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): April 23, 2018 | ||
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 and 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: April 23, 2018 | 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 21% to $28.8 million, or $0.89 per diluted share, compared to $23.8 million, or $0.72 per diluted share, in the first quarter a year ago. |
• | Net interest income, before the provision for loan losses, was $99.4 million, compared to $98.3 million in the preceding quarter and $94.9 million in the first quarter a year ago. |
• | Net interest margin was 4.35% for the current quarter, compared to 4.18% in the preceding quarter and 4.25% in the first quarter a year ago. |
• | Revenues were $120.7 million during the quarter ended March 31, 2018, $125.9 million during the preceding quarter and $113.9 million during the first quarter a year ago. |
• | Revenues from core operations* were $117.4 million, compared to $117.1 million in the preceding quarter, and $114.6 million in the first quarter a year ago. |
• | Return on average assets was 1.16% in the current quarter, compared to 0.97% in the first quarter a year ago. |
• | Return on average equity was 9.14% in the current quarter, compared to 7.30% in the first quarter a year ago. |
• | Provision for loan losses was $2.0 million, increasing the allowance for loan losses to $92.2 million or 1.22% of total loans. |
• | Net loans receivable were $7.46 billion at March 31, 2018, compared to $7.51 billion at December 31, 2017, and increased 2% compared to $7.33 billion a year ago. |
• | Core deposits increased 3% compared to March 31, 2017 and represented 88% of total deposits at March 31, 2018. |
• | Increased quarterly cash dividend to shareholders by 40% to $0.35 per share. |
• | Common shareholders' tangible equity per share* was $30.43 at March 31, 2018, compared to $30.78 at the preceding quarter end and $31.68 a year ago. |
• | The ratio of tangible common shareholders' equity to tangible assets* remained strong at 9.82% at March 31, 2018, compared to 10.61% at the preceding quarter end and 10.72% a year ago. |
• | Repurchased 269,711 shares of common stock at an average price of $56.93 per share. |
• | Non-performing assets declined by $4.0 million to $23.5 million or 0.23% of total assets. |
RESULTS OF OPERATIONS | Quarters Ended | |||||||||||
(in thousands except shares and per share data) | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
INTEREST INCOME: | ||||||||||||
Loans receivable | $ | 94,022 | $ | 93,145 | $ | 91,288 | ||||||
Mortgage-backed securities | 7,331 | 7,006 | 4,647 | |||||||||
Securities and cash equivalents | 3,467 | 3,324 | 3,161 | |||||||||
104,820 | 103,475 | 99,096 | ||||||||||
INTEREST EXPENSE: | ||||||||||||
Deposits | 3,358 | 3,111 | 2,791 | |||||||||
Federal Home Loan Bank advances | 677 | 766 | 273 | |||||||||
Other borrowings | 70 | 77 | 74 | |||||||||
Junior subordinated debentures | 1,342 | 1,257 | 1,104 | |||||||||
5,447 | 5,211 | 4,242 | ||||||||||
Net interest income before provision for loan losses | 99,373 | 98,264 | 94,854 | |||||||||
PROVISION FOR LOAN LOSSES | 2,000 | 2,000 | 2,000 | |||||||||
Net interest income | 97,373 | 96,264 | 92,854 | |||||||||
NON-INTEREST INCOME: | ||||||||||||
Deposit fees and other service charges | 11,296 | 10,840 | 10,389 | |||||||||
Mortgage banking operations | 4,864 | 5,025 | 4,603 | |||||||||
Bank owned life insurance | 853 | 1,020 | 1,095 | |||||||||
Miscellaneous | 1,037 | 1,923 | 3,636 | |||||||||
18,050 | 18,808 | 19,723 | ||||||||||
Net gain (loss) on sale of securities | 4 | (2,310 | ) | 13 | ||||||||
Net change in valuation of financial instruments carried at fair value | 3,308 | (1,013 | ) | (688 | ) | |||||||
Gain on sale of branches, including related loans and deposits | — | 12,189 | — | |||||||||
Total non-interest income | 21,362 | 27,674 | 19,048 | |||||||||
