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Banner Corporation Reports Net Income of $37.6 Million, or $1.09 Per Diluted Share, for First Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share

Banner Corporation (NASDAQ:BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $37.6 million, or $1.09 per diluted share, for the first quarter of 2024, compared to $42.6 million, or $1.24 per diluted share, for the preceding quarter and $55.6 million, or $1.61 per diluted share, for the first quarter of 2023. Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago. The decrease in net interest income compared to the preceding quarter and prior year quarter reflects an increase in funding costs, partially offset by an increase in yields on earning assets. Banner’s first quarter 2024 results included a $4.9 million net loss on the sale of securities, compared to a $4.8 million net loss on the sale of securities in the preceding quarter and a $7.3 million net loss on the sale of securities in the first quarter of 2023. Banner’s first quarter 2024 results also included a $520,000 provision for credit losses, compared to a $2.5 million provision for credit losses in the preceding quarter and a $524,000 recapture of provision for credit losses in the first quarter of 2023. In addition, the preceding quarter included a $3.5 million fair value gain recorded on multifamily loans as a result of their transfer from held for sale to held for investment, with no similar transaction recorded in the current quarter.

Banner announced that its Board of Directors declared a regular quarterly cash dividend of $0.48 per share. The dividend will be payable May 10, 2024, to common shareholders of record on April 30, 2024.

“Banner’s operating performance for the first quarter of 2024 reflects our super community bank business strategy of emphasizing a moderate risk profile and strong relationship banking, positioning the Company to weather current market conditions,” said Mark Grescovich, President and CEO. “Our results for the first quarter of 2024 benefited from higher yields on interest-earning assets. However, the continued high interest rate environment, and its effect on funding costs, resulted in moderate compression in our net interest margin during the quarter. We continue to maintain strong credit quality metrics and a solid reserve for potential credit losses. Additionally, we continue to benefit from a strong core deposit base, with core deposits representing 89% of total deposits at quarter end. Banner has upheld its core values for the past 133 years, which are to do the right thing for our clients, communities, colleagues, company and shareholders; and to provide consistent and reliable strength through all economic cycles and change events.”

At March 31, 2024, Banner, on a consolidated basis, had $15.52 billion in assets, $10.72 billion in net loans and $13.16 billion in deposits. Banner operates 135 full-service branch offices, including branches located in eight of the top 20 largest western Metropolitan Statistical Areas by population.

First Quarter 2024 Highlights

  • Revenues were $144.6 million for the first quarter of 2024, compared to $152.5 million in the preceding quarter and $162.6 million in the first quarter a year ago.
  • Adjusted revenue* (the total of net interest income and total non-interest income adjusted for the net gain or loss on the sale of securities and the net change in valuation of financial instruments) was $150.4 million in the first quarter of 2024, compared to $157.1 million in the preceding quarter and $170.4 million in the first quarter a year ago.
  • Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago.
  • Net interest margin, on a tax equivalent basis, was 3.74%, compared to 3.83% in the preceding quarter and 4.30% in the first quarter a year ago.
  • Mortgage banking operations revenue was $2.3 million for the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago.
  • Return on average assets was 0.97%, compared to 1.09% in the preceding quarter and 1.44% in the first quarter a year ago.
  • Net loans receivable increased 1% to $10.72 billion at March 31, 2024, compared to $10.66 billion at December 31, 2023, and increased 7% compared to $10.02 billion at March 31, 2023.
  • Non-performing assets were $29.9 million, or 0.19% of total assets, at March 31, 2024, compared to $30.1 million, or 0.19% of total assets, at December 31, 2023 and $27.1 million, or 0.17% of total assets, at March 31, 2023.
  • The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable, as of March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable, as of December 31, 2023 and $141.5 million, or 1.39% of total loans receivable, as of March 31, 2023.
  • Total deposits increased to $13.16 billion at March 31, 2024, compared to $13.03 billion at December 31, 2023 and $13.15 billion at March 31, 2023. Core deposits represented 89% of total deposits at March 31, 2024.
  • Banner Bank’s estimated uninsured deposits were approximately 31% of total deposits at both March 31, 2024 and December 31, 2023.
  • Banner Bank’s estimated uninsured deposits, excluding collateralized public deposits and affiliate deposits, were approximately 28% of total deposits at both March 31, 2024 and December 31, 2023.
  • Available borrowing capacity was $5.05 billion at March 31, 2024, compared to $4.65 billion at December 31, 2023.
  • On-balance sheet liquidity was $2.77 billion at March 31, 2024, compared to $2.93 billion at December 31, 2023.
  • Dividends paid to shareholders were $0.48 per share in the quarter ended March 31, 2024.
  • Common shareholders’ equity per share increased 1% to $48.39 at March 31, 2024, compared to $48.12 at the preceding quarter end, and increased 8% from $44.64 at March 31, 2023.
  • Tangible common shareholders’ equity per share* increased 1% to $37.40 at March 31, 2024, compared to $37.09 at the preceding quarter end, and increased 12% from $33.52 at March 31, 2023.

*Non-GAAP (Generally Accepted Accounting Principles) financial measure; See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Income Statement Review

Net interest income was $133.0 million in the first quarter of 2024, compared to $138.4 million in the preceding quarter and $153.3 million in the first quarter a year ago. Net interest margin on a tax equivalent basis decreased nine basis points to 3.74% for the first quarter of 2024, compared to 3.83% in the preceding quarter, and decreased compared to 4.30% in the first quarter a year ago. Net interest margin for the current quarter was impacted by increased funding costs reflecting the persistent high interest rate environment, partially offset by increased yields on loans due to new loans being originated at higher interest rates.

Average yields on interest-earning assets increased 10 basis points to 5.16% for the first quarter of 2024, compared to 5.06% for the preceding quarter, and increased compared to 4.68% in the first quarter a year ago. Average loan yields increased 10 basis points to 5.87%, compared to 5.77% in the preceding quarter, and increased compared to 5.38% in the first quarter a year ago. The increase in average yields on interest-earning assets, particularly loans, during the current quarter reflects the benefit of new loans being originated at higher interest rates. Total deposit costs increased 19 basis points to 1.37% in the first quarter of 2024, compared to 1.18% in the preceding quarter, and compared to 0.28% in the first quarter a year ago. The increase in the cost of deposits was due to a larger percentage of core deposits being in interest bearing accounts as well as an increase in the mix of higher cost retail CDs. The average rate paid on borrowings increased 21 basis points to 4.98% in the first quarter of 2024, compared to 4.77% in the preceding quarter, and compared to 3.41% in the first quarter a year ago. The total cost of funding liabilities increased 22 basis points to 1.53% during the first quarter of 2024, compared to 1.31% in the preceding quarter, and compared to 0.40% in the first quarter a year ago.

A $520,000 provision for credit losses was recorded in the current quarter (comprised of a $1.4 million provision for credit losses - loans, an $887,000 recapture of provision for credit losses - unfunded loan commitments and a $17,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $2.5 million provision for credit losses in the prior quarter (comprised of a $3.8 million provision for credit losses - loans, a $526,000 recapture of provision for credit losses - unfunded loan commitments, a $750,000 recapture of provision for credit losses - available for sale securities and a $23,000 recapture of provision for credit losses - held-to-maturity debt securities) and a $524,000 recapture of provision for credit losses in the first quarter a year ago (comprised of a $774,000 provision for credit losses - loans, a $1.3 million recapture of provision for credit losses - unfunded loan commitments and a $20,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter is primarily related to the loan growth in the construction and one- to four-family loan portfolios and was partially offset by a reduction in unfunded loan commitments in the construction portfolio. The provision for credit losses for the preceding quarter primarily reflected increased loan balances and higher than forecasted net loan charge-offs, partially offset by an increase in the trading price of our investments in other banks’ subordinated debt.

