Exhibit 99.1
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CONTACT:
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MARK J. GRESCOVICH,
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PRESIDENT & CEO
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PETER J. CONNER, CFO
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(509) 527-3636
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NEWS RELEASE
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Banner Corporation Reports Net Income of $49.9 Million, or $1.44 Per Diluted Share, for Fourth
Quarter 2021;
Earns Record $201.0 Million in Net Income, or $5.76 Per Diluted Share, for 2021;
Declares Increased Quarterly Cash Dividend of $0.44 Per Share
Walla Walla, WA - January 20, 2022 - Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of
Banner Bank, today reported net income of $49.9 million, or $1.44 per diluted share, for the fourth quarter of 2021, virtually unchanged from $49.9 million, or $1.44 per diluted share, for the third quarter of 2021 and compared to $39.0 million, or
$1.10 per diluted share, for the fourth quarter of 2020. Banner’s fourth quarter 2021 results include $5.2 million in recapture of provision for credit losses, compared to $8.6 million in recapture of provision for credit losses in the preceding
quarter and $602,000 in provision for credit losses in the fourth quarter of 2020. Net income for 2021 increased 73% to a record $201.0 million, or $5.76 per diluted share, compared to $115.9 million, or $3.26 per diluted share for 2020. Full year
2021 results include $33.4 million in recapture of provision for credit losses, compared to $67.9 million in provision for credit losses in 2020.
Banner announced that its Board of Directors increased its regular quarterly cash dividend by 7% to $0.44 per
share. The dividend will be payable February 14, 2022, to common shareholders of record on February 3, 2022.
“Banner’s record 2021 operating results reflect the continued execution of our super community bank strategy including implementation
of Banner Forward. We are generating new client relationships and adding to our core funding position by growing core deposits while maintaining a moderate risk profile,” said Mark Grescovich, President and CEO. “Our performance for the fourth
quarter benefited from lower operating expense, continued core deposit growth and an acceleration of SBA PPP loan fee income as a result of SBA PPP loan forgiveness. The unprecedented level of market liquidity and our continued focus on building
client relationships contributed to our core deposits increasing 16% compared to December 31, 2020. We continue to live by our core values, summed up as doing the right thing for our clients, our communities, our colleagues, our company and our
shareholders while providing a consistent and reliable source of capital through all economic cycles and changing events.”
“During the third quarter of 2021 we began implementing Banner Forward, a bank-wide initiative to drive revenue growth and reduce
operating expense,” said Grescovich. “Full implementation is expected by 2023, with the goal of delivering sequential improvements in operating performance over the course of the next six quarters while staying true to our mission and value
proposition of being connected, knowledgeable and responsive to our clients, communities and employees. Banner Forward is focused on accelerating growth in commercial banking, deepening relationships with retail clients, and advancing technology
strategies to enhance our digital service channels, while streamlining underwriting and back office processes. During the fourth quarter of 2021, we incurred expenses of $1.2 million related to Banner Forward.”
At December 31, 2021, Banner Corporation had $16.80 billion in assets, $8.95 billion in net loans and $14.33
billion in deposits. Banner operates 150 branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 2
Fourth Quarter 2021 Highlights
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Revenues decreased 6% to $146.0 million, primarily due to a decline in SBA PPP loan forgiveness related interest income,
compared to $155.5 million in the preceding quarter, and increased 1% when compared to $144.9 million in the fourth quarter a year ago.
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Net interest income decreased to $121.5 million in the fourth quarter of 2021, compared to $130.1 million in the preceding
quarter and increased compared to $121.4 million in the fourth quarter a year ago.
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Net interest margin on a tax equivalent basis was 3.17%, compared to 3.47% in the preceding quarter and 3.64% in the fourth
quarter a year ago.
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Mortgage banking revenues decreased 41% to $5.6 million, compared to $9.6 million in the preceding quarter, and decreased
47% compared to $10.6 million in the fourth quarter a year ago.
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Return on average assets was 1.18%, compared to 1.20% in the preceding quarter and 1.04% in the fourth quarter a year ago.
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Net loans receivable decreased to $8.95 billion at December 31, 2021, compared to $9.08 billion at September 30, 2021, and
decreased 8% compared to $9.70 billion at December 31, 2020.
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Non-performing assets decreased to $23.7 million, or 0.14% of total assets, at December 31, 2021, compared to $29.7 million,
or 0.18% of total assets in the preceding quarter, and decreased from $36.5 million, or 0.24% of total assets, at December 31, 2020.
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The allowance for credit losses - loans was $132.1 million, or 1.45% of total loans receivable, as of December 31, 2021,
compared to $139.9 million, or 1.52% of total loans receivable as of September 30, 2021 and $167.3 million, or 1.69% of total loans receivable as of December 31, 2020.
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Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased 1% to $13.49 billion at
December 31, 2021, compared to $13.31 billion at September 30, 2021, and increased 16% compared to $11.65 billion a year ago. Core deposits represented 94% of total deposits at December 31, 2021.
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Dividends to shareholders were $0.41 per share in the quarter ended December 31, 2021.
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Common shareholders’ equity per share increased 1% to $49.35 at December 31, 2021, compared to $48.67 at the preceding
quarter end, and increased 4% from $47.39 a year ago.
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Tangible common shareholders’ equity per share* increased 2% to $38.02 at December 31, 2021, compared to $37.30 at the
preceding quarter end, and increased 5% from $36.17 a year ago.
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*Tangible common shareholders’ equity per share and the ratio of tangible common equity to
tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments and net gain (loss) on the sale of securities from the total of net interest income and total
non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, Banner Forward expenses, amortization of core deposit intangibles, real estate owned operations, loss on extinguishment
of debt and state/municipal taxes from non-interest expense divided by adjusted revenue) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings
release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our
peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.
Significant Recent Initiatives and Events
In September 2021, Banner completed the consolidation of five branches as it continues to see migration of
transactions to the digital space, reducing in-branch transactions. In addition, Banner has made the decision to consolidate another seven branches in February 2022. During the past year, client adoption of mobile and digital banking accelerated,
while physical branch transaction volume declined. Banner anticipates this shift in client service delivery channel preference will continue after the COVID-19 pandemic ends.
Income Statement Review
Net interest income was $121.5 million in the fourth quarter of 2021, compared to $130.1 million in the preceding
quarter and $121.4 million in the fourth quarter a year ago.
Banner’s net interest margin on a tax equivalent basis was 3.17% for the fourth quarter of 2021, a 30 basis-point
decrease compared to 3.47% in the preceding quarter and a 47 basis-point decrease compared to 3.64% in the fourth quarter a year ago.
“Lower interest income, primarily as a result of the decline in the acceleration of the recognition of deferred
loan fee income due to loan repayments from SBA PPP loan forgiveness, adversely affected our net interest margin during the quarter. This impact was partially offset by a decrease in the cost of funding liabilities,” said Grescovich. Acquisition
accounting adjustments added five basis points to the net interest margin in the current quarter, three basis points in the preceding quarter and five basis points in the fourth quarter a year ago. The total purchase discount for acquired loans was
$9.7 million at December 31, 2021, compared to $11.5 million at September 30, 2021, and $16.1 million at December 31, 2020. For the year ended December 31, 2021, Banner’s net interest margin on a tax equivalent basis was 3.39% compared to 3.85% in
2020.
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 3
Average yields on interest-earning assets decreased 33 basis points to 3.29% in the fourth quarter compared to
3.62% for the preceding quarter and decreased 58 basis points compared to 3.87% in the fourth quarter a year ago. These decreases in average yield between periods primarily reflects decreases in the average yield on investment securities and
increases in the average balance of interest-bearing deposits, as excess liquidity was invested in low yielding short term investments. Average loan yields decreased 31 basis points to 4.57% compared to 4.88% in the preceding quarter and increased
four basis points compared to 4.53% in the fourth quarter a year ago. The decrease in average loan yields during the current quarter compared to the preceding quarter was primarily the result of the decline in the acceleration of the recognition of
deferred loan fee income due to loan repayments from SBA PPP loan forgiveness during the quarter. Loan discount accretion added eight basis points to average loan yields in the current quarter, five basis points in the preceding quarter and seven
basis points in the fourth quarter a year ago. Deposit costs were 0.07% in the fourth quarter of 2021, a one basis-point decrease compared to the preceding quarter and a seven basis-point decrease compared to the fourth quarter a year ago. The
year-over-year decrease in quarterly deposit costs was primarily the result of decreases in market interest rates during 2020. The total cost of funding liabilities was 0.13% during the fourth quarter of 2021, a three basis-point decrease compared
to the preceding quarter and an 11 basis-point decrease compared to the fourth quarter a year ago.
Banner recorded a $5.2 million recapture of provision for credit losses in the current quarter (comprised of an
$8.1 million recapture provision for credit losses - loans, a $2.3 million provision for credit losses - unfunded loan commitments and a $579,000 provision for credit losses - held-to-maturity debt securities). This recapture compares to an $8.6
million recapture of provision for credit losses in the prior quarter (comprised of an $8.9 million recapture of provision for credit losses - loans and a $218,000 provision for credit losses - unfunded loan commitments) and a $602,000 provision for
credit losses in the fourth quarter a year ago (comprised of a $593,000 recapture of provision for credit losses - loans and a $1.2 million provision for credit losses - unfunded loan commitments). The recapture of provision for credit losses for
the current and preceding quarters primarily reflects improvement in the level of adversely classified loans as well as in the forecasted economic indicators utilized to calculate credit losses.
Total non-interest income was $24.5 million in the fourth quarter of 2021, compared to $25.3 million in the
preceding quarter and $23.5 million in the fourth quarter a year ago. Deposit fees and other service charges were $10.3 million in the fourth quarter of 2021, compared to $10.5 million in the preceding quarter and $8.3 million in the fourth quarter
a year ago. The increase in deposit fees and other service charges from the fourth quarter a year ago is primarily a result of increased transaction deposit account activity and higher fees on certain transactions. Mortgage banking revenues,
including gains on one- to four-family and multifamily loan sales and loan servicing fees, decreased to $5.6 million in the fourth quarter, compared to $9.6 million in the preceding quarter and decreased compared to $10.6 million in the fourth
quarter of 2020. The lower mortgage banking revenue for the current quarter compared to the prior quarter is primarily due to no multifamily loan sales or related gains during the current quarter compared to the prior quarter, which included
$2.4 million of gain on the sale of multifamily loans. The decrease from the fourth quarter of 2020 reflects a reduction in the volume of one- to four-family loans sold as well as a decrease in the gain on sale margin on one- to four-family
held-for-sale loans. Home purchase activity accounted for 64% of one- to four-family mortgage loan originations in the fourth quarter of 2021, compared to 68% in the prior quarter and 51% in the fourth quarter of 2020. Miscellaneous non-interest
income increased to $4.7 million in the fourth quarter of 2021, compared to $2.2 million in the preceding quarter and $1.4 million in the fourth quarter a year ago. The increase in miscellaneous non-interest income from the prior quarter and fourth
quarter a year ago is primarily a result of a valuation adjustment on the SBA servicing asset, higher gains related to SBA loans sold as well as gains related to the disposition of closed branch locations. For the year ended December 31, 2021, total
non-interest income decreased 2% to $96.4 million, compared to $98.6 million in 2020.
