SECURITIES AND EXCHANGE COMMISSION
|
||
WASHINGTON, D.C. 20549
|
||
FORM 8-K
|
||
CURRENT REPORT
|
||
PURSUANT TO SECTION 13 OR 15 (d) OF THE
|
||
SECURITIES EXCHANGE ACT OF 1934
|
||
Date of Report (Date of earliest event reported): October 22, 2014
|
||
Banner Corporation
|
||
(Exact name of registrant as specified in its charter)
|
||
Washington
|
0-26584
|
91-1691604
|
(State or other jurisdiction
|
(Commission
|
(I.R.S. Employer
|
of incorporation)
|
File Number)
|
Identification No.)
|
10 S. First Avenue, Walla Walla, Washington
|
99362
|
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Registrant's telephone number (including area code) (509) 527-3636
|
||
Not Applicable
|
||
(Former name or former address, if changed since last report)
|
[ ]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
BANNER CORPORATION
|
|
Date: October 22, 2014
|
By: /s/Lloyd W. Baker
|
Lloyd W. Baker
|
|
Executive Vice President and
Chief Financial Officer
|
|
Contact: Mark J. Grescovich,
President & CEO
Lloyd W. Baker, CFO
(509) 527-3636
News Release
|
•
|
Net income increased 27% to $14.8 million, or $0.76 per diluted share, compared to $11.7 million, or $0.60 per diluted share in the third quarter of 2013.
|
•
|
Annualized return on average assets was 1.23%.
|
•
|
Annualized return on average equity was 10.29%.
|
•
|
Revenues from core operations* increased 13% to $59.0 million, compared to $52.4 million in the third quarter a year ago.
|
•
|
Net interest margin was 4.07% for the current quarter, compared to 4.06% in the second quarter of 2014 and 4.09% in the third quarter a year ago.
|
•
|
Core deposits increased 19% and represent 79% of total deposits.
|
•
|
Deposit fees and other service charges increased 19% to $8.3 million.
|
•
|
Total loans increased $44.1 million during the quarter and increased 16% compared to a year ago.
|
•
|
Non-performing assets decreased slightly compared to the prior quarter to $23.8 million, or 0.50% of total assets, at September 30, 2014, and declined 20% from a year earlier.
|
•
|
Common stockholders' tangible equity per share* increased to $29.16 at September 30, 2014 compared to $28.57 in the preceding quarter and $27.02 in the third quarter a year ago.
|
•
|
The ratio of tangible common stockholders' equity to tangible assets* remained strong at 12.00% at September 30, 2014.
|
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||
(in thousands except shares and per share data)
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||||
INTEREST INCOME:
|
||||||||||||||||||||
Loans receivable
|
$
|
46,496
|
$
|
43,199
|
$
|
41,953
|
$
|
131,439
|
$
|
125,734
|
||||||||||
Mortgage-backed securities
|
1,459
|
1,446
|
1,281
|
4,376
|
3,847
|
|||||||||||||||
Securities and cash equivalents
|
1,809
|
1,895
|
1,803
|
5,595
|
5,535
|
|||||||||||||||
49,764
|
46,540
|
45,037
|
141,410
|
135,116
|
||||||||||||||||
INTEREST EXPENSE:
|
||||||||||||||||||||
Deposits
|
1,903
|
1,910
|
2,330
|
5,776
|
7,539
|
|||||||||||||||
Federal Home Loan Bank advances
|
20
|
51
|
28
|
110
|
92
|
|||||||||||||||
Other borrowings
|
43
|
45
|
44
|
133
|
151
|
|||||||||||||||
Junior subordinated debentures
|
734
|
726
|
742
|
2,180
|
2,225
|
|||||||||||||||
2,700
|
2,732
|
3,144
|
8,199
|
10,007
|
||||||||||||||||
Net interest income before provision for loan losses
|
47,064
|
43,808
|
41,893
|
133,211
|
125,109
|
|||||||||||||||
PROVISION FOR LOAN LOSSES
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Net interest income
|
47,064
|
43,808
|
41,893
|
133,211
|
125,109
|
|||||||||||||||
OTHER OPERATING INCOME:
|
||||||||||||||||||||
Deposit fees and other service charges
|
8,289
|
7,346
|
6,982
|
22,237
|
19,911
|
|||||||||||||||
Mortgage banking operations
|
2,842
|
2,600
|
2,590
|
7,282
|
9,002
|
|||||||||||||||
Miscellaneous
|
761
|
644
|
920
|
2,041
|
2,375
|
|||||||||||||||