NON-INTEREST EXPENSE: | ||||||||||||
Salary and employee benefits | 50,067 | 48,082 | 46,063 | |||||||||
Less capitalized loan origination costs | (4,011 | ) | (4,134 | ) | (4,316 | ) | ||||||
Occupancy and equipment | 11,766 | 12,088 | 11,996 | |||||||||
Information / computer data services | 4,381 | 4,731 | 3,994 | |||||||||
Payment and card processing services | 3,700 | 3,807 | 3,223 | |||||||||
Professional services | 4,428 | 5,301 | 5,152 | |||||||||
Advertising and marketing | 1,830 | 3,412 | 1,328 | |||||||||
Deposit insurance | 1,341 | 1,251 | 1,266 | |||||||||
State/municipal business and use taxes | 713 | 737 | 799 | |||||||||
Real estate operations | 439 | (941 | ) | (966 | ) | |||||||
Amortization of core deposit intangibles | 1,382 | 1,457 | 1,624 | |||||||||
Miscellaneous | 5,670 | 6,710 | 6,118 | |||||||||
Total non-interest expense | 81,706 | 82,501 | 76,281 | |||||||||
Income before provision for income taxes | 37,029 | 41,437 | 35,621 | |||||||||
PROVISION FOR INCOME TAXES | 8,239 | 54,985 | 11,828 | |||||||||
NET INCOME (LOSS) | $ | 28,790 | $ | (13,548 | ) | $ | 23,793 | |||||
Earnings (Loss) per share available to common shareholders: | ||||||||||||
Basic | $ | 0.89 | $ | (0.41 | ) | $ | 0.72 | |||||
Diluted | $ | 0.89 | $ | (0.41 | ) | $ | 0.72 | |||||
Cumulative dividends declared per common share | $ | 0.35 | $ | 0.25 | $ | 0.25 | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 32,397,568 | 32,655,973 | 32,933,444 | |||||||||
Diluted | 32,516,456 | 32,766,335 | 33,051,459 | |||||||||
Decrease in common shares outstanding | (302,812 | ) | (528,299 | ) | (40,523 | ) |
FINANCIAL CONDITION | Percentage Change | |||||||||||||||||
(in thousands except shares and per share data) | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Prior Qtr | Prior Yr Qtr | |||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 188,418 | $ | 199,624 | $ | 196,277 | (5.6 | )% | (4.0 | )% | ||||||||
Interest-bearing deposits | 53,630 | 61,576 | 104,431 | (12.9 | )% | (48.6 | )% | |||||||||||
Total cash and cash equivalents | 242,048 | 261,200 | 300,708 | (7.3 | )% | (19.5 | )% | |||||||||||
Securities - trading | 25,574 | 22,318 | 24,753 | 14.6 | % | 3.3 | % | |||||||||||
Securities - available for sale | 1,406,505 | 919,485 | 1,223,764 | 53.0 | % | 14.9 | % | |||||||||||
Securities - held to maturity | 262,645 | 260,271 | 266,391 | 0.9 | % | (1.4 | )% | |||||||||||
Federal Home Loan Bank stock | 18,036 | 10,334 | 10,334 | 74.5 | % | 74.5 | % | |||||||||||
Loans held for sale | 141,808 | 40,725 | 86,707 | 248.2 | % | 63.5 | % | |||||||||||
Loans receivable | 7,556,046 | 7,598,884 | 7,421,255 | (0.6 | )% | 1.8 | % | |||||||||||
Allowance for loan losses | (92,207 | ) | (89,028 | ) | (86,527 | ) | 3.6 | % | 6.6 | % | ||||||||
Net loans | 7,463,839 | 7,509,856 | 7,334,728 | (0.6 | )% | 1.8 | % | |||||||||||
Accrued interest receivable | 32,824 | 31,259 | 30,312 | 5.0 | % | 8.3 | % | |||||||||||
Real estate owned held for sale, net | 328 | 360 | 3,040 | (8.9 | )% | (89.2 | )% | |||||||||||
Property and equipment, net | 156,005 | 154,815 | 162,467 | 0.8 | % | (4.0 | )% | |||||||||||
Goodwill | 242,659 | 242,659 | 244,583 | — | % | (0.8 | )% | |||||||||||
Other intangibles, net | 24,966 | 22,655 | 28,488 | 10.2 | % | (12.4 | )% | |||||||||||
Bank-owned life insurance | 163,519 | 162,668 | 159,948 | 0.5 | % | 2.2 | % | |||||||||||
Other assets | 136,508 | 124,604 | 192,155 | 9.6 | % | (29.0 | )% | |||||||||||
Total assets | $ | 10,317,264 | $ | 9,763,209 | $ | 10,068,378 | 5.7 | % | 2.5 | % | ||||||||
LIABILITIES | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Non-interest-bearing | $ | 3,383,439 | $ | 3,265,544 | $ | 3,213,044 | 3.6 | % | 5.3 | % | ||||||||
Interest-bearing transaction and savings accounts | 4,141,268 | 3,950,950 | 4,064,198 | 4.8 | % | 1.9 | % | |||||||||||
Interest-bearing certificates | 1,018,355 | 966,937 | 1,144,718 | 5.3 | % | (11.0 | )% | |||||||||||