Banner’s fourth quarter 2021 results included a $2.7 million net gain for fair value adjustments as a result of
changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading and limited partnership investments, and a $136,000 net loss on the sale of securities. In the preceding
quarter, results included a $1.8 million net gain for fair value adjustments and a $56,000 net gain on the sale of securities. In the fourth quarter a year ago, results included a $1.7 million net gain for fair value adjustments and a $197,000 net
gain on the sale of securities.
Total revenue decreased 6% to $146.0 million for the fourth quarter of 2021, compared to $155.5 million in the
preceding quarter, and increased 1% compared to $144.9 million in the fourth quarter a year ago. For the year, total revenues increased 2% to $593.3 million compared to $579.9 million for the same period one year earlier. Adjusted revenue* (the
total of net interest income and total non-interest income excluding the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $143.4 million in the fourth quarter of 2021, compared to $153.6 million
in the preceding quarter and $143.0 million in the fourth quarter of 2020. For the year ended December 31, 2021, adjusted revenue* was $588.2 million, compared to $579.6 million in 2020.
Total non-interest expense was $91.8 million in the fourth quarter of 2021, compared to $102.1 million in the
preceding quarter and $95.6 million in the fourth quarter of 2020. The decrease in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $10.1 million decrease in professional and legal expenses. The
decrease in professional and legal expenses was primarily due to $5.8 million of consultant expense related to the Banner Forward initiative and a $4.0 million accrual related to pending litigation recorded during the prior quarter. Additionally,
salary and employee benefits expense decreased $2.0 million, primarily due to a reduction in staffing, and payment and card processing services expense decreased $1.1 million, primarily reflecting a decrease in fraud related losses. These decreases
were partially offset by a $2.3 million loss on extinguishment of debt as a result of the redemption of $8.2 million of junior subordinated debentures during the current quarter. The year-over-year quarterly decrease in non-interest expense also
primarily reflects decreases in salary and employee benefits expense, and professional and legal expenses. The year-over-year quarterly decreases in non-interest expense were partially offset by an increase in payment and card processing services
expense, a decrease in capitalized loan origination costs and the previously mentioned loss on extinguishment of debt. COVID-19 expenses were
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 4
$127,000 for the fourth quarter of 2021, compared to $44,000 for the preceding quarter and $333,000 in the fourth
quarter a year ago. For the year, total non-interest expense was $380.1 million, compared to $369.6 million in the same period a year earlier. Banner’s efficiency ratio was 62.88% for the current quarter, compared to 65.70% in the preceding quarter
and 65.93% in the year ago quarter. Banner’s adjusted efficiency ratio* was 59.71% for the current quarter, compared to 59.65% in the preceding quarter and 64.31% in the year ago quarter.
For the fourth quarter of 2021, Banner had $9.5 million in state and federal income tax expense for an effective tax rate of 16.0%,
reflecting the benefits from tax exempt income and an adjustment to the deferred tax asset during the quarter. Banner’s statutory income tax rate is 23.7%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned
effects of the state income tax rates.
Balance Sheet Review
Total assets increased to $16.80 billion at December 31, 2021, compared to $16.64 billion at September 30, 2021,
and increased 12% when compared to $15.03 billion at December 31, 2020. The total of securities and interest-bearing deposits held at other banks was $6.26 billion at December 31, 2021, compared to $6.03 billion at September 30, 2021 and $3.69
billion at December 31, 2020. The average effective duration of Banner's securities portfolio was approximately 4.6 years at December 31, 2021, compared to 3.6 years at December 31, 2020.
Total loans receivable decreased 1% to $9.08 billion at December 31, 2021, compared to $9.22 billion at September
30, 2021, and decreased 8% when compared to $9.87 billion at December 31, 2020. The decrease in total loans receivable compared to the prior quarter primarily reflects the forgiveness of SBA PPP loans. Excluding SBA PPP loans, total loans
receivable increased $42.6 million during the current quarter. SBA PPP loans decreased 57% to $133.9 million at December 31, 2021, compared to $310.2 million at September 30, 2021, and decreased 87% when compared to $1.04 billion at December 31,
2020. The decrease in SBA PPP loans was partially offset by increases in commercial real estate and multifamily real estate. Commercial real estate and multifamily real estate loans increased 1% to $4.28 billion at December 31, 2021, compared to
$4.24 billion at September 30, 2021, and increased 6% compared to $4.03 billion a year ago. Commercial business loans decreased 7% to $1.96 billion at December 31, 2021, compared to $2.12 billion at September 30, 2021, and decreased 33% compared to
$2.92 billion a year ago, primarily due to SBA PPP loans forgiven. Excluding SBA PPP loans, commercial business loans increased 1% to $1.83 billion at December 31, 2021, compared to $1.82 billion at September 30, 2021, and decreased 2% compared to
$1.88 billion a year ago. Agricultural business loans decreased to $285.8 million at December 31, 2021, compared to $287.5 million at September 30, 2021 and decreased from $299.9 million a year ago. Total construction, land and land development
loans were $1.31 billion at December 31, 2021, a 1% decrease from $1.33 billion at September 30, 2021, and a 2% increase compared to $1.29 billion a year earlier. Consumer loans decreased to $555.9 million at December 31, 2021, compared to $561.2
million at September 30, 2021, and decreased from $605.8 million a year ago. One- to four-family loans increased slightly to $683.3 million at December 31, 2021, compared to $682.4 million at September 30, 2021, and decreased from $717.9 million a
year ago. The year over year decrease primarily reflects held for investment loans being refinanced and sold as held for sale loans.
Loans held for sale were $96.5 million at December 31, 2021, compared to $63.7 million at September 30, 2021, and
$243.8 million at December 31, 2020. The volume of one- to four- family residential mortgage loans sold was $245.9 million in the current quarter, compared to $232.2 million in the preceding quarter and $356.6 million in the fourth quarter a year
ago. Banner sold no multifamily loans during the fourth quarter of 2021, compared to $96.1 million in the preceding quarter and $10.4 million in the fourth quarter a year ago.
Total deposits increased 1% to $14.33 billion at December 31, 2021, compared to $14.16 billion at September 30,
2021, and increased 14% when compared to $12.57 billion a year ago. The year-over-year increase in total deposits was due primarily to SBA PPP loan funds deposited into client accounts and an increase in general client liquidity due to reduced
business investment and consumer spending during the COVID-19 pandemic. Non-interest-bearing account balances decreased to $6.39 billion at December 31, 2021, compared to $6.40 billion at September 30, 2021, and increased 16% compared to $5.49
billion a year ago. Core deposits were 94% of total deposits at both December 31, 2021 and September 30, 2021. Certificates of deposit decreased to $838.6 million at December 31, 2021, compared to $851.1 million at September 30, 2021, and decreased
8% compared to $915.3 million a year earlier. FHLB borrowings were $50.0 million at both December 31, 2021 and September 30, 2021 and decreased from $150.0 million a year ago.
At December 31, 2021, total common shareholders’ equity was $1.69 billion, or 10.06% of assets, compared to $1.67
billion or 10.02% of assets at September 30, 2021, and $1.67 billion or 11.09% of assets a year ago. At December 31, 2021, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.30 billion, or 7.93%
of tangible assets*, compared to $1.28 billion, or 7.86% of tangible assets, at September 30, 2021, and $1.27 billion, or 8.69% of tangible assets, a year ago. Banner’s tangible book value per share* increased to $38.02 at December 31, 2021,
compared to $36.17 per share a year ago.
Banner and its subsidiary bank continue to maintain capital levels in excess of the requirements to be categorized
as “well-capitalized.” At December 31, 2021, Banner's common equity Tier 1 capital ratio was 11.54%, its Tier 1 leverage capital to average assets ratio was 8.76%, and its total capital to risk-weighted assets ratio was 14.71%.
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 5
Credit Quality
The allowance for credit losses - loans was $132.1 million at December 31, 2021, or 1.45% of total loans
receivable outstanding and 578% of non-performing loans, compared to $139.9 million at September 30, 2021, or 1.52% of total loans receivable outstanding and 485% of non-performing loans, and $167.3 million at December 31, 2020, or 1.69% of total
loans receivable outstanding and 470% of non-performing loans. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $12.4 million at December 31, 2021,
compared to $10.1 million at September 30, 2021 and $13.3 million at December 31, 2020. Net loan recoveries totaled $311,000 in the fourth quarter of 2021, compared to $756,000 in the preceding quarter and $93,000 of net loan charge-offs in the
fourth quarter a year ago. Non-performing loans were $22.8 million at December 31, 2021, compared to $28.9 million at September 30, 2021, and $35.6 million a year ago. Real estate owned and other repossessed assets were $869,000 at both
December 31, 2021 and September 30, 2021, compared to $867,000 a year ago.
Banner’s total substandard loans were $198.4 million at December 31, 2021, compared to $225.8 million at
September 30, 2021, and $340.2 million a year ago. The quarter over quarter decrease primarily reflects the payoff of substandard loans as well as balance paydowns and risk rating upgrades.
Banner’s total non-performing assets were $23.7 million, or 0.14% of total assets, at
December 31, 2021, compared to $29.7 million, or 0.18% of total assets, at September 30, 2021, and $36.5 million, or 0.24% of total assets, a year ago.
At December 31, 2021, Banner had 21 mortgage loans totaling $6.4 million operating under
forbearance agreements due to COVID-19. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these modifications are not considered to be troubled debt restructurings pursuant to applicable
accounting and regulatory guidance.
