Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent
company of Banner Bank and Islanders Bank, today reported net
income increased 19% to $39.7 million, or $1.14 per diluted share,
in the second quarter of 2019, compared to $33.3 million, or $0.95
per diluted share, in the preceding quarter and increased by 22%
when compared to $32.4 million, or $1.00 per diluted share, in the
second quarter of 2018. Second quarter of 2019 results
include $301,000 of acquisition-related expenses. In the
preceding quarter, Banner’s results included a $676,000 write-down
on a former administration building as well as $2.1 million of
acquisition-related expenses. In the second quarter of 2018
there were no acquisition-related expenses. In the first six
months of 2019, net income increased 19% to $73.0 million, or $2.09
per diluted share, compared to $61.2 million, or $1.89 per diluted
share, in the first six months a year ago.
“Banner’s second quarter financial results
demonstrate the effectiveness of our strategic plan and the success
of our super community bank model,” stated Mark J. Grescovich,
President and Chief Executive Officer. “Our operating
performance generated solid revenue growth with increases in both
net interest income and non-interest income compared to both the
preceding quarter and the same quarter last year. The ongoing
benefits of the Skagit Bank acquisition also contributed to
profitability, as expenses declined through the realization of
synergies from the transaction.”
At June 30, 2019, Banner Corporation had $11.85
billion in assets, $8.65 billion in net loans and $9.29 billion in
deposits. Banner operates 176 branch offices, including
branch offices located in eight of the top 20 largest western
Metropolitan Statistical Areas by population. The acquisition
of Skagit Bancorp, Inc. and its wholly-owned subsidiary, Skagit
Bank, (collectively "Skagit") on November 1, 2018, added $916
million in assets and, after consolidation, six banking locations
along the I-5 corridor from Seattle to the Canadian border.
Second Quarter 2019
Highlights
- Revenues increased 4% to $139.4 million during the second
quarter of 2019, compared to $134.2 million in the preceding
quarter and increased 10% compared to $126.3 million in the second
quarter a year ago.
- Net interest income, before the provision for loan losses, was
$116.7 million, compared to $116.1 million in the preceding quarter
and increased 11% from $105.1 million in the second quarter a year
ago.
- Net interest margin was 4.38% for the current quarter, compared
to 4.37% in the preceding quarter and 4.39% in the second quarter a
year ago.
- Total cost of funds of 56 basis points was unchanged compared
with the prior quarter.
- Return on average assets was 1.36% in the current quarter
compared to 1.15% in the preceding quarter and 1.25% in the second
quarter a year ago.
- Net loans receivable increased to $8.65 billion at June 30,
2019, compared to $8.60 billion at March 31, 2019 and increased 14%
when compared to $7.59 billion at June 30, 2018.
- Provision for loan losses was $2.0 million for the quarter,
increasing the allowance for loan losses to $98.3 million, or 1.12%
of total loans receivable, as of June 30, 2019.
- Core deposits increased slightly to $8.22 billion compared to
$8.21 billion at March 31, 2019 and increased 11% compared to a
year ago. Core deposits represented 88% of total deposits at
June 30, 2019.
- Quarterly dividends to shareholders for the current quarter
were $0.41 per share.
- Common shareholders’ equity per share increased to $43.99 at
June 30, 2019, an increase of 2% from $42.99 at the preceding
quarter end and an increase of 14% from $38.67 a year ago.
- Tangible common shareholders' equity per share* increased to
$33.36 at June 30, 2019, an increase of 3% from $32.47 at the
preceding quarter end and an increase of 9% from $30.57 a year
ago.
- Repurchased 600,000 shares of common stock at an average cost
of $53.46 per share.
- Non-performing assets remained low at $21.0 million, or 0.18%
of total assets, at June 30, 2019, compared to $22.0 million, or
0.19% of total assets three months earlier, and $16.5 million, or
0.16% of total assets, at June 30, 2018.
*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 revenue from core operations (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) and
state/municipal taxes from non-interest expense divided by revenues
from core operations) 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.
Income Statement Review
Banner's net interest margin was 4.38% for the
second quarter of 2019, a one basis-point increase compared to
4.37% in the preceding quarter and a one basis-point decrease
compared to 4.39% in the second quarter a year ago.
Acquisition accounting adjustments added seven basis points to the
net interest margin in both the current quarter and the preceding
quarter compared to six basis points in the second quarter a year
ago. The total purchase discount for acquired loans was $22.6
million at June 30, 2019, compared to $24.2 million at March 31,
2019 and $18.1 million at June 30, 2018. In the first six
months of the year, Banner’s net interest margin was 4.38% compared
to 4.37% in the first six months of 2018.
Average interest-earning asset yields increased
two basis points to 4.91% compared to 4.89% for the preceding
quarter and increased 21 basis points compared to 4.70% in the
second quarter a year ago. Average loan yields increased two
basis points to 5.33% compared to 5.31% in the preceding quarter
and increased 18 basis points compared to 5.15% in the second
quarter a year ago. Loan discount accretion added nine basis
points to loan yields in both the second quarter of 2019 and the
preceding quarter, compared to eight basis points in the second
quarter a year ago. Deposit costs were 0.39% in the second
quarter of 2019, a two basis-point increase compared to the
preceding quarter and a 19 basis-point increase compared to the
second quarter a year ago. The total cost of funds was 0.56%
during the second quarter of 2019, unchanged compared to the
preceding quarter and a 23 basis-point increase compared to the
second quarter a year ago, largely reflecting an increase in the
cost of deposits and in FHLB advances.
Banner recorded a $2.0 million provision for
loan losses in the current quarter, the same as in the prior
quarter and the year ago quarter. The provision is primarily
a result of new loan originations, the renewal of acquired loans
out of the discounted acquired loan portfolio and net
charge-offs.
Total non-interest income was $22.7 million in
the second quarter of 2019, compared to $18.1 million in the first
quarter of 2019 and $21.2 million in the second quarter a year
ago. Deposit fees and other service charges were $14.0
million in the second quarter of 2019, compared to $12.6 million in
the preceding quarter and $12.0 million in the second quarter a
year ago. The increase in deposit fees and other service
charges during the current quarter compared to the prior quarter
was primarily due to seasonal increases in interchange fee income;
the increase over the prior year period reflects an overall
increase in deposit accounts including those acquired from the
Skagit acquisition. Mortgage banking revenues, including
gains on one- to four-family and multifamily loan sales and loan
servicing fees, increased to $5.9 million in the second quarter,
compared to $3.4 million in the preceding quarter and $4.6 million
in the second quarter of 2018. The higher mortgage banking
revenue reflected an increase in residential and multifamily
mortgage held-for-sale loan production. Home purchase
activity accounted for 81% of one- to four-family mortgage loan
originations in the second quarter of 2019, compared to 80% in the
prior quarter and 81% in the second quarter of 2018. In the
first six months of 2019, total non-interest income was $40.8
million, compared to $42.6 million in the first six months of
2018.
Banner’s second quarter 2019 results included a
$114,000 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 $28,000 net loss on the sale of securities. In
the preceding quarter, results included an $11,000 net gain for
fair value adjustments and a $1,000 net gain on the sale of
securities. In the second quarter a year ago, results
included a $224,000 net gain for fair value adjustments and a
$44,000 net gain on the sale of securities.
Total revenues increased 4% to $139.4 million
for the second quarter of 2019, compared to $134.2 million in the
preceding quarter and increased 10% compared to $126.3 million in
the second quarter a year ago. Year-to-date, total revenues
increased 11% to $273.6 million compared to $247.0 million for the
same period one year earlier. Revenues from core operations*
(revenues excluding the net gain and loss on the sale of securities
and the net change in valuation of financial instruments) were
$139.5 million in the second quarter of 2019, compared to $134.2
million in the preceding quarter and $126.0 million in the second
quarter of 2018. In the first six months of the year,
revenues from core operations* were $273.7 million, compared to
$243.4 million in the first six months of 2018.
Banner’s total non-interest expense was $86.7
million in the second quarter of 2019, compared to $90.0 million in
the preceding quarter and $82.6 million in the second quarter of
2018. The decrease in non-interest expense during the current
quarter reflects the first full quarter of synergies from the
integration and consolidation of the Skagit systems and
operations. In addition, the decrease in acquisition-related
expenses, which were $301,000 for the second quarter of 2019,
compared to $2.1 million for the preceding quarter, contributed to
the decrease in non-interest expense for the quarter. There
were no acquisition-related expenses for the year ago quarter.
Higher loan originations and annual updates to our loan deferred
origination cost models resulted in a $2.6 million increase in
capitalized loan origination costs, offsetting increases in
salary and benefits driven by increased commissions on loan
originations. Year-to-date, total non-interest expense was
$176.7 million, compared to $164.3 million in the same period a
year earlier. Banner’s efficiency ratio improved to 62.22%
for the current quarter, compared to 67.06% in the preceding
quarter and 65.44% in the year ago quarter. Banner’s adjusted
efficiency ratio* was 59.56% for the current quarter, compared to
63.32% in the preceding quarter and 64.09% in the year ago
quarter.
For the second quarter of 2019, Banner recorded
$11.0 million in state and federal income tax expense for an
effective tax rate of 21.6%, reflecting in part the benefits from
tax exempt income sources. Banner’s normal, expected
statutory income tax rate is 23.7%, representing a blend of the
statutory federal income tax rate of 21.0% and apportioned effects
of the state income tax rates.
Balance Sheet Review
Total assets increased to $11.85 billion at June
30, 2019, compared to $11.74 billion at March 31, 2019 and $10.38
billion at June 30, 2018. The total of securities and
interest-bearing deposits held at other banks was $1.85 billion at
June 30, 2019, compared to $1.89 billion at March 31, 2019 and
$1.74 billion at June 30, 2018. The average effective
duration of Banner's securities portfolio was approximately 2.6
years at June 30, 2019, compared to 4.0 years at June 30, 2018.