Total deposits | 8,543,062 | 8,183,431 | 8,421,960 | 4.4 | % | 1.4 | % | |||||||||||
Advances from Federal Home Loan Bank at fair value | 192,195 | 202 | 213 | nm | nm | |||||||||||||
Customer repurchase agreements and other borrowings | 101,844 | 95,860 | 120,245 | 6.2 | % | (15.3 | )% | |||||||||||
Junior subordinated debentures at fair value | 112,516 | 98,707 | 96,040 | 14.0 | % | 17.2 | % | |||||||||||
Accrued expenses and other liabilities | 72,497 | 71,344 | 66,201 | 1.6 | % | 9.5 | % | |||||||||||
Deferred compensation | 41,027 | 41,039 | 40,315 | — | % | 1.8 | % | |||||||||||
Total liabilities | 9,063,141 | 8,490,583 | 8,744,974 | 6.7 | % | 3.6 | % | |||||||||||
SHAREHOLDERS' EQUITY | ||||||||||||||||||
Common stock | 1,172,960 | 1,187,127 | 1,214,517 | (1.2 | )% | (3.4 | )% | |||||||||||
Retained earnings | 79,773 | 90,535 | 110,783 | (11.9 | )% | (28.0 | )% | |||||||||||
Other components of shareholders' equity | 1,390 | (5,036 | ) | (1,896 | ) | nm | (173.3 | )% | ||||||||||
Total shareholders' equity | 1,254,123 | 1,272,626 | 1,323,404 | (1.5 | )% | (5.2 | )% | |||||||||||
Total liabilities and shareholders' equity | $ | 10,317,264 | $ | 9,763,209 | $ | 10,068,378 | 5.7 | % | 2.5 | % | ||||||||
Common Shares Issued: | ||||||||||||||||||
Shares outstanding at end of period | 32,423,673 | 32,726,485 | 33,152,864 | |||||||||||||||
Common shareholders' equity per share (1) | $ | 38.68 | $ | 38.89 | $ | 39.92 | ||||||||||||
Common shareholders' tangible equity per share (1) (2) | $ | 30.43 | $ | 30.78 | $ | 31.68 | ||||||||||||
Common shareholders' tangible equity to tangible assets (2) | 9.82 | % | 10.61 | % | 10.72 | % | ||||||||||||
Consolidated Tier 1 leverage capital ratio | 11.06 | % | 11.33 | % | 11.79 | % |
(1) | Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding. | ||||
(2) | Common shareholders' tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of the press release tables. |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||
Percentage Change | ||||||||||||||||||
LOANS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Prior Qtr | Prior Yr Qtr | |||||||||||||
Commercial real estate: | ||||||||||||||||||
Owner occupied | $ | 1,278,814 | $ | 1,284,363 | $ | 1,361,095 | (0.4 | )% | (6.0 | )% | ||||||||
Investment properties | 1,876,937 | 1,937,423 | 2,011,618 | (3.1 | )% | (6.7 | )% | |||||||||||
Multifamily real estate | 321,039 | 314,188 | 254,246 | 2.2 | % | 26.3 | % | |||||||||||
Commercial construction | 163,314 | 148,435 | 141,505 | 10.0 | % | 15.4 | % | |||||||||||
Multifamily construction | 159,108 | 154,662 | 114,728 | 2.9 | % | 38.7 | % | |||||||||||
One- to four-family construction | 434,204 | 415,327 | 366,191 | 4.5 | % | 18.6 | % | |||||||||||
Land and land development: | ||||||||||||||||||
Residential | 167,783 | 164,516 | 151,649 | 2.0 | % | 10.6 | % | |||||||||||
Commercial | 24,331 | 24,583 | 29,597 | (1.0 | )% | (17.8 | )% | |||||||||||
Commercial business | 1,296,691 | 1,279,894 | 1,224,541 | 1.3 | % | 5.9 | % | |||||||||||
Agricultural business including secured by farmland | 307,243 | 338,388 | 313,374 | (9.2 | )% | (2.0 | )% | |||||||||||
One- to four-family real estate | 833,598 | 848,289 | 802,991 | (1.7 | )% | 3.8 | % | |||||||||||
Consumer: | ||||||||||||||||||
Consumer secured by one- to four-family real estate | 522,826 | 522,931 | 493,495 | — | % | 5.9 | % | |||||||||||
Consumer-other | 170,158 | 165,885 | 156,225 | 2.6 | % | 8.9 | % | |||||||||||
Total loans receivable | $ | 7,556,046 | $ | 7,598,884 | $ | 7,421,255 | (0.6 | )% | 1.8 | % | ||||||||
Restructured loans performing under their restructured terms | $ | 14,264 | $ | 16,115 | $ | 17,193 | ||||||||||||
Loans 30 - 89 days past due and on accrual (1) | $ | 23,557 | $ | 29,278 | $ | 22,214 | ||||||||||||
Total delinquent loans (including loans on non-accrual), net (2) | $ | 42,186 | $ | 50,503 | $ | 37,563 | ||||||||||||