Conference Call
Banner will host a conference call on Friday, January 21, 2022, at 8:00 a.m. PST, to discuss
its fourth quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (844) 200-6205 using
access code 579750 to participate in the call. A replay will be available for one week at (866) 813-9403 using access code 905147, or at www.bannerbank.com.
About the Company
Banner Corporation is a $16.80 billion bank holding company operating one commercial bank in four Western states
through a network of branches offering a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the
Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “believe,” “will,” “will likely
result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “potential,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and
specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial
performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those
anticipated in the statements and could negatively affect Banner’s operating and stock price performance.
The COVID-19, pandemic is adversely affecting us, our clients, counterparties, employees, and third-party service
providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Deterioration in general business and economic conditions, including increases in unemployment rates,
or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and increase stock price volatility. In
addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that could cause actual results to differ materially from
the results anticipated or projected include, but are not limited to, the following: (1) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the
adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (2) results of examinations by regulatory
authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner’s activities;
(3) competitive pressures among depository institutions; (4) interest rate movements and their impact on client behavior and net interest margin; (5) uncertainty regarding the future of the London Interbank Offered Rate (LIBOR), and the potential
transition away from LIBOR toward new interest rate benchmarks; (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 clients’ needs and developments in the market place; (9) the ability to access cost-effective funding; (10) disruptions, security breaches or other adverse events, failures
BANR - Fourth Quarter
2021 Results
January 20, 2022
Page 6
or interruptions in, or attacks on, information
technology systems or on the third-party vendors who perform critical processing functions; (11) changes in financial markets; (12) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (13) the
costs, effects and outcomes of litigation; (14) legislation or regulatory changes, including but not limited to changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules, other governmental
initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (15) changes in accounting principles, policies or guidelines; (16) future acquisitions by Banner
of other depository institutions or lines of business; (17) future goodwill impairment due to changes in Banner’s business, changes in market conditions, including as a result of the COVID-19 pandemic or other factors; (18) the costs associated
with Banner Forward and (19) 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.
BANR - Fourth Quarter
2021 Results
January 20, 2022
Page 7
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RESULTS OF OPERATIONS
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Quarters Ended
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Twelve Months Ended
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(in thousands except shares and per share data)
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Dec 31, 2021
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Sep 30, 2021
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Dec 31, 2020
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Dec 31, 2021
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Dec 31, 2020
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INTEREST INCOME:
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Loans receivable
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$
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104,929
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$
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116,487
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$
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115,545
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$
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445,731
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$
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466,360
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Mortgage-backed securities
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13,220
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11,695
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7,438
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45,723
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31,792
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|||||||||||||||
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Securities and cash equivalents
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8,397
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7,686
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6,170
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29,046
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20,994
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|||||||||||||||
|
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126,546
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135,868
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129,153
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520,500
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519,146
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INTEREST EXPENSE:
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Deposits
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2,384
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2,749
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4,392
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11,770
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25,015
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|||||||||||||||
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Federal Home Loan Bank advances
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348
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655
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987
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2,592
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5,023
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|||||||||||||||
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Other borrowings
|
109
|
125
|
121
|
467
|
603
|
|||||||||||||||
|
Junior subordinated debentures and subordinated notes
|
2,175
|
2,193
|
2,216
|
8,780
|
7,204
|
|||||||||||||||
|
|
5,016
|
5,722
|
7,716
|
23,609
|
37,845
|
|||||||||||||||
|
Net interest income
|
121,530
|
130,146
|
121,437
|
496,891
|
481,301
|
|||||||||||||||
|
(RECAPTURE)/PROVISION FOR CREDIT LOSSES
|
(5,243
|
)
|
(8,638
|
)
|
602
|
(33,388
|
)
|
67,875
|
||||||||||||
|
Net interest income after (recapture)/provision for credit losses
|
126,773
|
138,784
|
120,835
|
530,279
|
413,426
|
|||||||||||||||
|
NON-INTEREST INCOME:
|
||||||||||||||||||||
|
Deposit fees and other service charges
|
10,341
|
10,457
|
8,293
|
39,495
|
34,384
|
|||||||||||||||
|
Mortgage banking operations
|
5,643
|
9,613
|
10,586
|
33,948
|
51,083
|
|||||||||||||||
|
Bank-owned life insurance
|
1,203
|
1,245
|
1,319
|
5,000
|
5,972
|
|||||||||||||||
|
Miscellaneous
|
4,702
|
2,185
|
1,410
|
12,875
|
6,821
|
|||||||||||||||
|
|
21,889
|
23,500
|
21,608
|
91,318
|
98,260
|
|||||||||||||||
|
Net (loss) gain on sale of securities
|
(136
|
)
|
56
|
197
|
482
|
1,012
|
||||||||||||||
|
Net change in valuation of financial instruments carried at fair value
|
2,721
|
1,778
|
1,704
|
4,616
|
(656
|
)
|
||||||||||||||
|
Total non-interest income
|
24,474
|
25,334
|
23,509
|
96,416
|
98,616
|
|||||||||||||||
|
NON-INTEREST EXPENSE:
|
||||||||||||||||||||
|
Salary and employee benefits
|
57,798
|
59,799
|
60,906
|
244,351
|
245,400
|
|||||||||||||||
|
Less capitalized loan origination costs
|
(7,647
|
)
|
(8,290
|
)
|
(9,415
|
)
|
(34,401