Total non-interest income was $11.6 million in the first quarter of 2024, compared to $14.1 million in the preceding quarter and $9.3 million in the first quarter a year ago. The decrease in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $3.1 million decrease in mortgage banking operations revenue and a $1.1 million decrease in the fair value adjustments on financial instruments carried at fair value during the current quarter, partially offset by a $1.5 million increase in deposit fees and other service charges. The increase in non-interest income during the current quarter compared to the prior year quarter was primarily due to a $2.3 million decrease in the net loss recognized on the sale of securities.

Mortgage banking operations revenue, including gains on one- to four-family and multifamily loan sales and loan servicing fees, was $2.3 million in the first quarter of 2024, compared to $5.4 million in the preceding quarter and $2.7 million in the first quarter a year ago. The decrease from the preceding quarter primarily reflects a $3.5 million reversal of the lower of cost or market adjustment on multifamily loans held for sale recognized during the preceding quarter due to the transfer of all remaining multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. In 2023, the Bank discontinued the origination of multifamily loans for sale into the secondary market. The volume of one- to four-family loans sold during the current quarter increased compared to the prior year quarter, although overall volumes remained low due to reduced refinancing and purchase activity in the current rate environment. Home purchase activity accounted for 89% of one- to four-family mortgage loan originations in the first quarter of 2024, compared to 92% in the preceding quarter and 88% in the first quarter of 2023.

First quarter 2024, non-interest income included a $992,000 net loss for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of limited partnership investments, and a $4.9 million net loss on the sale of securities. In the preceding quarter, non-interest income included a $139,000 net gain for fair value adjustments and a $4.8 million net loss on the sale of securities. In the first quarter a year ago, non-interest income included a $552,000 net loss for fair value adjustments and a $7.3 million net loss on the sale of securities.

Total non-interest expense was $97.6 million in the first quarter of 2024, compared to $96.6 million in the preceding quarter and $94.6 million in the first quarter of 2023. The increase in non-interest expense for the current quarter compared to the prior quarter primarily reflects a $2.3 million increase in salary and employee benefits, primarily due to typically higher first quarter payroll taxes and 401(k) expense, as well as higher medical insurance expense, partially offset by a $737,000 decrease in professional and legal expense and a $607,000 decrease in advertising and marketing expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits, payment and card processing services expense and deposit insurance expense. Banner’s efficiency ratio was 67.55% for the first quarter of 2024, compared to 63.37% in the preceding quarter and 58.20% in the same quarter a year ago. Banner’s adjusted efficiency ratio* was 63.70% for the first quarter of 2024, compared to 60.04% in the preceding quarter and 54.23% in the year ago quarter.

*Non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a discussion and reconciliation of non-GAAP financial measures.

Federal and state income tax expense totaled $8.8 million for the first quarter of 2024 resulting in an effective tax rate of 19.0%, reflecting the benefits from tax exempt income. Banner’s statutory income tax rate for the quarter ended March 31, 2024, was 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 decreased to $15.52 billion at March 31, 2024, compared to $15.67 billion at December 31, 2023, and $15.53 billion at March 31, 2023. Securities and interest-bearing deposits held at other banks totaled $3.32 billion at March 31, 2024, compared to $3.48 billion at December 31, 2023 and $3.99 billion at March 31, 2023. The decrease compared to the prior quarter was primarily due to the sale of securities and normal cash flows from the security portfolio. The average effective duration of the securities portfolio was approximately 6.6 years at both March 31, 2024 and March 31, 2023.

Total loans receivable increased to $10.87 billion at March 31, 2024, compared to $10.81 billion at December 31, 2023, and $10.16 billion at March 31, 2023. One- to four-family residential loans increased 3% to $1.57 billion at March 31, 2024, compared to $1.52 billion at December 31, 2023, and increased 25% compared to $1.25 billion at March 31, 2023. The increase in one- to four-family residential loans was the result of one- to four-family construction loans converting to one- to four-family portfolio loans upon the completion of the construction phase and new loan production. Multifamily real estate loans decreased slightly to $809.1 million at March 31, 2024, compared to $811.2 million at December 31, 2023, and increased 16% compared to $696.9 million at March 31, 2023. The increase in multifamily real estate loans year over year was primarily the result of the conversion of affordable housing multifamily construction loans to the multifamily portfolio upon the completion of the construction phase as well as the transfer of $43.5 million of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. Construction, land and land development loans increased 2% to $1.57 billion at March 31, 2024, compared to $1.54 billion at December 31, 2023, and increased 7% compared to $1.47 billion at March 31, 2023. The increase in construction, land and land development loans was primarily the result of new loan production and advances on multifamily construction loans, primarily related to affordable housing projects. Agricultural business loans decreased 4% to $318.0 million at March 31, 2024, compared to $331.1 million at December 31, 2023, primarily due to operating line paydowns, and increased 17% compared to $272.7 million at March 31, 2023, primarily due to new loan production.

Loans held for sale were $9.4 million at March 31, 2024, compared to $11.2 million at December 31, 2023 and $49.0 million at March 31, 2023. One- to four-family residential mortgage loans sold totaled $65.9 million in the current quarter, compared to $65.6 million in the preceding quarter and $40.5 million in the first quarter a year ago. The decrease in loans held for sale compared to March 31, 2023 was due to the previously mentioned transfer of multifamily loans held for sale to the held for investment loan portfolio in the fourth quarter of 2023. There were no multifamily loans held for sale at March 31, 2024 or December 31, 2023.

Total deposits increased to $13.16 billion at March 31, 2024, compared to $13.03 billion at December 31, 2023 and $13.15 billion a year ago. Core deposits increased 1% to $11.67 billion at March 31, 2024, compared to $11.55 billion at December 31, 2023, and decreased 4% compared to $12.20 billion at March 31, 2023. The increase in core deposits compared to the prior quarter was primarily due to increases in savings accounts while the decrease compared to the prior year quarter reflected clients moving funds out of non-interest bearing accounts into higher yielding certificates of deposits. Core deposits were 89% of total deposits at March 31, 2024, compared to 89% of total deposits at December 31, 2023 and 93% of total deposits at March 31, 2023. Certificates of deposit increased 1% to $1.49 billion at March 31, 2024, compared to $1.48 billion at December 31, 2023, and increased 56% compared to $949.9 million a year earlier. The increase in certificates of deposit during the current quarter compared to the preceding quarter and first quarter a year ago was principally due to clients seeking higher yields moving funds from core deposit accounts to higher yielding certificates of deposit. The increase in certificates of deposit from the first quarter a year ago was also due to a $107.5 million increase in brokered deposits.

Banner Bank’s estimated uninsured deposits were $4.18 billion or 31% of total deposits at March 31, 2024, compared to $4.08 billion or 31% of total deposits at December 31, 2023. The uninsured deposit calculation includes $316.6 million and $305.3 million of collateralized public deposits at March 31, 2024 and December 31, 2023, respectively. Uninsured deposits also include cash held by the holding company of $113.9 million and $108.2 million at March 31, 2024 and December 31, 2023, respectively. Banner Bank’s estimated uninsured deposits, excluding collateralized public deposits and cash held at the holding company, were 28% of total deposits at both March 31, 2024 and December 31, 2023.

Banner had $52.0 million of FHLB advances at March 31, 2024, compared to $323.0 million at December 31, 2023 and $170.0 million a year ago. At March 31, 2024, Banner’s off-balance sheet liquidity included additional borrowing capacity of $3.27 billion at the FHLB and $1.66 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

Subordinated notes, net of issuance costs, were $89.5 million at March 31, 2024 compared to $92.9 million at December 31, 2023 and $99.0 million at March 31, 2023. The decrease in subordinated notes from both the preceding and prior year quarters was due to Banner Bank’s purchase of $10.0 million of Banner’s subordinated debt over the past year.