Net loans receivable increased modestly to $8.65
billion at June 30, 2019, compared to $8.60 billion at March 31,
2019 and increased 14% when compared to $7.59 billion at June 30,
2018. The year-over-year increase in net loans included
$631.7 million of portfolio loans acquired in the Skagit
acquisition during the fourth quarter of 2018. Commercial
real estate and multifamily real estate loans were $3.95 billion at
June 30, 2019, unchanged from March 31, 2019, and increased 13%
compared to $3.51 billion a year ago. Commercial business
loans increased 5% to $1.60 billion at June 30, 2019, compared to
$1.52 billion at March 31, 2019, and increased 22% compared to
$1.31 billion a year ago. Agricultural business loans
increased by 2% to $380.8 million at June 30, 2019, compared to
$373.3 million three months earlier and increased by 13% compared
to $336.7 million a year ago. Total construction, land and
land development loans decreased slightly to $1.08 billion at June
30, 2019, compared to $1.10 billion at March 31, 2019 and increased
10% compared to $980.4 million a year earlier. Consumer loans
increased 2% to $790.0 million at June 30, 2019, compared to $777.4
million at March 31, 2019 and increased 12% compared to $706.8
million a year ago. One- to four-family loans declined
modestly to $944.6 million at June 30, 2019, compared to $967.6
million at March 31, 2019 and increased 12% compared to $840.5
million a year ago.
Loans held for sale increased substantially to
$170.7 million at June 30, 2019, compared to $45.9 million at March
31, 2019 and $78.8 million at June 30, 2018. The volume of
one- to four- family residential mortgage loans sold was $139.0
million in the current quarter, compared to $107.2 million in the
preceding quarter and $124.1 million in the second quarter a year
ago. During the second quarter of 2019, Banner did not sell
any multifamily loans, compared to $149.9 million in the preceding
quarter and $135.7 million in the second quarter a year ago.
Total deposits decreased slightly to $9.29
billion at June 30, 2019, compared to $9.38 billion at March 31,
2019 and increased 9% when compared to $8.53 billion a year ago, as
the addition of deposits from the Skagit acquisition was partially
offset by a $101.0 million decline in the use of brokered
certificates of deposit from March 31, 2019 and a $141.7 million
decline from a year ago. Non-interest-bearing account
balances decreased slightly to $3.67 billion at
June 30, 2019, compared to $3.68 billion at March 31,
2019 and increased 10% compared to $3.35 billion a year ago.
Core deposits (non-interest-bearing and interest-bearing
transaction and savings accounts) increased slightly from the prior
quarter and increased 11% compared to a year ago. Core
deposits represented 88% of total deposits at June 30, 2019, the
same as the prior period and 87% of total deposits a year
earlier. Certificates of deposit decreased 8% to $1.07
billion at June 30, 2019, compared to $1.16 billion at March 31,
2019 and decreased 7% compared to $1.15 billion a year
earlier. The decrease in certificates of deposit primarily
reflects the decrease in brokered deposits to $138.4 million at
June 30, 2019, compared to $239.4 million at March 31, 2019 and
$280.1 million a year earlier.
At June 30, 2019, total common shareholders'
equity was $1.52 billion, or 12.84% of assets, compared to $1.51
billion or 12.87% of assets at March 31, 2019 and $1.25 billion or
12.07% of assets a year ago. At June 30, 2019, tangible
common shareholders' equity*, which excludes goodwill and other
intangible assets, net, was $1.15 billion, or 10.05% of tangible
assets*, compared to $1.14 billion, or 10.04% of tangible assets,
at March 31, 2019 and $990.5 million, or 9.79% of tangible assets,
a year ago. Banner's tangible book value per share* increased
to $33.36 at June 30, 2019, compared to $30.57 per share a year
ago.
Banner repurchased 600,000 shares of its common
stock in the second quarter of 2019 at an average cost of $53.46
per share. During the first quarter there were no repurchases
of common stock. Banner and its subsidiary banks continue to
maintain capital levels in excess of the requirements to be
categorized as “well-capitalized” under the Basel III and Dodd
Frank Act regulatory standards. At June 30, 2019, Banner's
common equity Tier 1 capital ratio was 10.98%, its Tier 1 leverage
capital to average assets ratio was 10.83%, and its total capital
to risk-weighted assets ratio was 13.37%.
Credit Quality
The allowance for loan losses was $98.3 million
at June 30, 2019, or 1.12% of total loans receivable outstanding
and 534% of non-performing loans compared to $97.3 million at March
31, 2019, or 1.12% of total loans receivable outstanding and 504%
of non-performing loans, and $93.9 million at June 30, 2018, or
1.22% of total loans receivable outstanding and 613% of
non-performing loans. Net loan charge-offs totaled $1.1
million in the second quarter, compared to net loan charge-offs of
$1.2 million in the preceding quarter and net loan charge-offs of
$332,000 in the second quarter a year ago. Primarily as a
result of the origination of new loans, the renewal of acquired
loans out of the discounted acquired loan portfolio and net
charge-offs, Banner recorded a $2.0 million provision for loan
losses in the current quarter, which was the same amount as
recorded in the prior quarter and in the year ago quarter.
Non-performing loans were $18.4 million at June 30, 2019, compared
to $19.3 million at March 31, 2019 and $15.3 million a year
ago. Real estate owned and other repossessed assets were $2.6
million at June 30, 2019, compared to $2.7 million at March 31,
2019 and $1.2 million a year ago. The increase compared to a
year ago primarily reflects $2.6 million of real estate owned
acquired in the Skagit acquisition.
In accordance with acquisition accounting, loans
acquired from acquisitions were recorded at their estimated fair
value, which resulted in a net discount to the loans’ contractual
amounts, a portion of which reflects a discount for possible credit
losses. Credit discounts are included in the determination of
fair value, and as a result, no allowance for loan losses is
recorded for acquired loans at the acquisition date. At June
30, 2019, the total purchase discount for acquired loans was $22.6
million.
Banner's total non-performing assets were $21.0
million, or 0.18% of total assets, at June 30, 2019, compared to
$22.0 million, or 0.19% of total assets, at March 31, 2019, and
$16.5 million, or 0.16% of total assets, a year ago. In
addition to non-performing assets, there were $12.9 million
purchased credit-impaired loans at June 30, 2019, compared to $13.3
million at March 31, 2019, and $18.1 million at June 30, 2018.
Conference Call
Banner will host a conference call on Thursday,
July 25, 2019, at 8:00 a.m. PDT, to discuss its second quarter
results. To listen to the call on-line, go to
www.bannerbank.com. Investment professionals are invited to
dial (866) 235-9915 to participate in the call. A replay will
be available for one week at (877) 344-7529 using access code
10132624, or at www.bannerbank.com.
About the Company
Banner Corporation is an $11.85 billion bank
holding company operating two commercial banks in four Western
states through a network of branches offering a full range of
deposit services and business, commercial real estate,
construction, residential, agricultural and consumer loans.
Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”), in press releases or other public
stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases
