
0.2 |
% |
|
17.5 |
% |
Accrued expenses and other
liabilities |
|
373,685 |
|
|
202,643 |
|
|
208,753 |
|
|
84.4 |
% |
|
79.0 |
% |
Deferred compensation |
|
46,625 |
|
|
45,460 |
|
|
45,401 |
|
|
2.6 |
% |
|
2.7 |
% |
Total liabilities |
|
14,500,975 |
|
|
13,365,359 |
|
|
11,179,250 |
|
|
8.5 |
% |
|
29.7 |
% |
SHAREHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1,326,269 |
|
|
1,349,879 |
|
|
1,343,699 |
|
|
(1.7 |
)% |
|
(1.3 |
)% |
Retained earnings |
|
279,582 |
|
|
247,316 |
|
|
177,922 |
|
|
13.0 |
% |
|
57.1 |
% |
Other components of
shareholders’ equity |
|
12,966 |
|
|
69,069 |
|
|
80,079 |
|
|
(81.2 |
)% |
|
(83.8 |
)% |
Total shareholders’ equity |
|
1,618,817 |
|
|
1,666,264 |
|
|
1,601,700 |
|
|
(2.8 |
)% |
|
1.1 |
% |
Total liabilities and shareholders’ equity |
|
$ |
16,119,792 |
|
|
$ |
15,031,623 |
|
|
$ |
12,780,950 |
|
|
7.2 |
% |
|
26.1 |
% |
Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
Shares outstanding at end of
period |
|
34,735,343 |
|
|
35,159,200 |
|
|
35,102,459 |
|
|
|
|
|
Common shareholders’ equity
per share (1) |
|
$ |
46.60 |
|
|
$ |
47.39 |
|
|
$ |
45.63 |
|
|
|
|
|
Common shareholders’ tangible
equity per share (1) (2) |
|
$ |
35.29 |
|
|
$ |
36.17 |
|
|
$ |
34.23 |
|
|
|
|
|
Common shareholders’ tangible
equity to tangible assets (2) |
|
7.80 |
% |
|
8.69 |
% |
|
9.70 |
% |
|
|
|
|
Consolidated Tier 1 leverage
capital ratio |
|
9.10 |
% |
|
9.50 |
% |
|
10.45 |
% |
|
|
|
|
(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 |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
Owner-occupied |
|
$ |
1,045,656 |
|
|
$ |
1,076,467 |
|
|
$ |
1,024,089 |
|
|
(2.9 |
)% |
|
2.1 |
% |
Investment properties |
|
1,931,805 |
|
|
1,955,684 |
|
|
2,007,537 |
|
|
(1.2 |
)% |
|
(3.8 |
)% |
Small balance CRE |
|
639,330 |
|
|
573,849 |
|
|
591,783 |
|
|
11.4 |
% |
|
8.0 |
% |
Multifamily real estate |
|
433,775 |
|
|
428,223 |
|
|
400,206 |
|
|
1.3 |
% |
|
8.4 |
% |
Construction, land and land
development: |
|
|
|
|
|
|
|
|
|
|
Commercial construction |
|
199,037 |
|
|
228,937 |
|
|
205,476 |
|
|
(13.1 |
)% |
|
(3.1 |
)% |
Multifamily construction |
|
305,694 |
|
|
305,527 |
|
|
250,410 |
|
|
0.1 |
% |
|
22.1 |
% |
One- to four-family construction |
|
542,840 |
|
|
507,810 |
|
|
534,956 |
|
|
6.9 |
% |
|
1.5 |
% |
Land and land development |
|
266,730 |
|
|
248,915 |
|
|
232,506 |
|
|
7.2 |
% |
|
14.7 |
% |
Commercial business: |
|
|
|
|
|
|
|
|
|
|
Commercial business |
|
2,376,594 |
|
|
2,178,461 |
|
|
1,357,817 |
|
|
9.1 |
% |
|
75.0 |
% |
Small business scored |
|
717,502 |
|
|
743,451 |
|
|
807,539 |
|
|
(3.5 |
)% |
|
(11.1 |
)% |
Agricultural business,
including secured by farmland |
|
262,410 |
|
|
299,949 |
|
|
330,257 |
|
|
(12.5 |
)% |
|
(20.5 |
)% |
One- to four-family
residential |
|
655,627 |
|
|
717,939 |
|
|
881,387 |
|
|
(8.7 |
)% |
|
(25.6 |
)% |
Consumer: |
|
|
|
|
|
|
|
|
|
|
Consumer—home equity revolving lines of credit |
|
466,132 |
|
|
491,812 |
|
|
521,618 |
|
|
(5.2 |
)% |
|
(10.6 |
)% |
Consumer—other |
|
104,565 |
|
|
113,958 |
|
|
140,163 |
|
|
(8.2 |
)% |
|
(25.4 |
)% |
Total loans receivable |
|
$ |
9,947,697 |
|
|
$ |
9,870,982 |
|
|
$ |
9,285,744 |