At March 31, 2024, total common shareholders’ equity was $1.66 billion, or 10.73% of total assets, compared to $1.65 billion or 10.55% of total assets at December 31, 2023, and $1.53 billion or 9.86% of total assets at March 31, 2023. The increase in total common shareholders’ equity at March 31, 2024 compared to December 31, 2023 was primarily due to a $20.8 million increase in retained earnings as a result of $37.6 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the first quarter of 2024. The increase in retained earnings was partially offset by a $10.3 million increase in accumulated other comprehensive loss, primarily due to a decrease in the fair value of the security portfolio as a result of an increase in market interest rates during the first quarter of 2024. At March 31, 2024, tangible common shareholders’ equity*, which excludes goodwill and other intangible assets, net, was $1.29 billion, or 8.50% of tangible assets*, compared to $1.27 billion, or 8.33% of tangible assets, at December 31, 2023, and $1.15 billion, or 7.59% of tangible assets, a year ago.

*Non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

Banner and Banner Bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At March 31, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.06%, its estimated Tier 1 leverage capital to average assets ratio was 10.71%, and its estimated total capital to risk-weighted assets ratio was 14.70%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $151.1 million, or 1.39% of total loans receivable and 513% of non-performing loans, at March 31, 2024, compared to $149.6 million, or 1.38% of total loans receivable and 506% of non-performing loans, at December 31, 2023, and $141.5 million, or 1.39% of total loans receivable and 528% of non-performing loans, at March 31, 2023. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $13.6 million at March 31, 2024, compared to $14.5 million at December 31, 2023, and $13.4 million at March 31, 2023. Net loan recoveries totaled $73,000 in the first quarter of 2024, compared to net loan charge-offs of $1.1 million in the preceding quarter and net loan charge-offs of $782,000 in the first quarter a year ago. Non-performing loans were $29.5 million at March 31, 2024, compared to $29.6 million at December 31, 2023, and $26.8 million a year ago.

Substandard loans were $116.1 million at March 31, 2024, compared to $125.4 million at December 31, 2023 and $148.0 million a year ago. The decrease primarily reflects paydowns and payoffs of substandard loans as well as risk rating upgrades.

Total non-performing assets were $29.9 million, or 0.19% of total assets, at March 31, 2024, compared to $30.1 million, or 0.19% of total assets, at December 31, 2023, and $27.1 million, or 0.17% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, April 18, 2024, at 8:00 a.m. PDT, to discuss its first quarter results. Interested investors may listen to the call live at www.bannerbank.com. Investment professionals are invited to dial (833) 470-1428 using access code 062587 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $15.52 billion bank holding company operating a 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.

Factors that could cause Banner’s actual results to differ materially from those described in the forward-looking statements, include but are not limited to, the following: (1) potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth, or increased political instability due to acts of war; (2) changes in the interest rate environment, including past increases in the Board of Governors of the Federal Reserve System (the “Federal Reserve”) benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; (3) the impact of continuing elevated inflation and the current and future monetary policies of the Federal Reserve in response thereto; (4) the effects of any federal government shutdown; (5) the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; (6) 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; (7) 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; (8) competitive pressures among depository institutions; (9) the effect of inflation on interest rate movements and their impact on client behavior and net interest margin; (10) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (11) fluctuations in real estate values; (12) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (13) the ability to access cost-effective funding; (14) disruptions, security breaches or other adverse events, failures or interruptions in, or attacks on, information technology systems or on the third-party vendors who perform critical processing functions; (15) changes in financial markets; (16) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (17) the costs, effects and outcomes of litigation; (18) 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; (19) changes in accounting principles, policies or guidelines; (20) future acquisitions by Banner of other depository institutions or lines of business; (21) future goodwill impairment due to changes in Banner’s business or changes in market conditions; (22) effects of critical accounting policies and judgments, including the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; (23) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and (24) other risks detailed from time to time in Banner’s other reports filed with and furnished to the Securities and Exchange Commission including Banner’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

RESULTS OF OPERATIONS

 

Quarters Ended

(in thousands except shares and per share data)

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

INTEREST INCOME:

 

 

 

 

 

 

Loans receivable

 

$

156,475

 

 

$

154,532

 

 

$

133,257

 

Mortgage-backed securities

 

 

16,934

 

 

 

17,398

 

 

 

18,978

 

Securities and cash equivalents

 

 

11,279

 

 

 

11,808

 

 

 

14,726

 

Total interest income

 

 

184,688

 

 

 

183,738

 

 

 

166,961

 

INTEREST EXPENSE:

 

 

 

 

 

 

Deposits

 

 

44,613

 

 

 

39,342

 

 

 

9,244

 

Federal Home Loan Bank (FHLB) advances

 

 

2,972

 

 

 

1,870

 

 

 

1,264

 

Other borrowings

 

 

1,175

 

 

 

1,125

 

 

 

381

 

Subordinated debt

 

 

2,969

 

 

 

2,992

 

 

 

2,760

 

Total interest expense

 

 

51,729

 

 

 

45,329

 

 

 

13,649

 

Net interest income

 

 

132,959

 

 

 

138,409

 

 

 

153,312

 

PROVISION (RECAPTURE) FOR CREDIT LOSSES

 

 

520

 

 

 

2,522

 

 

 

(524

)

Net interest income after provision (recapture) for credit losses

 

 

132,439

 

 

 

135,887

 

 

 

153,836

 

NON-INTEREST INCOME:

 

 

 

 

 

 

Deposit fees and other service charges

 

 

11,022

 

 

 

9,560

 

 

 

10,562

 

Mortgage banking operations

 

 

2,335

 

 

 

5,391

 

 

 

2,691

 

Bank-owned life insurance

 

 

2,237

 

 

 

2,609

 

 

 

2,188

 

Miscellaneous

 

 

1,892

 

 

 

1,159

 

 

 

1,640

 

 

 

 

17,486

 

 

 

18,719

 

 

 

17,081

 

Net loss on sale of securities

 

 

(4,903

)

 

 

(4,806

)

 

 

(7,252

)

Net change in valuation of financial instruments carried at fair value

 

 

(992

)

 

 

139

 

 

 

(552

)

Total non-interest income

 

 

11,591

 

 

 

14,052

 

 

 

9,277

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

Salary and employee benefits

 

 

62,369

 

 

 

60,111

 

 

 

61,389

 

Less capitalized loan origination costs

 

 

(3,676

)

 

 

(3,871

)

 

 

(3,431

)

Occupancy and equipment

 

 

12,462

 

 

 

12,200

 

 

 

11,970

 

Information and computer data services

 

 

7,320

 

 

 

7,098

 

 

 

7,147

 

Payment and card processing services

 

 

5,710

 

 

 

6,088

 

 

 

4,618

 

Professional and legal expenses

 

 

1,530

 

 

 

2,267

 

 

 

2,121

 

Advertising and marketing

 

 

1,079

 

 

 

1,686

 

 

 

806

 

Deposit insurance

 

 

2,809

 

 

 

2,926

 

 

 

1,890

 

State and municipal business and use taxes

 

 

1,304

 

 

 

1,372

 

 

 

1,300

 

Real estate operations, net

 

 

(220

)

 

 

47

 

 

 

(277

)

Amortization of core deposit intangibles

 

 

723

 

 

 

858

 

 

 

1,050

 

Miscellaneous

 

 

6,231

 

 

 

5,839

 

 

 

6,038

 

Total non-interest expense

 

 

97,641

 

 

 

96,621

 

 

 

94,621

 

Income before provision for income taxes

 

 

46,389

 

 

 

53,318

 

 