"may," “believe,” “will,” “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimate,” “project,” “plans,”
"potential," or similar expressions are intended to identify
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. You are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date such statements are made and based
only on information then actually known to Banner. Banner
does not undertake and specifically disclaims any obligation to
revise any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date
of such statements. These statements may relate to future
financial performance, strategic plans or objectives, revenues or
earnings projections, or other financial information. By
their nature, these statements are subject to numerous
uncertainties that could cause actual results to differ materially
from those anticipated in the statements and could negatively
affect Banner's operating and stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1)
expected revenues, cost savings, synergies and other benefits from
the Skagit acquisition might not be realized within the expected
time frames or at all and costs or difficulties relating to
integration matters, including but not limited to customer and
employee retention, might be greater than expected; (2) the credit
risks of lending activities, including changes in the level and
direction of loan delinquencies and write-offs and changes in
estimates of the adequacy of the allowance for loan losses, which
could necessitate additional provisions for loan losses, resulting
both from loans originated and loans acquired from other financial
institutions; (3) results of examinations by regulatory
authorities, including the possibility that any such regulatory
authority may, among other things, require increases in the
allowance for loan losses or writing down of assets or impose
restrictions or penalties with respect to Banner's activities; (4)
competitive pressures among depository institutions; (5) interest
rate movements and their impact on customer behavior and net
interest margin; (6) the impact of repricing and competitors'
pricing initiatives on loan and deposit products; (7) fluctuations
in real estate values; (8) the ability to adapt successfully to
technological changes to meet customers' needs and developments in
the market place; (9) the ability to access cost-effective funding;
(10) changes in financial markets; (11) changes in economic
conditions in general and in Washington, Idaho, Oregon and
California in particular; (12) the costs, effects and outcomes of
litigation; (13) 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 |
|
Six months ended |
(in thousands except shares and
per share data) |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
Loans receivable |
|
$ |
117,007 |
|
|
$ |
115,455 |
|
|
$ |
99,853 |
|
|
$ |
232,462 |
|
|
$ |
193,875 |
|
Mortgage-backed securities |
|
9,794 |
|
|
10,507 |
|
|
8,899 |
|
|
20,301 |
|
|
16,230 |
|
Securities and cash equivalents |
|
4,037 |
|
|
4,034 |
|
|
3,671 |
|
|
8,071 |
|
|
7,138 |
|
|
|
130,838 |
|
|
129,996 |
|
|
112,423 |
|
|
260,834 |
|
|
217,243 |
|
INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
9,023 |
|
|
8,643 |
|
|
4,264 |
|
|
17,666 |
|
|
7,622 |
|
Federal Home Loan Bank advances |
|
3,370 |
|
|
3,476 |
|
|
1,499 |
|
|
6,846 |
|
|
2,177 |
|
Other borrowings |
|
67 |
|
|
60 |
|
|
49 |
|
|
127 |
|
|
119 |
|
Junior subordinated debentures |
|
1,683 |
|
|
1,713 |
|
|
1,548 |
|
|
3,396 |
|
|
2,889 |
|
|
|
14,143 |
|
|
13,892 |
|
|
7,360 |
|
|
28,035 |
|
|
12,807 |
|
Net interest income before provision for loan losses |
|
116,695 |
|
|
116,104 |
|
|
105,063 |
|
|
232,799 |
|
|
204,436 |
|
PROVISION FOR LOAN
LOSSES |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
4,000 |
|
|
4,000 |
|
Net interest income |
|
114,695 |
|
|
114,104 |
|
|
103,063 |
|
|
228,799 |
|
|
200,436 |
|
NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
|
|
Deposit fees and other service charges |
|
14,046 |
|
|
12,618 |
|
|
11,985 |
|
|
26,664 |
|
|
23,281 |
|
Mortgage banking operations |
|
5,936 |
|
|
3,415 |
|
|
4,643 |
|
|
9,351 |
|
|
9,507 |
|
Bank-owned life insurance |
|
1,123 |
|
|
1,276 |
|
|
933 |
|
|
2,399 |
|
|
1,785 |
|
Miscellaneous |
|
1,713 |
|
|
804 |
|
|
3,388 |
|
|
2,517 |
|
|
4,426 |
|
|
|
22,818 |
|
|
18,113 |
|
|
20,949 |
|
|
40,931 |
|
|
38,999 |
|
Net (loss) gain on sale of securities |
|
(28 |
) |
|
1 |
|
|
44 |
|
|
(27 |
) |
|
48 |
|
Net change in valuation of financial instruments carried at fair
value |
|
(114 |
) |
|
11 |
|
|
224 |
|
|
(103 |
) |
|
3,532 |
|
Total non-interest income |
|
22,676 |
|
|
18,125 |
|
|
21,217 |
|
|
40,801 |
|
|
42,579 |
|
NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
|
|
Salary and employee benefits |
|
55,629 |
|
|
54,640 |
|
|
51,494 |
|
|
110,269 |
|
|
101,561 |
|
Less capitalized loan origination costs |
|
(7,399 |
) |
|
(4,849 |
) |
|
(4,733 |
) |
|
(12,248 |
) |
|
(8,744 |
) |
Occupancy and equipment |
|
12,681 |
|
|
13,766 |
|
|
11,574 |
|
|
26,447 |
|
|
23,340 |
|
Information / computer data services |
|
5,273 |
|
|
5,326 |
|
|
4,564 |
|
|
10,599 |
|
|
8,945 |
|
Payment and card processing services |
|
4,041 |
|
|
3,984 |
|
|
3,731 |
|
|
8,025 |
|
|
7,431 |
|
Professional and legal expenses |
|
2,336 |
|
|
2,434 |
|
|
3,838 |
|
|
4,770 |
|
|
8,266 |
|
Advertising and marketing |
|
2,065 |
|
|
1,529 |
|
|
2,141 |
|
|
3,594 |
|
|
3,971 |
|
Deposit insurance |
|
1,418 |
|
|
1,418 |
|
|
1,021 |
|
|
2,836 |
|
|
2,362 |
|
State/municipal business and use taxes |
|
1,007 |
|
|
945 |
|
|
816 |
|
|
1,952 |
|
|
1,529 |
|
Real estate operations |
|
260 |
|
|
(123 |
) |
|
(319 |
) |
|
137 |
|
|
121 |
|
Amortization of core deposit intangibles |
|
2,053 |
|
|
2,052 |
|
|
1,382 |
|
|
4,105 |
|
|
2,764 |
|
Miscellaneous |
|
7,051 |
|
|
6,744 |
|
|
7,128 |
|
|
13,795 |
|
|
12,797 |
|
|
|
86,415 |
|
|
87,866 |
|
|
82,637 |
|
|
174,281 |
|
|
164,343 |
|
Acquisition-related expenses |
|
301 |
|
|
2,148 |
|
|
— |
|
|
2,449 |
|
|
— |
|
Total non-interest expense |
|
86,716 |
|
|
90,014 |
|
|
82,637 |
|
|
176,730 |
|
|
164,343 |
|
Income before provision for income taxes |
|
50,655 |
|
|
42,215 |
|
|
41,643 |
|
|
92,870 |
|
|
78,672 |
|
PROVISION
FOR INCOME TAXES |
|
10,955 |
|
|
8,869 |
|
|
9,219 |
|
|
19,824 |
|
|
17,458 |
|
NET
INCOME |
|
$ |
39,700 |
|
|
$ |
33,346 |
|
|
$ |
32,424 |
|
|
$ |
73,046 |
|
|
$ |
61,214 |
|
Earnings per share available
to common shareholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.14 |
|
|
$ |
0.95 |
|
|
$ |
1.01 |
|
|
$ |
2.09 |
|
|
$ |
1.89 |
|
Diluted |
|
$ |
1.14 |
|
|
$ |
0.95 |
|
|
$ |
1.00 |
|
|
$ |
2.09 |
|
|
$ |
1.89 |
|
Cumulative dividends declared
per common share |
|
$ |
0.41 |
|
|
$ |
0.41 |
|
|
$ |
0.85 |
|
|
$ |
0.82 |
|
|
$ |
1.20 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
34,831,047 |
|
|
35,050,376 |
|
|
32,250,514 |
|
|
34,940,106 |
|
|
32,323,635 |
|
Diluted |
|
34,882,359 |
|
|
35,172,056 |
|
|
32,331,609 |
|
|
35,028,881 |
|
|
32,422,287 |
|
Decrease in common shares
outstanding |
|
(579,103 |
) |
|
(30,026 |
) |
|
(17,977 |
) |
|
(609,129 |
) |
|
(320,789 |
) |
FINANCIAL CONDITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
(in thousands except shares and
per share data) |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
187,043 |
|
|
$ |
218,458 |
|
|
$ |
231,029 |
|
|
$ |
195,652 |
|
|
(14.4 |
)% |
|
(4.4 |
)% |
Interest-bearing deposits |
|
59,753 |
|
|
43,080 |
|
|
41,167 |
|
|
53,773 |
|
|
38.7 |
% |
|
11.1 |
% |
Total cash and cash equivalents |
|
246,796 |
|
|
261,538 |