|
)
|
(34,848
|
)
|
||||||||||
|
Occupancy and equipment
|
13,885
|
13,153
|
14,248
|
52,850
|
53,362
|
|||||||||||||||
|
Information / computer data services
|
6,441
|
6,110
|
6,402
|
24,356
|
24,386
|
|||||||||||||||
|
Payment and card processing services
|
5,062
|
6,181
|
3,960
|
20,544
|
16,095
|
|||||||||||||||
|
Professional and legal expenses
|
2,251
|
12,324
|
5,643
|
22,274
|
12,093
|
|||||||||||||||
|
Advertising and marketing
|
2,071
|
1,521
|
2,828
|
6,036
|
6,412
|
|||||||||||||||
|
Deposit insurance expense
|
1,340
|
1,469
|
1,548
|
5,583
|
6,516
|
|||||||||||||||
|
State/municipal business and use taxes
|
976
|
1,219
|
1,071
|
4,343
|
4,355
|
|||||||||||||||
|
Real estate operations
|
49
|
53
|
(283
|
)
|
(22
|
)
|
(190
|
)
|
||||||||||||
|
Amortization of core deposit intangibles
|
1,574
|
1,575
|
1,865
|
6,571
|
7,732
|
|||||||||||||||
|
Loss on extinguishment of debt
|
2,284
|
—
|
—
|
2,284
|
—
|
|||||||||||||||
|
Miscellaneous
|
5,594
|
6,977
|
5,871
|
24,236
|
22,712
|
|||||||||||||||
|
91,678
|
102,091
|
94,644
|
379,005
|
364,025
|
||||||||||||||||
|
COVID-19 expenses
|
127
|
44
|
333
|
436
|
3,502
|
|||||||||||||||
|
Merger and acquisition-related expenses
|
—
|
10
|
579
|
660
|
2,062
|
|||||||||||||||
|
Total non-interest expense
|
91,805
|
102,145
|
95,556
|
380,101
|
369,589
|
|||||||||||||||
|
Income before provision for income taxes
|
59,442
|
61,973
|
48,788
|
246,594
|
142,453
|
|||||||||||||||
|
PROVISION FOR INCOME TAXES
|
9,515
|
12,089
|
9,831
|
45,546
|
26,525
|
|||||||||||||||
|
NET INCOME
|
$
|
49,927
|
$
|
49,884
|
$
|
38,957
|
$
|
201,048
|
$
|
115,928
|
||||||||||
|
Earnings per share available to common shareholders:
|
||||||||||||||||||||
|
Basic
|
$
|
1.46
|
$
|
1.45
|
$
|
1.11
|
$
|
5.81
|
$
|
3.29
|
||||||||||
|
Diluted
|
$
|
1.44
|
$
|
1.44
|
$
|
1.10
|
$
|
5.76
|
$
|
3.26
|
||||||||||
|
Cumulative dividends declared per common share
|
$
|
0.41
|
$
|
0.41
|
$
|
0.41
|
$
|
1.64
|
$
|
1.23
|
||||||||||
|
Weighted average common shares outstanding:
|
||||||||||||||||||||
|
Basic
|
34,292,967
|
34,446,510
|
35,200,769
|
34,610,056
|
35,264,252
|
|||||||||||||||
|
Diluted
|
34,575,607
|
34,669,492
|
35,425,810
|
34,919,188
|
35,528,848
|
|||||||||||||||
|
Increase (decrease) in common shares outstanding
|
641
|
(298,897
|
)
|
632
|
(906,568
|
)
|
(592,376
|
)
|
||||||||||||
BANR - Fourth Quarter 2021
Results
January 20, 2022
Page 8
| FINANCIAL CONDITION |
Percentage Change |
|||||||||||||||||||
| (in thousands except shares and per share data) |
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Prior
Qtr
|
Prior
Yr Qtr
|
|||||||||||||||
| ASSETS | ||||||||||||||||||||
|
Cash and due from banks
|
$
|
358,461
|
$
|
392,035
|
$
|
311,899
|
(8.6)
|
%
|
14.9
|
%
|
||||||||||
|
Interest-bearing deposits
|
1,775,839
|
1,808,547
|
922,284
|
(1.8)
|
%
|
92.5
|
%
|
|||||||||||||
|
Total cash and cash equivalents
|
2,134,300
|
2,200,582
|
1,234,183
|
(3.0)
|
%
|
72.9
|
%
|
|||||||||||||
|
Securities - trading
|
26,981
|
26,875
|
24,980
|
0.4
|
%
|
8.0
|
%
|
|||||||||||||
|
Securities - available for sale
|
3,638,993
|
3,446,575
|
2,322,593
|
5.6
|
%
|
56.7
|
%
|
|||||||||||||
|
Securities - held to maturity
|
520,922
|
447,708
|
421,713
|
16.4
|
%
|
23.5
|
%
|
|||||||||||||
|
Total securities
|
4,186,896
|
3,921,158
|
2,769,286
|
6.8
|
%
|
51.2
|
%
|
|||||||||||||
|
Federal Home Loan Bank stock
|
12,000
|
12,000
|
16,358
|
—
|
%
|
(26.6)
|
%
|
|||||||||||||
|
Securities purchased under agreements to resell
|
300,000
|
300,000
|
—
|
—
|
%
|
nm
|
||||||||||||||
|
Loans held for sale
|
96,487
|
63,678
|
243,795
|
51.5
|
%
|
(60.4)
|
%
|
|||||||||||||
|
Loans receivable
|
9,084,763
|
9,218,384
|
9,870,982
|
(1.4)
|
%
|
(8.0)
|
%
|
|||||||||||||
|
Allowance for credit losses - loans
|
(132,099
|
)
|
(139,915
|
)
|
(167,279
|
)
|
(5.6)
|
%
|
(21.0)
|
%
|
||||||||||
|
Net loans receivable
|
8,952,664
|
9,078,469
|
9,703,703
|
(1.4)
|
%
|
(7.7)
|
%
|
|||||||||||||
|
Accrued interest receivable
|
42,916
|
43,644
|
46,617
|
(1.7)
|
%
|
(7.9)
|
%
|
|||||||||||||
|
Real estate owned (REO) held for sale, net
|
852
|
852
|
816
|
—
|
%
|
4.4
|
%
|
|||||||||||||
|
Property and equipment, net
|
148,759
|
151,503
|
164,556
|
(1.8)
|
%
|
(9.6)
|
%
|
|||||||||||||
|
Goodwill
|
373,121
|
373,121
|
373,121
|
—
|
%
|
—
|
%
|
|||||||||||||
|
Other intangibles, net
|
14,855
|
16,429
|
21,426
|
(9.6)
|
%
|
(30.7)
|
%
|
|||||||||||||
|
Bank-owned life insurance
|
244,156
|
192,950
|
191,830
|
26.5
|
%
|
27.3
|
%
|
|||||||||||||
|
Operating lease right-of-use assets
|
55,257
|
58,523
|
55,367
|
(5.6)
|
%
|
(0.2)
|
%
|
|||||||||||||
|
Other assets
|
242,609
|
224,970
|
210,565
|
7.8
|
%
|
15.2
|
%
|
|||||||||||||
|
Total assets
|
$
|
16,804,872
|
$
|
16,637,879
|
$
|
15,031,623
|
1.0
|
%
|
11.8
|
%
|
||||||||||
| LIABILITIES |
||||||||||||||||||||
| Deposits: |
||||||||||||||||||||
|
Non-interest-bearing
|
$
|
6,385,177
|
$
|
6,400,864
|
$
|
5,492,924
|
(0.2)
|
%
|
16.2
|
%
|
||||||||||
|
Interest-bearing transaction and savings accounts
|
7,103,125
|
6,912,759
|
6,159,052
|
2.8
|
%
|
15.3
|
%
|
|||||||||||||
|
Interest-bearing certificates
|
838,631
|
851,054
|
915,320
|
(1.5)
|
%
|
(8.4)
|
%
|
|||||||||||||
|
Total deposits
|
14,326,933
|
14,164,677
|
12,567,296
|
1.1
|
%
|
14.0
|
%
|
|||||||||||||
|
Advances from Federal Home Loan Bank
|
50,000
|
50,000
|
150,000
|
—
|
%
|
(66.7)
|
%
|
|||||||||||||
|
Customer repurchase agreements and other borrowings
|
264,490
|
247,358
|
184,785
|
6.9
|
%
|
43.1
|
%
|
|||||||||||||
|
Subordinated notes, net
|
98,564
|
98,472
|
98,201
|
0.1
|
%
|
0.4
|
%
|
|||||||||||||
|
Junior subordinated debentures at fair value
|
119,815
|
124,853
|
116,974
|
(4.0)
|
%
|
2.4
|
%
|
|||||||||||||
|
Operating lease liabilities
|
59,756
|
62,946
|
59,343
|
(5.1)
|
%
|
0.7
|
%
|
|||||||||||||
|
Accrued expenses and other liabilities
|
148,303
|
175,960
|
143,300
|
(15.7)
|
%
|
3.5
|
%
|
|||||||||||||
|
Deferred compensation
|
46,684
|
46,494
|
45,460
|
0.4
|
%
|
2.7
|
%
|
|||||||||||||
|
Total liabilities
|
15,114,545
|
14,970,760
|
13,365,359
|
1.0
|
%
|
13.1
|
%
|
|||||||||||||
| SHAREHOLDERS' EQUITY |
||||||||||||||||||||
|
Common stock
|
1,299,381
|
1,297,145
|
1,349,879
|
0.2
|
%
|
(3.7)
|
%
|
|||||||||||||
|
Retained earnings
|
390,762
|
355,035
|
247,316
|
10.1
|
%
|
58.0
|
%
|
|||||||||||||
|
Other components of shareholders’ equity
|
184
|
14,939
|
69,069
|
(98.8)
|
%
|
(99.7)
|
%
|
|||||||||||||
|
Total shareholders’ equity
|
1,690,327
|
1,667,119
|
1,666,264
|
1.4
|
%
|
1.4
|
%
|
|||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
16,804,872
|
$
|
16,637,879
|
$
|
15,031,623
|
1.0
|
%
|
11.8
|
%
|
||||||||||
|
Common Shares Issued:
|
||||||||||||||||||||
|
Shares outstanding at end of period
|
34,252,632
|
34,251,991
|
35,159,200
|
|||||||||||||||||
|
Common shareholders’ equity per share (1)
|
$
|
49.35
|
$
|
48.67
|
$
|
47.39
|
||||||||||||||
|
Common shareholders’ tangible equity per share (1) (2)
|
$
|
38.02
|
$
|
37.30
|
$
|
36.17
|
||||||||||||||
|
Common shareholders’ tangible equity to tangible assets (2)
|
7.93
|
%
|
7.86
|
%
|
8.69
|
%
|
||||||||||||||
|
Consolidated Tier 1 leverage capital ratio
|
8.76
|
%
|
8.79
|
%
|
9.50
|
%
|
||||||||||||||
|
(1)
|
Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
|
|
(2)
|
Common shareholders’ tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other
intangible assets. These ratios represent
non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final two pages of the press release
tables.
|
BANR - Fourth Quarter 2021
Results
January 20, 2022
Page 9
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
Percentage Change
|
||||||||||||||||||||
|
LOANS
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Prior
Qtr
|
Prior Yr
Qtr
|
|||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||
|
Owner-occupied
|
$
|
1,131,828
|
$
|
1,122,275
|
$
|
1,076,467
|
0.9
|
%
|
5.1
|
%
|
||||||||||
|
Investment properties
|
1,990,461
|
1,980,284
|
1,955,684
|
0.5
|
%
|
1.8
|
%
|
|||||||||||||
|
Small balance CRE
|
598,212
|
601,751
|
573,849
|
(0.6)
|
%
|
4.2
|
%
|
|||||||||||||
|
Multifamily real estate
|
564,100
|
532,760
|
428,223
|
5.9
|
%
|
31.7
|
%
|
|||||||||||||
|
Construction, land and land development:
|
||||||||||||||||||||
|
Commercial construction
|
169,530
|
170,205
|
228,937
|
(0.4)
|
%
|
(25.9)
|
%
|
|||||||||||||
|
Multifamily construction
|
259,116
|
278,184
|
305,527
|
(6.9)
|
%
|
(15.2)
|
%
|
|||||||||||||
|
One- to four-family construction
|
568,753
|
571,431
|
507,810
|
(0.5)
|
%
|
12.0
|
%
|