 

68,492

 

PROVISION FOR INCOME TAXES

 

 

8,830

 

 

 

10,694

 

 

 

12,937

 

NET INCOME

 

$

37,559

 

 

$

42,624

 

 

$

55,555

 

Earnings per common share:

 

 

 

 

 

 

Basic

 

$

1.09

 

 

$

1.24

 

 

$

1.62

 

Diluted

 

$

1.09

 

 

$

1.24

 

 

$

1.61

 

Cumulative dividends declared per common share

 

$

0.48

 

 

$

0.48

 

 

$

0.48

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

34,391,564

 

 

 

34,381,780

 

 

 

34,239,533

 

Diluted

 

 

34,521,105

 

 

 

34,472,155

 

 

 

34,457,869

 

Increase in common shares outstanding

 

 

46,852

 

 

 

2,420

 

 

 

114,522

 

 

FINANCIAL CONDITION

 

 

 

 

 

 

 

Percentage Change

(in thousands except shares and per share data)

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

Prior Qtr

 

Prior Yr Qtr

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

168,427

 

 

$

209,634

 

 

$

194,629

 

 

(19.7

)%

 

(13.5

)%

Interest-bearing deposits

 

 

40,849

 

 

 

44,830

 

 

 

48,363

 

 

(8.9

)%

 

(15.5

)%

Total cash and cash equivalents

 

 

209,276

 

 

 

254,464

 

 

 

242,992

 

 

(17.8

)%

 

(13.9

)%

Securities - trading

 

 

 

 

 

 

 

 

28,591

 

 

nm

 

(100.0

)%

Securities - available for sale, amortized cost $2,617,986, $2,729,980 and $3,040,211, respectively

 

 

2,244,939

 

 

 

2,373,783

 

 

 

2,653,860

 

 

(5.4

)%

 

(15.4

)%

Securities - held to maturity, fair value $869,097, $907,514 and $957,062, respectively

 

 

1,038,312

 

 

 

1,059,055

 

 

 

1,109,595

 

 

(2.0

)%

 

(6.4

)%

Total securities

 

 

3,283,251

 

 

 

3,432,838

 

 

 

3,792,046

 

 

(4.4

)%

 

(13.4

)%

FHLB stock

 

 

11,741

 

 

 

24,028

 

 

 

16,800

 

 

(51.1

)%

 

(30.1

)%

Securities purchased under agreements to resell

 

 

 

 

 

 

 

 

150,000

 

 

nm

 

(100.0

)%

Loans held for sale

 

 

9,357

 

 

 

11,170

 

 

 

49,016

 

 

(16.2

)%

 

(80.9

)%

Loans receivable

 

 

10,869,096

 

 

 

10,810,455

 

 

 

10,160,684

 

 

0.5

%

 

7.0

%

Allowance for credit losses – loans

 

 

(151,140

)

 

 

(149,643

)

 

 

(141,457

)

 

1.0

%

 

6.8

%

Net loans receivable

 

 

10,717,956

 

 

 

10,660,812

 

 

 

10,019,227

 

 

0.5

%

 

7.0

%

Accrued interest receivable

 

 

66,124

 

 

 

63,100

 

 

 

52,094

 

 

4.8

%

 

26.9

%

Property and equipment, net

 

 

129,889

 

 

 

132,231

 

 

 

136,362

 

 

(1.8

)%

 

(4.7

)%

Goodwill

 

 

373,121

 

 

 

373,121

 

 

 

373,121

 

 

%

 

%

Other intangibles, net

 

 

4,961

 

 

 

5,684

 

 

 

8,390

 

 

(12.7

)%

 

(40.9

)%

Bank-owned life insurance

 

 

306,600

 

 

 

304,366

 

 

 

299,754

 

 

0.7

%

 

2.3

%

Operating lease right-of-use assets

 

 

40,834

 

 

 

43,731

 

 

 

47,106

 

 

(6.6

)%

 

(13.3

)%

Other assets

 

 

365,169

 

 

 

364,846

 

 

 

346,695

 

 

0.1

%

 

5.3

%

Total assets

 

$

15,518,279

 

 

$

15,670,391

 

 

$

15,533,603

 

 

(1.0

)%

 

(0.1

)%

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing

 

$

4,699,553

 

 

$

4,792,369

 

 

$

5,764,009

 

 

(1.9

)%

 

(18.5

)%

Interest-bearing transaction and savings accounts

 

 

6,973,338

 

 

 

6,759,661

 

 

 

6,440,261

 

 

3.2

%

 

8.3

%

Interest-bearing certificates

 

 

1,485,880

 

 

 

1,477,467

 

 

 

949,932

 

 

0.6

%

 

56.4

%

Total deposits

 

 

13,158,771

 

 

 

13,029,497

 

 

 

13,154,202

 

 

1.0

%

 

%

Advances from FHLB

 

 

52,000

 

 

 

323,000

 

 

 

170,000

 

 

(83.9

)%

 

(69.4

)%

Other borrowings

 

 

183,341

 

 

 

182,877

 

 

 

214,564

 

 

0.3

%

 

(14.6

)%

Subordinated notes, net

 

 

89,456

 

 

 

92,851

 

 

 

99,046

 

 

(3.7

)%

 

(9.7

)%

Junior subordinated debentures at fair value

 

 

66,586

 

 

 

66,413

 

 

 

74,703

 

 

0.3

%

 

(10.9

)%

Operating lease liabilities

 

 

45,524

 

 

 

48,659

 

 

 

52,772

 

 

(6.4

)%

 

(13.7

)%

Accrued expenses and other liabilities

 

 

211,578

 

 

 

228,428

 

 

 

191,326

 

 

(7.4

)%

 

10.6

%

Deferred compensation

 

 

46,515

 

 

 

45,975

 

 

 

45,295

 

 

1.2

%

 

2.7

%

Total liabilities

 

 

13,853,771

 

 

 

14,017,700

 

 

 

14,001,908

 

 

(1.2

)%

 

(1.1

)%

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

1,300,969

 

 

 

1,299,651

 

 

 

1,293,225

 

 

0.1

%

 

0.6

%

Retained earnings

 

 

663,021

 

 

 

642,175

 

 

 

564,106

 

 

3.2

%

 

17.5

%

Accumulated other comprehensive loss

 

 

(299,482

)

 

 

(289,135

)

 

 

(325,636

)

 

3.6

%

 

(8.0

)%

Total shareholders’ equity

 

 

1,664,508

 

 

 

1,652,691

 

 

 

1,531,695

 

 

0.7

%

 

8.7

%

Total liabilities and shareholders’ equity

 

$

15,518,279

 

 

$

15,670,391

 

 

$

15,533,603

 

 

(1.0

)%

 

(0.1

)%

Common Shares Issued:

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period

 

 

34,395,221

 

 

 

34,348,369

 

 

 

34,308,540

 

 

 

 

 

Common shareholders’ equity per share (1)

 

$

48.39

 

 

$

48.12

 

 

$

44.64

 

 

 

 

 

Common shareholders’ tangible equity per share (1) (2)

 

$

37.40

 

 

$

37.09

 

 

$

33.52

 

 

 

 

 

Common shareholders’ tangible equity to tangible assets (2)

 

 

8.50

%

 

 

8.33

%

 

 

7.59

%

 

 

 

 

Consolidated Tier 1 leverage capital ratio

 

 

10.71

%

 

 

10.56

%

 

 

9.96

%

 

 

 

 

nm

Not meaningful

(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 and tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

 

 

 

 

 

 

 

Percentage Change

LOANS

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

Prior Qtr

 

Prior Yr Qtr

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate (CRE):

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

$

905,063

 

 

$

915,897

 

 

$

865,705

 

 

(1.2

)%

 