|
|
272,196 |
|
|
249,425 |
|
|
(5.6 |
)% |
|
(1.1 |
)% |
Securities - trading |
|
25,741 |
|
|
25,838 |
|
|
25,896 |
|
|
25,640 |
|
|
(0.4 |
)% |
|
0.4 |
% |
Securities - available for
sale |
|
1,561,009 |
|
|
1,603,804 |
|
|
1,636,223 |
|
|
1,400,312 |
|
|
(2.7 |
)% |
|
11.5 |
% |
Securities - held to
maturity |
|
203,222 |
|
|
218,993 |
|
|
234,220 |
|
|
263,176 |
|
|
(7.2 |
)% |
|
(22.8 |
)% |
Total securities |
|
1,789,972 |
|
|
1,848,635 |
|
|
1,896,339 |
|
|
1,689,128 |
|
|
(3.2 |
)% |
|
6.0 |
% |
Federal Home Loan Bank
stock |
|
34,583 |
|
|
27,063 |
|
|
31,955 |
|
|
19,916 |
|
|
27.8 |
% |
|
73.6 |
% |
Loans held for sale |
|
170,744 |
|
|
45,865 |
|
|
171,031 |
|
|
78,833 |
|
|
272.3 |
% |
|
116.6 |
% |
Loans receivable |
|
8,746,550 |
|
|
8,692,657 |
|
|
8,684,595 |
|
|
7,684,732 |
|
|
0.6 |
% |
|
13.8 |
% |
Allowance for loan losses |
|
(98,254 |
) |
|
(97,308 |
) |
|
(96,485 |
) |
|
(93,875 |
) |
|
1.0 |
% |
|
4.7 |
% |
Net loans receivable |
|
8,648,296 |
|
|
8,595,349 |
|
|
8,588,110 |
|
|
7,590,857 |
|
|
0.6 |
% |
|
13.9 |
% |
Accrued interest
receivable |
|
40,238 |
|
|
41,220 |
|
|
38,593 |
|
|
34,004 |
|
|
(2.4 |
)% |
|
18.3 |
% |
Real estate owned held for
sale, net |
|
2,513 |
|
|
2,611 |
|
|
2,611 |
|
|
473 |
|
|
(3.8 |
)% |
|
431.3 |
% |
Property and equipment,
net |
|
171,233 |
|
|
171,057 |
|
|
171,809 |
|
|
153,224 |
|
|
0.1 |
% |
|
11.8 |
% |
Goodwill |
|
339,154 |
|
|
339,154 |
|
|
339,154 |
|
|
242,659 |
|
|
— |
% |
|
39.8 |
% |
Other intangibles, net |
|
28,595 |
|
|
30,647 |
|
|
32,924 |
|
|
19,858 |
|
|
(6.7 |
)% |
|
44.0 |
% |
Bank-owned life insurance |
|
178,922 |
|
|
178,202 |
|
|
177,467 |
|
|
164,225 |
|
|
0.4 |
% |
|
8.9 |
% |
Other assets |
|
196,328 |
|
|
198,944 |
|
|
149,128 |
|
|
136,592 |
|
|
(1.3 |
)% |
|
43.7 |
% |
Total assets |
|
$ |
11,847,374 |
|
|
$ |
11,740,285 |
|
|
$ |
11,871,317 |
|
|
$ |
10,379,194 |
|
|
0.9 |
% |
|
14.1 |
% |
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,671,995 |
|
|
$ |
3,676,984 |
|
|
$ |
3,657,817 |
|
|
$ |
3,346,777 |
|
|
(0.1 |
)% |
|
9.7 |
% |
Interest-bearing transaction and savings accounts |
|
4,546,202 |
|
|
4,535,969 |
|
|
4,498,966 |
|
|
4,032,283 |
|
|
0.2 |
% |
|
12.7 |
% |
Interest-bearing certificates |
|
1,070,770 |
|
|
1,163,276 |
|
|
1,320,265 |
|
|
1,148,607 |
|
|
(8.0 |
)% |
|
(6.8 |
)% |
Total deposits |
|
9,288,967 |
|
|
9,376,229 |
|
|
9,477,048 |
|
|
8,527,667 |
|
|
(0.9 |
)% |
|
8.9 |
% |
Advances from Federal Home
Loan Bank |
|
606,000 |
|
|
418,000 |
|
|
540,189 |
|
|
239,190 |
|
|
45.0 |
% |
|
153.4 |
% |
Customer repurchase agreements
and other borrowings |
|
118,370 |
|
|
121,719 |
|
|
118,995 |
|
|
112,458 |
|
|
(2.8 |
)% |
|
5.3 |
% |
Junior subordinated debentures
at fair value |
|
113,621 |
|
|
113,917 |
|
|
114,091 |
|
|
112,774 |
|
|
(0.3 |
)% |
|
0.8 |
% |
Accrued expenses and other
liabilities |
|
159,131 |
|
|
158,669 |
|
|
102,061 |
|
|
93,281 |
|
|
0.3 |
% |
|
70.6 |
% |
Deferred compensation |
|
40,230 |
|
|
40,560 |
|
|
40,338 |
|
|
40,814 |
|
|
(0.8 |
)% |
|
(1.4 |
)% |
Total liabilities |
|
10,326,319 |
|
|
10,229,094 |
|
|
10,392,722 |
|
|
9,126,184 |
|
|
1.0 |
% |
|
13.2 |
% |
SHAREHOLDERS'
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1,306,888 |
|
|
1,338,386 |
|
|
1,337,436 |
|
|
1,173,656 |
|
|
(2.4 |
)% |
|
11.4 |
% |
Retained earnings |
|
178,257 |
|
|
152,911 |
|
|
134,055 |
|
|
84,485 |
|
|
16.6 |
% |
|
111.0 |
% |
Other components of
shareholders' equity |
|
35,910 |
|
|
19,894 |
|
|
7,104 |
|
|
(5,131 |
) |
|
80.5 |
% |
|
nm |
|
Total shareholders' equity |
|
1,521,055 |
|
|
1,511,191 |
|
|
1,478,595 |
|
|
1,253,010 |
|
|
0.7 |
% |
|
21.4 |
% |
Total liabilities and shareholders' equity |
|
$ |
11,847,374 |
|
|
$ |
11,740,285 |
|
|
$ |
11,871,317 |
|
|
$ |
10,379,194 |
|
|
0.9 |
% |
|
14.1 |
% |
Common Shares
Issued: |
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at end of
period |
|
34,573,643 |
|
|
35,152,746 |
|
|
35,182,772 |
|
|
32,405,696 |
|
|
|
|
|
Common shareholders' equity
per share (1) |
|
$ |
43.99 |
|
|
$ |
42.99 |
|
|
$ |
42.03 |
|
|
$ |
38.67 |
|
|
|
|
|
Common shareholders' tangible
equity per share (1) (2) |
|
$ |
33.36 |
|
|
$ |
32.47 |
|
|
$ |
31.45 |
|
|
$ |
30.57 |
|
|
|
|
|
Common shareholders' tangible
equity to tangible assets (2) |
|
10.05 |
% |
|
10.04 |
% |
|
9.62 |
% |
|
9.79 |
% |
|
|
|
|
Consolidated Tier 1 leverage
capital ratio |
|
10.83 |
% |
|
10.73 |
% |
|
10.98 |
% |
|
10.80 |
% |
|
|
|
|
(1 |
) |
Calculation is based on number of
common shares outstanding at the end of the period rather than
weighted average shares outstanding. |
(2 |
) |
Common shareholders' tangible
equity excludes goodwill and other intangible assets. Tangible
assets exclude goodwill and other intangible assets. These
ratios represent non-GAAP financial measures. See also
Non-GAAP Financial Measures reconciliation tables on the last two
pages of the press release tables. |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage Change |
LOANS |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
Owner occupied |
|
$ |
1,433,995 |
|
|
$ |
1,442,724 |
|
|
$ |
1,430,097 |
|
|
$ |
1,256,730 |
|
|
(0.6 |
)% |
|
14.1 |
% |
Investment properties |
|
2,116,306 |
|
|
2,124,049 |
|
|
2,131,059 |
|
|
1,920,790 |
|
|
(0.4 |
)% |
|
10.2 |
% |
Multifamily real estate |
|
402,241 |
|
|
387,142 |
|
|
368,836 |
|
|
330,384 |
|
|
3.9 |
% |
|
21.7 |
% |
Commercial construction |
|
172,931 |
|
|
181,888 |
|
|
172,410 |
|
|
166,089 |
|
|
(4.9 |
)% |
|
4.1 |
% |
Multifamily construction |
|
189,160 |
|
|
183,203 |
|
|
184,630 |
|
|
147,576 |
|
|
3.3 |
% |
|
28.2 |
% |
One- to four-family
construction |
|
503,061 |
|
|
514,468 |
|
|
534,678 |
|
|
480,591 |
|
|
(2.2 |
)% |
|
4.7 |
% |
Land and land
development: |
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
187,180 |
|
|
187,660 |
|
|
188,508 |
|
|
163,335 |
|
|
(0.3 |
)% |
|
14.6 |
% |
Commercial |
|
27,470 |
|
|
28,928 |
|
|
27,278 |
|
|
22,849 |
|
|
(5.0 |
)% |
|
20.2 |
% |
Commercial business |
|
1,598,788 |
|
|
1,524,298 |
|
|
1,483,614 |
|
|
1,312,424 |
|
|
4.9 |
% |
|
21.8 |
% |
Agricultural business
including secured by farmland |
|
380,805 |
|
|
373,322 |
|
|
404,873 |
|
|
336,709 |
|
|
2.0 |
% |
|
13.1 |
% |
One- to four-family real
estate |
|
944,617 |
|
|
967,581 |
|
|
973,616 |
|
|
840,470 |
|
|
(2.4 |
)% |
|
12.4 |
% |
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer secured by one- to four-family real estate |
|
575,658 |
|
|
564,872 |
|
|
568,979 |
|
|
536,007 |
|
|
1.9 |
% |
|
7.4 |
% |
Consumer-other |
|
214,338 |
|
|
212,522 |
|
|
216,017 |
|
|
170,778 |
|
|
0.9 |
% |
|
25.5 |
% |
Total loans receivable |
|
$ |
8,746,550 |
|
|
$ |
8,692,657 |
|
|
$ |
8,684,595 |
|
|
$ |
7,684,732 |
|
|
0.6 |
% |
|
13.8 |
% |
Restructured loans performing
under their restructured terms |
|
$ |
6,594 |
|
|
$ |
13,036 |
|
|
$ |
13,422 |
|
|
$ |
13,793 |
|
|
|
|
|
Loans 30 - 89 days past due
and on accrual (1) |
|
$ |
17,923 |
|
|
$ |
28,972 |
|
|
$ |
25,108 |
|
|
$ |
8,040 |
|
|
|
|
|
Total delinquent loans
(including loans on non-accrual), net (2) |
|
$ |
34,749 |
|
|
$ |
46,616 |
|
|
$ |
38,721 |
|
|
$ |
22,620 |
|
|
|
|
|
Total delinquent
loans / Total loans receivable |
|
0.40 |
% |
|
0.54 |
% |
|
0.45 |
% |
|
0.29 |
% |
|
|
|
|
(1) Includes $21,000 of purchased credit-impaired loans at
June 30, 2019 compared to $3,000 at December 31, 2018 and $6,000 at
June 30, 2018. (2) Delinquent loans include $330,000 of
delinquent purchased credit-impaired loans at June 30, 2019
compared to $519,000 at December 31, 2018 and $1.0 million at June
30, 2018.