|
|
0.8 |
% |
|
7.1 |
% |
Restructured loans performing
under their restructured terms |
|
$ |
6,424 |
|
|
$ |
6,673 |
|
|
$ |
6,423 |
|
|
|
|
|
Loans 30 - 89 days past due
and on accrual |
|
$ |
19,233 |
|
|
$ |
12,291 |
|
|
$ |
39,974 |
|
|
|
|
|
Total delinquent loans
(including loans on non-accrual), net |
|
$ |
42,444 |
|
|
$ |
36,131 |
|
|
$ |
61,101 |
|
|
|
|
|
Total delinquent
loans / Total loans receivable |
|
0.43 |
% |
|
0.37 |
% |
|
0.66 |
% |
|
|
|
|
LOANS BY GEOGRAPHIC
LOCATION |
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington |
|
$ |
4,683,600 |
|
|
47.1 |
% |
|
$ |
4,647,553 |
|
|
$ |
4,350,273 |
|
|
0.8 |
% |
|
7.7 |
% |
California |
|
2,320,384 |
|
|
23.3 |
% |
|
2,279,749 |
|
|
2,140,895 |
|
|
1.8 |
% |
|
8.4 |
% |
Oregon |
|
1,801,104 |
|
|
18.1 |
% |
|
1,792,156 |
|
|
1,664,652 |
|
|
0.5 |
% |
|
8.2 |
% |
Idaho |
|
539,061 |
|
|
5.4 |
% |
|
537,996 |
|
|
524,663 |
|
|
0.2 |
% |
|
2.7 |
% |
Utah |
|
92,399 |
|
|
0.9 |
% |
|
80,704 |
|
|
52,747 |
|
|
14.5 |
% |
|
75.2 |
% |
Other |
|
511,149 |
|
|
5.2 |
% |
|
532,824 |
|
|
552,514 |
|
|
(4.1 |
)% |
|
(7.5 |
)% |
Total loans receivable |
|
$ |
9,947,697 |
|
|
100.0 |
% |
|
$ |
9,870,982 |
|
|
$ |
9,285,744 |
|
|
0.8 |
% |
|
7.1 |
% |
ADDITIONAL FINANCIAL INFORMATION(dollars in
thousands)
The following table shows loan originations (excluding loans
held for sale) activity for the quarters ending March 31,
2021, December 31, 2020, and March 31, 2020 (in
thousands).
LOAN
ORIGINATIONS |
Quarters Ended |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Commercial real estate |
$ |
199,294 |
|
|
$ |
93,838 |
|
|
$ |
76,359 |
|
Multifamily real estate |
13,271 |
|
|
7,900 |
|
|
10,171 |
|
Construction and land |
451,545 |
|
|
515,280 |
|
|
369,613 |
|
Commercial business: |
|
|
|
|
|
Commercial business |
168,049 |
|
|
133,112 |
|
|
199,873 |
|
SBA PPP |
428,180 |
|
|
— |
|
|
— |
|
Agricultural business |
27,267 |
|
|
11,552 |
|
|
31,261 |
|
One-to four-family
residential |
64,286 |
|
|
28,402 |
|
|
31,041 |
|
Consumer |
131,671 |
|
|
97,416 |
|
|
67,357 |
|
Total loan originations
(excluding loans held for sale) |
$ |
1,483,563 |
|
|
$ |
887,500 |
|
|
$ |
785,675 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
Quarters Ended |
CHANGE IN
THE |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
ALLOWANCE FOR CREDIT
LOSSES - LOANS |
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
167,279 |
|
|
$ |
167,965 |
|
|
$ |
100,559 |
|
Beginning balance adjustment
for adoption of ASC 326 |
|
— |
|
|
— |
|
|
7,812 |
|
(Recapture)/provision for
credit losses - loans |
|
(8,035 |
) |
|
(593 |
) |
|
21,713 |
|
Recoveries of loans previously
charged off: |
|
|
|
|
|
|
Commercial real estate |
|
24 |
|
|
31 |
|
|
167 |
|
Construction and land |
|
100 |
|
|
— |
|
|
— |
|
One- to four-family real estate |
|
113 |
|
|
194 |
|
|
148 |
|
Commercial business |
|
979 |
|
|
2,444 |
|
|
205 |
|
Agricultural business, including secured by farmland |
|
— |
|
|
51 |
|
|
1,750 |
|
Consumer |
|
296 |
|
|
90 |
|
|
96 |
|
|
|
1,512 |
|
|
2,810 |
|
|
2,366 |
|
Loans charged off: |
|
|
|
|
|
|
Commercial real estate |
|
(3,763 |
) |
|
(1,375 |
) |
|
(100 |
) |