4.5

%

Investment properties

 

 

1,544,885

 

 

 

1,541,344

 

 

 

1,520,261

 

 

0.2

%

 

1.6

%

Small balance CRE

 

 

1,159,355

 

 

 

1,178,500

 

 

 

1,179,749

 

 

(1.6

)%

 

(1.7

)%

Multifamily real estate

 

 

809,101

 

 

 

811,232

 

 

 

696,864

 

 

(0.3

)%

 

16.1

%

Construction, land and land development:

 

 

 

 

 

 

 

 

 

 

Commercial construction

 

 

158,011

 

 

 

170,011

 

 

 

191,051

 

 

(7.1

)%

 

(17.3

)%

Multifamily construction

 

 

573,014

 

 

 

503,993

 

 

 

362,425

 

 

13.7

%

 

58.1

%

One- to four-family construction

 

 

495,931

 

 

 

526,432

 

 

 

584,655

 

 

(5.8

)%

 

(15.2

)%

Land and land development

 

 

344,563

 

 

 

336,639

 

 

 

329,438

 

 

2.4

%

 

4.6

%

Commercial business:

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

1,262,716

 

 

 

1,255,734

 

 

 

1,266,047

 

 

0.6

%

 

(0.3

)%

Small business scored

 

 

1,028,067

 

 

 

1,022,154

 

 

 

960,650

 

 

0.6

%

 

7.0

%

Agricultural business, including secured by farmland:

 

 

 

 

 

 

 

 

 

 

Agricultural business, including secured by farmland

 

 

317,958

 

 

 

331,089

 

 

 

272,707

 

 

(4.0

)%

 

16.6

%

One- to four-family residential

 

 

1,566,834

 

 

 

1,518,046

 

 

 

1,252,104

 

 

3.2

%

 

25.1

%

Consumer:

 

 

 

 

 

 

 

 

 

 

Consumer—home equity revolving lines of credit

 

 

597,060

 

 

 

588,703

 

 

 

564,334

 

 

1.4

%

 

5.8

%

Consumer—other

 

 

106,538

 

 

 

110,681

 

 

 

114,694

 

 

(3.7

)%

 

(7.1

)%

Total loans receivable

 

$

10,869,096

 

 

$

10,810,455

 

 

$

10,160,684

 

 

0.5

%

 

7.0

%

Loans 30 - 89 days past due and on accrual

 

$

19,649

 

 

$

19,744

 

 

$

14,037

 

 

 

 

 

Total delinquent loans (including loans on non-accrual), net

 

$

39,429

 

 

$

43,164

 

 

$

37,251

 

 

 

 

 

Total delinquent loans / Total loans receivable

 

 

0.36

%

 

 

0.40

%

 

 

0.37

%

 

 

 

 

 

LOANS BY GEOGRAPHIC LOCATION

 

 

 

 

 

 

 

 

 

Percentage Change

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

Prior Qtr

 

Prior Yr Qtr

 

 

Amount

 

Percentage

 

Amount

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington

 

$

5,091,912

 

 

46.9

%

 

$

5,095,602

 

 

$

4,808,821

 

 

(0.1

)%

 

5.9

%

California

 

 

2,687,114

 

 

24.7

%

 

 

2,670,923

 

 

 

2,490,666

 

 

0.6

%

 

7.9

%

Oregon

 

 

2,013,453

 

 

18.5

%

 

 

1,974,001

 

 

 

1,823,057

 

 

2.0

%

 

10.4

%

Idaho

 

 

613,155

 

 

5.6

%

 

 

610,064

 

 

 

565,335

 

 

0.5

%

 

8.5

%

Utah

 

 

72,652

 

 

0.7

%

 

 

68,931

 

 

 

67,085

 

 

5.4

%

 

8.3

%

Other

 

 

390,810

 

 

3.6

%

 

 

390,934

 

 

 

405,720

 

 

%

 

(3.7

)%

Total loans receivable

 

$

10,869,096

 

 

100.0

%

 

$

10,810,455

 

 

$

10,160,684

 

 

0.5

%

 

7.0

%

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

LOAN ORIGINATIONS

Quarters Ended

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Commercial real estate

$

67,362

 

 

$

76,277

 

 

$

75,768

 

Multifamily real estate

 

385

 

 

 

5,360

 

 

 

35,520

 

Construction and land

 

437,273

 

 

 

382,905

 

 

 

247,842

 

Commercial business

 

154,715

 

 

 

166,984

 

 

 

131,826

 

Agricultural business

 

34,406

 

 

 

15,058

 

 

 

23,181

 

One-to four-family residential

 

17,568

 

 

 

37,446

 

 

 

34,265

 

Consumer

 

66,145

 

 

 

57,427

 

 

 

60,888

 

Total loan originations (excluding loans held for sale)

$

777,854

 

 

$

741,457

 

 

$

609,290

 

 
ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

 

 

Quarters Ended

CHANGE IN THE

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

ALLOWANCE FOR CREDIT LOSSES – LOANS

 

 

 

 

 

 

Balance, beginning of period

 

$

149,643

 

 

$

146,960

 

 

$

141,465

 

Provision for credit losses – loans

 

 

1,424

 

 

 

3,821

 

 

 

774

 

Recoveries of loans previously charged off:

 

 

 

 

 

 

Commercial real estate

 

 

1,389

 

 

 

129

 

 

 

184

 

One- to four-family real estate

 

 

16

 

 

 

18

 

 

 

117

 

Commercial business

 

 

781

 

 

 

237

 

 

 

119

 

Agricultural business, including secured by farmland

 

 

106

 

 

 

16

 

 

 

109

 

Consumer

 

 

159

 

 

 

131

 

 

 

169

 

 

 

 

2,451

 

 

 

531

 

 

 

698

 

Loans charged off:

 

 

 

 

 

 

Construction and land

 

 

 

 

 

(933

)

 

 

 

One- to four-family real estate

 

 

 

 

 

(8

)

 

 

(30

)

Commercial business

 

 

(1,809

)

 

 

(310

)

 

 

(1,158

)

Consumer

 

 

(569

)

 

 

(418

)

 

 

(292

)

 

 

 

(2,378

)

 

 

(1,669

)

 

 

(1,480

)

Net recoveries (charge-offs)

 

 

73

 

 

 

(1,138

)

 

 

(782

)

Balance, end of period

 

$

151,140

 

 

$

149,643

 

 

$

141,457

 

Net recoveries (charge-offs) / Average loans receivable

 

 

0.001

%

 

 

(0.011

)%

 

 

(0.008

)%

 

ALLOCATION OF

 

 

 

 

 

 

ALLOWANCE FOR CREDIT LOSSES – LOANS

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Commercial real estate

 

$

43,555

 

 

$

44,384

 

 

$

42,975

 

Multifamily real estate

 

 

9,293

 

 

 

9,326

 

 

 

8,475

 

Construction and land

 

 

28,908

 

 

 

28,095

 

 

 

28,433

 

One- to four-family real estate

 

 

20,432

 

 

 

19,271

 

 

 

15,736

 

Commercial business

 

 

35,544

 

 

 

35,464

 

 

 

33,735

 

Agricultural business, including secured by farmland

 

 

3,890

 

 

 

3,865

 

 

 

3,094

 

Consumer

 

 

9,518

 

 

 

9,238

 

 

 

9,009

 

Total allowance for credit losses – loans

 

$

151,140

 

 

$

149,643

 

 

$

141,457

 

Allowance for credit losses - loans / Total loans receivable

 

 

1.39

%

 

 

1.38

%

 

 

1.39

%

Allowance for credit losses - loans / Non-performing loans

 

 

513

%

 

 

506

%

 

 

528

%

 

 

 

Quarters Ended

CHANGE IN THE

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS

 

 