LOANS BY GEOGRAPHIC
LOCATION |
|
|
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington |
|
$ |
4,293,854 |
|
|
49.1 |
% |
|
$ |
4,329,759 |
|
|
$ |
4,324,588 |
|
|
$ |
3,550,945 |
|
|
(0.8 |
)% |
|
20.9 |
% |
Oregon |
|
1,628,102 |
|
|
18.6 |
% |
|
1,639,427 |
|
|
1,636,152 |
|
|
1,601,939 |
|
|
(0.7 |
)% |
|
1.6 |
% |
California |
|
1,659,326 |
|
|
19.0 |
% |
|
1,581,654 |
|
|
1,596,604 |
|
|
1,477,293 |
|
|
4.9 |
% |
|
12.3 |
% |
Idaho |
|
548,189 |
|
|
6.3 |
% |
|
524,705 |
|
|
521,026 |
|
|
500,201 |
|
|
4.5 |
% |
|
9.6 |
% |
Utah |
|
62,944 |
|
|
0.7 |
% |
|
59,940 |
|
|
57,318 |
|
|
76,414 |
|
|
5.0 |
% |
|
(17.6 |
)% |
Other |
|
554,135 |
|
|
6.3 |
% |
|
557,172 |
|
|
548,907 |
|
|
477,940 |
|
|
(0.5 |
)% |
|
15.9 |
% |
Total loans receivable |
|
$ |
8,746,550 |
|
|
100.0 |
% |
|
$ |
8,692,657 |
|
|
$ |
8,684,595 |
|
|
$ |
7,684,732 |
|
|
0.6 |
% |
|
13.8 |
% |
ADDITIONAL FINANCIAL INFORMATION(dollars in
thousands)
The following table shows loan originations (excluding loans
held for sale) activity for the quarters ending June 30, 2019,
March 31, 2019, and June 30, 2018 and the six months ending June
30, 2019 and June 30, 2018 (in thousands):
LOAN
ORIGINATIONS |
Quarters Ended |
|
Six Months Ended |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
Commercial real estate |
$ |
81,361 |
|
|
$ |
94,196 |
|
|
$ |
155,781 |
|
|
$ |
175,557 |
|
|
$ |
221,506 |
|
Multifamily real estate |
21,651 |
|
|
7,617 |
|
|
6,090 |
|
|
29,267 |
|
|
6,825 |
|
Construction and land |
368,224 |
|
|
233,494 |
|
|
361,427 |
|
|
601,718 |
|
|
692,350 |
|
Commercial business |
241,134 |
|
|
125,912 |
|
|
195,909 |
|
|
367,046 |
|
|
328,896 |
|
Agricultural business |
20,702 |
|
|
32,059 |
|
|
41,480 |
|
|
52,761 |
|
|
68,054 |
|
One-to four-family
residential |
26,210 |
|
|
31,789 |
|
|
26,416 |
|
|
57,999 |
|
|
44,351 |
|
Consumer |
119,970 |
|
|
63,774 |
|
|
114,289 |
|
|
183,743 |
|
|
184,822 |
|
Total loan originations
(excluding loans held for sale) |
$ |
879,252 |
|
|
$ |
588,841 |
|
|
$ |
901,392 |
|
|
$ |
1,468,091 |
|
|
$ |
1,546,804 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended |
|
Six months ended |
CHANGE IN
THE |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
ALLOWANCE FOR LOAN
LOSSES |
|
|
|
|
|
|
|
|
|
|
Balance, beginning of
period |
|
$ |
97,308 |
|
|
$ |
96,485 |
|
|
$ |
92,207 |
|
|
$ |
96,485 |
|
|
$ |
89,028 |
|
Provision for loan losses |
|
2,000 |
|
|
2,000 |
|
|
2,000 |
|
|
4,000 |
|
|
4,000 |
|
Recoveries of loans previously
charged off: |
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
149 |
|
|
21 |
|
|
216 |
|
|
170 |
|
|
1,568 |
|
Construction and land |
|
30 |
|
|
22 |
|
|
11 |
|
|
52 |
|
|
185 |
|
One- to four-family real estate |
|
230 |
|
|
43 |
|
|
356 |
|
|
273 |
|
|
646 |
|
Commercial business |
|
215 |
|
|
23 |
|
|
100 |
|
|
238 |
|
|
270 |
|
Agricultural business, including secured by farmland |
|
35 |
|
|
— |
|
|
41 |
|
|
35 |
|
|
41 |
|
Consumer |
|
223 |
|
|
110 |
|
|
106 |
|
|
333 |
|
|
218 |
|
|
|
882 |
|
|
219 |
|
|
830 |
|
|
1,101 |
|
|
2,928 |
|
Loans charged off: |
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
(393 |
) |
|
(431 |
) |
|
(299 |
) |
|
(824 |
) |
|
(299 |
) |
One- to four-family real estate |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16 |
) |
Commercial business |
|
(802 |
) |
|
(590 |
) |
|
(375 |
) |
|
(1,392 |
) |
|
(894 |
) |
Agricultural business, including secured by farmland |
|
(162 |
) |
|
(4 |
) |
|
(329 |
) |
|
(166 |
) |
|
(336 |
) |
Consumer |
|
(579 |
) |
|
(371 |
) |
|
(159 |
) |
|
(950 |
) |
|
(536 |
) |
|
|
(1,936 |
) |
|
(1,396 |
) |
|
(1,162 |
) |
|
(3,332 |
) |
|
(2,081 |
) |
Net (charge-offs) recoveries |
|
(1,054 |
) |
|
(1,177 |
) |
|
(332 |
) |
|
(2,231 |
) |
|
847 |
|
Balance, end of period |
|
$ |
98,254 |
|
|
$ |
97,308 |
|
|
$ |
93,875 |
|
|
$ |
98,254 |
|
|
$ |
93,875 |
|
Net (charge-offs) recoveries /
Average loans receivable |
|
(0.012 |
)% |
|
(0.013 |
)% |
|
(0.004 |
)% |
|
(0.025 |
)% |
|
0.011 |
% |
ALLOCATION
OF |
|
|
|
|
|
|
|
|
ALLOWANCE FOR LOAN
LOSSES |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
Specific or allocated loss
allowance: |
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
26,730 |
|
|
$ |
27,091 |
|
|
$ |
27,132 |
|
|
$ |
24,413 |
|
Multifamily real estate |
|
4,344 |
|
|
4,020 |
|
|
3,818 |
|
|
3,718 |
|
Construction and land |
|
23,554 |
|
|
23,713 |
|
|
24,442 |
|
|
27,034 |
|
One- to four-family real estate |
|
4,701 |
|
|
4,711 |
|
|
4,714 |
|
|
3,932 |
|
Commercial business |
|
19,557 |
|
|
18,662 |
|
|
19,438 |
|
|
19,141 |
|
Agricultural business, including secured by farmland |
|
3,691 |
|
|
3,596 |
|
|
3,778 |
|
|
3,162 |
|
Consumer |
|
8,452 |
|
|
7,980 |
|
|
7,972 |
|
|
5,725 |
|
Total allocated |
|
91,029 |
|
|
89,773 |
|
|
91,294 |
|
|
87,125 |
|
Unallocated |
|
7,225 |
|
|
7,535 |
|
|
5,191 |
|
|
6,750 |
|
Total allowance for loan losses |
|
$ |
98,254 |
|
|
$ |
97,308 |
|
|
$ |
96,485 |
|
|
$ |
93,875 |
|
Allowance for loan losses /
Total loans receivable |
|
1.12 |
% |
|
1.12 |
% |
|
1.11 |
% |
|
1.22 |
% |
Allowance for loan losses /
Non-performing loans |
|
534 |
% |
|
504 |
% |
|
616 |
% |
|
613 |
% |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
NON-PERFORMING
ASSETS |
|
|
|
|
|
|
|
Loans on non-accrual
status: |
|
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
|
Commercial |
$ |
4,603 |
|
|
$ |
5,734 |
|
|
$ |
4,088 |
|
|
$ |
4,341 |
|
Construction and land |
2,214 |
|
|
3,036 |
|
|
3,188 |
|
|
1,176 |
|
One- to four-family |
2,665 |
|
|
1,538 |
|
|
1,544 |
|
|
2,281 |
|
Commercial business |
2,983 |
|
|
3,614 |
|
|
2,936 |
|
|
2,673 |
|
Agricultural business, including secured by farmland |
1,359 |
|
|
2,507 |
|
|
1,751 |
|
|
1,712 |
|
Consumer |
3,230 |
|
|
2,181 |
|
|
1,241 |
|
|
1,176 |
|
|
17,054 |
|
|
18,610 |
|
|
14,748 |
|
|
13,359 |
|
Loans more than 90 days
delinquent, still on accrual: |
|
|
|
|
|
|
|
Secured by real estate: |
|
|
|
|
|
|
|
Construction and land |
262 |
|
|
— |
|
|
— |
|
|
784 |
|
One- to four-family |
995 |
|
|
640 |
|
|
658 |
|
|
905 |
|
Commercial business |
1 |
|
|
1 |
|
|
1 |
|
|
1 |
|
Consumer |
97 |
|
|
42 |
|
|
247 |
|
|
253 |
|
|
1,355 |
|
|
683 |
|
|
906 |
|
|
1,943 |
|
Total non-performing
loans |
18,409 |
|
|
19,293 |
|
|
15,654 |
|
|
15,302 |
|
Real estate owned (REO) |
2,513 |
|
|
2,611 |
|
|
2,611 |
|
|
473 |
|
Other repossessed assets |
112 |
|
|
50 |
|
|
592 |
|
|
733 |
|
Total non-performing assets |
$ |
21,034 |
|
|
$ |
21,954 |
|
|
$ |
18,857 |
|
|
$ |
16,508 |
|
Total non-performing
assets to total assets |
0.18 |
% |
|
0.19 |
% |
|
0.16 |
% |
|
0.16 |
% |
Purchased credit-impaired
loans, net |
$ |
12,945 |
|
|
$ |
13,330 |
|
|
$ |
14,413 |
|
|
$ |
18,063 |
|
|
Quarters Ended |
|
Six months ended |
REAL ESTATE
OWNED |
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
Balance, beginning of
period |
$ |
2,611 |
|
|
$ |
2,611 |
|
|
$ |
328 |
|
|
$ |
2,611 |
|
|
$ |
360 |
|
Additions from loan foreclosures |
61 |
|
|
— |
|
|
393 |
|
|
61 |
|
|
521 |
|
Proceeds from dispositions of REO |
(150 |
) |
|
— |
|
|
(314 |
) |
|
(150 |
) |
|
(314 |
) |
Gain on sale of REO |
(9 |
) |
|
— |
|
|
66 |
|
|
(9 |
) |
|
66 |
|
Valuation adjustments in the period |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(160 |
) |
Balance, end of period |
$ |
2,513 |
|
|
$ |
2,611 |
|
|
$ |
473 |
|
|
$ |
2,513 |
|
|
$ |