|||||||||||||
|
Land and land development
|
313,454
|
308,164
|
248,915
|
1.7
|
%
|
25.9
|
%
|
|||||||||||||
|
Commercial business:
|
||||||||||||||||||||
|
Commercial business
|
1,039,502
|
1,039,731
|
1,133,989
|
—
|
%
|
(8.3)
|
%
|
|||||||||||||
|
SBA PPP
|
132,574
|
306,976
|
1,044,472
|
(56.8)
|
%
|
(87.3)
|
%
|
|||||||||||||
|
Small business scored
|
792,310
|
775,554
|
743,451
|
2.2
|
%
|
6.6
|
%
|
|||||||||||||
|
Agricultural business, including secured by farmland:
|
||||||||||||||||||||
|
Agricultural business, including secured by farmland
|
284,399
|
284,255
|
299,949
|
0.1
|
%
|
(5.2)
|
%
|
|||||||||||||
|
SBA PPP
|
1,354
|
3,214
|
—
|
(57.9)
|
%
|
nm
|
||||||||||||||
|
One- to four-family residential
|
683,268
|
682,368
|
717,939
|
0.1
|
%
|
(4.8)
|
%
|
|||||||||||||
|
Consumer:
|
||||||||||||||||||||
|
Consumer—home equity revolving lines of credit
|
458,533
|
462,819
|
491,812
|
(0.9)
|
%
|
(6.8)
|
%
|
|||||||||||||
|
Consumer—other
|
97,369
|
98,413
|
113,958
|
(1.1)
|
%
|
(14.6)
|
%
|
|||||||||||||
|
Total loans receivable
|
$
|
9,084,763
|
$
|
9,218,384
|
$
|
9,870,982
|
(1.4)
|
%
|
(8.0)
|
%
|
||||||||||
|
Restructured loans performing under their restructured terms
|
$
|
5,309
|
$
|
5,273
|
$
|
6,673
|
||||||||||||||
|
Loans 30 - 89 days past due and on accrual
|
$
|
11,558
|
$
|
6,911
|
$
|
12,291
|
||||||||||||||
|
Total delinquent loans (including loans on non-accrual), net
|
$
|
18,688
|
$
|
18,619
|
$
|
36,131
|
||||||||||||||
|
Total delinquent loans / Total loans receivable
|
0.21
|
%
|
0.20
|
%
|
0.37
|
%
|
||||||||||||||
|
LOANS BY GEOGRAPHIC LOCATION
|
Percentage Change
|
|||||||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Prior
Qtr
|
Prior Yr Qtr
|
||||||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
|||||||||||||||||||||
|
Washington
|
$
|
4,264,590
|
47.0
|
%
|
$
|
4,319,008
|
$
|
4,647,553
|
(1.3)
|
%
|
(8.2)
|
%
|
||||||||||||
|
California
|
2,138,340
|
23.5
|
%
|
2,160,280
|
2,279,749
|
(1.0)
|
%
|
(6.2)
|
%
|
|||||||||||||||
|
Oregon
|
1,652,364
|
18.2
|
%
|
1,679,452
|
1,792,156
|
(1.6)
|
%
|
(7.8)
|
%
|
|||||||||||||||
|
Idaho
|
525,141
|
5.8
|
%
|
536,128
|
537,996
|
(2.0)
|
%
|
(2.4)
|
%
|
|||||||||||||||
|
Utah
|
74,913
|
0.8
|
%
|
89,620
|
80,704
|
(16.4)
|
%
|
(7.2)
|
%
|
|||||||||||||||
|
Other
|
429,415
|
4.7
|
%
|
433,896
|
532,824
|
(1.0)
|
%
|
(19.4)
|
%
|
|||||||||||||||
|
Total loans receivable
|
$
|
9,084,763
|
100.0
|
%
|
$
|
9,218,384
|
$
|
9,870,982
|
(1.4)
|
%
|
(8.0)
|
%
|
||||||||||||
BANR - Fourth Quarter 2021
Results
January 20, 2022
Page 10
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
|
LOAN ORIGINATIONS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
||||||||||||||||
|
Commercial real estate
|
$
|
196,350
|
$
|
174,827
|
$
|
93,838
|
$
|
565,809
|
$
|
356,361
|
||||||||||
|
Multifamily real estate
|
25,933
|
26,155
|
7,900
|
110,640
|
27,119
|
|||||||||||||||
|
Construction and land
|
522,081
|
496,386
|
515,280
|
1,975,664
|
1,588,311
|
|||||||||||||||
|
Commercial business:
|
||||||||||||||||||||
|
Commercial business
|
203,549
|
229,859
|
133,112
|
731,315
|
628,981
|
|||||||||||||||
|
SBA PPP
|
—
|
907
|
—
|
485,077
|
1,176,018
|
|||||||||||||||
|
Agricultural business
|
13,061
|
9,223
|
11,552
|
61,997
|
76,096
|
|||||||||||||||
|
One-to four-family residential
|
52,251
|
49,594
|
28,402
|
206,662
|
116,713
|
|||||||||||||||
|
Consumer
|
101,365
|
145,102
|
97,416
|
465,213
|
423,526
|
|||||||||||||||
|
Total loan originations (excluding loans held for sale)
|
$
|
1,114,590
|
$
|
1,132,053
|
$
|
887,500
|
$
|
4,602,377
|
$
|
4,393,125
|
||||||||||
January 20, 2022
Page 11
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
CHANGE IN THE
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
|||||||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - LOANS
|
||||||||||||||||||||
|
Balance, beginning of period
|
$
|
139,915
|
$
|
148,009
|
$
|
167,965
|
$
|
167,279
|
$
|
100,559
|
||||||||||
|
Beginning balance adjustment for adoption of ASC 326
|
—
|
—
|
—
|
—
|
7,812
|
|||||||||||||||
|
(Recapture)/provision for credit losses - loans
|
(8,127)
|
|
(8,850)
|
|
(593)
|
|
(33,112)
|
|
64,285
|
|||||||||||
|
Recoveries of loans previously charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
635
|
923
|
31
|
1,729
|
275
|
|||||||||||||||
|
Construction and land
|
—
|
—
|
—
|
100
|
105
|
|||||||||||||||
|
One- to four-family real estate
|
47
|
19
|
194
|
199
|
467
|
|||||||||||||||
|
Commercial business
|
267
|
230
|
2,444
|
1,797
|
3,265
|
|||||||||||||||
|
Agricultural business, including secured by farmland
|
5
|
17
|
51
|
30
|
1,823
|
|||||||||||||||
|
Consumer
|
140
|
227
|
90
|
760
|
328
|
|||||||||||||||
|
|
1,094
|
1,416
|
2,810
|
4,615
|
6,263
|
|||||||||||||||
|
Loans charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
(1)
|
|
—
|
(1,375)
|
|
(3,767)
|
|
(1,854)
|
|
|||||||||||
|
Multifamily real estate
|
(59)
|
|
—
|
—
|
(59)
|
|
(66)
|
|
||||||||||||
|
Construction and land
|
—
|
—
|
—
|
—
|
(100)
|
|
||||||||||||||
|
One- to four-family real estate
|
—
|
—
|
—
|
—
|
(136)
|
|
||||||||||||||
|
Commercial business
|
(488)
|
|
(362)
|
|
(1,019)
|
|
(1,762)
|
|
(7,253)
|
|
||||||||||
|
Agricultural business, including secured by farmland
|
—
|
(179)
|
|
(37)
|
|
(181)
|
|
(591)
|
|
|||||||||||
|
Consumer
|
(235)
|
|
(119)
|
|
(472)
|
|
(914)
|
|
(1,640)
|
|
||||||||||
|
|
(783)
|
|
(660)
|
|
(2,903)
|
|
(6,683)
|
|
(11,640)
|
|
||||||||||
|
Net recoveries (charge-offs)
|
311
|
756
|
(93)
|
|
(2,068)
|
|
(5,377)
|
|
||||||||||||
|
Balance, end of period
|
$
|
132,099
|
$
|
139,915
|
$
|
167,279
|
$
|
132,099
|
$
|
167,279
|
||||||||||
|
Net recoveries (charge-offs) / Average loans receivable
|
0.003
|
%
|
0.008
|
%
|
(0.001)
|
%
|
(0.021)
|
%
|
(0.053)
|
%
|
||||||||||
|
ALLOCATION OF
|
||||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - LOANS
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||
|
Specific or allocated credit loss allowance:
|
||||||||||||
|
Commercial real estate
|
$
|
52,995
|
$
|
57,215
|
$
|
57,791
|
||||||
|
Multifamily real estate
|
7,043
|
6,657
|
3,893
|
|||||||||
|
Construction and land
|
27,294
|
29,342
|
41,295
|
|||||||||
|
One- to four-family real estate
|
8,205
|
9,460
|
9,913
|
|||||||||
|
Commercial business
|
26,421
|
26,873
|
35,007
|
|||||||||
|
Agricultural business, including secured by farmland
|
3,190
|
3,177
|
4,914
|
|||||||||
|
Consumer
|
6,951
|
7,191
|
14,466
|
|||||||||
|
Total allowance for credit losses - loans
|
$
|
132,099
|
$
|
139,915
|
$
|
167,279
|
||||||
|
Allowance for credit losses - loans / Total loans receivable
|
1.45
|
%
|
1.52
|
%
|
1.69
|
%
|
||||||
|
Allowance for credit losses - loans / Non-performing loans
|
578
|
%
|
485
|
%
|
470
|
%
|
||||||
|
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
CHANGE IN THE
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
|||||||||||||||
|
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
|
||||||||||||||||||||
|
Balance, beginning of period
|
$
|
10,127
|
$
|
9,909
|
$
|
12,094
|
$
|
13,297
|
$
|
2,716
|
||||||||||
|
Beginning balance adjustment for adoption of ASC 326
|
—
|
—
|
—
|
—
|
7,022
|
|||||||||||||||
|
Provision/(recapture) for credit losses - unfunded loan commitments
|
2,305
|
218
|
1,203
|
(865
|
)
|
3,559
|
||||||||||||||
|
Balance, end of period
|
$
|
12,432
|
$
|
10,127
|
$
|
13,297
|
$
|
12,432
|
$
|
13,297
|
||||||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 12
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||
|
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||
|
NON-PERFORMING ASSETS
|
||||||||||||
|
Loans on non-accrual status:
|
||||||||||||
|
Secured by real estate:
|
||||||||||||
|
Commercial
|
$
|
14,159
|
$
|
14,931
|
$
|
18,199
|
||||||
|
Construction and land
|
479
|
354
|
936
|
|||||||||
|
One- to four-family
|
2,711
|
3,182
|
3,556
|
|||||||||
|
Commercial business
|
2,156
|
2,700
|
5,407
|
|||||||||
|
Agricultural business, including secured by farmland
|
1,022
|
1,022
|
1,743
|
|||||||||
|
Consumer
|
1,754
|
1,850
|
2,719
|
|||||||||
|
|
22,281
|
24,039
|
32,560
|
|||||||||
|
Loans more than 90 days delinquent, still on accrual:
|
||||||||||||
|
Secured by real estate:
|
||||||||||||
|
Commercial
|
—
|
3,955
|
—
|
|||||||||
|
One- to four-family
|
436
|
772
|
1,899
|
|||||||||
|
Commercial business
|
2
|
61
|
1,025
|
|||||||||
|
Consumer
|
117
|
34
|
130
|
|||||||||
|
|
555
|
4,822
|
3,054
|
|||||||||
|
Total non-performing loans
|
22,836
|
28,861
|
35,614
|
|||||||||
|
REO
|
852
|
852
|
816
|
|||||||||
|
Other repossessed assets