 

 

 

 

Balance, beginning of period

 

$

14,484

 

 

$

15,010

 

 

$

14,721

 

Recapture of provision for credit losses - unfunded loan commitments

 

 

(887

)

 

 

(526

)

 

 

(1,278

)

Balance, end of period

 

$

13,597

 

 

$

14,484

 

 

$

13,443

 

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

NON-PERFORMING ASSETS

 

 

 

 

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Loans on non-accrual status:

 

 

 

 

 

Secured by real estate:

 

 

 

 

 

Commercial

$

2,753

 

 

$

2,677

 

 

$

2,815

 

Construction and land

 

5,029

 

 

 

3,105

 

 

 

172

 

One- to four-family

 

7,750

 

 

 

5,702

 

 

 

6,789

 

Commercial business

 

7,355

 

 

 

9,002

 

 

 

9,365

 

Agricultural business, including secured by farmland

 

2,496

 

 

 

3,167

 

 

 

4,074

 

Consumer

 

3,411

 

 

 

3,204

 

 

 

2,247

 

 

 

28,794

 

 

 

26,857

 

 

 

25,462

 

Loans more than 90 days delinquent, still on accrual:

 

 

 

 

 

Secured by real estate:

 

 

 

 

 

Construction and land

 

286

 

 

 

1,138

 

 

 

 

One- to four-family

 

409

 

 

 

1,205

 

 

 

445

 

Commercial business

 

 

 

 

1

 

 

 

 

Consumer

 

 

 

 

401

 

 

 

865

 

 

 

695

 

 

 

2,745

 

 

 

1,310

 

Total non-performing loans

 

29,489

 

 

 

29,602

 

 

 

26,772

 

REO

 

448

 

 

 

526

 

 

 

340

 

Other repossessed assets

 

 

 

 

 

 

 

17

 

Total non-performing assets

$

29,937

 

 

$

30,128

 

 

$

27,129

 

Total non-performing assets to total assets

 

0.19

%

 

 

0.19

%

 

 

0.17

%

 

LOANS BY CREDIT RISK RATING

 

 

 

 

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Pass

$

10,731,015

 

 

$

10,671,281

 

 

$

10,008,385

 

Special Mention

 

22,029

 

 

 

13,732

 

 

 

4,251

 

Substandard

 

116,052

 

 

 

125,442

 

 

 

148,048

 

Total

$

10,869,096

 

 

$

10,810,455

 

 

$

10,160,684

 

 

 

 

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION

 

 

 

 

 

 

 

Percentage Change

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

Prior Qtr

 

Prior Yr Qtr

Non-interest-bearing

 

$

4,699,553

 

 

$

4,792,369

 

 

$

5,764,009

 

 

(1.9

)%

 

(18.5

)%

Interest-bearing checking

 

 

2,112,799

 

 

 

2,098,526

 

 

 

1,794,477

 

 

0.7

%

 

17.7

%

Regular savings accounts

 

 

3,171,933

 

 

 

2,980,530

 

 

 

2,502,084

 

 

6.4

%

 

26.8

%

Money market accounts

 

 

1,688,606

 

 

 

1,680,605

 

 

 

2,143,700

 

 

0.5

%

 

(21.2

)%

Total interest-bearing transaction and savings accounts

 

 

6,973,338

 

 

 

6,759,661

 

 

 

6,440,261

 

 

3.2

%

 

8.3

%

Total core deposits

 

 

11,672,891

 

 

 

11,552,030

 

 

 

12,204,270

 

 

1.0

%

 

(4.4

)%

Interest-bearing certificates

 

 

1,485,880

 

 

 

1,477,467

 

 

 

949,932

 

 

0.6

%

 

56.4

%

Total deposits

 

$

13,158,771

 

 

$

13,029,497

 

 

$

13,154,202

 

 

1.0

%

 

%

 

GEOGRAPHIC CONCENTRATION OF DEPOSITS

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

Percentage Change

 

 

Amount

 

Percentage

 

Amount

 

Amount

 

Prior Qtr

 

Prior Yr Qtr

Washington

 

$

7,258,785

 

 

55.2

%

 

$

7,247,392

 

 

$

7,237,499

 

 

0.2

%

 

0.3

%

Oregon

 

 

2,914,605

 

 

22.1

%

 

 

2,852,677

 

 

 

2,911,788

 

 

2.2

%

 

0.1

%

California

 

 

2,316,515

 

 

17.6

%

 

 

2,269,557

 

 

 

2,309,174

 

 

2.1

%

 

0.3

%

Idaho

 

 

668,866

 

 

5.1

%

 

 

659,871

 

 

 

695,741

 

 

1.4

%

 

(3.9

)%

Total deposits

 

$

13,158,771

 

 

100.0

%

 

$

13,029,497

 

 

$

13,154,202

 

 

1.0

%

 

%

 

 

 

 

 

 

 

 

 

INCLUDED IN TOTAL DEPOSITS

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Public non-interest-bearing accounts

 

$

140,477

 

 

$

146,916

 

 

$

177,913

 

Public interest-bearing transaction & savings accounts

 

 

251,161

 

 

 

209,699

 

 

 

183,924

 

Public interest-bearing certificates

 

 

28,821

 

 

 

52,048

 

 

 

26,857

 

Total public deposits

 

$

420,459

 

 

$

408,663

 

 

$

388,694

 

Collateralized public deposits

 

$

316,554

 

 

$

305,306

 

 

$

277,725

 

Total brokered deposits

 

$

107,527

 

 

$

108,058

 

 

$

 

 

 

 

 

 

 

 

AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Number of deposit accounts

 

 

461,399

 

 

 

463,750

 

 

 

462,880

 

Average account balance per account

 

$

29

 

 

$

29

 

 

$

28

 

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

ESTIMATED REGULATORY CAPITAL RATIOS AS OF MARCH 31, 2024

 

Actual

 

Minimum to be categorized as "Adequately Capitalized"

 

Minimum to be

categorized as

"Well Capitalized"

 

 

Amount

 

Ratio

 

Amount

 

Ratio

 

Amount

 

Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

Banner Corporation-consolidated:

 

 

 

 

 

 

 

 

 

 

 

 

Total capital to risk-weighted assets

 

$

1,927,380

 

 

14.70

%

 

$

1,049,048

 

 

8.00

%

 

$

1,311,311

 

 

10.00

%

Tier 1 capital to risk-weighted assets

 

 

1,667,720

 

 

12.72

%

 

 

786,786

 

 

6.00

%

 

 

786,786

 

 

6.00

%

Tier 1 leverage capital to average assets

 

 

1,667,720

 

 

10.71

%

 

 

622,892

 

 

4.00

%

 

 

n/a

 

 

n/a

 

Common equity tier 1 capital to risk-weighted assets

 

 

1,581,220

 

 

12.06

%

 

 

590,090

 

 

4.50

%

 

 

n/a

 

 

n/a

 

Banner Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Total capital to risk-weighted assets

 

 

1,807,301

 

 

13.77

%

 

 

1,049,707

 

 

8.00

%

 

 

1,312,134

 

 

10.00

%

Tier 1 capital to risk-weighted assets

 

 

1,647,641

 

 

12.56

%

 

 

787,281

 

 

6.00

%

 

 

1,049,707

 

 

8.00

%

Tier 1 leverage capital to average assets

 

 

1,647,641

 

 

10.58

%

 

 

622,882

 

 

4.00

%

 

 

778,603

 

 

5.00

%

Common equity tier 1 capital to risk-weighted assets

 

 

1,647,641

 

 

12.56

%

 

 

590,460

 

 

4.50

%

 

 

852,887

 

 

6.50

%

 

These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

(rates / ratios annualized)

 

ANALYSIS OF NET INTEREST SPREAD

Quarters Ended

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

 

