Banner Corporation Reports Net Income of $46.9 Million, or $1.33 Per Diluted Share, for First Quarter 2021; Declares Quarterly Cash Dividend of $0.41 Per Share
Banner Corporation (NASDAQ: BANR) reported a net income of $46.9 million, or $1.33 per diluted share, for Q1 2021, marking a 20% increase from Q4 2020 and a 178% increase from Q1 2020. The results included an $8.0 million recapture of provision for credit losses and $571,000 in merger-related expenses. The Board declared a quarterly cash dividend of $0.41 per share, payable on May 14, 2021. Total assets reached $16.12 billion, with net loans improving to $9.79 billion. Core deposits surged 36% year-over-year to $12.64 billion.
- Net income rose 20% quarter-over-quarter to $46.9 million.
- Core deposits increased 36% year-over-year to $12.64 billion.
- The declared dividend of $0.41 per share shows confidence in financial stability.
- Return on average assets improved to 1.24% from 1.04% in Q4 2020.
- Total revenues decreased 2% from the previous quarter to $141.9 million.
- Net interest income fell to $117.7 million, down from $121.4 million in Q4 2020.
- Non-performing assets slightly increased to $37.0 million, or 0.23% of total assets.
WALLA WALLA, Wash., April 21, 2021 (GLOBE NEWSWIRE) -- Banner Corporation (NASDAQ GSM: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of
Banner announced that its Board of Directors declared a regular quarterly cash dividend of
“Banner’s core operating performance during the first quarter reflects the continued execution of our super community bank strategy, even with the challenges of the pandemic,” said Mark Grescovich, President and CEO. “We benefited from continued strong mortgage banking fee revenue, core deposit growth and the branch consolidations we completed during the prior quarter. Overall, we achieved a return on average assets of
“Due to an improvement in forecasted economic conditions, a decline in loan balances other than guaranteed SBA Paycheck Protection Program (PPP) loans, we recorded an
At March 31, 2021, Banner Corporation had
COVID-19 Pandemic Update
- SBA Paycheck Protection Program. The U.S. Small Business Administration (SBA) provides assistance to small businesses impacted by COVID-19 through the Paycheck Protection Program (PPP), which was designed to provide near-term relief to help small businesses sustain operations. Under the initial PPP program, Banner funded 9,103 applications totaling
$1.15 billion of loans in its service area. In January 2021, Banner began accepting and processing loan applications under the second PPP program enacted in December 2020. As of March 31, 2021, Banner had funded 4,107 applications totaling$410.8 million of loans under the second PPP program. As of March 31, 2021, Banner had received SBA forgiveness for 1,255 PPP loans totaling$259.9 million . - Loan Accommodations. Banner is continuing to offer payment and financial relief programs for borrowers impacted by COVID-19. These programs include initial loan payment deferrals or interest-only payments for up to 90 days, waived late fees, and, on a more limited basis, waived interest and temporarily suspended foreclosure proceedings. Deferred loans are re-evaluated at the end of the initial deferral period and will either return to the original loan terms or may be eligible for an additional deferral period for up to 90 days. In addition, Banner has entered into payment forbearance agreements with other clients for periods of up to six months. At March 31, 2021, Banner had 91 loans totaling
$33.9 million still on deferral. Of the loans still on deferral, 79 loans totaling$25.7 million are mortgage loans operating under forbearance agreements. Since these loans were performing loans that were current on their payments prior to the COVID-19 pandemic, these modifications are not considered to be troubled debt restructurings pursuant to applicable accounting and regulatory guidance. - Allowance for Credit Losses. Banner recorded a recapture of provision for credit losses of
$8.0 million for the first quarter of 2021. This compares to a$601,000 recapture of provision for credit losses recorded in the preceding quarter and a$21.7 million provision for credit losses recorded in the first quarter a year ago. The recapture of provision for credit losses for the current quarter primarily reflects the decrease in loan balances, excluding the increase in PPP loans, as well as improvement in the forecasted economic indicators, while the recapture of the provision for credit losses recorded in the preceding quarter primarily reflected the decrease in loan balances. The provision for credit losses recorded in the first quarter a year ago reflected the deterioration in forecasted economic indicators and the economic outlook that existed at March 31, 2020 as a result of the COVID-19 pandemic. - Branch Operations, IT Changes and One-Time Expenses. Banner has been taking steps to resume more normal branch activities with specific guidelines in place to help safeguard the safety of our clients and personnel. To further the well-being of staff and clients, Banner implemented measures to allow employees to work from home to the extent practicable. To facilitate this approach, Banner allocated additional computer equipment to staff and enhanced Banner’s network capabilities with several upgrades. These expenses plus other expenses incurred in response to the COVID-19 pandemic resulted in
$148,000 of related costs during the first quarter of 2021, compared to$333,000 of related costs in the preceding quarter and$239,000 of related costs in the first quarter a year ago. - Capital Management. At March 31, 2021, the tangible common shareholders’ equity to tangible assets* ratio was
7.80% and Banner’s capital was well in excess of all regulatory requirements. On December 21, 2020, Banner announced that its Board of Directors authorized the repurchase of up to 1,757,781 shares of Banner’s common stock, which is equivalent to approximately5% of its common stock. During the current quarter, Banner repurchased 500,000 shares of its common stock at an average cost of$50.62 per share.