11,892
|
10,590
|
10,492
|
31,560
|
31,288
|
||||||||||||||||
Net gain on sale of securities
|
6
|
—
|
2
|
41
|
1,020
|
|||||||||||||||
Other-than-temporary impairment recovery
|
—
|
—
|
—
|
—
|
409
|
|||||||||||||||
Net change in valuation of financial instruments carried at fair value
|
1,452
|
464
|
(352
|
)
|
1,662
|
(1,954
|
)
|
|||||||||||||
Acquisition bargain purchase gain
|
—
|
9,079
|
—
|
9,079
|
—
|
|||||||||||||||
Total other operating income
|
13,350
|
20,133
|
10,142
|
42,342
|
30,763
|
|||||||||||||||
OTHER OPERATING EXPENSE:
|
||||||||||||||||||||
Salary and employee benefits
|
22,971
|
22,330
|
21,244
|
66,457
|
63,197
|
|||||||||||||||
Less capitalized loan origination costs
|
(3,204
|
)
|
(3,282
|
)
|
(2,915
|
)
|
(8,680
|
)
|
(8,856
|
)
|
||||||||||
Occupancy and equipment
|
5,819
|
5,540
|
5,317
|
17,055
|
16,061
|
|||||||||||||||
Information / computer data services
|
2,131
|
1,918
|
1,710
|
5,984
|
5,353
|
|||||||||||||||
Payment and card processing services
|
3,201
|
2,746
|
2,530
|
8,462
|
7,284
|
|||||||||||||||
Professional services
|
784
|
1,109
|
1,074
|
2,900
|
2,799
|
|||||||||||||||
Advertising and marketing
|
2,454
|
1,370
|
1,556
|
4,878
|
4,853
|
|||||||||||||||
Deposit insurance
|
607
|
637
|
564
|
1,820
|
1,826
|
|||||||||||||||
State/municipal business and use taxes
|
475
|
388
|
461
|
1,022
|
1,463
|
|||||||||||||||
Real estate operations
|
(190
|
)
|
(109
|
)
|
(601
|
)
|
(260
|
)
|
(1,047
|
)
|
||||||||||
Amortization of core deposit intangibles
|
531
|
450
|
471
|
1,460
|
1,453
|
|||||||||||||||
Acquisition related costs
|
(494
|
)
|
1,979
|
—
|
1,530
|
—
|
||||||||||||||
Miscellaneous
|
3,410
|
3,359
|
3,079
|
9,884
|
9,660
|
|||||||||||||||
Total other operating expense
|
38,495
|
38,435
|
34,490
|
112,512
|
104,046
|
|||||||||||||||
Income before provision for income taxes
|
21,919
|
25,506
|
17,545
|
63,041
|
51,826
|
|||||||||||||||
PROVISION FOR INCOME TAXES
|
7,076
|
8,499
|
5,880
|
20,620
|
16,825
|
|||||||||||||||
NET INCOME
|
$
|
14,843
|
$
|
17,007
|
$
|
11,665
|
$
|
42,421
|
$
|
35,001
|
||||||||||
Earnings per share available to common shareholders:
|
||||||||||||||||||||
Basic
|
$
|
0.77
|
$
|
0.88
|
$
|
0.60
|
$
|
2.19
|
$
|
1.81
|
||||||||||
Diluted
|
$
|
0.76
|
$
|
0.88
|
$
|
0.60
|
$
|
2.19
|
$
|
1.80
|
||||||||||
Cumulative dividends declared per common share
|
$
|
0.18
|
$
|
0.18
|
$
|
0.15
|
$
|
0.54
|
$
|
0.39
|
||||||||||
Weighted average common shares outstanding:
|
||||||||||||||||||||
Basic
|
19,372,740
|
19,342,023
|
19,338,564
|
19,352,575
|
19,347,502
|
|||||||||||||||
Diluted
|
19,419,344
|
19,409,601
|
19,397,329
|
19,385,933
|
19,402,659
|
|||||||||||||||
Change in common shares outstanding
|
2,801
|
(7,831
|
)
|
(10,139
|
)
|
27,736
|
88,085
|
(in thousands except shares and per share data)
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
ASSETS
|
||||||||||||||||
Cash and due from banks
|
$
|
69,023
|
$
|
83,571
|
$
|
69,340
|
$
|
69,711
|
||||||||
Federal funds and interest-bearing deposits
|
82,702
|
62,990
|
106,625
|
67,638
|
||||||||||||
Securities - trading
|
51,076
|
61,393
|
63,887
|
62,472
|
||||||||||||
Securities - available for sale
|
433,745
|
455,353
|
477,407
|
470,280
|
||||||||||||
Securities - held to maturity
|
133,069
|
133,186
|
96,545
|
102,513
|
||||||||||||
Federal Home Loan Bank stock
|
29,106
|
31,191
|
35,708
|
35,390
|
||||||||||||
Loans receivable:
|
||||||||||||||||
Held for sale
|
6,949
|
7,322
|
8,394
|
2,734
|
||||||||||||
Held for portfolio
|
3,799,746
|
3,755,277
|
3,267,042
|
3,415,711
|
||||||||||||
Allowance for loan losses
|
(74,331
|
)
|
(74,310
|
)
|
(75,925
|
)
|
(74,258
|
)
|
||||||||
3,732,364
|
3,688,289
|
3,199,511
|
3,344,187
|
|||||||||||||
Accrued interest receivable
|
17,062
|
15,579
|
15,164
|
13,996
|
||||||||||||
Real estate owned held for sale, net
|