Total delinquent loans / Total loans outstanding | 0.56 | % | 0.66 | % | 0.51 | % |
LOANS BY GEOGRAPHIC LOCATION | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | ||||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | ||||||||||||||
Washington | $ | 3,490,646 | 46.2% | $ | 3,508,542 | 46.2 | % | $ | 3,401,005 | 45.8% | |||||||||
Oregon | 1,580,278 | 20.9% | 1,590,233 | 20.9 | % | 1,493,054 | 20.1% | ||||||||||||
California | 1,405,411 | 18.6% | 1,415,076 | 18.6 | % | 1,255,597 | 16.9% | ||||||||||||
Idaho | 481,972 | 6.4% | 492,603 | 6.5 | % | 471,519 | 6.4% | ||||||||||||
Utah | 83,637 | 1.1% | 73,382 | 1.0 | % | 281,379 | 3.8% | ||||||||||||
Other | 514,102 | 6.8% | 519,048 | 6.8 | % | 518,701 | 7.0% | ||||||||||||
Total loans | $ | 7,556,046 | 100.0% | $ | 7,598,884 | 100.0 | % | $ | 7,421,255 | 100.0% |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||
(dollars in thousands) | ||||||||||||
Quarters Ended | ||||||||||||
CHANGE IN THE | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
ALLOWANCE FOR LOAN LOSSES | ||||||||||||
Balance, beginning of period | $ | 89,028 | $ | 89,100 | $ | 85,997 | ||||||
Provision for loan losses | 2,000 | 2,000 | 2,000 | |||||||||
Recoveries of loans previously charged off: | ||||||||||||
Commercial real estate | 1,352 | 19 | 70 | |||||||||
Construction and land | 174 | 57 | 83 | |||||||||
One- to four-family real estate | 290 | 8 | 145 | |||||||||
Commercial business | 170 | 305 | 173 | |||||||||
Agricultural business, including secured by farmland | — | 1 | 113 | |||||||||
Consumer | 112 | 188 | 94 | |||||||||
2,098 | 578 | 678 | ||||||||||
Loans charged off: | ||||||||||||
Commercial real estate | — | (549 | ) | — | ||||||||
One- to four-family real estate | (16 | ) | (38 | ) | — | |||||||
Commercial business | (519 | ) | (517 | ) | (1,626 | ) | ||||||
Agricultural business, including secured by farmland | (7 | ) | (1,110 | ) | (159 | ) | ||||||
Consumer | (377 | ) | (436 | ) | (363 | ) | ||||||
(919 | ) | (2,650 | ) | (2,148 | ) | |||||||
Net (charge-offs) recoveries | 1,179 | (2,072 | ) | (1,470 | ) | |||||||
Balance, end of period | $ | 92,207 | $ | 89,028 | $ | 86,527 | ||||||
Net (charge-offs) recoveries / Average loans outstanding | 0.015 | % | (0.027 | )% | (0.019 | )% |
ALLOCATION OF | ||||||||||||
ALLOWANCE FOR LOAN LOSSES | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
Specific or allocated loss allowance: | ||||||||||||
Commercial real estate | $ | 23,461 | $ | 22,824 | $ | 20,472 | ||||||
Multifamily real estate | 2,592 | 1,633 | 1,378 | |||||||||
Construction and land | 28,766 | 27,568 | 29,464 | |||||||||
One- to four-family real estate | 3,779 | 2,055 | 1,974 | |||||||||
Commercial business | 19,885 | 18,311 | 19,768 | |||||||||
Agricultural business, including secured by farmland | 2,999 | 4,053 | 3,245 | |||||||||
Consumer | 5,514 | 3,866 | 3,840 | |||||||||
Total allocated | 86,996 | 80,310 | 80,141 | |||||||||
Unallocated | 5,211 | 8,718 | 6,386 | |||||||||
Total allowance for loan losses | $ | 92,207 | $ | 89,028 | $ | 86,527 | ||||||
Allowance for loan losses / Total loans outstanding | 1.22 | % | 1.17 | % | 1.17 | % | ||||||
Allowance for loan losses / Non-performing loans | 410 | % | 329 | % | 479 | % |
ADDITIONAL FINANCIAL INFORMATION | |||||||||||
(dollars in thousands) | |||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
NON-PERFORMING ASSETS | |||||||||||
Loans on non-accrual status: | |||||||||||
Secured by real estate: | |||||||||||
Commercial | $ | 6,877 | $ | 10,646 | $ | 6,910 | |||||
Multifamily | — | — | 147 | ||||||||
Construction and land | 984 | 798 | 1,775 | ||||||||
One- to four-family | 2,815 | 3,264 | 3,386 | ||||||||
Commercial business | 3,037 | 3,406 | 2,700 | ||||||||
Agricultural business, including secured by farmland | 6,120 | 6,132 | 1,012 | ||||||||
Consumer | 1,237 | 1,297 | 1,285 | ||||||||
21,070 | 25,543 | 17,215 | |||||||||