473 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPOSIT
COMPOSITION |
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing |
|
$ |
3,671,995 |
|
|
$ |
3,676,984 |
|
|
$ |
3,657,817 |
|
|
$ |
3,346,777 |
|
|
(0.1 |
)% |
|
9.7 |
% |
Interest-bearing checking |
|
1,187,035 |
|
|
1,174,169 |
|
|
1,191,016 |
|
|
1,012,519 |
|
|
1.1 |
% |
|
17.2 |
% |
Regular savings accounts |
|
1,848,048 |
|
|
1,865,852 |
|
|
1,842,581 |
|
|
1,635,080 |
|
|
(1.0 |
)% |
|
13.0 |
% |
Money market accounts |
|
1,511,119 |
|
|
1,495,948 |
|
|
1,465,369 |
|
|
1,384,684 |
|
|
1.0 |
% |
|
9.1 |
% |
Total interest-bearing transaction and savings accounts |
|
4,546,202 |
|
|
4,535,969 |
|
|
4,498,966 |
|
|
4,032,283 |
|
|
0.2 |
% |
|
12.7 |
% |
Total core deposits |
|
8,218,197 |
|
|
8,212,953 |
|
|
8,156,783 |
|
|
7,379,060 |
|
|
0.1 |
% |
|
11.4 |
% |
Interest-bearing
certificates |
|
1,070,770 |
|
|
1,163,276 |
|
|
1,320,265 |
|
|
1,148,607 |
|
|
(8.0 |
)% |
|
(6.8 |
)% |
Total deposits |
|
$ |
9,288,967 |
|
|
$ |
9,376,229 |
|
|
$ |
9,477,048 |
|
|
$ |
8,527,667 |
|
|
(0.9 |
)% |
|
8.9 |
% |
GEOGRAPHIC
CONCENTRATION OF DEPOSITS |
|
|
|
|
|
|
|
|
|
|
|
Percentage Change |
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
|
Prior Qtr |
|
Prior Yr Qtr |
|
|
Amount |
|
Percentage |
|
Amount |
|
Amount |
|
Amount |
|
|
|
|
Washington |
|
$ |
5,503,280 |
|
|
59.2 |
% |
|
$ |
5,604,567 |
|
|
$ |
5,674,328 |
|
|
$ |
4,735,357 |
|
|
(1.8 |
)% |
|
16.2 |
% |
Oregon |
|
1,919,051 |
|
|
20.7 |
% |
|
1,906,132 |
|
|
1,891,145 |
|
|
1,886,435 |
|
|
0.7 |
% |
|
1.7 |
% |
California |
|
1,399,137 |
|
|
15.1 |
% |
|
1,402,213 |
|
|
1,434,033 |
|
|
1,444,413 |
|
|
(0.2 |
)% |
|
(3.1 |
)% |
Idaho |
|
467,499 |
|
|
5.0 |
% |
|
463,317 |
|
|
477,542 |
|
|
461,462 |
|
|
0.9 |
% |
|
1.3 |
% |
Total deposits |
|
$ |
9,288,967 |
|
|
100.0 |
% |
|
$ |
9,376,229 |
|
|
$ |
9,477,048 |
|
|
$ |
8,527,667 |
|
|
(0.9 |
)% |
|
8.9 |
% |
INCLUDED IN TOTAL
DEPOSITS |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
Public non-interest-bearing
accounts |
|
$ |
102,348 |
|
|
$ |
92,122 |
|
|
$ |
96,009 |
|
|
$ |
86,040 |
|
Public interest-bearing
transaction & savings accounts |
|
121,262 |
|
|
118,033 |
|
|
121,392 |
|
|
114,457 |
|
Public interest-bearing
certificates |
|
28,656 |
|
|
29,572 |
|
|
30,089 |
|
|
24,390 |
|
Total public deposits |
|
$ |
252,266 |
|
|
$ |
239,727 |
|
|
$ |
247,490 |
|
|
$ |
224,887 |
|
Total brokered deposits |
|
$ |
138,395 |
|
|
$ |
239,444 |
|
|
$ |
377,347 |
|
|
$ |
280,055 |
|
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 JUNE 30, 2019 |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
Amount |
|
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
Banner
Corporation-consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
$ |
1,327,875 |
|
|
13.37 |
% |
|
$ |
794,575 |
|
|
8.00 |
% |
|
$ |
993,218 |
|
|
10.00 |
% |
Tier 1 capital to
risk-weighted assets |
|
1,227,022 |
|
|
12.35 |
% |
|
595,931 |
|
|
6.00 |
% |
|
595,931 |
|
|
6.00 |
% |
Tier 1 leverage capital
to average assets |
|
1,227,022 |
|
|
10.83 |
% |
|
453,256 |
|
|
4.00 |
% |
|
|
n/a |
|
|
n/a |
|
Common equity tier 1
capital to risk-weighted assets |
|
1,091,022 |
|
|
10.98 |
% |
|
446,948 |
|
|
4.50 |
% |
|
|
n/a |
|
|
n/a |
|
Banner Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
1,236,298 |
|
|
12.69 |
% |
|
779,191 |
|
|
8.00 |
% |
|
973,989 |
|
|
10.00 |
% |
Tier 1 capital to
risk-weighted assets |
|
1,137,866 |
|
|
11.68 |
% |
|
584,393 |
|
|
6.00 |
% |
|
779,191 |
|
|
8.00 |
% |
Tier 1 leverage capital
to average assets |
|
1,137,866 |
|
|
10.30 |
% |
|
442,043 |
|
|
4.00 |
% |
|
552,553 |
|
|
5.00 |
% |
Common equity tier 1
capital to risk-weighted assets |
|
1,137,866 |
|
|
11.68 |
% |
|
438,295 |
|
|
4.50 |
% |
|
633,093 |
|
|
6.50 |
% |
Islanders Bank: |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital to
risk-weighted assets |
|
35,804 |
|
|
18.80 |
% |
|
15,239 |
|
|
8.00 |
% |
|
19,049 |
|
|
10.00 |
% |
Tier 1 capital to
risk-weighted assets |
|
33,422 |
|
|
17.54 |
% |
|
11,430 |
|
|
6.00 |
% |
|
15,239 |
|
|
8.00 |
% |
Tier 1 leverage capital
to average assets |
|
33,422 |
|
|
12.00 |
% |
|
11,143 |
|
|
4.00 |
% |
|
13,929 |
|
|
5.00 |
% |
Common equity tier 1
capital to risk-weighted assets |
|
33,422 |
|
|
17.54 |
% |
|
8,572 |
|
|
4.50 |
% |
|
12,382 |
|
|
6.50 |
% |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Quarters Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 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 |
$ |
47,663 |
|
$ |
567 |
|
4.77 |
% |
|
$ |
98,005 |
|
$ |
1,121 |
|
4.64 |
% |
|
$ |
112,664 |
|
$ |
1,295 |
|
4.61 |
% |
Mortgage loans |
6,800,802 |
|
89,682 |
|
5.29 |
% |
|
6,833,933 |
|
88,602 |
|
5.26 |
% |
|
6,050,560 |
|
76,908 |
|
5.10 |
% |
Commercial/agricultural loans |
1,769,603 |
|
23,924 |
|
5.42 |
% |
|
1,703,503 |
|
22,812 |
|
5.43 |
% |
|
1,479,148 |
|
19,381 |
|
5.26 |
% |
Consumer and other loans |
179,693 |
|
2,834 |
|
6.33 |
% |
|
183,451 |
|
2,920 |
|
6.46 |
% |
|
141,401 |
|
2,269 |
|
6.44 |
% |
Total loans(1) |
8,797,761 |
|
117,007 |
|
5.33 |
% |
|
8,818,892 |
|
115,455 |
|
5.31 |
% |
|
7,783,773 |
|
99,853 |
|
5.15 |
% |
Mortgage-backed securities |
1,354,048 |
|
9,794 |
|
2.90 |
% |
|
1,392,118 |
|
10,507 |
|
3.06 |
% |
|
1,261,809 |
|
8,899 |
|
2.83 |
% |
Other securities |
448,721 |
|
3,310 |
|
2.96 |
% |
|
484,134 |
|
3,479 |
|
2.91 |
% |
|
473,953 |
|
3,331 |
|
2.82 |
% |
Interest-bearing deposits with banks |
53,955 |
|
340 |
|
2.53 |
% |
|
44,757 |
|
289 |
|
2.62 |
% |
|
51,886 |
|
211 |
|
1.63 |
% |
FHLB stock |
30,902 |
|
387 |
|
5.02 |
% |
|
31,761 |
|
266 |
|
3.40 |
% |
|
22,231 |
|
129 |
|
2.33 |
% |
Total investment securities |
1,887,626 |
|
13,831 |
|
2.94 |
% |
|
1,952,770 |
|
14,541 |
|
3.02 |
% |
|
1,809,879 |
|
12,570 |
|
2.79 |
% |
Total interest-earning assets |
10,685,387 |
|
130,838 |
|
4.91 |
% |
|
10,771,662 |
|
129,996 |
|
4.89 |
% |
|
9,593,652 |
|
112,423 |
|
4.70 |
% |
Non-interest-earning
assets |
1,048,811 |
|
|
|
|
1,031,591 |
|
|
|
|
804,229 |
|
|
|
Total assets |
$ |
11,734,198 |
|
|
|
|
$ |
11,803,253 |
|
|
|
|
$ |
10,397,881 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,177,534 |
|
564 |
|
0.19 |
% |
|
$ |
1,153,949 |
|
475 |
|
0.17 |
% |
|
$ |
1,051,409 |
|
281 |
|
0.11 |
% |
Savings accounts |
1,851,913 |
|
2,119 |
|
0.46 |
% |
|
1,854,123 |
|
1,920 |
|
0.42 |
% |
|
1,648,739 |
|
811 |
|
0.20 |
% |
Money market accounts |
1,497,717 |
|
2,656 |
|
0.71 |
% |
|
1,490,326 |
|
2,251 |
|
0.61 |
% |
|
1,419,578 |
|
792 |
|
0.22 |
% |
Certificates of deposit |
1,105,844 |
|
3,684 |
|
1.34 |
% |
|
1,253,613 |
|
3,997 |
|
1.29 |
% |
|
1,067,742 |
|
2,380 |
|
0.89 |
% |
Total interest-bearing deposits |
5,633,008 |
|
9,023 |
|
0.64 |
% |
|
5,752,011 |
|
8,643 |
|
0.61 |
% |
|
5,187,468 |
|
4,264 |
|
0.33 |
% |
Non-interest-bearing deposits |
3,652,096 |
|
— |
|
— |
% |
|
3,605,922 |
|
— |
|
— |
% |
|
3,324,104 |
|
— |
|
— |
% |
Total deposits |
9,285,104 |
|
9,023 |
|
0.39 |
% |
|
9,357,933 |
|
8,643 |
|
0.37 |
% |
|
8,511,572 |
|
4,264 |
|
0.20 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
514,703 |
|
3,370 |
|
2.63 |
% |
|
534,238 |
|
3,476 |
|
2.64 |
% |
|
296,495 |
|
1,499 |
|
2.03 |
% |
Other borrowings |
122,455 |
|
67 |
|
0.22 |
% |
|
118,008 |
|
60 |
|
0.21 |
% |
|
105,013 |
|
49 |
|
0.19 |
% |
Junior subordinated debentures |
140,212 |
|
1,683 |
|
4.81 |