3,928
|
4,388
|
4,818
|
4,044
|
||||||||||||
Property and equipment, net
|
91,291
|
91,912
|
89,092
|
90,267
|
||||||||||||
Other intangibles, net
|
3,362
|
3,892
|
2,937
|
2,449
|
||||||||||||
Bank-owned life insurance
|
63,293
|
62,815
|
61,442
|
61,945
|
||||||||||||
Other assets
|
49,368
|
50,740
|
60,809
|
64,006
|
||||||||||||
$
|
4,759,389
|
$
|
4,745,299
|
$
|
4,283,285
|
$
|
4,388,898
|
|||||||||
LIABILITIES
|
||||||||||||||||
Deposits:
|
||||||||||||||||
Non-interest-bearing
|
$
|
1,304,720
|
$
|
1,210,068
|
$
|
1,051,831
|
$
|
1,115,346
|
||||||||
Interest-bearing transaction and savings accounts
|
1,833,404
|
1,771,865
|
1,583,430
|
1,629,885
|
||||||||||||
Interest-bearing certificates
|
852,994
|
936,986
|
900,024
|
872,695
|
||||||||||||
3,991,118
|
3,918,919
|
3,535,285
|
3,617,926
|
|||||||||||||
Advances from Federal Home Loan Bank at fair value
|
250
|
45,251
|
20,258
|
27,250
|
||||||||||||
Customer repurchase agreements
|
67,605
|
88,946
|
82,909
|
83,056
|
||||||||||||
Junior subordinated debentures at fair value
|
77,624
|
77,313
|
73,637
|
73,928
|
||||||||||||
Accrued expenses and other liabilities
|
32,375
|
35,619
|
25,562
|
31,324
|
||||||||||||
Deferred compensation
|
16,359
|
16,238
|
15,642
|
16,442
|
||||||||||||
4,185,331
|
4,182,286
|
3,753,293
|
3,849,926
|
|||||||||||||
STOCKHOLDERS' EQUITY
|
||||||||||||||||
Common stock
|
568,255
|
567,483
|
568,535
|
569,028
|
||||||||||||
Retained earnings (accumulated deficit)
|
6,780
|
(4,541
|
)
|
(33,701
|
)
|
(25,073
|
)
|
|||||||||
Other components of stockholders' equity
|
(977
|
)
|
71
|
(4,842
|
)
|
(4,983
|
)
|
|||||||||
574,058
|
563,013
|
529,992
|
538,972
|
|||||||||||||
$
|
4,759,389
|
$
|
4,745,299
|
$
|
4,283,285
|
$
|
4,388,898
|
|||||||||
Common Shares Issued:
|
||||||||||||||||
Shares outstanding at end of period
|
19,571,505
|
19,568,704
|
19,543,050
|
19,543,769
|
||||||||||||
Less unearned ESOP shares at end of period
|
—
|
—
|
34,340
|
34,340
|
||||||||||||
Shares outstanding at end of period excluding unearned ESOP shares
|
19,571,505
|
19,568,704
|
19,508,710
|
19,509,429
|
||||||||||||
Common stockholders' equity per share (1)
|
$
|
29.33
|
$
|
28.77
|
$
|
27.17
|
$
|
27.63
|
||||||||
Common stockholders' tangible equity per share (1) (2)
|
$
|
29.16
|
$
|
28.57
|
$
|
27.02
|
$
|
27.50
|
||||||||
Common stockholders' tangible equity to tangible assets (2)
|
12.00
|
%
|
11.79
|
%
|
12.31
|
%
|
12.23
|
%
|
||||||||
Consolidated Tier 1 leverage capital ratio
|
13.14
|
%
|
13.65
|
%
|
13.63
|
%
|
13.64
|
%
|
(1)
|
Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding and excludes unallocated shares in the ESOP.
|
(2)
|
Common stockholders' tangible equity excludes other intangibles. Tangible assets exclude other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of the press release tables.
|
(dollars in thousands)
|
||||||||||||||||
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
|||||||||||||
LOANS (including loans held for sale):
|
||||||||||||||||
Commercial real estate:
|
||||||||||||||||
Owner occupied
|
$
|
546,333
|
$
|
541,558
|
$
|
508,341
|
$
|
502,601
|
||||||||
Investment properties
|
854,284
|
807,499
|
613,757
|
692,457
|
||||||||||||
Multifamily real estate
|
183,944
|
188,792
|
133,770
|
137,153
|
||||||||||||
Commercial construction
|
18,606
|
12,638
|
18,730
|
12,168
|
||||||||||||
Multifamily construction
|
48,606
|
39,864
|
33,888
|
52,081
|
||||||||||||
One- to four-family construction
|
214,141
|
213,414
|
194,187
|
200,864
|
||||||||||||
Land and land development:
|
||||||||||||||||
Residential
|
89,649
|
73,030
|
75,576
|
75,695
|
||||||||||||
Commercial
|
10,505
|
10,679
|
11,231
|
10,450
|
||||||||||||
Commercial business
|
728,088
|
735,128
|
635,658
|
682,169
|
||||||||||||
Agricultural business including secured by farmland
|
240,048
|
245,742
|
223,187