Loans more than 90 days delinquent, still on accrual: | |||||||||||
Secured by real estate: | |||||||||||
Construction and land | — | 298 | — | ||||||||
One- to four-family | 591 | 1,085 | 545 | ||||||||
Commercial business | 1 | 18 | — | ||||||||
Agricultural business, including secured by farmland | 820 | — | — | ||||||||
Consumer | 7 | 85 | 297 | ||||||||
1,419 | 1,486 | 842 | |||||||||
Total non-performing loans | 22,489 | 27,029 | 18,057 | ||||||||
Real estate owned (REO) | 328 | 360 | 3,040 | ||||||||
Other repossessed assets | 694 | 107 | 162 | ||||||||
Total non-performing assets | $ | 23,511 | $ | 27,496 | $ | 21,259 | |||||
Total non-performing assets to total assets | 0.23 | % | 0.28 | % | 0.21 | % | |||||
Purchased credit-impaired loans, net | $ | 19,316 | $ | 21,310 | $ | 30,501 |
Quarters Ended | |||||||||||
REAL ESTATE OWNED | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | ||||||||
Balance, beginning of period | $ | 360 | $ | 1,496 | $ | 11,081 | |||||
Additions from loan foreclosures | 128 | — | — | ||||||||
Proceeds from dispositions of REO | — | (2,092 | ) | (9,193 | ) | ||||||
Gain on sale of REO | — | 956 | 1,202 | ||||||||
Valuation adjustments in the period | (160 | ) | — | (50 | ) | ||||||
Balance, end of period | $ | 328 | $ | 360 | $ | 3,040 |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||
DEPOSIT COMPOSITION | Percentage Change | |||||||||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Prior Qtr | Prior Yr | ||||||||||||||
Non-interest-bearing | $ | 3,383,439 | $ | 3,265,544 | $ | 3,213,044 | 3.6 | % | 5.3 | % | ||||||||
Interest-bearing checking | 1,043,840 | 971,137 | 928,232 | 7.5 | % | 12.5 | % | |||||||||||
Regular savings accounts | 1,637,814 | 1,557,500 | 1,592,023 | 5.2 | % | 2.9 | % | |||||||||||
Money market accounts | 1,459,614 | 1,422,313 | 1,543,943 | 2.6 | % | (5.5 | )% | |||||||||||
Total interest-bearing transaction and savings accounts | 4,141,268 | 3,950,950 | 4,064,198 | 4.8 | % | 1.9 | % | |||||||||||
Interest-bearing certificates | 1,018,355 | 966,937 | 1,144,718 | 5.3 | % | (11.0 | )% | |||||||||||
Total deposits | $ | 8,543,062 | $ | 8,183,431 | $ | 8,421,960 | 4.4 | % | 1.4 | % |
GEOGRAPHIC CONCENTRATION OF DEPOSITS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||||||||
Amount | Percentage | Amount | Percentage | Amount | Percentage | |||||||||||||
Washington | $ | 4,766,646 | 55.8% | $ | 4,506,249 | 55.0% | $ | 4,619,457 | 54.9% | |||||||||
Oregon | 1,868,043 | 21.9% | 1,797,147 | 22.0% | 1,746,143 | 20.7% | ||||||||||||
California | 1,454,421 | 17.0% | 1,432,819 | 17.5% | 1,469,351 | 17.4% | ||||||||||||
Idaho | 453,952 | 5.3% | 447,216 | 5.5% | 429,850 | 5.1% | ||||||||||||
Utah | — | —% | — | —% | 157,159 | 1.9% | ||||||||||||
Total deposits | $ | 8,543,062 | 100.0% | $ | 8,183,431 | 100.0% | $ | 8,421,960 | 100.0% |
INCLUDED IN TOTAL DEPOSITS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
Public non-interest-bearing accounts | $ | 78,714 | $ | 86,987 | $ | 80,322 | ||||||
Public interest-bearing transaction & savings accounts | 111,597 | 111,732 | 125,921 | |||||||||
Public interest-bearing certificates | 24,928 | 23,685 | 31,024 | |||||||||
Total public deposits | $ | 215,239 | $ | 222,404 | $ | 237,267 | ||||||
Total brokered deposits | $ | 169,523 | $ | 57,228 | $ | 171,521 |
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 MARCH 31, 2018 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Banner Corporation-consolidated: | |||||||||||||||||||||
Total capital to risk-weighted assets | $ | 1,176,192 | 13.28 | % | $ | 708,592 | 8.00 | % | $ | 885,739 | 10.00 | % | |||||||||
Tier 1 capital to risk-weighted assets | 1,081,536 | 12.21 | % | 531,444 | 6.00 | % | 531,444 | 6.00 | % | ||||||||||||
Tier 1 leverage capital to average assets | 1,081,536 | 11.06 | % | 391,147 | 4.00 | % | n/a | n/a | |||||||||||||