First Quarter 2021 Highlights
- Revenues decreased to
$141.9 million , compared to$144.9 million in the preceding quarter, and increased3% when compared to$138.4 million in the first quarter a year ago. - Net interest income, before the recapture of provision for credit losses, decreased to
$117.7 million in the first quarter of 2021, compared to$121.4 million in the preceding quarter and$119.3 million in the first quarter a year ago. - Net interest margin on a tax equivalent basis was
3.44% , compared to3.64% in the preceding quarter and4.25% in the first quarter a year ago. - Mortgage banking revenues increased
7% to$11.4 million , compared to$10.7 million in the preceding quarter, and12% compared to$10.2 million in the first quarter a year ago. - Return on average assets was
1.24% , compared to1.04% in the preceding quarter and0.54% in the first quarter a year ago. - Net loans receivable increased to
$9.79 billion at March 31, 2021, compared to$9.70 billion at December 31, 2020, and7% when compared to$9.16 billion at March 31, 2020. - Non-performing assets increased slightly to
$37.0 million , or0.23% of total assets, at March 31, 2021, compared to$36.5 million , or0.24% of total assets in the preceding quarter, and decreased from$46.1 million , or0.36% of total assets, at March 31, 2020. - The allowance for credit losses - loans was
$156.1 million , or1.57% of total loans receivable, as of March 31, 2021, compared to$167.3 million , or1.69% of total loans receivable as of December 31, 2020 and$130.5 million or1.41% of total loans receivable as of March 31, 2020. - A
$1.2 million recapture of provision for credit losses - unfunded loan commitments was recorded and the allowance for credit losses - unfunded loan commitments was$12.1 million as of March 31, 2021, compared to$13.3 million as of December 31, 2020 and$11.5 million as of March 31, 2020. - Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased
8% to$12.64 billion at March 31, 2021, compared to$11.65 billion at December 31, 2020, and increased36% compared to$9.28 billion a year ago. Core deposits represented93% of total deposits at March 31, 2021. - Dividends to shareholders were
$0.41 per share in the quarter ended March 31, 2021. - Common shareholders’ equity per share decreased
2% to$46.60 at March 31, 2021, compared to$47.39 at the preceding quarter end, and increased2% from$45.63 a year ago. - Tangible common shareholders’ equity per share* decreased
2% to$35.29 at March 31, 2021, compared to$36.17 at the preceding quarter end, and increased3% from$34.23 a year ago.
*Tangible common shareholders’ equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to adjusted revenue (which excludes fair value adjustments and net gain (loss) on the sale of securities from the total of net interest income before provision for loan credit and non-interest income) and the adjusted efficiency ratio (which excludes merger and acquisition-related expenses, COVID-19 expenses, amortization of core deposit intangibles, real estate owned gain (loss), Federal Home Loan Bank (FHLB) prepayment penalties, state/municipal taxes and provision for credit losses - unfunded loan commitments from non-interest expense divided by adjusted revenue) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.