Multifamily real estate |
|
— |
|
|
— |
|
|
(66 |
) |
One- to four-family real estate |
|
— |
|
|
— |
|
|
(64 |
) |
Commercial business |
|
(789 |
) |
|
(1,019 |
) |
|
(1,384 |
) |
Agricultural business, including secured by farmland |
|
— |
|
|
(37 |
) |
|
— |
|
Consumer |
|
(150 |
) |
|
(472 |
) |
|
(348 |
) |
|
|
(4,702 |
) |
|
(2,903 |
) |
|
(1,962 |
) |
Net charge-offs |
|
(3,190 |
) |
|
(93 |
) |
|
404 |
|
Balance, end of period |
|
$ |
156,054 |
|
|
$ |
167,279 |
|
|
$ |
130,488 |
|
Net charge-offs / Average
loans receivable |
|
(0.032 |
)% |
|
(0.001 |
)% |
|
0.004 |
% |
|
|
|
|
|
|
|
ALLOCATION
OF |
|
|
|
|
|
|
ALLOWANCE FOR CREDIT
LOSSES - LOANS |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Specific or allocated credit
loss allowance: |
|
|
|
|
|
|
Commercial real estate |
|
$ |
59,411 |
|
|
$ |
57,791 |
|
|
$ |
29,339 |
|
Multifamily real estate |
|
4,367 |
|
|
3,893 |
|
|
2,805 |
|
Construction and land |
|
36,440 |
|
|
41,295 |
|
|
34,217 |
|
One- to four-family real estate |
|
7,988 |
|
|
9,913 |
|
|
11,884 |
|
Commercial business |
|
31,411 |
|
|
35,007 |
|
|
31,648 |
|
Agricultural business, including secured by farmland |
|
4,617 |
|
|
4,914 |
|
|
4,513 |
|
Consumer |
|
11,820 |
|
|
14,466 |
|
|
16,082 |
|
Total allowance for credit losses - loans |
|
$ |
156,054 |
|
|
$ |
167,279 |
|
|
$ |
130,488 |
|
Allowance for credit losses -
loans / Total loans receivable |
|
1.57 |
% |
|
1.69 |
% |
|
1.41 |
% |
Allowance for credit losses -
loans / Non-performing loans |
|
426 |
% |
|
470 |
% |
|
299 |
% |
|
|
Quarters Ended |
CHANGE IN
THE |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
ALLOWANCE FOR CREDIT
LOSSES - UNFUNDED LOAN COMMITMENTS |
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
13,297 |
|
|
$ |
12,094 |
|
|
$ |
2,716 |
|
Beginning balance adjustment
for adoption of ASC 326 |
|
— |
|
|
— |
|
|
7,022 |
|
(Recapture)/provision for
credit losses - unfunded loan commitments |
|
(1,220 |
) |
|
1,203 |
|
|
1,722 |
|
Balance, end of period |
|
$ |
12,077 |
|
|
$ |
13,297 |
|
|
$ |
11,460 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
NON-PERFORMING
ASSETS |
|
|
|
|
|
Loans on non-accrual
status: |
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
Commercial |
$ |
21,615 |
|
|
$ |
18,199 |
|
|
$ |
8,512 |
|
Construction and land |
986 |
|
|
936 |
|
|
1,393 |
|
One- to four-family |
4,456 |
|
|
3,556 |
|
|
3,045 |
|
Commercial business |
4,194 |
|
|
5,407 |
|
|
25,027 |
|
Agricultural business, including secured by farmland |
1,536 |
|
|
1,743 |
|
|
495 |
|
Consumer |
2,244 |
|
|
2,719 |
|
|
1,812 |
|
|
35,031 |
|
|
32,560 |
|
|
40,284 |
|
Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
Commercial |
— |
|
|
— |
|
|
24 |
|
Construction and land |
— |
|
|
— |
|
|
1,407 |
|
One- to four-family |
1,524 |
|
|
1,899 |
|
|
1,089 |
|
Commercial business |
37 |
|
|
1,025 |
|
|
77 |
|
Agricultural business, including secured by farmland |
— |
|
|
— |
|
|
461 |
|
Consumer |
— |
|
|
130 |
|
|
320 |
|
|
1,561 |
|
|
3,054 |
|
|
3,378 |
|
Total non-performing
loans |
36,592 |
|
|
35,614 |
|
|
43,662 |
|
Real estate owned (REO) |
340 |
|
|
816 |
|
|
2,402 |
|
Other repossessed assets |
37 |
|
|