% |
|
140,212 |
|
1,713 |
|
4.95 |
% |
|
140,212 |
|
1,548 |
|
4.43 |
% |
Total borrowings |
777,370 |
|
5,120 |
|
2.64 |
% |
|
792,458 |
|
5,249 |
|
2.69 |
% |
|
541,720 |
|
3,096 |
|
2.29 |
% |
Total funding liabilities |
10,062,474 |
|
14,143 |
|
0.56 |
% |
|
10,150,391 |
|
13,892 |
|
0.56 |
% |
|
9,053,292 |
|
7,360 |
|
0.33 |
% |
Other non-interest-bearing
liabilities(2) |
151,436 |
|
|
|
|
151,937 |
|
|
|
|
75,784 |
|
|
|
Total liabilities |
10,213,910 |
|
|
|
|
10,302,328 |
|
|
|
|
9,129,076 |
|
|
|
Shareholders' equity |
1,520,288 |
|
|
|
|
1,500,925 |
|
|
|
|
1,268,805 |
|
|
|
Total liabilities and shareholders' equity |
$ |
11,734,198 |
|
|
|
|
$ |
11,803,253 |
|
|
|
|
$ |
10,397,881 |
|
|
|
Net interest income/rate
spread |
|
$ |
116,695 |
|
4.35 |
% |
|
|
$ |
116,104 |
|
4.33 |
% |
|
|
$ |
105,063 |
|
4.37 |
% |
Net interest margin |
|
|
4.38 |
% |
|
|
|
4.37 |
% |
|
|
|
4.39 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.36 |
% |
|
|
|
1.15 |
% |
|
|
|
1.25 |
% |
Return on average equity |
|
|
10.47 |
% |
|
|
|
9.01 |
% |
|
|
|
10.25 |
% |
Average equity/average
assets |
|
|
12.96 |
% |
|
|
|
12.72 |
% |
|
|
|
12.20 |
% |
Average interest-earning
assets/average interest-bearing liabilities |
|
|
166.69 |
% |
|
|
|
164.59 |
% |
|
|
|
167.45 |
% |
Average interest-earning
assets/average funding liabilities |
|
|
106.19 |
% |
|
|
|
106.12 |
% |
|
|
|
105.97 |
% |
Non-interest income/average
assets |
|
|
0.78 |
% |
|
|
|
0.62 |
% |
|
|
|
0.82 |
% |
Non-interest expense/average
assets |
|
|
2.96 |
% |
|
|
|
3.09 |
% |
|
|
|
3.19 |
% |
Efficiency ratio(4) |
|
|
62.22 |
% |
|
|
|
67.06 |
% |
|
|
|
65.44 |
% |
Adjusted efficiency
ratio(5) |
|
|
59.56 |
% |
|
|
|
63.32 |
% |
|
|
|
64.09 |
% |
(1 |
) |
Average balances include loans
accounted for on a nonaccrual basis and loans 90 days or more past
due. Amortization of net deferred loan fees/costs is included
with interest on loans. |
(2 |
) |
Average other
non-interest-bearing liabilities include fair value adjustments
related to FHLB advances and junior subordinated debentures. |
(3 |
) |
Yields and costs have not been
adjusted for the effect of tax-exempt interest. |
(4 |
) |
Non-interest expense divided
by the total of net interest income (before provision for loan
losses) and non-interest income. |
(5 |
) |
Adjusted non-interest expense
divided by adjusted revenue. Adjusted revenue excludes net
gain (loss) on sale of securities and fair value adjustments.
Adjusted non-interest expense excludes acquisition-related
expenses, amortization of core deposit intangibles (CDI), REO gain
(loss), and state/municipal business and use taxes. These
represent non-GAAP financial measures. See also Non-GAAP
Financial Measures reconciliation tables on the last two pages of
this press release. |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
(rates / ratios
annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF NET
INTEREST SPREAD |
Six months ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
|
Average Balance |
Interest and Dividends |
Yield/Cost(3) |
Interest-earning assets: |
|
|
|
|
|
|
|
Held for sale loans |
$ |
72,694 |
|
$ |
1,688 |
|
4.68 |
% |
|
$ |
85,815 |
|
$ |
1,976 |
|
4.64 |
% |
Mortgage loans |
6,817,276 |
|
178,284 |
|
5.27 |
% |
|
6,028,667 |
|
150,573 |
|
5.04 |
% |
Commercial/agricultural loans |
1,736,735 |
|
46,736 |
|
5.43 |
% |
|
1,467,789 |
|
36,803 |
|
5.06 |
% |
Consumer and other loans |
181,562 |
|
5,754 |
|
6.39 |
% |
|
141,016 |
|
4,523 |
|
6.47 |
% |
Total loans(1) |
8,808,267 |
|
232,462 |
|
5.32 |
% |
|
7,723,287 |
|
193,875 |
|
5.06 |
% |
Mortgage-backed securities |
1,372,978 |
|
20,301 |
|
2.98 |
% |
|
1,160,407 |
|
16,230 |
|
2.82 |
% |
Other securities |
466,330 |
|
6,789 |
|
2.94 |
% |
|
468,480 |
|
6,420 |
|
2.76 |
% |
Interest-bearing deposits with banks |
49,382 |
|
629 |
|
2.57 |
% |
|
58,164 |
|
442 |
|
1.53 |
% |
FHLB stock |
31,329 |
|
653 |
|
4.20 |
% |
|
19,406 |
|
276 |
|
2.87 |
% |
Total investment securities |
1,920,019 |
|
28,372 |
|
2.98 |
% |
|
1,706,457 |
|
23,368 |
|
2.76 |
% |
Total interest-earning assets |
10,728,286 |
|
260,834 |
|
4.90 |
% |
|
9,429,744 |
|
217,243 |
|
4.65 |
% |
Non-interest-earning
assets |
1,040,248 |
|
|
|
|
804,862 |
|
|
|
Total assets |
$ |
11,768,534 |
|
|
|
|
$ |
10,234,606 |
|
|
|
Deposits: |
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
1,165,807 |
|
1,039 |
|
0.18 |
% |
|
$ |
1,027,800 |
|
527 |
|
0.10 |
% |
Savings accounts |
1,853,012 |
|
4,039 |
|
0.44 |
% |
|
1,625,335 |
|
1,438 |
|
0.18 |
% |
Money market accounts |
1,494,042 |
|
4,907 |
|
0.66 |
% |
|
1,431,068 |
|
1,458 |
|
0.21 |
% |
Certificates of deposit |
1,179,320 |
|
7,681 |
|
1.31 |
% |
|
1,033,431 |
|
4,199 |
|
0.82 |
% |
Total interest-bearing deposits |
5,692,181 |
|
17,666 |
|
0.63 |
% |
|
5,117,634 |
|
7,622 |
|
0.30 |
% |
Non-interest-bearing deposits |
3,629,136 |
|
— |
|
— |
% |
|
3,303,509 |
|
— |
|
— |
% |
Total deposits |
9,321,317 |
|
17,666 |
|
0.38 |
% |
|
8,421,143 |
|
7,622 |
|
0.18 |
% |
Other interest-bearing
liabilities: |
|
|
|
|
|
|
|
FHLB advances |
524,417 |
|
6,846 |
|
2.63 |
% |
|
226,407 |
|
2,177 |
|
1.94 |
% |
Other borrowings |
120,243 |
|
127 |
|
0.21 |
% |
|
103,073 |
|
119 |
|
0.23 |
% |
Junior subordinated debentures |
140,212 |
|
3,396 |
|
4.88 |
% |
|
140,212 |
|
2,889 |
|
4.16 |
% |
Total borrowings |
784,872 |
|
10,369 |
|
2.66 |
% |
|
469,692 |
|
5,185 |
|
2.23 |
% |
Total funding liabilities |
10,106,189 |
|
28,035 |
|
0.56 |
% |
|
8,890,835 |
|
12,807 |
|
0.29 |
% |
Other non-interest-bearing
liabilities(2) |
151,685 |
|
|
|
|
70,908 |
|
|
|
Total liabilities |
10,257,874 |
|
|
|
|
8,961,743 |
|
|
|
Shareholders' equity |
1,510,660 |
|
|
|
|
1,272,863 |
|
|
|
Total liabilities and shareholders' equity |
$ |
11,768,534 |
|
|
|
|
$ |
10,234,606 |
|
|
|
Net interest income/rate
spread |
|
$ |
232,799 |
|
4.34 |
% |
|
|
$ |
204,436 |
|
4.36 |
% |
Net interest margin |
|
|
4.38 |
% |
|
|
|
4.37 |
% |
Additional Key
Financial Ratios: |
|
|
|
|
|
|
|
Return on average assets |
|
|
1.25 |
% |
|
|
|
1.21 |
% |
Return on average equity |
|
|
9.75 |
% |
|
|
|
9.70 |
% |
Average equity/average
assets |
|
|
12.84 |
% |
|
|
|
12.44 |
% |
Average interest-earning
assets/average interest-bearing liabilities |
|
|
165.64 |
% |
|
|
|
168.77 |
% |
Average interest-earning
assets/average funding liabilities |
|
|
106.16 |
% |
|
|
|
106.06 |
% |
Non-interest income/average
assets |
|
|
0.70 |
% |
|
|
|
0.84 |
% |
Non-interest expense/average
assets |
|
|
3.03 |
% |
|
|
|
3.24 |
% |
Efficiency ratio(4) |
|
|
64.59 |
% |
|
|
|
66.53 |
% |
Adjusted efficiency
ratio(5) |
|
|
61.41 |
% |
|
|
|
65.70 |
% |
(1) |
|
Average balances include loans
accounted for on a nonaccrual basis and loans 90 days or more past
due. Amortization of net deferred loan fees/costs is included
with interest on loans. |
(2) |
|
Average other
non-interest-bearing liabilities include fair value adjustments
related to FHLB advances and junior subordinated debentures. |
(3) |
|
Yields and costs have not been
adjusted for the effect of tax-exempt interest. |
(4) |
|
Non-interest expense divided
by the total of net interest income (before provision for loan
losses) and non-interest income. |
(5) |
|
Adjusted non-interest expense
divided by adjusted revenue. Adjusted revenue excludes net
gain (loss) on sale of securities and fair value adjustments.