Common equity tier 1 capital to risk-weighted assets | 945,536 | 10.68 | % | 398,583 | 4.50 | % | n/a | n/a | |||||||||||||
Banner Bank: | |||||||||||||||||||||
Total capital to risk-weighted assets | 1,115,304 | 12.88 | % | 692,895 | 8.00 | % | 866,118 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 1,023,061 | 11.81 | % | 519,671 | 6.00 | % | 692,895 | 8.00 | % | ||||||||||||
Tier 1 leverage capital to average assets | 1,023,061 | 10.76 | % | 380,234 | 4.00 | % | 475,292 | 5.00 | % | ||||||||||||
Common equity tier 1 capital to risk-weighted assets | 1,023,061 | 11.81 | % | 389,753 | 4.50 | % | 562,977 | 6.50 | % | ||||||||||||
Islanders Bank: | |||||||||||||||||||||
Total capital to risk-weighted assets | 32,716 | 16.77 | % | 15,607 | 8.00 | % | 19,509 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 30,303 | 15.53 | % | 11,705 | 6.00 | % | 15,607 | 8.00 | % | ||||||||||||
Tier 1 leverage capital to average assets | 30,303 | 11.03 | % | 10,985 | 4.00 | % | 13,731 | 5.00 | % | ||||||||||||
Common equity tier 1 capital to risk-weighted assets | 30,303 | 15.53 | % | 8,779 | 4.50 | % | 12,681 | 6.50 | % |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||
(rates / ratios annualized) | ||||||||||||||||||||||||||
ANALYSIS OF NET INTEREST SPREAD | Quarters Ended | |||||||||||||||||||||||||
March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||||||||||||||||
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: | ||||||||||||||||||||||||||
Mortgage loans | $ | 6,065,199 | $ | 74,346 | 4.97 | % | $ | 6,064,650 | $ | 73,349 | 4.80 | % | $ | 6,104,779 | $ | 72,549 | 4.82 | % | ||||||||
Commercial/agricultural loans | 1,456,303 | 17,423 | 4.85 | % | 1,454,639 | 17,549 | 4.79 | % | 1,464,532 | 16,546 | 4.58 | % | ||||||||||||||
Consumer and other loans | 140,627 | 2,253 | 6.50 | % | 144,412 | 2,247 | 6.17 | % | 138,033 | 2,193 | 6.44 | % | ||||||||||||||
Total loans(1) | 7,662,129 | 94,022 | 4.98 | % | 7,663,701 | 93,145 | 4.82 | % | 7,707,344 | 91,288 | 4.80 | % | ||||||||||||||
Mortgage-backed securities | 1,057,878 | 7,331 | 2.81 | % | 1,131,692 | 7,006 | 2.46 | % | 842,071 | 4,647 | 2.24 | % | ||||||||||||||
Other securities | 462,947 | 3,090 | 2.71 | % | 459,065 | 3,028 | 2.62 | % | 453,793 | 3,037 | 2.71 | % | ||||||||||||||
Interest-bearing deposits with banks | 64,512 | 231 | 1.45 | % | 60,109 | 191 | 1.26 | % | 32,195 | 93 | 1.17 | % | ||||||||||||||
FHLB stock | 16,549 | 146 | 3.58 | % | 18,496 | 105 | 2.25 | % | 15,550 | 31 | 0.81 | % | ||||||||||||||
Total investment securities | 1,601,886 | 10,798 | 2.73 | % | 1,669,362 | 10,330 | 2.46 | % | 1,343,609 | 7,808 | 2.36 | % | ||||||||||||||
Total interest-earning assets | 9,264,015 | 104,820 | 4.59 | % | 9,333,063 | 103,475 | 4.40 | % | 9,050,953 | 99,096 | 4.44 | % | ||||||||||||||
Non-interest-earning assets | 805,503 | 861,232 | 923,165 | |||||||||||||||||||||||
Total assets | $ | 10,069,518 | $ | 10,194,295 | $ | 9,974,118 | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Interest-bearing checking accounts | $ | 1,003,929 | 246 | 0.10 | % | $ | 964,306 | 222 | 0.09 | % | $ | 896,764 | 200 | 0.09 | % | |||||||||||
Savings accounts | 1,601,671 | 627 | 0.16 | % | 1,567,845 | 550 | 0.14 | % | 1,557,734 | 523 | 0.14 | % | ||||||||||||||
Money market accounts | 1,442,685 | 666 | 0.19 | % | 1,471,875 | 645 | 0.17 | % | 1,522,470 | 651 | 0.17 | % | ||||||||||||||
Certificates of deposit | 998,738 | 1,819 | 0.74 | % | 1,024,069 | 1,694 | 0.66 | % | 1,089,316 | 1,417 | 0.53 | % | ||||||||||||||
Total interest-bearing deposits | 5,047,023 | 3,358 | 0.27 | % | 5,028,095 | 3,111 | 0.25 | % | 5,066,284 | 2,791 | 0.22 | % | ||||||||||||||
Non-interest-bearing deposits | 3,282,686 | — | — | % | 3,325,452 | — | — | % | 3,148,520 | — | — | % | ||||||||||||||
Total deposits | 8,329,709 | 3,358 | 0.16 | % | 8,353,547 | 3,111 | 0.15 | % | 8,214,804 | 2,791 | 0.14 | % | ||||||||||||||
Other interest-bearing liabilities: | ||||||||||||||||||||||||||