Significant Recent Initiatives and Events
On February 5, 2021, Islanders Bank, a wholly-owned subsidiary of Banner Corporation, was merged into Banner Bank. As a result, Banner recorded expenses associated with the merger of
On December 11, 2020, Banner Bank completed the consolidation of 15 branches and on September 25, 2020, Banner Bank completed the consolidation of six branches. As a result, Banner recorded expenses associated with these branch consolidations of
Income Statement Review
Net interest income, before the recapture of provision for credit losses, was
Banner’s net interest margin on a tax equivalent basis was
“Higher core deposit balances, resulting in a significant increase in low yielding short term investments, adversely affected our net interest margin during the quarter,” said Grescovich. “Additionally, the on-going low interest rate environment continues to put pressure on loan yields.” Acquisition accounting adjustments added five basis points to the net interest margin in both the current and preceding quarter and ten basis points in the first quarter a year ago. The total purchase discount for acquired loans was
Average interest-earning asset yields decreased 23 basis points to
Banner recorded an
Total non-interest income was
Banner’s first quarter 2021 results included a
Banner’s total revenue decreased
Total non-interest expense was
For the first quarter of 2021, Banner had
Balance Sheet Review
Total assets increased
Net loans receivable increased
Loans held for sale were
Total deposits increased
At March 31, 2021, total common shareholders’ equity was
Banner and its subsidiary bank continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized.” At March 31, 2021, Banner's common equity Tier 1 capital ratio was
Credit Quality
The allowance for credit losses - loans was
In accordance with acquisition accounting, loans acquired from acquisitions were recorded at their estimated fair value, which resulted in a net purchase discount to the loans’ contractual amounts, a portion of which reflects a discount for possible credit losses. Credit discounts were included in the determination of fair value, and as a result, no allowance for credit losses was recorded for loans acquired from acquisitions prior to January 1, 2020. At March 31, 2021, the total purchase discount for acquired loans was
Banner’s total substandard loans were
Banner’s total non-performing assets were
Conference Call
Banner will host a conference call on Thursday, April 22, 2021, at 8:00 a.m. PDT, to discuss its first quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (866) 235-9915 to participate in the call. A replay will be available for one week at (877) 344-7529 using access code 10153346, or at www.bannerbank.com.
About the Company
Banner Corporation is a
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “may,” “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” “potential,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made and based only on information then actually known to Banner. Banner does not undertake and specifically disclaims any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements and could negatively affect Banner’s operating and stock price performance.
The COVID-19, pandemic is adversely affecting us, our clients, counterparties, employees, and third-party service providers, and the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects is uncertain. Deterioration in general business and economic conditions, including increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Other factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses, which could necessitate additional provisions for credit losses, resulting both from loans originated and loans acquired from other financial institutions; (2) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for credit losses or writing down of assets or impose restrictions or penalties with respect to Banner’s activities; (3) competitive pressures among depository institutions; (4) interest rate movements and their impact on client behavior and net interest margin; (5) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (6) fluctuations in real estate values; (7) the ability to adapt successfully to technological changes to meet clients’ needs and developments in the market place; (8) the ability to access cost-effective funding; (9) changes in financial markets; (10) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (11) the costs, effects and outcomes of litigation; (12) legislation or regulatory changes, including but not limited to the impact of the Dodd-Frank Act and regulations adopted thereunder, changes in regulatory capital requirements pursuant to the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (13) changes in accounting principles, policies or guidelines; (14) future acquisitions by Banner of other depository institutions or lines of business; (15) future goodwill impairment due to changes in Banner’s business, changes in market conditions, including as a result of the COVID-19 pandemic or other factors; and (16) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks detailed from time to time in our filings with the Securities and Exchange Commission including our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K.