|
228,291
|
||||||||||||
One- to four-family real estate
|
527,271
|
558,744
|
543,263
|
529,494
|
||||||||||||
Consumer:
|
||||||||||||||||
Consumer secured by one- to four-family real estate
|
215,385
|
209,511
|
170,019
|
173,188
|
||||||||||||
Consumer-other
|
129,835
|
126,000
|
113,829
|
121,834
|
||||||||||||
Total loans outstanding
|
$
|
3,806,695
|
$
|
3,762,599
|
$
|
3,275,436
|
$
|
3,418,445
|
||||||||
Restructured loans performing under their restructured terms
|
$
|
30,387
|
$
|
37,461
|
$
|
50,430
|
$
|
47,428
|
||||||||
Loans 30 - 89 days past due and on accrual
|
$
|
6,925
|
$
|
7,670
|
$
|
9,313
|
$
|
8,784
|
||||||||
Total delinquent loans (including loans on non-accrual)
|
$
|
26,703
|
$
|
27,415
|
$
|
32,002
|
$
|
22,010
|
||||||||
Total delinquent loans / Total loans outstanding
|
0.70
|
%
|
0.73
|
%
|
0.98
|
%
|
0.64
|
%
|
GEOGRAPHIC CONCENTRATION
|
||||||||||||||||||||
OF LOANS AT SEPTEMBER 30, 2014
|
Washington
|
Oregon
|
Idaho
|
Other
|
Total
|
|||||||||||||||
Commercial real estate:
|
||||||||||||||||||||
Owner occupied
|
$
|
389,967
|
$
|
85,032
|
$
|
53,891
|
$
|
17,443
|
$
|
546,333
|
||||||||||
Investment properties
|
532,415
|
123,874
|
59,963
|
138,032
|
854,284
|
|||||||||||||||
Multifamily real estate
|
141,337
|
27,685
|
14,847
|
75
|
183,944
|
|||||||||||||||
Commercial construction
|
16,953
|
—
|
1,653
|
—
|
18,606
|
|||||||||||||||
Multifamily construction
|
41,462
|
7,144
|
—
|
—
|
48,606
|
|||||||||||||||
One- to four-family construction
|
128,882
|
82,656
|
2,603
|
—
|
214,141
|
|||||||||||||||
Land and land development:
|
||||||||||||||||||||
Residential
|
50,257
|
38,327
|
1,065
|
—
|
89,649
|
|||||||||||||||
Commercial
|
5,055
|
2,569
|
2,881
|
—
|
10,505
|
|||||||||||||||
Commercial business
|
392,334
|
121,078
|
80,262
|
134,414
|
728,088
|
|||||||||||||||
Agricultural business including secured by farmland
|
123,910
|
63,146
|
52,992
|
—
|
240,048
|
|||||||||||||||
One- to four-family real estate
|
329,751
|
173,384
|
23,371
|
765
|
527,271
|
|||||||||||||||
Consumer:
|
||||||||||||||||||||
Consumer secured by one- to four-family real estate
|
130,312
|
69,121
|
15,313
|
639
|
215,385
|
|||||||||||||||
Consumer-other
|
83,379
|
39,818
|
6,241
|
397
|
129,835
|
|||||||||||||||
Total loans outstanding
|
$
|
2,366,014
|
$
|
833,834
|
$
|
315,082
|
$
|
291,765
|
$
|
3,806,695
|
||||||||||
Percent of total loans
|
62.1
|
%
|
21.9
|
%
|
8.3
|
%
|
7.7
|
%
|
100.0
|
%
|
(dollars in thousands)
|
||||||||||||||||||||
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||
CHANGE IN THE
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||||
ALLOWANCE FOR LOAN LOSSES
|
||||||||||||||||||||
Balance, beginning of period
|
$
|
74,310
|
$
|
74,371
|
$
|
76,121
|
$
|
74,258
|
$
|
76,759
|
||||||||||
Provision
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
Recoveries of loans previously charged off:
|
||||||||||||||||||||
Commercial real estate
|
94
|
274
|
331
|
664
|
2,295
|
|||||||||||||||
Construction and land
|
84
|
472
|
507
|
788
|
945
|
|||||||||||||||
One- to four-family real estate
|
143
|
204
|
19
|
535
|
138
|
|||||||||||||||
Commercial business
|
256
|
286
|
339
|
835
|
1,391
|
|||||||||||||||
Agricultural business, including secured by farmland
|
587
|
311
|
265
|
1,248
|
612
|
|||||||||||||||
Consumer
|
53
|
58
|
68
|
393
|
287
|
|||||||||||||||
1,217
|
1,605
|
1,529
|
4,463
|
5,668
|
||||||||||||||||
Loans charged off:
|
||||||||||||||||||||
Commercial real estate
|
—
|
(1,001
|
)
|
(850
|
)
|
(1,239
|
)
|
(1,616
|
)
|
|||||||||||
Multifamily real estate
|
(20
|
)
|
—
|
—
|
(20
|
)
|
—
|
|||||||||||||
Construction and land
|
—
|
(207
|
)
|
—
|
(207
|
)
|
(854
|
)
|
||||||||||||
One- to four-family real estate
|
(239
|
)
|
(14
|
)
|
(207
|
)
|
(632
|
)
|
(1,260
|
)
|
||||||||||
Commercial business
|
(83
|
)
|
(260
|
)
|
(246
|