FHLB advances | 155,540 | 677 | 1.77 | % | 204,502 | 766 | 1.49 | % | 130,274 | 273 | 0.85 | % | ||||||||||||||
Other borrowings | 101,111 | 70 | 0.28 | % | 106,678 | 77 | 0.29 | % | 108,091 | 74 | 0.28 | % | ||||||||||||||
Junior subordinated debentures | 140,212 | 1,342 | 3.88 | % | 140,212 | 1,257 | 3.56 | % | 140,212 | 1,104 | 3.19 | % | ||||||||||||||
Total borrowings | 396,863 | 2,089 | 2.13 | % | 451,392 | 2,100 | 1.85 | % | 378,577 | 1,451 | 1.55 | % | ||||||||||||||
Total funding liabilities | 8,726,572 | 5,447 | 0.25 | % | 8,804,939 | 5,211 | 0.23 | % | 8,593,381 | 4,242 | 0.20 | % | ||||||||||||||
Other non-interest-bearing liabilities(2) | 65,978 | 63,654 | 58,489 | |||||||||||||||||||||||
Total liabilities | 8,792,550 | 8,868,593 | 8,651,870 | |||||||||||||||||||||||
Shareholders' equity | 1,276,968 | 1,325,702 | 1,322,248 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 10,069,518 | $ | 10,194,295 | $ | 9,974,118 | ||||||||||||||||||||
Net interest income/rate spread | $ | 99,373 | 4.34 | % | $ | 98,264 | 4.17 | % | $ | 94,854 | 4.24 | % | ||||||||||||||
Net interest margin | 4.35 | % | 4.18 | % | 4.25 | % | ||||||||||||||||||||
Additional Key Financial Ratios: | ||||||||||||||||||||||||||
Return on average assets | 1.16 | % | (0.53 | )% | 0.97 | % | ||||||||||||||||||||
Return on average equity | 9.14 | % | (4.05 | )% | 7.30 | % | ||||||||||||||||||||
Average equity/average assets | 12.68 | % | 13.00 | % | 13.26 | % | ||||||||||||||||||||
Average interest-earning assets/average interest-bearing liabilities | 170.17 | % | 170.33 | % | 166.23 | % | ||||||||||||||||||||
Average interest-earning assets/average funding liabilities | 106.16 | % | 106.00 | % | 105.32 | % | ||||||||||||||||||||
Non-interest income/average assets | 0.86 | % | 1.08 | % | 0.77 | % | ||||||||||||||||||||
Non-interest expense/average assets | 3.29 | % | 3.21 | % | 3.10 | % | ||||||||||||||||||||
Efficiency ratio(4) | 67.67 | % | 65.51 | % | 66.97 | % | ||||||||||||||||||||
Adjusted efficiency ratio(5) | 67.42 | % | 69.40 | % | 65.30 | % |
(1) | Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans. |
(2) | Average other non-interest-bearing liabilities include fair value adjustments related to FHLB advances and junior subordinated debentures. |
(3) | Yields and costs have not been adjusted for the effect of tax-exempt interest. |
(4) | Non-interest expense divided by the total of net interest income (before provision for loan losses) and non-interest income. |
(5) | Adjusted non-interest expense divided by adjusted revenue. Adjusted revenue excludes net gain (loss) on sale of securities and fair value adjustments. Adjusted non-interest expense excludes amortization of core deposit intangibles (CDI), REO gain (loss), and state/municipal business and use taxes. These represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of 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. Where applicable, comparable earnings information using GAAP financial measures is also presented. | |||||||||||
REVENUE FROM CORE OPERATIONS | Quarters Ended | ||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
Net interest income before provision for loan losses | $ | 99,373 | $ | 98,264 | $ | 94,854 | |||||
Total non-interest income | 21,362 | 27,674 | 19,048 | ||||||||
Total GAAP revenue | 120,735 | 125,938 | 113,902 | ||||||||
Exclude net (gain) loss on sale of securities | (4 | ) | 2,310 | (13 | ) | ||||||
Exclude change in valuation of financial instruments carried at fair value | (3,308 | ) | 1,013 | 688 | |||||||
Exclude gain on sale of branches | — | (12,189 | ) | — | |||||||
Revenue from core operations (non-GAAP) | $ | 117,423 | $ | 117,072 | $ | 114,577 |
NON-INTEREST INCOME FROM CORE OPERATIONS | Quarters Ended | |||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | ||||||||||
Total non-interest income (GAAP) | $ | 21,362 | $ | 27,674 | $ | 19,048 | ||||||