|
17
|
17
|
51
|
|||||||||
|
Total non-performing assets
|
$
|
23,705
|
$
|
29,730
|
$
|
36,481
|
||||||
|
Total non-performing assets to total assets
|
0.14
|
%
|
0.18
|
%
|
0.24
|
%
|
||||||
|
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||
|
LOANS BY CREDIT RISK RATING
|
||||||||||||
|
Pass
|
$
|
8,874,468
|
$
|
8,956,604
|
$
|
9,494,147
|
||||||
|
Special Mention
|
11,932
|
36,001
|
36,598
|
|||||||||
|
Substandard
|
198,363
|
225,779
|
340,237
|
|||||||||
|
Total
|
$
|
9,084,763
|
$
|
9,218,384
|
$
|
9,870,982
|
||||||
|
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
REAL ESTATE OWNED
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
|||||||||||||||
|
Balance, beginning of period
|
$
|
852
|
$
|
763
|
$
|
1,795
|
$
|
816
|
$
|
814
|
||||||||||
|
Additions from loan foreclosures
|
—
|
89
|
—
|
512
|
1,588
|
|||||||||||||||
|
Proceeds from dispositions of REO
|
—
|
—
|
(1,555
|
)
|
(783
|
)
|
(2,360
|
)
|
||||||||||||
|
Gain on sale of REO
|
—
|
—
|
603
|
307
|
819
|
|||||||||||||||
|
Valuation adjustments in the period
|
—
|
—
|
(27
|
)
|
—
|
(45
|
)
|
|||||||||||||
|
Balance, end of period
|
$
|
852
|
$
|
852
|
$
|
816
|
$
|
852
|
$
|
816
|
||||||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 13
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
DEPOSIT COMPOSITION
|
Percentage Change
|
|||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Prior Qtr
|
Prior Yr Qtr
|
||||||||||||||||
|
Non-interest-bearing
|
$
|
6,385,177
|
$
|
6,400,864
|
$
|
5,492,924
|
(0.2)
|
%
|
16.2
|
%
|
||||||||||
|
Interest-bearing checking
|
1,947,414
|
1,799,657
|
1,569,435
|
8.2
|
%
|
24.1
|
%
|
|||||||||||||
|
Regular savings accounts
|
2,784,716
|
2,773,995
|
2,398,482
|
0.4
|
%
|
16.1
|
%
|
|||||||||||||
|
Money market accounts
|
2,370,995
|
2,339,107
|
2,191,135
|
1.4
|
%
|
8.2
|
%
|
|||||||||||||
|
Total interest-bearing transaction and savings accounts
|
7,103,125
|
6,912,759
|
6,159,052
|
2.8
|
%
|
15.3
|
%
|
|||||||||||||
|
Total core deposits
|
13,488,302
|
13,313,623
|
11,651,976
|
1.3
|
%
|
15.8
|
%
|
|||||||||||||
|
Interest-bearing certificates
|
838,631
|
851,054
|
915,320
|
(1.5)
|
%
|
(8.4)
|
%
|
|||||||||||||
|
Total deposits
|
$
|
14,326,933
|
$
|
14,164,677
|
$
|
12,567,296
|
1.1
|
%
|
14.0
|
%
|
||||||||||
|
GEOGRAPHIC CONCENTRATION OF DEPOSITS
|
||||||||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Percentage Change
|
|||||||||||||||||||||
|
Amount
|
Percentage
|
Amount
|
Amount
|
Prior Qtr
|
Prior Yr Qtr
|
|||||||||||||||||||
|
Washington
|
$
|
7,952,376
|
55.5
|
%
|
$
|
7,877,919
|
$
|
7,058,404
|
0.9
|
%
|
12.7
|
%
|
||||||||||||
|
Oregon
|
3,067,054
|
21.4
|
%
|
3,030,109
|
2,604,908
|
1.2
|
%
|
17.7
|
%
|
|||||||||||||||
|
California
|
2,524,296
|
17.6
|
%
|
2,501,521
|
2,237,949
|
0.9
|
%
|
12.8
|
%
|
|||||||||||||||
|
Idaho
|
783,207
|
5.5
|
%
|
755,128
|
666,035
|
3.7
|
%
|
17.6
|
%
|
|||||||||||||||
|
Total deposits
|
$
|
14,326,933
|
100.0
|
%
|
$
|
14,164,677
|
$
|
12,567,296
|
1.1
|
%
|
14.0
|
%
|
||||||||||||
|
INCLUDED IN TOTAL DEPOSITS
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||
|
Public non-interest-bearing accounts
|
$
|
193,917
|
$
|
193,414
|
$
|
175,352
|
||||||
|
Public interest-bearing transaction & savings accounts
|
159,957
|
161,407
|
127,523
|
|||||||||
|
Public interest-bearing certificates
|
39,961
|
40,851
|
59,127
|
|||||||||
|
Total public deposits
|
$
|
393,835
|
$
|
395,672
|
$
|
362,002
|
||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 14
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
|
Actual
|
Minimum to be
categorized as
"Adequately
Capitalized"
|
Minimum to be
categorized as
"Well Capitalized"
|
||||||||||||||||||||||
|
REGULATORY CAPITAL RATIOS AS OF
DECEMBER 31, 2021
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
|
Banner Corporation-consolidated:
|
||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
$
|
1,663,943
|
14.71
|
%
|
$
|
904,633
|
8.00
|
%
|
$
|
1,130,791
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
1,440,694
|
12.74
|
%
|
678,474
|
6.00
|
%
|
678,474
|
6.00
|
%
|
|||||||||||||||
|
Tier 1 leverage capital to average assets
|
1,440,694
|
8.76
|
%
|
658,091
|
4.00
|
%
|
n/a
|
n/a
|
||||||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,305,194
|
11.54
|
%
|
508,856
|
4.50
|
%
|
n/a
|
n/a
|
||||||||||||||||
|
Banner Bank:
|
||||||||||||||||||||||||
|
Total capital to risk-weighted assets
|
1,552,204
|
13.73
|
%
|
904,159
|
8.00
|
%
|
1,130,199
|
10.00
|
%
|
|||||||||||||||
|
Tier 1 capital to risk-weighted assets
|
1,428,955
|
12.64
|
%
|
678,119
|
6.00
|
%
|
904,159
|
8.00
|
%
|
|||||||||||||||
|
Tier 1 leverage capital to average assets
|
1,428,955
|
8.69
|
%
|
657,882
|
4.00
|
%
|
822,353
|
5.00
|
%
|
|||||||||||||||
|
Common equity tier 1 capital to risk-weighted assets
|
1,428,955
|
12.64
|
%
|
508,589
|
4.50
|
%
|
734,629
|
6.50
|
%
|
|||||||||||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 15
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||||||||||||||||||||||||
|
(dollars in thousands)
|
|||||||||||||||||||||||||||||
|
(rates / ratios annualized)
|
|||||||||||||||||||||||||||||
|
ANALYSIS OF NET INTEREST
SPREAD
|
Quarters Ended
|
||||||||||||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||||||||||||||||||||
|
Average
Balance
|
Interest
and
Dividends
|
Yield / Cost(3)
|
Average
Balance
|
Interest
and
Dividends
|
Yield / Cost(3)
|
Average
Balance
|
Interest
and
Dividends
|
Yield / Cost(3)
|
|||||||||||||||||||||
|
Interest-earning assets:
|
|||||||||||||||||||||||||||||
|
Held for sale loans
|
$
|
73,101
|
$
|
601
|
3.26
|
%
|
$
|
114,938
|
$
|
996
|
3.44
|
%
|
$
|
110,414
|
$
|
976
|
3.52
|
%
|
|||||||||||
|
Mortgage loans
|
7,362,363
|
83,059
|
4.48
|
%
|
7,245,962
|
83,803
|
4.59
|
%
|
7,251,101
|
84,634
|
4.64
|
%
|
|||||||||||||||||
|
Commercial/agricultural loans
|
1,460,486
|
14,966
|
4.07
|
%
|
1,534,978
|
15,776
|
4.08
|
%
|
1,626,508
|
19,143
|
4.68
|
%
|
|||||||||||||||||
|
SBA PPP loans
|
209,776
|
5,845
|
11.05
|
%
|
566,515
|
15,421
|
10.80
|
%
|
1,125,844
|
10,002
|
3.53
|
%
|
|||||||||||||||||
|
Consumer and other loans
|
119,658
|
1,749
|
5.80
|
%
|
120,112
|
1,774
|
5.86
|
%
|
135,498
|
2,057
|
6.04
|
%
|
|||||||||||||||||
|
Total loans(1)(3)
|
9,225,384
|
106,220
|
4.57
|
%
|
9,582,505
|
117,770
|
4.88
|
%
|
10,249,365
|
116,812
|
4.53
|
%
|
|||||||||||||||||
|
Mortgage-backed securities
|
2,838,759
|
13,344
|
1.86
|
%
|
2,560,027
|
11,820
|
1.83
|
%
|
1,429,635
|
7,536
|
2.10
|
%
|
|||||||||||||||||
|
Other securities
|
1,550,383
|
8,466
|
2.17
|
%
|
1,491,035
|
7,873
|
2.09
|
%
|
975,166
|
6,634
|
2.71
|
%
|
|||||||||||||||||
|
Equity securities
|
—
|
—
|
—
|
%
|
—
|
—
|
—
|
%
|
234,822
|
64
|
0.11
|
%
|
|||||||||||||||||
|
Interest-bearing deposits with banks
|
1,901,165
|
731
|
0.15
|
%
|
1,486,839
|
586
|
0.16
|
%
|
611,234
|
219
|
0.14
|
%
|
|||||||||||||||||
|
FHLB stock
|
12,000
|
135
|
4.46
|
%
|
13,957
|
135
|
3.84
|
%
|
16,361
|
162
|
3.94
|
%
|
|||||||||||||||||
|
Total investment securities (3)
|
6,302,307
|
22,676
|
1.43
|
%
|
5,551,858
|
20,414
|
1.46
|
%
|
3,267,218
|
14,615
|
1.78
|
%
|
|||||||||||||||||
|
Total interest-earning assets
|
15,527,691
|
128,896
|
3.29
|
%
|
15,134,363
|
138,184
|
3.62
|
%
|
13,516,583
|
131,427
|
3.87
|
%
|
|||||||||||||||||
|
Non-interest-earning assets
|
1,306,437
|
1,301,383
|
1,349,055
|
||||||||||||||||||||||||||
|
Total assets
|
$
|
16,834,128
|
$
|
16,435,746
|
$
|
14,865,638
|
|||||||||||||||||||||||
|
Deposits:
|
|||||||||||||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,875,097
|
289
|
0.06
|
%
|
$
|
1,771,869
|
282
|
0.06
|
%
|
$
|
1,483,183
|
315
|
0.08
|
%
|
||||||||||||||
|
Savings accounts
|
2,773,597
|
400
|
0.06
|
%
|
2,721,028
|
458
|
0.07
|
%
|
2,375,015
|
691
|
0.12
|
%
|
|||||||||||||||||
|
Money market accounts
|
2,367,861
|
559
|
0.09
|
%
|
2,322,453
|
668
|
0.11
|
%
|
2,165,960
|
1,047
|
0.19
|
%
|
|||||||||||||||||
|
Certificates of deposit
|
840,920
|
1,136
|
0.54
|
%
|
863,971
|
1,341
|
0.62
|
%
|
916,286
|
2,339
|
1.02
|
%
|
|||||||||||||||||
|
Total interest-bearing deposits
|
7,857,475
|
2,384
|
0.12
|
%
|
7,679,321
|
2,749
|
0.14
|
%
|
6,940,444
|
4,392
|
0.25
|
%
|
|||||||||||||||||
|
Non-interest-bearing deposits
|
6,523,149
|
—
|
—
|
%
|
6,275,634
|
—
|
—
|
%
|
5,499,240
|
—
|
—
|
%
|
|||||||||||||||||
|
Total deposits
|
14,380,624
|
2,384
|
0.07
|
%
|
13,954,955
|
2,749
|
0.08
|
%
|
12,439,684
|
4,392
|
0.14
|
%
|
|||||||||||||||||
|
Other interest-bearing liabilities:
|
|||||||||||||||||||||||||||||
|
FHLB advances
|