51 |
|
|
47 |
|
Total non-performing assets |
$ |
36,969 |
|
|
$ |
36,481 |
|
|
$ |
46,111 |
|
Total non-performing
assets to total assets |
0.23 |
% |
|
0.24 |
% |
|
0.36 |
% |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
LOANS BY CREDIT RISK
RATING |
|
|
|
|
|
|
|
|
|
|
|
Pass |
$ |
9,584,429 |
|
|
$ |
9,494,147 |
|
|
$ |
9,095,264 |
|
Special Mention |
51,692 |
|
|
36,598 |
|
|
64,406 |
|
Substandard |
311,576 |
|
|
340,237 |
|
|
126,074 |
|
Total |
$ |
9,947,697 |
|
|
$ |
9,870,982 |
|
|
$ |
9,285,744 |
|
|
Quarters Ended |
REAL ESTATE
OWNED |
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Balance, beginning of period |
$ |
816 |
|
|
$ |
1,795 |
|
|
$ |
814 |
|
Additions from loan foreclosures |
— |
|
|
— |
|
|
1,588 |
|
Proceeds from dispositions of REO |
(783 |
) |
|
(1,555 |
) |
|
— |
|
Gain on sale of REO |
307 |
|
|
603 |
|
|
— |
|
Valuation adjustments in the period |
— |
|
|
(27 |
) |
|
— |
|
Balance, end of period |
$ |
340 |
|
|
$ |
816 |
|
|
$ |
2,402 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
Percentage Change |
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
5,994,693 |
|
|
$ |
5,492,924 |
|
|
$ |
4,107,262 |
|
|
9.1 |
% |
|
46.0 |
% |
Interest-bearing checking |
|
1,722,085 |
|
|
1,569,435 |
|
|
1,331,860 |
|
|
9.7 |
% |
|
29.3 |
% |
Regular savings accounts |
|
2,597,731 |
|
|
2,398,482 |
|
|
1,997,265 |
|
|
8.3 |
% |
|
30.1 |
% |
Money market accounts |
|
2,327,380 |
|
|
2,191,135 |
|
|
1,846,844 |
|
|
6.2 |
% |
|
26.0 |
% |
Total interest-bearing transaction and savings accounts |
|
6,647,196 |
|
|
6,159,052 |
|
|
5,175,969 |
|
|
7.9 |
% |
|
28.4 |
% |
Total core deposits |
|
12,641,889 |
|
|
11,651,976 |
|
|
9,283,231 |
|
|
8.5 |
% |
|
36.2 |
% |
Interest-bearing
certificates |
|
906,978 |
|
|
915,320 |
|
|
1,166,306 |
|
|
(0.9 |
)% |
|
(22.2 |
)% |
Total deposits |
|
$ |
13,548,867 |
|
|
$ |
12,567,296 |
|
|
$ |
10,449,537 |
|
|
7.8 |
% |
|
29.7 |
% |
GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
|
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
|
Percentage Change |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Prior Qtr |
|
Prior Yr Qtr |
Washington |
|
$ |
7,504,389 |
|
|
55.4 |
% |
|
$ |
7,058,404 |
|
|
$ |
6,037,864 |
|
|
6.3 |
% |
|
24.3 |
% |
Oregon |
|
2,929,027 |
|
|
21.6 |
% |
|
2,604,908 |
|
|
2,093,738 |
|
|
12.4 |
% |
|
39.9 |
% |
California |
|
2,401,299 |
|
|
17.7 |
% |
|
2,237,949 |
|
|
1,828,064 |
|
|
7.3 |
% |
|
31.4 |
% |
Idaho |
|
714,152 |
|
|
5.3 |
% |
|
666,035 |
|
|
489,871 |
|
|
7.2 |
% |
|
45.8 |
% |
Total deposits |
|
$ |
13,548,867 |
|
|
100.0 |
% |
|
$ |
12,567,296 |
|
|
$ |
10,449,537 |
|
|
7.8 |
% |
|
29.7 |
% |
INCLUDED IN TOTAL
DEPOSITS |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Public non-interest-bearing accounts |
|
$ |
151,850 |
|
|
$ |
175,352 |
|
|
$ |
115,354 |
|
Public interest-bearing
transaction & savings accounts |
|
169,192 |
|
|
127,523 |
|
|
130,958 |
|
Public interest-bearing
certificates |
|
51,021 |
|
|
59,127 |
|
|
48,232 |
|
Total public deposits |
|
$ |
372,063 |
|
|
$ |
362,002 |
|
|
$ |
294,544 |
|
Total brokered deposits |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
250,977 |