Exclude net (gain) loss on sale of securities | (4 | ) | 2,310 | (13 | ) | |||||||
Exclude change in valuation of financial instruments carried at fair value | (3,308 | ) | 1,013 | 688 | ||||||||
Exclude gain on sale of branches | — | (12,189 | ) | — | ||||||||
Non-interest income from core operations (non-GAAP) | $ | 18,050 | $ | 18,808 | $ | 19,723 |
EARNINGS FROM CORE OPERATIONS | Quarters Ended | |||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | ||||||||||
Net income (GAAP) | $ | 28,790 | $ | (13,548 | ) | $ | 23,793 | |||||
Exclude net (gain) loss on sale of securities | (4 | ) | 2,310 | (13 | ) | |||||||
Exclude change in valuation of financial instruments carried at fair value | (3,308 | ) | 1,013 | 688 | ||||||||
Exclude gain on sale of branches | — | (12,189 | ) | — | ||||||||
Exclude related tax expense (benefit) | 795 | 3,192 | (243 | ) | ||||||||
Exclude deferred tax asset revaluation due to new tax law | — | 42,630 | — | |||||||||
Total earnings from core operations (non-GAAP) | $ | 26,273 | $ | 23,408 | $ | 24,225 | ||||||
Diluted earnings (loss) per share (GAAP) | $ | 0.89 | $ | (0.41 | ) | $ | 0.72 | |||||
Diluted core earnings per share (non-GAAP) | $ | 0.81 | $ | 0.71 | $ | 0.73 |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||
(dollars in thousands) | ||||||||||||
ADJUSTED EFFICIENCY RATIO | Quarters Ended | |||||||||||
Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | ||||||||||
Non-interest expense (GAAP) | $ | 81,706 | $ | 82,501 | $ | 76,281 | ||||||
Exclude CDI amortization | (1,382 | ) | (1,457 | ) | (1,624 | ) | ||||||
Exclude state/municipal tax expense | (713 | ) | (737 | ) | (799 | ) | ||||||
Exclude REO (loss) gain | (439 | ) | 941 | 966 | ||||||||
Adjusted non-interest expense (non-GAAP) | $ | 79,172 | $ | 81,248 | $ | 74,824 | ||||||
Net interest income before provision for loan losses (GAAP) | $ | 99,373 | $ | 98,264 | $ | 94,854 | ||||||
Non-interest income (GAAP) | 21,362 | 27,674 | 19,048 | |||||||||
Total revenue | 120,735 | 125,938 | 113,902 | |||||||||
Exclude net (gain) loss on sale of securities | (4 | ) | 2,310 | (13 | ) | |||||||
Exclude net change in valuation of financial instruments carried at fair value | (3,308 | ) | 1,013 | 688 | ||||||||
Exclude gain on sale of branches | — | (12,189 | ) | — | ||||||||
Adjusted revenue (non-GAAP) | $ | 117,423 | $ | 117,072 | $ | 114,577 | ||||||
Efficiency ratio (GAAP) | 67.67 | % | 65.51 | % | 66.97 | % | ||||||
Adjusted efficiency ratio (non-GAAP) | 67.42 | % | 69.40 | % | 65.30 | % |
TANGIBLE COMMON SHAREHOLDERS' EQUITY TO TANGIBLE ASSETS | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | |||||||||
Shareholders' equity (GAAP) | $ | 1,254,123 | $ | 1,272,626 | $ | 1,323,404 | ||||||
Exclude goodwill and other intangible assets, net | 267,625 | 265,314 | 273,071 | |||||||||
Tangible common shareholders' equity (non-GAAP) | $ | 986,498 | $ | 1,007,312 | $ | 1,050,333 | ||||||
Total assets (GAAP) | $ | 10,317,264 | $ | 9,763,209 | $ | 10,068,378 | ||||||
Exclude goodwill and other intangible assets, net | 267,625 | 265,314 | 273,071 | |||||||||
Total tangible assets (non-GAAP) | $ | 10,049,639 | $ | 9,497,895 | $ | 9,795,307 | ||||||
Common shareholders' equity to total assets (GAAP) | 12.16 | % | 13.03 | % | 13.14 | % | ||||||
Tangible common shareholders' equity to tangible assets (non-GAAP) | 9.82 | % | 10.61 | % | 10.72 | % | ||||||
TANGIBLE COMMON SHAREHOLDERS' EQUITY PER SHARE | ||||||||||||
Tangible common shareholders' equity | $ | 986,498 | $ | 1,007,312 | $ | 1,050,333 | ||||||
Common shares outstanding at end of period | 32,423,673 | 32,726,485 | 33,152,864 | |||||||||
Common shareholders' equity (book value) per share (GAAP) | $ | 38.68 | $ | 38.89 | $ | 39.92 | ||||||
Tangible common shareholders' equity (tangible book value) per share (non-GAAP) | $ | 30.43 | $ | 30.78 | $ | 31.68 |
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