50,000
|
348
|
2.76
|
%
|
98,370
|
655
|
2.64
|
%
|
150,000
|
987
|
2.62
|
%
|
|||||||||||||||||
|
Other borrowings
|
266,559
|
109
|
0.16
|
%
|
252,720
|
125
|
0.20
|
%
|
187,560
|
121
|
0.26
|
%
|
|||||||||||||||||
|
Junior subordinated debentures and subordinated notes
|
246,510
|
2,175
|
3.50
|
%
|
247,944
|
2,193
|
3.51
|
%
|
247,944
|
2,216
|
3.56
|
%
|
|||||||||||||||||
|
Total borrowings
|
563,069
|
2,632
|
1.85
|
%
|
599,034
|
2,973
|
1.97
|
%
|
585,504
|
3,324
|
2.26
|
%
|
|||||||||||||||||
|
Total funding liabilities
|
14,943,693
|
5,016
|
0.13
|
%
|
14,553,989
|
5,722
|
0.16
|
%
|
13,025,188
|
7,716
|
0.24
|
%
|
|||||||||||||||||
|
Other non-interest-bearing liabilities(2)
|
216,940
|
202,918
|
195,965
|
||||||||||||||||||||||||||
|
Total liabilities
|
15,160,633
|
14,756,907
|
13,221,153
|
||||||||||||||||||||||||||
|
Shareholders’ equity
|
1,673,495
|
1,678,839
|
1,644,485
|
||||||||||||||||||||||||||
|
Total liabilities and shareholders’
equity
|
$
|
16,834,128
|
$
|
16,435,746
|
$
|
14,865,638
|
|||||||||||||||||||||||
|
Net interest income/rate spread (tax equivalent)
|
$
|
123,880
|
3.16
|
%
|
$
|
132,462
|
3.46
|
%
|
$
|
123,711
|
3.63
|
%
|
|||||||||||||||||
|
Net interest margin (tax equivalent)
|
3.17
|
%
|
3.47
|
%
|
3.64
|
%
|
|||||||||||||||||||||||
|
Reconciliation to reported net interest income:
|
|||||||||||||||||||||||||||||
|
Adjustments for taxable equivalent basis
|
(2,350
|
)
|
(2,316
|
)
|
(2,274
|
)
|
|||||||||||||||||||||||
|
Net interest income and margin, as reported
|
$
|
121,530
|
3.11
|
%
|
$
|
130,146
|
3.41
|
%
|
$
|
121,437
|
3.57
|
%
|
|||||||||||||||||
|
Additional Key Financial Ratios:
|
|||||||||||||||||||||||||||||
|
Return on average assets
|
1.18
|
%
|
1.20
|
%
|
1.04
|
%
|
|||||||||||||||||||||||
|
Return on average equity
|
11.84
|
%
|
11.79
|
%
|
9.42
|
%
|
|||||||||||||||||||||||
|
Average equity/average assets
|
9.94
|
%
|
10.21
|
%
|
11.06
|
%
|
|||||||||||||||||||||||
|
Average interest-earning assets/average
interest-bearing liabilities
|
184.40
|
%
|
182.82
|
%
|
179.60
|
%
|
|||||||||||||||||||||||
|
Average interest-earning assets/average
funding liabilities
|
103.91
|
%
|
103.99
|
%
|
103.77
|
%
|
|||||||||||||||||||||||
|
Non-interest income/average assets
|
0.58
|
%
|
0.61
|
%
|
0.63
|
%
|
|||||||||||||||||||||||
|
Non-interest expense/average assets
|
2.16
|
%
|
2.47
|
%
|
2.56
|
%
|
|||||||||||||||||||||||
|
Efficiency ratio(4)
|
62.88
|
%
|
65.70
|
%
|
65.93
|
%
|
|||||||||||||||||||||||
|
Adjusted efficiency ratio(5)
|
59.71
|
%
|
59.65
|
%
|
64.31
|
%
|
|||||||||||||||||||||||
|
(1)
|
Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net
deferred loan fees/costs is included with interest on loans.
|
|
(2)
|
Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
|
|
(3)
|
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was
$1.3 million for each of the three months ended December 31, 2021, September 30, 2021 and December 31, 2020. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.1 million for the three months ended
December 31, 2021 and $1.0 million for both the three months ended September 30, 2021 and December 31, 2020.
|
|
(4)
|
Non-interest expense divided by the total of net interest income and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP
Financial Measures on the final two pages of the press release tables.
|
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 16
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||
|
(rates / ratios annualized)
|
||||||||||||||||||||||||
|
ANALYSIS OF NET INTEREST SPREAD
|
Twelve Months Ended
|
|||||||||||||||||||||||
|
Dec 31, 2021
|
Dec 31, 2020
|
|||||||||||||||||||||||
|
Average
Balance
|
Interest and
Dividends
|
Yield/Cost(3)
|
Average
Balance
|
Interest and
Dividends
|
Yield/Cost(3)
|
|||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Held for sale loans
|
$
|
94,252
|
$
|
3,066
|
3.25
|
%
|
$
|
144,220
|
$
|
5,482
|
3.80
|
%
|
||||||||||||
|
Mortgage loans
|
7,225,860
|
328,115
|
4.54
|
%
|
7,303,584
|
352,878
|
4.83
|
%
|
||||||||||||||||
|
Commercial/agricultural loans
|
1,498,808
|
62,479
|
4.17
|
%
|
1,765,265
|
80,567
|
4.56
|
%
|
||||||||||||||||
|
SBA PPP loans
|
770,041
|
49,854
|
6.47
|
%
|
760,912
|
23,133
|
3.04
|
%
|
||||||||||||||||
|
Consumer and other loans
|
122,520
|
7,298
|
5.96
|
%
|
147,827
|
9,208
|
6.23
|
%
|
||||||||||||||||
|
Total loans(1)(3)
|
9,711,481
|
450,812
|
4.64
|
%
|
10,121,808
|
471,268
|
4.66
|
%
|
||||||||||||||||
|
Mortgage-backed securities
|
2,451,110
|
46,199
|
1.88
|
%
|
1,330,355
|
32,188
|
2.42
|
%
|
||||||||||||||||
|
Other securities
|
1,336,974
|
30,114
|
2.25
|
%
|
777,378
|
21,839
|
2.81
|
%
|
||||||||||||||||
|
Equity securities
|
429
|
—
|
—
|
%
|
182,846
|
373
|
0.20
|
%
|
||||||||||||||||
|
Interest-bearing deposits with banks
|
1,392,619
|
1,955
|
0.14
|
%
|
272,725
|
907
|
0.33
|
%
|
||||||||||||||||
|
FHLB stock
|
13,966
|
592
|
4.24
|
%
|
18,952
|
947
|
5.00
|
%
|
||||||||||||||||
|
Total investment securities(3)
|
5,195,098
|
78,860
|
1.52
|
%
|
2,582,256
|
56,254
|
2.18
|
%
|
||||||||||||||||
|
Total interest-earning assets
|
14,906,579
|
529,672
|
3.55
|
%
|
12,704,064
|
527,522
|
4.15
|
%
|
||||||||||||||||
|
Non-interest-earning assets
|
1,268,348
|
1,262,170
|
||||||||||||||||||||||
|
Total assets
|
$
|
16,174,927
|
$
|
13,966,234
|
||||||||||||||||||||
|
Deposits:
|
||||||||||||||||||||||||
|
Interest-bearing checking accounts
|
$
|
1,755,293
|
1,188
|
0.07
|
%
|
$
|
1,385,252
|
1,479
|
0.11
|
%
|
||||||||||||||
|
Savings accounts
|
2,652,018
|
1,833
|
0.07
|
%
|
2,194,418
|
4,257
|
0.19
|
%
|
||||||||||||||||
|
Money market accounts
|
2,305,814
|
2,670
|
0.12
|
%
|
1,996,870
|
6,275
|
0.31
|
%
|
||||||||||||||||
|
Certificates of deposit
|
876,509
|
6,079
|
0.69
|
%
|
1,030,722
|
13,004
|
1.26
|
%
|
||||||||||||||||
|
Total interest-bearing deposits
|
7,589,634
|
11,770
|
0.16
|
%
|
6,607,262
|
25,015
|
0.38
|
%
|
||||||||||||||||
|
Non-interest-bearing deposits
|
6,132,875
|
—
|
—
|
%
|
4,929,768
|
—
|
—
|
%
|
||||||||||||||||
|
Total deposits
|
13,722,509
|
11,770
|
0.09
|
%
|
11,537,030
|
25,015
|
0.22
|
%
|
||||||||||||||||
|
Other interest-bearing liabilities:
|
||||||||||||||||||||||||
|
FHLB advances
|
97,945
|
2,592
|
2.65
|
%
|
215,093
|
5,023
|
2.34
|
%
|
||||||||||||||||
|
Other borrowings
|
240,817
|
467
|
0.19
|
%
|
193,862
|
603
|
0.31
|
%
|
||||||||||||||||
|
Junior subordinated debentures and subordinated notes
|
247,583
|
8,780
|
3.55
|
%
|
198,490
|
7,204
|
3.63
|
%
|
||||||||||||||||
|
Total borrowings
|
586,345
|
11,839
|
2.02
|
%
|
607,445
|
12,830
|
2.11
|
%
|
||||||||||||||||
|
Total funding liabilities
|
14,308,854
|
23,609
|
0.16
|
%
|
12,144,475
|
37,845
|
0.31
|
%
|
||||||||||||||||
|
Other non-interest-bearing liabilities(2)
|
206,774
|
197,422
|
||||||||||||||||||||||
|
Total liabilities
|
14,515,628
|
12,341,897
|
||||||||||||||||||||||
|
Shareholders’ equity
|
1,659,299
|
1,624,337
|
||||||||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$
|
16,174,927
|
$
|
13,966,234
|
||||||||||||||||||||
|
Net interest income/rate spread (tax equivalent)
|
$
|
506,063
|
3.39
|
%
|
$
|
489,677
|
3.84
|
%
|
||||||||||||||||
|
Net interest margin (tax equivalent)
|
3.39
|
%
|
3.85
|
%
|
||||||||||||||||||||
|
Reconciliation to reported net interest income:
|
||||||||||||||||||||||||
|
Adjustments for taxable equivalent basis
|
(9,172
|
)
|
(8,376
|
)
|
||||||||||||||||||||
|
Net interest income and margin, as reported
|
$
|
496,891
|
3.33
|
%
|
$
|
481,301
|
3.79
|
%
|
||||||||||||||||
|
Additional Key Financial Ratios:
|
||||||||||||||||||||||||
|
Return on average assets
|
1.24
|
%
|
0.83
|
%
|
||||||||||||||||||||
|
Return on average equity
|
12.12
|
%
|
7.14
|
%
|
||||||||||||||||||||
|
Average equity/average assets
|
10.26
|
%
|
11.63
|
%
|
||||||||||||||||||||
|
Average interest-earning assets/average interest-bearing liabilities
|
|
182.32
|
%
|
176.09
|
%
|
|||||||||||||||||||
|
Average interest-earning assets/average funding liabilities
|
104.18
|
%
|
104.61
|
%
|
||||||||||||||||||||
|
Non-interest income/average assets
|
0.60
|
%
|
0.71
|
%
|
||||||||||||||||||||
|
Non-interest expense/average assets
|
2.35
|
%
|
2.65
|
%
|
||||||||||||||||||||
|
Efficiency ratio(4)
|
64.06
|
%
|
63.73
|
%
|
||||||||||||||||||||
|
Adjusted efficiency ratio(5)
|
60.22
|
%
|
60.76
|
%
|
||||||||||||||||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 17
|
(1)
|
Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net
deferred loan fees/costs is included with interest on loans.