|
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 MARCH 31, 2021 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk-weighted assets |
|
$ |
1,594,230 |
|
|
14.74 |
% |
|
$ |
865,281 |
|
|
8.00 |
% |
|
$ |
1,081,602 |
|
|
10.00 |
% |
Tier 1 capital to
risk-weighted assets |
|
1,358,958 |
|
|
12.56 |
% |
|
648,961 |
|
|
6.00 |
% |
|
648,961 |
|
|
6.00 |
% |
Tier 1 leverage capital to
average assets |
|
1,358,958 |
|
|
9.10 |
% |
|
597,434 |
|
|
4.00 |
% |
|
n/a |
|
|
n/a |
|
Common equity tier 1 capital
to risk-weighted assets |
|
1,215,458 |
|
|
11.24 |
% |
|
486,721 |
|
|
4.50 |
% |
|
n/a |
|
|
n/a |
|
Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to risk-weighted
assets |
|
1,473,846 |
|
|
13.63 |
% |
|
865,096 |
|
|
8.00 |
% |
|
1,081,370 |
|
|
10.00 |
% |
Tier 1 capital to
risk-weighted assets |
|
1,338,602 |
|
|
12.38 |
% |
|
648,822 |
|
|
6.00 |
% |
|
865,096 |
|
|
8.00 |
% |
Tier 1 leverage capital to
average assets |
|
1,338,602 |
|
|
8.95 |
% |
|
598,565 |
|
|
4.00 |
% |
|
748,207 |
|
|
5.00 |
% |
Common equity tier 1 capital
to risk-weighted assets |
|
1,338,602 |
|
|
12.38 |
% |
|
486,616 |
|
|
4.50 |
% |
|
702,890 |
|
|
6.50 |
% |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
|
March 31, 2021 |
|
December 31, 2020 |
|
March 31, 2020 |
|
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 |
$ |
119,341 |
|
|
$ |
925 |
|
|
3.14 |
% |
|
$ |
110,414 |
|
|
$ |
976 |
|
|
3.52 |
% |
|
$ |
152,627 |
|
|
$ |
1,520 |
|
|
4.01 |
% |
Mortgage loans |
7,144,770 |
|
|
80,580 |
|
|
4.57 |
% |
|
7,251,101 |
|
|
84,634 |
|
|
4.64 |
% |
|
7,310,115 |
|
|
93,061 |
|
|
5.12 |
% |
Commercial/agricultural loans |
2,691,554 |
|
|
26,711 |
|
|
4.02 |
% |
|
2,752,352 |
|
|
29,145 |
|
|
4.21 |
% |
|
1,884,006 |
|
|
22,959 |
|
|
4.90 |
% |
Consumer and other loans |
127,469 |
|
|
1,947 |
|
|
6.19 |
% |
|
135,498 |
|
|
2,057 |
|
|
6.04 |
% |
|
163,098 |
|
|
2,595 |
|
|
6.40 |
% |
Total loans(1)(3) |
10,083,134 |
|
|
110,163 |
|
|
4.43 |
% |
|
10,249,365 |
|
|
116,812 |
|
|
4.53 |
% |
|
9,509,846 |
|
|
120,135 |
|
|
5.08 |
% |
Mortgage-backed securities |
1,953,820 |
|
|
9,472 |
|
|
1.97 |
% |
|
1,429,635 |
|
|
7,536 |
|
|
2.10 |
% |
|
1,354,585 |
|
|
9,236 |
|
|
2.74 |
% |
Other securities |
1,048,856 |
|
|
6,687 |
|
|
2.59 |
% |
|
975,166 |
|
|
6,634 |
|
|
2.71 |
% |
|
458,116 |
|
|
3,310 |
|
|
2.91 |
% |
Equity securities |
1,742 |
|
|
— |
|
|
— |
% |
|
234,822 |
|
|
64 |
|
|
0.11 |
% |
|
— |
|
|
— |
|
|
— |
% |
Interest-bearing deposits with banks |
1,032,138 |
|
|
262 |
|
|
0.10 |
% |
|
611,234 |
|
|
219 |
|
|
0.14 |
% |
|
92,659 |
|
|
393 |
|
|
1.71 |
% |
FHLB stock |
15,952 |
|
|
161 |
|
|
4.09 |
% |
|
16,361 |
|
|
162 |
|
|
3.94 |
% |
|
26,522 |
|
|
322 |
|
|
4.88 |
% |
Total investment securities (3) |
4,052,508 |
|
|
16,582 |
|
|
1.66 |
% |
|
3,267,218 |
|
|
14,615 |
|
|
1.78 |
% |
|
1,931,882 |
|
|
13,261 |
|
|
2.76 |
% |
Total interest-earning assets |
14,135,642 |
|
|
126,745 |
|
|
3.64 |
% |
|
13,516,583 |
|
|
131,427 |
|
|
3.87 |
% |
|
11,441,728 |
|
|
133,396 |
|
|
4.69 |
% |
Non-interest-earning
assets |
1,237,281 |
|
|
|
|
|
|
1,349,055 |
|
|
|
|
|
|
1,193,256 |
|
|
|
|
|
Total assets |
$ |