)
|
(1,081
|
)
|
(1,573
|
)
|
||||||||||
Agricultural business, including secured by farmland
|
(125
|
)
|
—
|
(248
|
)
|
(125
|
)
|
(248
|
)
|
|||||||||||
Consumer
|
(729
|
)
|
(184
|
)
|
(174
|
)
|
(1,086
|
)
|
(951
|
)
|
||||||||||
(1,196
|
)
|
(1,666
|
)
|
(1,725
|
)
|
(4,390
|
)
|
(6,502
|
)
|
|||||||||||
Net (charge-offs) recoveries
|
21
|
(61
|
)
|
(196
|
)
|
73
|
(834
|
)
|
||||||||||||
Balance, end of period
|
$
|
74,331
|
$
|
74,310
|
$
|
75,925
|
$
|
74,331
|
$
|
75,925
|
||||||||||
Net charge-offs / Average loans outstanding
|
(0.001
|
)%
|
0.002
|
%
|
0.006
|
%
|
(0.002
|
)%
|
0.026
|
%
|
ALLOCATION OF
|
||||||||||||||||
ALLOWANCE FOR LOAN LOSSES
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
Specific or allocated loss allowance:
|
||||||||||||||||
Commercial real estate
|
$
|
19,505
|
$
|
18,884
|
$
|
15,618
|
$
|
16,759
|
||||||||
Multifamily real estate
|
4,892
|
5,765
|
5,283
|
5,306
|
||||||||||||
Construction and land
|
20,779
|
17,837
|
16,672
|
17,640
|
||||||||||||
One- to four-family real estate
|
9,136
|
9,270
|
13,187
|
11,486
|
||||||||||||
Commercial business
|
12,677
|
12,014
|
10,676
|
11,773
|
||||||||||||
Agricultural business, including secured by farmland
|
2,947
|
2,824
|
3,411
|
2,841
|
||||||||||||
Consumer
|
675
|
748
|
948
|
1,335
|
||||||||||||
Total allocated
|
70,611
|
67,342
|
65,795
|
67,140
|
||||||||||||
Unallocated
|
3,720
|
6,968
|
10,130
|
7,118
|
||||||||||||
Total allowance for loan losses
|
$
|
74,331
|
$
|
74,310
|
$
|
75,925
|
$
|
74,258
|
||||||||
Allowance for loan losses / Total loans outstanding
|
1.95
|
%
|
1.97
|
%
|
2.32
|
%
|
2.17
|
%
|
||||||||
Allowance for loan losses / Non-performing loans
|
376
|
%
|
376
|
%
|
305
|
%
|
300
|
%
|
(dollars in thousands)
|
|||||||||||||||
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
NON-PERFORMING ASSETS
|
|||||||||||||||
Loans on non-accrual status:
|
|||||||||||||||
Secured by real estate:
|
|||||||||||||||
Commercial
|
$
|
2,701
|
$
|
2,692
|
$
|
4,762
|
$
|
6,287
|
|||||||
Multifamily
|
397
|
422
|
333
|
—
|
|||||||||||
Construction and land
|
1,285
|
1,296
|
1,660
|
1,193
|
|||||||||||
One- to four-family
|
8,615
|
9,354
|
10,717
|
12,532
|
|||||||||||
Commercial business
|
1,037
|
925
|
963
|
723
|
|||||||||||
Agricultural business, including secured by farmland
|
229
|
104
|
—
|
—
|
|||||||||||
Consumer
|
1,138
|
1,205
|
1,634
|
1,173
|
|||||||||||
15,402
|
15,998
|
20,069
|
21,908
|
||||||||||||
Loans more than 90 days delinquent, still on accrual:
|
|||||||||||||||
Secured by real estate:
|
|||||||||||||||
Commercial
|
993
|
993
|
—
|
—
|
|||||||||||
Multifamily
|
—
|
—
|
1,701
|
—
|
|||||||||||
Construction and land
|
—
|
—
|
242
|
—
|
|||||||||||
One- to four-family
|
2,777
|
2,181
|
2,774
|
2,611
|
|||||||||||
Commercial business
|
301
|
280
|
24
|
—
|
|||||||||||
Agricultural business, including secured by farmland
|
—
|
—
|
—
|
105
|
|||||||||||
Consumer
|
306
|
293
|
52
|
144
|
|||||||||||
4,377
|
3,747
|
4,793
|
2,860
|
||||||||||||
Total non-performing loans
|
19,779
|
19,745
|
24,862
|
24,768
|
|||||||||||
Real estate owned (REO)
|
3,928
|
4,388
|
4,818
|
4,044
|
|||||||||||
Other repossessed assets
|
69
|
69
|
119
|
115
|
|||||||||||
Total non-performing assets
|
$
|
23,776
|
$
|
24,202
|
$
|
29,799
|
$
|
28,927
|
|||||||
Total non-performing assets / Total assets
|
0.50
|
%
|
0.51
|
%
|
0.70
|
%
|
0.66
|
%
|
DETAIL & GEOGRAPHIC CONCENTRATION OF
|
|||||||||||||||
NON-PERFORMING ASSETS AT SEPTEMBER 30, 2014
|
Washington
|
Oregon
|
Idaho
|
Total
|
|||||||||||
Secured by real estate:
|
|||||||||||||||
Commercial
|
$
|
3,693
|
$
|
—
|
$
|
—
|
$
|
3,693
|
|||||||
Multifamily
|
397
|
—
|
—
|
397
|
|||||||||||
Construction and land:
|
|||||||||||||||
Residential land acquisition & development
|
—
|
750
|
—
|
750
|
|||||||||||
Residential land improved lots
|
—