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

$

9,939

 

 

$

167

 

 

6.76

%

 

$

31,148

 

 

$

447

 

 

5.69

%

 

$

52,657

 

 

$

671

 

 

5.17

%

Mortgage loans

 

8,892,561

 

 

 

125,284

 

 

5.67

%

 

 

8,770,029

 

 

 

123,382

 

 

5.58

%

 

 

8,267,386

 

 

 

106,900

 

 

5.24

%

Commercial/agricultural loans

 

1,830,095

 

 

 

30,847

 

 

6.78

%

 

 

1,822,069

 

 

 

30,447

 

 

6.63

%

 

 

1,709,345

 

 

 

25,226

 

 

5.99

%

Consumer and other loans

 

133,854

 

 

 

2,196

 

 

6.60

%

 

 

138,049

 

 

 

2,237

 

 

6.43

%

 

 

137,096

 

 

 

2,115

 

 

6.26

%

Total loans(1)

 

10,866,449

 

 

 

158,494

 

 

5.87

%

 

 

10,761,295

 

 

 

156,513

 

 

5.77

%

 

 

10,166,484

 

 

 

134,912

 

 

5.38

%

Mortgage-backed securities

 

2,728,640

 

 

 

17,076

 

 

2.52

%

 

 

2,798,647

 

 

 

17,541

 

 

2.49

%

 

 

3,093,860

 

 

 

19,123

 

 

2.51

%

Other securities

 

984,639

 

 

 

11,501

 

 

4.70

%

 

 

1,035,842

 

 

 

11,993

 

 

4.59

%

 

 

1,404,355

 

 

 

15,095

 

 

4.36

%

Interest-bearing deposits with banks

 

45,264

 

 

 

459

 

 

4.08

%

 

 

45,286

 

 

 

506

 

 

4.43

%

 

 

53,584

 

 

 

608

 

 

4.60

%

FHLB stock

 

19,073

 

 

 

209

 

 

4.41

%

 

 

15,326

 

 

 

215

 

 

5.57

%

 

 

14,236

 

 

 

90

 

 

2.56

%

Total investment securities

 

3,777,616

 

 

 

29,245

 

 

3.11

%

 

 

3,895,101

 

 

 

30,255

 

 

3.08

%

 

 

4,566,035

 

 

 

34,916

 

 

3.10

%

Total interest-earning assets

 

14,644,065

 

 

 

187,739

 

 

5.16

%

 

 

14,656,396

 

 

 

186,768

 

 

5.06

%

 

 

14,732,519

 

 

 

169,828

 

 

4.68

%

Non-interest-earning assets

 

943,725

 

 

 

 

 

 

 

875,719

 

 

 

 

 

 

 

921,217

 

 

 

 

 

Total assets

$

15,587,790

 

 

 

 

 

 

$

15,532,115

 

 

 

 

 

 

$

15,653,736

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,104,242

 

 

 

6,716

 

 

1.28

%

 

$

2,060,226

 

 

 

5,907

 

 

1.14

%

 

$

1,779,664

 

 

 

906

 

 

0.21

%

Savings accounts

 

3,066,448

 

 

 

15,279

 

 

2.00

%

 

 

2,885,167

 

 

 

12,560

 

 

1.73

%

 

 

2,615,173

 

 

 

1,884

 

 

0.29

%

Money market accounts

 

1,674,159

 

 

 

8,388

 

 

2.02

%

 

 

1,723,426

 

 

 

7,644

 

 

1.76

%

 

 

2,167,138

 

 

 

3,799

 

 

0.71

%

Certificates of deposit

 

1,500,429

 

 

 

14,230

 

 

3.81

%

 

 

1,477,474

 

 

 

13,231

 

 

3.55

%

 

 

810,821

 

 

 

2,655

 

 

1.33

%

Total interest-bearing deposits

 

8,345,278

 

 

 

44,613

 

 

2.15

%

 

 

8,146,293

 

 

 

39,342

 

 

1.92

%

 

 

7,372,796

 

 

 

9,244

 

 

0.51

%

Non-interest-bearing deposits

 

4,711,922

 

 

 

 

 

%

 

 

5,036,523

 

 

 

 

 

%

 

 

5,960,791

 

 

 

 

 

%

Total deposits

 

13,057,200

 

 

 

44,613

 

 

1.37

%

 

 

13,182,816

 

 

 

39,342

 

 

1.18

%

 

 

13,333,587

 

 

 

9,244

 

 

0.28

%

Other interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FHLB advances

 

212,989

 

 

 

2,972

 

 

5.61

%

 

 

129,630

 

 

 

1,870

 

 

5.72

%

 

 

105,984

 

 

 

1,264

 

 

4.84

%

Other borrowings

 

180,692

 

 

 

1,175

 

 

2.62

%

 

 

185,518

 

 

 

1,125

 

 

2.41

%

 

 

229,459

 

 

 

381

 

 

0.67

%

Junior subordinated debentures and subordinated notes

 

181,579

 

 

 

2,969

 

 

6.58

%

 

 

182,678

 

 

 

2,992

 

 

6.50

%

 

 

189,178

 

 

 

2,760

 

 

5.92

%

Total borrowings

 

575,260

 

 

 

7,116

 

 

4.98

%

 

 

497,826

 

 

 

5,987

 

 

4.77

%

 

 

524,621

 

 

 

4,405

 

 

3.41

%

Total funding liabilities

 

13,632,460

 

 

 

51,729

 

 

1.53

%

 

 

13,680,642

 

 

 

45,329

 

 

1.31

%

 

 

13,858,208

 

 

 

13,649

 

 

0.40

%

Other non-interest-bearing liabilities(2)

 

303,412

 

 

 

 

 

 

 

311,539

 

 

 

 

 

 

 

293,205

 

 

 

 

 

Total liabilities

 

13,935,872

 

 

 

 

 

 

 

13,992,181

 

 

 

 

 

 

 

14,151,413

 

 

 

 

 

Shareholders’ equity

 

1,651,918

 

 

 

 

 

 

 

1,539,934

 

 

 

 

 

 

 

1,502,323

 

 

 

 

 

Total liabilities and shareholders’ equity

$

15,587,790

 

 

 

 

 

 

$

15,532,115

 

 

 

 

 

 

$

15,653,736

 

 

 

 

 

Net interest income/rate spread (tax equivalent)

 

 

$

136,010

 

 

3.63

%

 

 

 

$

141,439

 

 

3.75

%

 

 

 

$

156,179

 

 

4.28

%

Net interest margin (tax equivalent)

 

 

 

 

3.74

%

 

 

 

 

 

3.83

%

 

 

 

 

 

4.30

%

Reconciliation to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments for taxable equivalent basis

 

 

 

(3,051

)

 

 

 

 

 

 

(3,030

)

 

 

 

 

 

 

(2,867

)

 

 

Net interest income and margin, as reported

 

 

$

132,959

 

 

3.65

%

 

 

 

$

138,409

 

 

3.75

%

 

 

 

$

153,312

 

 

4.22

%

Additional Key Financial Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

 

0.97

%

 

 

 

 

 

1.09

%

 

 

 

 

 

1.44

%

Adjusted return on average assets(4)

 

 

 

 

1.08

%

 

 

 

 

 

1.18

%

 

 

 

 

 

1.60

%

Return on average equity

 

 

 

 

9.14

%

 

 

 

 

 

10.98

%

 

 

 

 

 

15.00

%

Adjusted return on average equity(4)

 

 

 

 

10.24

%

 

 

 

 

 

11.89

%

 

 

 

 

 

16.63

%

Average equity/average assets

 

 

 

 

10.60

%

 

 

 

 

 

9.91

%

 

 

 

 

 