15,372,923 |
|
|
|
|
|
|
$ |
14,865,638 |
|
|
|
|
|
|
$ |
12,634,984 |
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,616,824 |
|
|
315 |
|
|
0.08 |
% |
|
$ |
1,483,183 |
|
|
315 |
|
|
0.08 |
% |
|
$ |
1,266,647 |
|
|
469 |
|
|
0.15 |
% |
Savings accounts |
2,486,820 |
|
|
521 |
|
|
0.08 |
% |
|
2,375,015 |
|
|
691 |
|
|
0.12 |
% |
|
2,039,857 |
|
|
1,755 |
|
|
0.35 |
% |
Money market accounts |
2,242,748 |
|
|
775 |
|
|
0.14 |
% |
|
2,165,960 |
|
|
1,047 |
|
|
0.19 |
% |
|
1,743,118 |
|
|
2,439 |
|
|
0.56 |
% |
Certificates of deposit |
913,053 |
|
|
1,998 |
|
|
0.89 |
% |
|
916,286 |
|
|
2,339 |
|
|
1.02 |
% |
|
1,124,994 |
|
|
4,087 |
|
|
1.46 |
% |
Total interest-bearing deposits |
7,259,445 |
|
|
3,609 |
|
|
0.20 |
% |
|
6,940,444 |
|
|
4,392 |
|
|
0.25 |
% |
|
6,174,616 |
|
|
8,750 |
|
|
0.57 |
% |
Non-interest-bearing deposits |
5,663,820 |
|
|
— |
|
|
— |
% |
|
5,499,240 |
|
|
— |
|
|
— |
% |
|
3,965,380 |
|
|
— |
|
|
— |
% |
Total deposits |
12,923,265 |
|
|
3,609 |
|
|
0.11 |
% |
|
12,439,684 |
|
|
4,392 |
|
|
0.14 |
% |
|
10,139,996 |
|
|
8,750 |
|
|
0.35 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
144,444 |
|
|
934 |
|
|
2.62 |
% |
|
150,000 |
|
|
987 |
|
|
2.62 |
% |
|
405,429 |
|
|
2,064 |
|
|
2.05 |
% |
Other borrowings |
202,930 |
|
|
109 |
|
|
0.22 |
% |
|
187,560 |
|
|
121 |
|
|
0.26 |
% |
|
124,771 |
|
|
116 |
|
|
0.37 |
% |
Junior subordinated debentures and subordinated notes |
247,944 |
|
|
2,208 |
|
|
3.61 |
% |
|
247,944 |
|
|
2,216 |
|
|
3.56 |
% |
|
147,944 |
|
|
1,477 |
|
|
4.02 |
% |
Total borrowings |
595,318 |
|
|
3,251 |
|
|
2.21 |
% |
|
585,504 |
|
|
3,324 |
|
|
2.26 |
% |
|
678,144 |
|
|
3,657 |
|
|
2.17 |
% |
Total funding liabilities |
13,518,583 |
|
|
6,860 |
|
|
0.21 |
% |
|
13,025,188 |
|
|
7,716 |
|
|
0.24 |
% |
|
10,818,140 |
|
|
12,407 |
|
|
0.46 |
% |
Other non-interest-bearing
liabilities(2) |
207,560 |
|
|
|
|
|
|
195,965 |
|
|
|
|
|
|
212,162 |
|
|
|
|
|
Total liabilities |
13,726,143 |
|
|
|
|
|
|
13,221,153 |
|
|
|
|
|
|
11,030,302 |
|
|
|
|
|
Shareholders’ equity |
1,646,780 |
|
|
|
|
|
|
1,644,485 |
|
|
|
|
|
|
1,604,682 |
|
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
15,372,923 |
|
|
|
|
|
|
$ |
14,865,638 |
|
|
|
|
|
|
$ |
12,634,984 |
|
|
|
|
|
Net interest income/rate
spread (tax equivalent) |
|
|
$ |
119,885 |
|
|
3.43 |
% |
|
|
|
$ |
123,711 |
|
|
3.63 |
% |
|
|
|
$ |
120,989 |
|
|
4.23 |
% |
Net interest margin (tax
equivalent) |
|
|
|
|
3.44 |
% |
|
|
|
|
|
3.64 |
% |
|
|
|
|
|
4.25 |
% |
Reconciliation to reported net
interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments for taxable
equivalent basis |
|
|
(2,224 |
) |
|
|
|
|
|
(2,274 |
) |
|
|
|
|
|
(1,731 |
) |
|
|
Net interest income and
margin, as reported |
|
|
$ |
117,661 |
|
|
3.38 |
% |
|
|
|
$ |
121,437 |
|
|
3.57 |
% |
|
|
|
$ |
119,258 |
|
|
4.19 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
|
|
1.24 |
% |
|
|
|
|
|
1.04 |
% |
|
|
|
|
|
0.54 |
% |
Return on average equity |
|
|
|
|
11.54 |
% |
|
|
|
|
|
9.42 |
% |
|
|
|
|
|
4.23 |
% |
Average equity/average
assets |
|
|
|
|
10.71 |
% |
|
|
|
|
|
11.06 |
% |
|
|
|
|
|
12.70 |
% |
Average interest-earning