|
536
|
—
|
536
|
|||||||||||
Total construction and land
|
—
|
1,286
|
—
|
1,286
|
|||||||||||
One- to four-family
|
9,903
|
947
|
542
|
11,392
|
|||||||||||
Commercial business
|
1,294
|
39
|
5
|
1,338
|
|||||||||||
Agricultural business, including secured by farmland
|
—
|
229
|
—
|
229
|
|||||||||||
Consumer
|
1,233
|
81
|
130
|
1,444
|
|||||||||||
Total non-performing loans
|
16,520
|
2,582
|
677
|
19,779
|
|||||||||||
Real estate owned (REO)
|
1,515
|
2,380
|
33
|
3,928
|
|||||||||||
Other repossessed assets
|
69
|
—
|
—
|
69
|
|||||||||||
Total non-performing assets at end of the period
|
$
|
18,104
|
$
|
4,962
|
$
|
710
|
$
|
23,776
|
(dollars in thousands)
|
|||||||||||||||||
Quarters Ended
|
Nine Months Ended
|
||||||||||||||||
REAL ESTATE OWNED
|
Sep 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||
Balance, beginning of period
|
$
|
4,388
|
$
|
6,714
|
$
|
4,044
|
$
|
15,778
|
|||||||||
Additions from loan foreclosures
|
135
|
963
|
2,837
|
2,467
|
|||||||||||||
Additions from capitalized costs
|
—
|
297
|
37
|
344
|
|||||||||||||
Proceeds from dispositions of REO
|
(860
|
)
|
(3,970
|
)
|
(3,633
|
)
|
(15,758
|
)
|
|||||||||
Gain on sale of REO
|
265
|
1,005
|
680
|
2,477
|
|||||||||||||
Valuation adjustments in the period
|
—
|
(191
|
)
|
(37
|
)
|
(490
|
)
|
||||||||||
Balance, end of period
|
$
|
3,928
|
$
|
4,818
|
$
|
3,928
|
$
|
4,818
|
|||||||||
DEPOSIT COMPOSITION
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
Non-interest-bearing
|
$
|
1,304,720
|
$
|
1,210,068
|
$
|
1,051,831
|
$
|
1,115,346
|
||||||||
Interest-bearing checking
|
429,876
|
437,810
|
399,343
|
422,910
|
||||||||||||
Regular savings accounts
|
899,868
|
843,950
|
775,260
|
798,764
|
||||||||||||
Money market accounts
|
503,660
|
490,105
|
408,827
|
408,211
|
||||||||||||
Interest-bearing transaction & savings accounts
|
1,833,404
|
1,771,865
|
1,583,430
|
1,629,885
|
||||||||||||
Interest-bearing certificates
|
852,994
|
936,986
|
900,024
|
872,695
|
||||||||||||
Total deposits
|
$
|
3,991,118
|
$
|
3,918,919
|
$
|
3,535,285
|
$
|
3,617,926
|
GEOGRAPHIC CONCENTRATION
|
||||||||||||||||
OF DEPOSITS AT SEPTEMBER 30, 2014
|
Washington
|
Oregon
|
Idaho
|
Total
|
||||||||||||
Total deposits
|
$
|
2,889,675
|
$
|
864,869
|
$
|
236,574
|
$
|
3,991,118
|
||||||||
Percent of total deposits
|
72.4
|
%
|
21.7
|
%
|
5.9
|
%
|
100.0
|
%
|
INCLUDED IN TOTAL DEPOSITS
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
Public non-interest-bearing accounts
|
$
|
34,535
|
$
|
23,886
|
$
|
20,630
|
$
|
21,699
|
||||||||
Public interest-bearing transaction & savings accounts
|
64,984
|
69,664
|
49,840
|
65,822
|
||||||||||||
Public interest-bearing certificates
|
48,508
|
48,180
|
51,562
|
51,465
|
||||||||||||
Total public deposits
|
$
|
148,027
|
$
|
141,730
|
$
|
122,032
|
$
|
138,986
|
||||||||
Total brokered deposits
|
$
|
41,249
|
$
|
88,209
|
$
|
4,531
|
$
|
4,291
|
OTHER BORROWINGS
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
||||||||||||
Customer repurchase agreements / "Sweep accounts"
|
$
|
67,605
|
$
|
88,946
|
$
|
82,909
|
$
|
83,056
|
(dollars in thousands)
|
||||||||||||||
Actual
|
Minimum for Capital Adequacy
or "Well Capitalized"
|
|||||||||||||
REGULATORY CAPITAL RATIOS AT SEPTEMBER 30, 2014
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||
Banner Corporation-consolidated:
|
||||||||||||||
Total capital to risk-weighted assets
|
$
|
679,311
|
16.59
|
%
|
$
|
327,607
|
8.00
|
%
|
||||||
Tier 1 capital to risk-weighted assets
|
627,828
|
15.33
|
%
|
163,803
|
4.00
|
%
|
||||||||
Tier 1 leverage capital to average assets
|
627,828
|
13.14
|
%
|
191,146
|
4.00
|
%
|
||||||||
Banner Bank:
|
||||||||||||||
Total capital to risk-weighted assets
|
599,617
|
15.32
|
%
|
391,421
|
10.00
|
%
|
||||||||
Tier 1 capital to risk-weighted assets
|
550,395
|
14.06
|
%
|
234,852
|
6.00
|