|
|
(2)
|
Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
|
|
(3)
|
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans
was $5.1 million and $4.9 million for the twelve months ended December 31, 2021 and December 31, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $4.1 million and $3.5 million for
the twelve months ended December 31, 2021 and December 31, 2020, respectively.
|
|
(4)
|
Non-interest expense divided by the total of net interest income and non-interest income.
|
|
(5)
|
Adjusted non-interest expense divided by adjusted revenue. These represent non-GAAP financial measures. See the non-GAAP
Financial Measures on the final two pages of the press release tables.
|
|
ADDITIONAL FINANCIAL INFORMATION
|
|||||||||
|
(dollars in thousands)
|
|||||||||
|
* Non-GAAP Financial Measures
|
|||||||||
|
In addition to results presented in accordance with generally accepted accounting principles in the United
States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative
information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are
supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation
may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:
|
|||||||||
|
ADJUSTED REVENUE
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
||||||||||||||||
|
Net interest income
|
$
|
121,530
|
$
|
130,146
|
$
|
121,437
|
$
|
496,891
|
$
|
481,301
|
||||||||||
|
Total non-interest income
|
24,474
|
25,334
|
23,509
|
96,416
|
98,616
|
|||||||||||||||
|
Total revenue (GAAP)
|
146,004
|
155,480
|
144,946
|
593,307
|
579,917
|
|||||||||||||||
|
Exclude net loss (gain) on sale of securities
|
136
|
(56)
|
|
(197)
|
|
(482)
|
|
(1,012)
|
|
|||||||||||
|
Exclude net change in valuation of financial instruments carried at
fair value
|
(2,721)
|
|
(1,778)
|
|
(1,704)
|
|
(4,616)
|
|
656
|
|||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
143,419
|
$
|
153,646
|
$
|
143,045
|
$
|
588,209
|
$
|
579,561
|
||||||||||
|
ADJUSTED EARNINGS
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
||||||||||||||||
|
Net income (GAAP)
|
$
|
49,927
|
$
|
49,884
|
$
|
38,957
|
$
|
201,048
|
$
|
115,928
|
||||||||||
|
Exclude net loss (gain) on sale of securities
|
136
|
(56
|
)
|
(197
|
)
|
(482
|
)
|
(1,012
|
)
|
|||||||||||
|
Exclude net change in valuation of financial instruments carried at
fair value
|
(2,721
|
)
|
(1,778
|
)
|
(1,704
|
)
|
(4,616
|
)
|
656
|
|||||||||||
|
Exclude merger and acquisition-related expenses
|
—
|
10
|
579
|
660
|
2,062
|
|||||||||||||||
|
Exclude COVID-19 expenses
|
127
|
44
|
333
|
436
|
3,502
|
|||||||||||||||
|
Exclude Banner Forward expenses
|
1,157
|
7,592
|
—
|
11,604
|
—
|
|||||||||||||||
|
Exclude loss on extinguishment of debt
|
2,284
|
—
|
—
|
2,284
|
—
|
|||||||||||||||
|
Exclude related net tax (benefit) expense
|
(236
|
)
|
(1,395
|
)
|
237
|
(2,373
|
)
|
(1,239
|
)
|
|||||||||||
|
Total adjusted earnings (non-GAAP)
|
$
|
50,674
|
$
|
54,301
|
$
|
38,205
|
$
|
208,561
|
$
|
119,897
|
||||||||||
|
Diluted earnings per share (GAAP)
|
$
|
1.44
|
$
|
1.44
|
$
|
1.10
|
$
|
5.76
|
$
|
3.26
|
||||||||||
|
Diluted adjusted earnings per share (non-GAAP)
|
$
|
1.47
|
$
|
1.57
|
$
|
1.08
|
$
|
5.97
|
$
|
3.37
|
||||||||||
BANR - Fourth Quarter 2021 Results
January 20, 2022
Page 18
|
ADDITIONAL FINANCIAL INFORMATION
|
||||||||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||
|
ADJUSTED EFFICIENCY RATIO
|
Quarters Ended
|
Twelve Months Ended
|
||||||||||||||||||
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
Dec 31, 2021
|
Dec 31, 2020
|
||||||||||||||||
|
Non-interest expense (GAAP)
|
$
|
91,805
|
$
|
102,145
|
$
|
95,556
|
$
|
380,101
|
$
|
369,589
|
||||||||||
|
Exclude merger and acquisition-related expenses
|
—
|
(10
|
)
|
(579
|
)
|
(660
|
)
|
(2,062
|
)
|
|||||||||||
|
Exclude COVID-19 expenses
|
(127
|
)
|
(44
|
)
|
(333
|
)
|
(436
|
)
|
(3,502
|
)
|
||||||||||
|
Exclude Banner Forward expenses
|
(1,157
|
)
|
(7,592
|
)
|
—
|
(11,604
|
)
|
—
|
||||||||||||
|
Exclude CDI amortization
|
(1,574
|
)
|
(1,575
|
)
|
(1,865
|
)
|
(6,571
|
)
|
(7,732
|
)
|
||||||||||
|
Exclude state/municipal tax expense
|
(976
|
)
|
(1,219
|
)
|
(1,071
|
)
|
(4,343
|
)
|
(4,355
|
)
|
||||||||||
|
Exclude REO operations
|
(49
|
)
|
(53
|
)
|
283
|
22
|
190
|
|||||||||||||
|
Exclude loss on extinguishment of debt
|
(2,284
|
)
|
—
|
—
|
(2,284
|
)
|
—
|
|||||||||||||
|
Adjusted non-interest expense (non-GAAP)
|
$
|
85,638
|
$
|
91,652
|
$
|
91,991
|
$
|
354,225
|
$
|
352,128
|
||||||||||
|
Net interest income (GAAP)
|
$
|
121,530
|
$
|
130,146
|
$
|
121,437
|
$
|
496,891
|
$
|
481,301
|
||||||||||
|
Non-interest income (GAAP)
|
24,474
|
25,334
|
23,509
|
96,416
|
98,616
|
|||||||||||||||
|
Total revenue
|
146,004
|
155,480
|
144,946
|
593,307
|
579,917
|
|||||||||||||||
|
Exclude net loss (gain) on sale of securities
|
136
|
(56
|
)
|
(197
|
)
|
(482
|
)
|
(1,012
|
)
|
|||||||||||
|
Exclude net change in valuation of financial instruments carried at
fair value
|
(2,721
|
)
|
(1,778
|
)
|
(1,704
|
)
|
(4,616
|
)
|
656
|
|||||||||||
|
Adjusted revenue (non-GAAP)
|
$
|
143,419
|
$
|
153,646
|
$
|
143,045
|
$
|
588,209
|
$
|
579,561
|
||||||||||
|
Efficiency ratio (GAAP)
|
62.88
|
%
|
65.70
|
%
|
65.93
|
%
|
64.06
|
%
|
63.73
|
%
|
||||||||||
|
Adjusted efficiency ratio (non-GAAP)
|
59.71
|
%
|
59.65
|
%
|
64.31
|
%
|
60.22
|
%
|
60.76
|
%
|
||||||||||
|
TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS
|
Dec 31, 2021
|
Sep 30, 2021
|
Dec 31, 2020
|
|||||||||
|
Shareholders’ equity (GAAP)
|
$
|
1,690,327
|
$
|
1,667,119
|
$
|
1,666,264
|
||||||
|
Exclude goodwill and other intangible assets, net
|
387,976
|
389,550
|
394,547
|
|||||||||
|
Tangible common shareholders’ equity (non-GAAP)
|
$
|
1,302,351
|
$
|
1,277,569
|
$
|
1,271,717
|
||||||
|
Total assets (GAAP)
|
$
|
16,804,872
|
$
|
16,637,879
|
$
|
15,031,623
|
||||||
|
Exclude goodwill and other intangible assets, net
|
387,976
|
389,550
|
394,547
|
|||||||||
|
Total tangible assets (non-GAAP)
|
$
|
16,416,896
|
$
|
16,248,329
|
$
|
14,637,076
|
||||||
|
Common shareholders’ equity to total assets (GAAP)
|
10.06
|
%
|
10.02
|
%
|
11.09
|
%
|
||||||
|
Tangible common shareholders’ equity to tangible assets (non-GAAP)
|
7.93
|
%
|
7.86
|
%
|
8.69
|
%
|
||||||
|
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE
|
||||||||||||
|
Tangible common shareholders’ equity (non-GAAP)
|
$
|
1,302,351
|
$
|
1,277,569
|
$
|
1,271,717
|
||||||
|
Common shares outstanding at end of period
|
34,252,632
|
34,251,991
|
35,159,200
|
|||||||||
|
Common shareholders’ equity (book value) per share (GAAP)
|
$
|
49.35
|
$
|
48.67
|
$
|
47.39
|
||||||
|
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)
|
$
|
38.02
|
$
|
37.30
|
$
|
36.17
|
||||||