CONTACT: | MARK J. GRESCOVICH, |
PRESIDENT & CEO | |
PETER J. CONNER, CFO | |
(509) 527-3636 |
RESULTS OF OPERATIONS | Quarters Ended | |||||||||||
(in thousands except shares and per share data) | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
INTEREST INCOME: | ||||||||||||
Loans receivable | $ | 108,924 | $ | 115,545 | $ | 118,926 | ||||||
Mortgage-backed securities | 9,371 | 7,438 | 9,137 | |||||||||
Securities and cash equivalents | 6,226 | 6,170 | 3,602 | |||||||||
124,521 | 129,153 | 131,665 | ||||||||||
INTEREST EXPENSE: | ||||||||||||
Deposits | 3,609 | 4,392 | 8,750 | |||||||||
Federal Home Loan Bank advances | 934 | 987 | 2,064 | |||||||||
Other borrowings | 109 | 121 | 116 | |||||||||
Junior subordinated debentures and subordinated notes | 2,208 | 2,216 | 1,477 | |||||||||
6,860 | 7,716 | 12,407 | ||||||||||
Net interest income before (recapture)/provision for credit losses | 117,661 | 121,437 | 119,258 | |||||||||
(RECAPTURE)/PROVISION FOR CREDIT LOSSES | (8,031 | ) | (601 | ) | 21,748 | |||||||
Net interest income | 125,692 | 122,038 | 97,510 | |||||||||
NON-INTEREST INCOME: | ||||||||||||
Deposit fees and other service charges | 8,939 | 8,293 | 9,803 | |||||||||
Mortgage banking operations | 11,440 | 10,690 | 10,191 | |||||||||
Bank-owned life insurance | 1,307 | 1,319 | 1,050 | |||||||||
Miscellaneous | 2,042 | 1,306 | 2,639 | |||||||||
23,728 | 21,608 | 23,683 | ||||||||||
Net gain on sale of securities | 485 | 197 | 78 | |||||||||
Net change in valuation of financial instruments carried at fair value | 59 | 1,704 | (4,596 | ) | ||||||||
Total non-interest income | 24,272 | 23,509 | 19,165 | |||||||||
NON-INTEREST EXPENSE: | ||||||||||||
Salary and employee benefits | 64,819 | 60,906 | 59,908 | |||||||||
Less capitalized loan origination costs | (9,696 | ) | (9,415 | ) | (5,806 | ) | ||||||
Occupancy and equipment | 12,989 | 14,248 | 13,107 | |||||||||
Information / computer data services | 6,203 | 6,402 | 5,810 | |||||||||
Payment and card processing services | 4,326 | 3,960 | 4,240 | |||||||||
Professional and legal expenses | 3,328 | 5,643 | 1,919 | |||||||||
Advertising and marketing | 1,263 | 2,828 | 1,827 | |||||||||
Deposit insurance expense | 1,533 | 1,548 | 1,635 | |||||||||
State/municipal business and use taxes | 1,065 | 1,071 | 984 | |||||||||
Real estate operations | (242 | ) | (283 | ) | 100 | |||||||
Amortization of core deposit intangibles | 1,711 | 1,865 | 2,001 | |||||||||
(Recapture)/provision for credit losses - unfunded loan commitments | (1,220 | ) | 1,203 | 1,722 | ||||||||
Miscellaneous | 5,509 | 5,871 | 6,357 | |||||||||
91,588 | 95,847 | 93,804 | ||||||||||
COVID-19 expenses | 148 | 333 | 239 | |||||||||
Merger and acquisition-related expenses | 571 | 579 | 1,142 | |||||||||
Total non-interest expense | 92,307 | 96,759 | 95,185 | |||||||||
Income before provision for income taxes | 57,657 | 48,788 | 21,490 | |||||||||
PROVISION FOR INCOME TAXES | 10,802 | 9,831 | 4,608 | |||||||||
NET INCOME | $ | 46,855 | $ | 38,957 | $ | 16,882 | ||||||
Earnings per share available to common shareholders: | ||||||||||||
Basic | $ | 1.34 | $ | 1.11 | $ | 0.48 | ||||||
Diluted | $ | 1.33 | $ | 1.10 | $ | 0.47 | ||||||
Cumulative dividends declared per common share | $ | 0.41 | $ | 0.41 | $ | 0.41 | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 34,973,383 | 35,200,769 | 35,463,541 | |||||||||
Diluted | 35,303,483 | 35,425,810 | 35,640,463 | |||||||||
(Decrease) increase in common shares outstanding | (423,857 | ) | 632 | (649,117 | ) |
FINANCIAL CONDITION | Percentage Change | |||||||||||||||||