9.60

%

Average interest-earning assets/average interest-bearing liabilities

 

 

 

 

164.16

%

 

 

 

 

 

169.55

%

 

 

 

 

 

186.55

%

Average interest-earning assets/average funding liabilities

 

 

 

 

107.42

%

 

 

 

 

 

107.13

%

 

 

 

 

 

106.31

%

Non-interest income/average assets

 

 

 

 

0.30

%

 

 

 

 

 

0.36

%

 

 

 

 

 

0.24

%

Non-interest expense/average assets

 

 

 

 

2.52

%

 

 

 

 

 

2.47

%

 

 

 

 

 

2.45

%

Efficiency ratio

 

 

 

 

67.55

%

 

 

 

 

 

63.37

%

 

 

 

 

 

58.20

%

Adjusted efficiency ratio(4)

 

 

 

 

63.70

%

 

 

 

 

 

60.04

%

 

 

 

 

 

54.23

%

 

 

 

 

 

 

 

 

 

(1)

Average balances include loans accounted for on a nonaccrual basis and accruing 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 $2.0 million for both the quarters ended March 31, 2024 and December 31, 2023 and was $1.7 million for the quarter ended March 31, 2023. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million, for both the quarters ended March 31, 2024 and December 31, 2023 and was $1.2 million for the quarter ended March 31, 2023.

(4)

Represent non-GAAP financial measures. See, “Additional Financial Information - Non-GAAP Financial Measures” on the final two pages of this press release for a reconciliation of non-GAAP financial measures.

 

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 earnings release contains certain non-GAAP financial measures. Tangible common shareholders’ equity per share and the ratio of tangible common equity to tangible assets, and references to adjusted revenue, adjusted earnings, the adjusted return on average assets, the adjusted return on average equity and the adjusted efficiency ratio represent non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below:

ADJUSTED REVENUE

Quarters Ended

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Net interest income (GAAP)

$

132,959

 

 

$

138,409

 

 

$

153,312

 

Non-interest income (GAAP)

 

11,591

 

 

 

14,052

 

 

 

9,277

 

Total revenue (GAAP)

 

144,550

 

 

 

152,461

 

 

 

162,589

 

Exclude: Net loss on sale of securities

 

4,903

 

 

 

4,806

 

 

 

7,252

 

Net change in valuation of financial instruments carried at fair value

 

992

 

 

 

(139

)

 

 

552

 

Adjusted revenue (non-GAAP)

$

150,445

 

 

$

157,128

 

 

$

170,393

 

ADJUSTED EARNINGS

Quarters Ended

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Net income (GAAP)

$

37,559

 

 

$

42,624

 

 

$

55,555

 

Exclude: Net loss on sale of securities

 

4,903

 

 

 

4,806

 

 

 

7,252

 

Net change in valuation of financial instruments carried at fair value

 

992

 

 

 

(139

)

 

 

552

 

Banner Forward expenses (1)

 

 

 

 

 

 

 

143

 

Related net tax benefit

 

(1,415

)

 

 

(1,121

)

 

 

(1,907

)

Total adjusted earnings (non-GAAP)

$

42,039

 

 

$

46,170

 

 

$

61,595

 

 

 

 

 

 

 

Diluted earnings per share (GAAP)

$

1.09

 

 

$

1.24

 

 

$

1.61

 

Diluted adjusted earnings per share (non-GAAP)

$

1.22

 

 

$

1.34

 

 

$

1.79

 

Return on average assets

 

0.97

%

 

 

1.09

%

 

 

1.44

%

Adjusted return on average assets (2)

 

1.08

%

 

 

1.18

%

 

 

1.60

%

Return on average equity

 

9.14

%

 

 

10.98

%

 

 

15.00

%

Adjusted return on average equity (3)

 

10.24

%

 

 

11.89

%

 

 

16.63

%

(1)

Included in miscellaneous expenses in results of operations.

(2)

Adjusted earnings (non-GAAP) divided by average assets.

(3)

Adjusted earnings (non-GAAP) divided by average equity.

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

ADJUSTED EFFICIENCY RATIO

 

Quarters Ended

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Non-interest expense (GAAP)

 

$

97,641

 

 

$

96,621

 

 

$

94,621

 

Exclude: Banner Forward expenses (1)

 

 

 

 

 

 

 

 

(143

)

CDI amortization

 

 

(723

)

 

 

(858

)

 

 

(1,050

)

State/municipal tax expense

 

 

(1,304

)

 

 

(1,372

)

 

 

(1,300

)

REO operations

 

 

220

 

 

 

(47

)

 

 

277

 

Adjusted non-interest expense (non-GAAP)

 

$

95,834

 

 

$

94,344

 

 

$

92,405

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

132,959

 

 

$

138,409

 

 

$

153,312

 

Non-interest income (GAAP)

 

 

11,591

 

 

 

14,052

 

 

 

9,277

 

Total revenue (GAAP)

 

 

144,550

 

 

 

152,461

 

 

 

162,589

 

Exclude: Net loss on sale of securities

 

 

4,903

 

 

 

4,806

 

 

 

7,252

 

Net change in valuation of financial instruments carried at fair value

 

 

992

 

 

 

(139

)

 

 

552

 

Adjusted revenue (non-GAAP)

 

$

150,445

 

 

$

157,128

 

 

$

170,393

 

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

 

67.55

%

 

 

63.37

%

 

 

58.20

%

Adjusted efficiency ratio (non-GAAP) (2)

 

 

63.70

%

 

 

60.04

%

 

 

54.23

%

(1)

Included in miscellaneous expenses in results of operations.

(2)

Adjusted non-interest expense (non-GAAP) divided by adjusted revenue.

 

TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS

 

 

 

 

 

 

 

 

Mar 31, 2024

 

Dec 31, 2023

 

Mar 31, 2023

Shareholders’ equity (GAAP)

 

$

1,664,508

 

 

$

1,652,691

 

 

$

1,531,695

 

Exclude goodwill and other intangible assets, net

 

 

378,082

 

 

 

378,805

 

 

 

381,511

 

Tangible common shareholders’ equity (non-GAAP)

 

$

1,286,426

 

 

$

1,273,886

 

 

$

1,150,184

 

 

 

 

 

 

 

 

Total assets (GAAP)

 

$

15,518,279

 

 

$

15,670,391

 

 

$

15,533,603

 

Exclude goodwill and other intangible assets, net

 

 

378,082

 

 

 

378,805

 

 

 

381,511

 

Total tangible assets (non-GAAP)

 

$

15,140,197

 

 

$

15,291,586

 

 

$

15,152,092

 

Common shareholders’ equity to total assets (GAAP)

 

 

10.73

%

 

 

10.55

%

 

 

9.86

%

Tangible common shareholders’ equity to tangible assets (non-GAAP)

 

 

8.50

%

 

 

8.33

%

 

 

7.59

%

 

 

 

 

 

 

 

TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE

 

 

 

 

 

 

Shareholders’ equity (GAAP)

 

$

1,664,508

 

 

$

1,652,691

 

 

$

1,531,695

 

Tangible common shareholders’ equity (non-GAAP)

 

$

1,286,426

 

 

$

1,273,886

 

 

$

1,150,184

 

Common shares outstanding at end of period

 

 

34,395,221

 

 

 

34,348,369

 

 

 

34,308,540

 

Common shareholders’ equity (book value) per share (GAAP)

 

$

48.39

 

 

$

48.12

 

 

$

44.64

 

Tangible common shareholders’ equity (tangible book value) per share (non-GAAP)

 

$

37.40

 

 

$

37.09

 

 

$

33.52

 

 

Contacts

MARK J. GRESCOVICH, PRESIDENT & CEO

ROBERT G. BUTTERFIELD, CFO

(509) 527-3636

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