%
|
||||||||
Tier 1 leverage capital to average assets
|
550,395
|
12.14
|
%
|
226,711
|
5.00
|
%
|
||||||||
Islanders Bank:
|
||||||||||||||
Total capital to risk-weighted assets
|
36,132
|
19.44
|
%
|
18,582
|
10.00
|
%
|
||||||||
Tier 1 capital to risk-weighted assets
|
33,850
|
18.22
|
%
|
11,149
|
6.00
|
%
|
||||||||
Tier 1 leverage capital to average assets
|
33,850
|
13.54
|
%
|
12,501
|
5.00
|
%
|
(dollars in thousands)
|
||||||||||||||||||||
(rates / ratios annualized)
|
||||||||||||||||||||
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||||
OPERATING PERFORMANCE
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||||
Average loans
|
$
|
3,834,007
|
$
|
3,588,654
|
$
|
3,291,950
|
$
|
3,633,990
|
$
|
3,252,943
|
||||||||||
Average securities
|
666,362
|
689,323
|
689,257
|
681,059
|
693,892
|
|||||||||||||||
Average interest earning cash
|
85,090
|
54,887
|
79,607
|
66,208
|
85,125
|
|||||||||||||||
Average non-interest-earning assets
|
213,045
|
197,796
|
190,621
|
203,432
|
206,789
|
|||||||||||||||
Total average assets
|
$
|
4,798,504
|
$
|
4,530,660
|
$
|
4,251,435
|
$
|
4,584,689
|
$
|
4,238,749
|
||||||||||
Average deposits
|
$
|
3,995,451
|
$
|
3,700,736
|
$
|
3,496,194
|
$
|
3,773,206
|
$
|
3,495,909
|
||||||||||
Average borrowings
|
228,724
|
279,266
|
241,006
|
256,666
|
233,831
|
|||||||||||||||
Average non-interest-bearing other liabilities (1)
|
2,026
|
(4,204
|
)
|
(13,016
|
)
|
(3,040
|
)
|
(12,931
|
)
|
|||||||||||
Total average liabilities
|
4,226,201
|
3,975,798
|
3,724,184
|
4,026,832
|
3,716,809
|
|||||||||||||||
Total average stockholders' equity
|
572,303
|
554,862
|
527,251
|
557,857
|
521,940
|
|||||||||||||||
Total average liabilities and equity
|
$
|
4,798,504
|
$
|
4,530,660
|
$
|
4,251,435
|
$
|
4,584,689
|
$
|
4,238,749
|
||||||||||
Interest rate yield on loans
|
4.81
|
%
|
4.83
|
%
|
5.06
|
%
|
4.84
|
%
|
5.17
|
%
|
||||||||||
Interest rate yield on securities
|
1.91
|
%
|
1.92
|
%
|
1.75
|
%
|
1.93
|
%
|
1.78
|
%
|
||||||||||
Interest rate yield on cash
|
0.28
|
%
|
0.31
|
%
|
0.22
|
%
|
0.30
|
%
|
0.25
|
%
|
||||||||||
Interest rate yield on interest-earning assets
|
4.31
|
%
|
4.31
|
%
|
4.40
|
%
|
4.32
|
%
|
4.48
|
%
|
||||||||||
Interest rate expense on deposits
|
0.19
|
%
|
0.21
|
%
|
0.26
|
%
|
0.20
|
%
|
0.29
|
%
|
||||||||||
Interest rate expense on borrowings
|
1.38
|
%
|
1.18
|
%
|
1.34
|
%
|
1.26
|
%
|
1.41
|
%
|
||||||||||
Interest rate expense on interest-bearing liabilities
|
0.25
|
%
|
0.28
|
%
|
0.33
|
%
|
0.27
|
%
|
0.36
|
%
|
||||||||||
Interest rate spread
|
4.06
|
%
|
4.03
|
%
|
4.07
|
%
|
4.05
|
%
|
4.12
|
%
|
||||||||||
Net interest margin
|
4.07
|
%
|
4.06
|
%
|
4.09
|
%
|
4.07
|
%
|
4.15
|
%
|
||||||||||
Other operating income / Average assets
|
1.10
|
%
|
1.78
|
%
|
0.95
|
%
|
1.23
|
%
|
0.97
|
%
|
||||||||||
Core operating income / Average assets (2)
|
0.98
|
%
|
0.94
|
%
|
0.98
|
%
|
0.92
|
%
|
0.99
|
%
|
||||||||||
Other operating expense / Average assets
|
3.18
|
%
|
3.40
|
%
|
3.22
|
%
|
3.28
|
%
|
3.28
|
%
|
||||||||||
Efficiency ratio (other operating expense / revenue)
|
63.72
|
%
|
60.11
|
%
|
66.28
|
%
|
64.09
|
%
|
66.75
|
%
|
||||||||||
Efficiency ratio (other operating expense / core operating revenue)(2)
|
66.13
|
%
|
67.02
|
%
|
65.84
|
%
|
67.36
|
%
|
66.53
|
%
|
||||||||||
Return on average assets
|
1.23
|
%
|
1.51
|
%
|
1.09
|
%
|
1.24
|
%
|
1.10
|
%
|
||||||||||
Return on average equity
|
10.29
|
%
|
12.29
|
%
|
8.78
|
%
|
10.17
|
%
|
8.97
|
%
|
||||||||||
Return on average tangible equity (3)
|
10.36
|
%
|
12.33
|
%
|
8.84
|
%
|
10.21
|
%
|
9.03
|
%
|
||||||||||
Average equity / Average assets
|
11.93
|
%
|
12.25
|
%
|
12.40
|
%
|
12.17
|
%
|
12.31
|
%
|
(1)
|
Average non-interest-bearing liabilities include fair value adjustments related to FHLB advances and Junior Subordinated Debentures.