(in thousands except shares and per share data) | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Prior Qtr | Prior Yr Qtr | |||||||||||||
ASSETS | ||||||||||||||||||
Cash and due from banks | $ | 296,184 | $ | 311,899 | $ | 211,013 | (5.0 | )% | 40.4 | % | ||||||||
Interest-bearing deposits | 1,353,743 | 922,284 | 83,988 | 46.8 | % | nm | ||||||||||||
Total cash and cash equivalents | 1,649,927 | 1,234,183 | 295,001 | 33.7 | % | 459.3 | % | |||||||||||
Securities - trading | 25,039 | 24,980 | 21,040 | 0.2 | % | 19.0 | % | |||||||||||
Securities - available for sale | 2,989,760 | 2,322,593 | 1,608,224 | 28.7 | % | 85.9 | % | |||||||||||
Securities - held to maturity | 441,857 | 421,713 | 437,846 | 4.8 | % | 0.9 | % | |||||||||||
Total securities | 3,456,656 | 2,769,286 | 2,067,110 | 24.8 | % | 67.2 | % | |||||||||||
Federal Home Loan Bank stock | 14,001 | 16,358 | 20,247 | (14.4 | )% | (30.8 | )% | |||||||||||
Loans held for sale | 135,263 | 243,795 | 182,428 | (44.5 | )% | (25.9 | )% | |||||||||||
Loans receivable | 9,947,697 | 9,870,982 | 9,285,744 | 0.8 | % | 7.1 | % | |||||||||||
Allowance for credit losses - loans | (156,054 | ) | (167,279 | ) | (130,488 | ) | (6.7 | )% | 19.6 | % | ||||||||
Net loans receivable | 9,791,643 | 9,703,703 | 9,155,256 | 0.9 | % | 7.0 | % | |||||||||||
Accrued interest receivable | 49,214 | 46,617 | 40,732 | 5.6 | % | 20.8 | % | |||||||||||
Real estate owned held for sale, net | 340 | 816 | 2,402 | (58.3 | )% | (85.8 | )% | |||||||||||
Property and equipment, net | 161,268 | 164,556 | 175,235 | (2.0 | )% | (8.0 | )% | |||||||||||
Goodwill | 373,121 | 373,121 | 373,121 | — | % | — | % | |||||||||||
Other intangibles, net | 19,715 | 21,426 | 27,157 | (8.0 | )% | (27.4 | )% | |||||||||||
Bank-owned life insurance | 191,388 | 191,830 | 193,140 | (0.2 | )% | (0.9 | )% | |||||||||||
Other assets | 277,256 | 265,932 | 249,121 | 4.3 | % | 11.3 | % | |||||||||||
Total assets | $ | 16,119,792 | $ | 15,031,623 | $ | 12,780,950 | 7.2 | % | 26.1 | % | ||||||||
LIABILITIES | ||||||||||||||||||
Deposits: | ||||||||||||||||||
Non-interest-bearing | $ | 5,994,693 | $ | 5,492,924 | $ | 4,107,262 | 9.1 | % | 46.0 | % | ||||||||
Interest-bearing transaction and savings accounts | 6,647,196 | 6,159,052 | 5,175,969 | 7.9 | % | 28.4 | % | |||||||||||
Interest-bearing certificates | 906,978 | 915,320 | 1,166,306 | (0.9 | )% | (22.2 | )% | |||||||||||
Total deposits | 13,548,867 | 12,567,296 | 10,449,537 | 7.8 | % | 29.7 | % | |||||||||||
Advances from Federal Home Loan Bank | 100,000 | 150,000 | 247,000 | (33.3 | )% | (59.5 | )% | |||||||||||
Customer repurchase agreements and other borrowings | 216,260 | 184,785 | 128,764 | 17.0 | % | 68.0 | % | |||||||||||
Subordinated notes, net | 98,290 | 98,201 | — | 0.1 | % | nm | ||||||||||||
Junior subordinated debentures at fair value | 117,248 | 116,974 | 99,795 | 0.2 | % | 17.5 | % | |||||||||||
Accrued expenses and other liabilities | 373,685 | 202,643 | 208,753 | 84.4 | % | 79.0 | % | |||||||||||
Deferred compensation | 46,625 | 45,460 | 45,401 | 2.6 | % | 2.7 | % | |||||||||||
Total liabilities | 14,500,975 | 13,365,359 | 11,179,250 | 8.5 | % | 29.7 | % | |||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||||
Common stock | 1,326,269 | 1,349,879 | 1,343,699 | (1.7 | )% | (1.3 | )% | |||||||||||
Retained earnings | 279,582 | 247,316 | 177,922 | 13.0 | % | 57.1 | % | |||||||||||
Other components of shareholders’ equity | 12,966 | 69,069 | 80,079 | (81.2 | )% | (83.8 | )% | |||||||||||
Total shareholders’ equity | 1,618,817 | 1,666,264 | 1,601,700 | (2.8 | )% | 1.1 | % | |||||||||||
Total liabilities and shareholders’ equity | $ | 16,119,792 | $ | 15,031,623 | $ | 12,780,950 | 7.2 | % | 26.1 | % | ||||||||