assets/average interest-bearing liabilities |
|
|
|
|
179.96 |
% |
|
|
|
|
|
179.60 |
% |
|
|
|
|
|
166.97 |
% |
Average interest-earning
assets/average funding liabilities |
|
|
|
|
104.56 |
% |
|
|
|
|
|
103.77 |
% |
|
|
|
|
|
105.76 |
% |
Non-interest income/average
assets |
|
|
|
|
0.64 |
% |
|
|
|
|
|
0.63 |
% |
|
|
|
|
|
0.61 |
% |
Non-interest expense/average
assets |
|
|
|
|
2.44 |
% |
|
|
|
|
|
2.59 |
% |
|
|
|
|
|
3.03 |
% |
Efficiency ratio(4) |
|
|
|
|
65.04 |
% |
|
|
|
|
|
66.76 |
% |
|
|
|
|
|
68.76 |
% |
Adjusted efficiency
ratio(5) |
|
|
|
|
63.85 |
% |
|
|
|
|
|
64.31 |
% |
|
|
|
|
|
62.26 |
% |
(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) Tax-exempt income is calculated on a
tax equivalent basis. The tax equivalent yield adjustment to
interest earned on loans was $1.2 million, $1.3 million, and $1.2
million for the three months ended March 31, 2021, December
31, 2020, and March 31, 2020, respectively. The tax equivalent
yield adjustment to interest earned on tax exempt securities was
$985,000, $1.0 million, and $522,000 for the three months ended
March 31, 2021, December 31, 2020, and March 31, 2020,
respectively.(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. These represent non-GAAP financial measures. See the
non-GAAP Financial Measures on the final two pages of the press
release tables.
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP Financial
Measures |
|
|
|
|
|
In addition to results presented in accordance with generally
accepted accounting principles in the United States of America
(GAAP), this press release contains certain non-GAAP financial
measures. Management has presented these non-GAAP financial
measures in this earnings release because it believes that they
provide useful and comparative information to assess trends in
Banner’s core operations reflected in the current quarter’s results
and facilitate the comparison of our performance with the
performance of our peers. 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 |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Net interest income before (recapture)/provision for credit
losses |
$ |
117,661 |
|
|
$ |
121,437 |
|
|
$ |
119,258 |
|
Total non-interest income |
24,272 |
|
|
23,509 |
|
|
19,165 |
|
Total GAAP revenue |
141,933 |
|
|
144,946 |
|
|
138,423 |
|
Exclude net gain on sale of securities |
(485 |
) |
|
(197 |
) |
|
(78 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
(59 |
) |
|
(1,704 |
) |
|
4,596 |
|
Adjusted revenue
(non-GAAP) |
$ |
141,389 |
|
|
$ |
143,045 |
|
|
$ |
142,941 |
|
ADJUSTED
EARNINGS |
|
Quarters Ended |
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Net income (GAAP) |
|
$ |
46,855 |
|
|
$ |
38,957 |
|
|
$ |
16,882 |
|
Exclude net gain on sale of securities |
|
(485 |
) |
|
(197 |
) |
|
(78 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
|
(59 |
) |
|
(1,704 |
) |
|
4,596 |
|
Exclude merger and acquisition-related expenses |
|
571 |
|
|
579 |
|
|
1,142 |
|
Exclude COVID-19 expenses |
|
148 |
|
|
333 |
|
|
239 |
|
Exclude related net tax (benefit) expense |
|
(42 |
) |
|
237 |
|
|
(1,405 |
) |
Total adjusted earnings
(non-GAAP) |
|
$ |
46,988 |
|
|
$ |
38,205 |
|
|
$ |