Adjusted non-interest expense excludes acquisition-related
expenses, amortization of CDI, REO gain (loss), and state/municipal
business and use taxes. These represent non-GAAP financial
measures. See also Non-GAAP Financial Measures reconciliation
tables on the last two pages of this press release. |
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
In addition to results presented in accordance with generally
accepted accounting principles in the United States of America
(GAAP), this press release contains certain non-GAAP financial
measures. Management has presented these non-GAAP financial
measures in this earnings release because it believes that they
provide useful and comparative information to assess trends in
Banner's core operations reflected in the current quarter's results
and facilitate the comparison of our performance with the
performance of our peers. However, these non-GAAP financial
measures are supplemental and are not a substitute for any analysis
based on GAAP. Where applicable, comparable earnings
information using GAAP financial measures is also presented.
Because not all companies use the same calculations, our
presentation may not be comparable to other similarly titled
measures as calculated by other companies. For a reconciliation of
these non-GAAP financial measures, see the tables below: |
|
|
|
|
|
|
|
|
|
|
REVENUE FROM CORE
OPERATIONS |
Quarters Ended |
|
Six months ended |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
Net interest income before
provision for loan losses |
$ |
116,695 |
|
|
$ |
116,104 |
|
|
$ |
105,063 |
|
|
$ |
232,799 |
|
|
$ |
204,436 |
|
Total non-interest income |
22,676 |
|
|
18,125 |
|
|
21,217 |
|
|
40,801 |
|
|
42,579 |
|
Total GAAP revenue |
139,371 |
|
|
134,229 |
|
|
126,280 |
|
|
273,600 |
|
|
247,015 |
|
Exclude net loss (gain) on sale of securities |
28 |
|
|
(1 |
) |
|
(44 |
) |
|
27 |
|
|
(48 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
114 |
|
|
(11 |
) |
|
(224 |
) |
|
103 |
|
|
(3,532 |
) |
Revenue from core operations
(non-GAAP) |
$ |
139,513 |
|
|
$ |
134,217 |
|
|
$ |
126,012 |
|
|
$ |
273,730 |
|
|
$ |
243,435 |
|
EARNINGS FROM CORE
OPERATIONS |
|
Quarters Ended |
|
Six months ended |
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
Net income (GAAP) |
|
$ |
39,700 |
|
|
$ |
33,346 |
|
|
$ |
32,424 |
|
|
$ |
73,046 |
|
|
$ |
61,214 |
|
Exclude net loss (gain) on sale of securities |
|
28 |
|
|
(1 |
) |
|
(44 |
) |
|
27 |
|
|
(48 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
|
114 |
|
|
(11 |
) |
|
(224 |
) |
|
103 |
|
|
(3,532 |
) |
Exclude acquisition-related expenses |
|
301 |
|
|
2,148 |
|
|
— |
|
|
2,449 |
|
|
— |
|
Exclude related tax (benefit) expense |
|
(106 |
) |
|
(513 |
) |
|
64 |
|
|
(619 |
) |
|
859 |
|
Total earnings from core
operations (non-GAAP) |
|
$ |
40,037 |
|
|
$ |
34,969 |
|
|
$ |
32,220 |
|
|
$ |
75,006 |
|
|
$ |
58,493 |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
(GAAP) |
|
$ |
1.14 |
|
|
$ |
0.95 |
|
|
$ |
1.00 |
|
|
$ |
2.09 |
|
|
$ |
1.89 |
|
Diluted core earnings per
share (non-GAAP) |
|
$ |
1.15 |
|
|
$ |
0.99 |
|
|
$ |
1.00 |
|
|
$ |
2.14 |
|
|
$ |
1.80 |
|
ADDITIONAL FINANCIAL
INFORMATION |
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EFFICIENCY
RATIO |
|
Quarters Ended |
|
Six months ended |
|
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Jun 30, 2018 |
|
Jun 30, 2019 |
|
Jun 30, 2018 |
Non-interest expense
(GAAP) |
|
$ |
86,716 |
|
|
$ |
90,014 |
|
|
$ |
82,637 |
|
|
$ |
176,730 |
|
|
$ |
164,343 |
|
Exclude acquisition-related expenses |
|
(301 |
) |
|
(2,148 |
) |
|
— |
|
|
(2,449 |
) |
|
— |
|
Exclude CDI amortization |
|
(2,053 |
) |
|
(2,052 |
) |
|
(1,382 |
) |
|
(4,105 |
) |
|
(2,764 |
) |
Exclude state/municipal tax expense |
|
(1,007 |
) |
|
(945 |
) |
|
(816 |
) |
|
(1,952 |
) |
|
(1,529 |
) |
Exclude REO (loss) gain |
|
(260 |
) |
|
123 |
|
|
319 |
|
|
(137 |
) |
|
(121 |
) |
Adjusted non-interest expense
(non-GAAP) |
|
$ |
83,095 |
|
|
$ |
84,992 |
|
|
$ |
80,758 |
|
|
$ |
168,087 |
|
|
$ |
159,929 |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before
provision for loan losses (GAAP) |
|
$ |
116,695 |
|
|
$ |
116,104 |
|
|
$ |
105,063 |
|
|
$ |
232,799 |
|
|
$ |
204,436 |
|
Non-interest income
(GAAP) |
|
22,676 |
|
|
18,125 |
|
|
21,217 |
|
|
40,801 |
|
|
42,579 |
|
Total revenue |
|
139,371 |
|
|
134,229 |
|
|
126,280 |
|
|
273,600 |
|
|
247,015 |
|
Exclude net loss (gain) on sale of securities |
|
28 |
|
|
(1 |
) |
|
(44 |
) |
|
27 |
|
|
(48 |
) |
Exclude net change in valuation of financial instruments carried at
fair value |
|
114 |
|
|
(11 |
) |
|
(224 |
) |
|
103 |
|
|
(3,532 |
) |
Revenue from core operations
(non-GAAP) |
|
$ |
139,513 |
|
|
$ |
134,217 |
|
|
$ |
126,012 |
|
|
$ |
273,730 |
|
|
$ |
243,435 |
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (GAAP) |
|
62.22 |
% |
|
67.06 |
% |
|
65.44 |
% |
|
64.59 |
% |
|
66.53 |
% |
Adjusted efficiency ratio
(non-GAAP) |
|
59.56 |
% |
|
63.32 |
% |
|
64.09 |
% |
|
61.41 |
% |
|
65.70 |
% |
TANGIBLE COMMON
SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS |
|
Jun 30, 2019 |
|
Mar 31, 2019 |
|
Dec 31, 2018 |
|
Jun 30, 2018 |
Shareholders' equity
(GAAP) |
|
$ |
1,521,055 |
|
|
$ |
1,511,191 |
|
|
$ |
1,478,595 |
|
|
$ |
1,253,010 |
|
Exclude goodwill and other intangible assets, net |
|
367,749 |
|
|
369,801 |
|
|
372,078 |
|
|
262,517 |
|
Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,153,306 |
|
|
$ |
1,141,390 |
|
|
$ |
1,106,517 |
|
|
$ |
990,493 |
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP) |
|
$ |
11,847,374 |
|
|
$ |
11,740,285 |
|
|
$ |
11,871,317 |
|
|
$ |
10,379,194 |
|
Exclude goodwill and other intangible assets, net |
|
367,749 |
|
|
369,801 |
|
|
372,078 |
|
|
262,517 |
|
Total tangible assets
(non-GAAP) |
|
$ |
11,479,625 |
|
|
$ |
11,370,484 |
|
|
$ |
11,499,239 |
|
|
$ |
10,116,677 |
|
Common shareholders' equity to
total assets (GAAP) |
|
12.84 |
% |
|
12.87 |
% |
|
12.46 |
% |
|
12.07 |
% |
Tangible common shareholders'
equity to tangible assets (non-GAAP) |
|
10.05 |
% |
|
10.04 |
% |
|
9.62 |
% |
|
9.79 |
% |
|
|
|
|
|
|
|
|
|
TANGIBLE COMMON
SHAREHOLDERS' EQUITY PER SHARE |
|
|
|
|
|
|
|
|
Tangible common shareholders'
equity (non-GAAP) |
|
$ |
1,153,306 |
|
|
$ |
1,141,390 |
|
|
$ |
1,106,517 |
|
|
$ |
990,493 |
|
Common shares outstanding at
end of period |
|
34,573,643 |
|
|
35,152,746 |
|
|
35,182,772 |
|
|
32,405,696 |
|
Common shareholders' equity
(book value) per share (GAAP) |
|
$ |
43.99 |
|
|
$ |
42.99 |
|
|
$ |
42.03 |
|
|
$ |
38.67 |
|
Tangible common shareholders'
equity (tangible book value) per share (non-GAAP) |
|
$ |
33.36 |
|
|
$ |
32.47 |
|
|
$ |
31.45 |
|
|
$ |
30.57 |
|
CONTACT: MARK J. GRESCOVICH,PRESIDENT & CEOPETER J.
CONNER, CFO(509) 527-3636
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