|
(2)
|
Core operating income (or core operating revenue) excludes gain/(loss) on sale of securities, fair value and other-than-temporary impairment (OTTI) adjustments and, in the current year, and acquisition bargain purchase gain and related expenses, which represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables.
|
(3)
|
Average tangible equity excludes other intangibles and represents a non-GAAP financial measure. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables.
|
(in thousands except shares and per share data)
|
|||||||||||||||||||
* Non-GAAP Financial Measures (unaudited)
|
|||||||||||||||||||
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented.
|
|||||||||||||||||||
REVENUE FROM CORE OPERATIONS
|
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||||
Net interest income before provision for loan losses
|
$
|
47,064
|
$
|
43,808
|
$
|
41,893
|
$
|
133,211
|
$
|
125,109
|
|||||||||
Total other operating income
|
13,350
|
20,133
|
10,142
|
42,342
|
30,763
|
||||||||||||||
Total GAAP revenue
|
60,414
|
63,941
|
52,035
|
175,553
|
155,872
|
||||||||||||||
Exclude net gain on sale of securities
|
(6
|
)
|
—
|
(2
|
)
|
(41
|
)
|
(1,020
|
)
|
||||||||||
Exclude other-than-temporary-impairment recovery
|
—
|
—
|
—
|
—
|
(409
|
)
|
|||||||||||||
Exclude change in valuation of financial instruments carried at fair value
|
(1,452
|
)
|
(464
|
)
|
352
|
(1,662
|
)
|
1,954
|
|||||||||||
Exclude acquisition bargain purchase gain
|
—
|
(9,079
|
)
|
—
|
(9,079
|
)
|
—
|
||||||||||||
Revenue from core operations (non-GAAP)
|
$
|
58,956
|
$
|
54,398
|
$
|
52,385
|
$
|
164,771
|
$
|
156,397
|
OTHER OPERATING INCOME FROM CORE OPERATIONS
|
Quarters Ended
|
Nine Months Ended
|
|||||||||||||||||
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Sep 30, 2014
|
Sep 30, 2013
|
|||||||||||||||
Total other operating income (GAAP)
|
$
|
13,350
|
$
|
20,133
|
$
|
10,142
|
$
|
42,342
|
$
|
30,763
|
|||||||||
Exclude net gain on sale of securities
|
(6
|
)
|
—
|
(2
|
)
|
(41
|
)
|
(1,020
|
)
|
||||||||||
Exclude other-than-temporary-impairment recovery
|
—
|
—
|
—
|
—
|
(409
|
)
|
|||||||||||||
Exclude change in valuation of financial instruments carried at fair value
|
(1,452
|
)
|
(464
|
)
|
352
|
(1,662
|
)
|
1,954
|
|||||||||||
Exclude acquisition bargain purchase gain
|
—
|
(9,079
|
)
|
—
|
(9,079
|
)
|
—
|
||||||||||||
Other operating income from core operations (non-GAAP)
|
$
|
11,892
|
$
|
10,590
|
$
|
10,492
|
$
|
31,560
|
$
|
31,288
|
TANGIBLE COMMON STOCKHOLDERS' EQUITY TO TANGIBLE ASSETS
|
Sep 30, 2014
|
Jun 30, 2014
|
Sep 30, 2013
|
Dec 31, 2013
|
|||||||||||
Stockholders' equity (GAAP)
|
$
|
574,058
|
$
|
563,013
|
$
|
529,992
|
$
|
538,972
|
|||||||
Exclude other intangible assets, net
|
3,362
|
3,892
|
2,937
|
2,449
|
|||||||||||
Tangible common stockholders' equity (non-GAAP)
|
$
|
570,696
|
$
|
559,121
|
$
|
527,055
|
$
|
536,523
|
|||||||
Total assets (GAAP)
|
$
|
4,759,389
|
$
|
4,745,299
|
$
|
4,283,285
|
$
|
4,388,898
|
|||||||
Exclude other intangible assets, net
|
3,362
|
3,892
|
2,937
|
2,449
|
|||||||||||
Total tangible assets (non-GAAP)
|
$
|
4,756,027
|
$
|
4,741,407
|
$
|
4,280,348
|
$
|
4,386,449
|
|||||||
Tangible common stockholders' equity to tangible assets (non-GAAP)
|
12.00
|
%
|
11.79
|
%
|
12.31
|
%
|
12.23
|
%
|
|||||||
TANGIBLE COMMON STOCKHOLDERS' EQUITY PER SHARE
|
|||||||||||||||
Tangible common stockholders' equity
|
$
|
570,696
|
$
|
559,121
|
$
|
527,055
|
$
|
536,523
|
|||||||
Common shares outstanding at end of period
|
19,571,505
|
19,568,704
|
19,508,710
|
19,509,429
|
|||||||||||
Common shareholders' equity (book value) per share (GAAP)
|
$
|
29.33
|
$
|
28.77
|
$
|
27.17
|
$
|
27.63
|
|||||||
Tangible common stockholders' equity (tangible book value) per share (non-GAAP)
|
$
|
29.16
|
$
|
28.57
|
$
|
27.02
|
$
|
27.50
|
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