21,376 |
|
|
|
|
|
|
|
|
Diluted earnings per share
(GAAP) |
|
$ |
1.33 |
|
|
$ |
1.10 |
|
|
$ |
0.47 |
|
Diluted adjusted earnings per
share (non-GAAP) |
|
$ |
1.33 |
|
|
$ |
1.08 |
|
|
$ |
0.60 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
ADJUSTED EFFICIENCY
RATIO |
|
Quarters Ended |
|
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Non-interest expense (GAAP) |
|
$ |
92,307 |
|
|
$ |
96,759 |
|
|
$ |
95,185 |
|
Exclude merger and acquisition-related expenses |
|
(571 |
) |
|
(579 |
) |
|
(1,142 |
) |
Exclude COVID-19 expenses |
|
(148 |
) |
|
(333 |
) |
|
(239 |
) |
Exclude CDI amortization |
|
(1,711 |
) |
|
(1,865 |
) |
|
(2,001 |
) |
Exclude state/municipal tax expense |
|
(1,065 |
) |
|
(1,071 |
) |
|
(984 |
) |
Exclude REO operations |
|
242 |
|
|
283 |
|
|
(100 |
) |
Exclude recapture/(provision) for credit losses - unfunded loan
commitments |
|
1,220 |
|
|
(1,203 |
) |
|
(1,722 |
) |
Adjusted non-interest expense
(non-GAAP) |
|
$ |
90,274 |
|
|
$ |
91,991 |
|
|
$ |
88,997 |
|
|
|
|
|
|
|
|
Net interest income before
(recapture)/provision for credit losses (GAAP) |
|
$ |
117,661 |
|
|
$ |
121,437 |
|
|
$ |
119,258 |
|
Non-interest income
(GAAP) |
|
24,272 |
|
|
23,509 |
|
|
19,165 |
|
Total revenue |
|
141,933 |
|
|
144,946 |
|
|
138,423 |
|
Exclude net gain on sale of securities |
|
(485 |
) |
|
(197 |
) |
|
(78 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
|
(59 |
) |
|
(1,704 |
) |
|
4,596 |
|
Adjusted revenue
(non-GAAP) |
|
$ |
141,389 |
|
|
$ |
143,045 |
|
|
$ |
142,941 |
|
|
|
|
|
|
|
|
Efficiency ratio (GAAP) |
|
65.04 |
% |
|
66.76 |
% |
|
68.76 |
% |
Adjusted efficiency ratio
(non-GAAP) |
|
63.85 |
% |
|
64.31 |
% |
|
62.26 |
% |
TANGIBLE COMMON
SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS |
|
Mar 31, 2021 |
|
Dec 31, 2020 |
|
Mar 31, 2020 |
Shareholders’ equity (GAAP) |
|
$ |
1,618,817 |
|
|
$ |
1,666,264 |
|
|
$ |
1,601,700 |
|
Exclude goodwill and other intangible assets, net |
|
392,836 |
|
|
394,547 |
|
|
400,278 |
|
Tangible common shareholders’
equity (non-GAAP) |
|
$ |
1,225,981 |
|
|
$ |
1,271,717 |
|
|
$ |
1,201,422 |
|
|
|
|
|
|
|
|
Total assets (GAAP) |
|
$ |
16,119,792 |
|
|
$ |
15,031,623 |
|
|
$ |
12,780,950 |
|
Exclude goodwill and other intangible assets, net |
|
392,836 |
|
|
394,547 |
|
|
400,278 |
|
Total tangible assets
(non-GAAP) |
|
$ |
15,726,956 |
|
|
$ |
14,637,076 |
|
|
$ |
12,380,672 |
|
Common shareholders’ equity to
total assets (GAAP) |
|
10.04 |
% |
|
11.09 |
% |
|
12.53 |
% |
Tangible common shareholders’
equity to tangible assets (non-GAAP) |
|
7.80 |
% |
|
8.69 |
% |
|
9.70 |
% |
|
|
|
|
|
|
|
TANGIBLE COMMON
SHAREHOLDERS’ EQUITY PER SHARE |
|
|
|
|
|
|
Tangible common shareholders’
equity (non-GAAP) |
|
$ |
1,225,981 |
|
|
$ |
1,271,717 |
|
|
$ |
1,201,422 |
|
Common shares outstanding at
end of period |
|
34,735,343 |
|
|
35,159,200 |
|
|
35,102,459 |
|
Common shareholders’ equity
(book value) per share (GAAP) |
|
$ |
46.60 |
|
|
$ |
47.39 |
|
|
$ |
45.63 |
|
Tangible common shareholders’
equity (tangible book value) per share (non-GAAP) |
|
$ |
35.29 |
|
|
$ |
36.17 |
|
|
$ |
34.23 |
|
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