Common Shares Issued: | ||||||||||||||||||
Shares outstanding at end of period | 34,735,343 | 35,159,200 | 35,102,459 | |||||||||||||||
Common shareholders’ equity per share (1) | $ | 46.60 | $ | 47.39 | $ | 45.63 | ||||||||||||
Common shareholders’ tangible equity per share (1) (2) | $ | 35.29 | $ | 36.17 | $ | 34.23 | ||||||||||||
Common shareholders’ tangible equity to tangible assets (2) | 7.80 | % | 8.69 | % | 9.70 | % | ||||||||||||
Consolidated Tier 1 leverage capital ratio | 9.10 | % | 9.50 | % | 10.45 | % |
(1 | ) | Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding. |
(2 | ) | Common shareholders’ tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final two pages of the press release tables. |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||
Percentage Change | ||||||||||||||||||
LOANS | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Prior Qtr | Prior Yr Qtr | |||||||||||||
Commercial real estate: | ||||||||||||||||||
Owner-occupied | $ | 1,045,656 | $ | 1,076,467 | $ | 1,024,089 | (2.9 | )% | 2.1 | % | ||||||||
Investment properties | 1,931,805 | 1,955,684 | 2,007,537 | (1.2 | )% | (3.8 | )% | |||||||||||
Small balance CRE | 639,330 | 573,849 | 591,783 | 11.4 | % | 8.0 | % | |||||||||||
Multifamily real estate | 433,775 | 428,223 | 400,206 | 1.3 | % | 8.4 | % | |||||||||||
Construction, land and land development: | ||||||||||||||||||
Commercial construction | 199,037 | 228,937 | 205,476 | (13.1 | )% | (3.1 | )% | |||||||||||
Multifamily construction | 305,694 | 305,527 | 250,410 | 0.1 | % | 22.1 | % | |||||||||||
One- to four-family construction | 542,840 | 507,810 | 534,956 | 6.9 | % | 1.5 | % | |||||||||||
Land and land development | 266,730 | 248,915 | 232,506 | 7.2 | % | 14.7 | % | |||||||||||
Commercial business: | ||||||||||||||||||
Commercial business | 2,376,594 | 2,178,461 | 1,357,817 | 9.1 | % | 75.0 | % | |||||||||||
Small business scored | 717,502 | 743,451 | 807,539 | (3.5 | )% | (11.1 | )% | |||||||||||
Agricultural business, including secured by farmland | 262,410 | 299,949 | 330,257 | (12.5 | )% | (20.5 | )% | |||||||||||
One- to four-family residential | 655,627 | 717,939 | 881,387 | (8.7 | )% | (25.6 | )% | |||||||||||
Consumer: | ||||||||||||||||||
Consumer—home equity revolving lines of credit | 466,132 | 491,812 | 521,618 | (5.2 | )% | (10.6 | )% | |||||||||||
Consumer—other | 104,565 | 113,958 | 140,163 | (8.2 | )% | (25.4 | )% | |||||||||||
Total loans receivable | $ | 9,947,697 | $ | 9,870,982 | $ | 9,285,744 | 0.8 | % | 7.1 | % | ||||||||
Restructured loans performing under their restructured terms | $ | 6,424 | $ | 6,673 | $ | 6,423 | ||||||||||||
Loans 30 - 89 days past due and on accrual | $ | 19,233 | $ | 12,291 | $ | 39,974 | ||||||||||||
Total delinquent loans (including loans on non-accrual), net | $ | 42,444 | $ | 36,131 | $ | 61,101 | ||||||||||||
Total delinquent loans / Total loans receivable | 0.43 | % | 0.37 | % | 0.66 | % |
LOANS BY GEOGRAPHIC LOCATION | Percentage Change | ||||||||||||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Prior Qtr | Prior Yr Qtr | |||||||||||||||||
Amount | Percentage | Amount | Amount | ||||||||||||||||||
Washington | $ | 4,683,600 | 47.1 | % | $ | 4,647,553 | $ | 4,350,273 | 0.8 | % | 7.7 | % | |||||||||
California | 2,320,384 | 23.3 | % | 2,279,749 | 2,140,895 | 1.8 | % | 8.4 | % | ||||||||||||
Oregon | 1,801,104 | 18.1 | % | 1,792,156 | 1,664,652 | 0.5 | % | 8.2 | % | ||||||||||||
Idaho | 539,061 | 5.4 | % | 537,996 | 524,663 | 0.2 | % | 2.7 | % | ||||||||||||
Utah | 92,399 | 0.9 | % | 80,704 | 52,747 | 14.5 | % | 75.2 | % | ||||||||||||
Other | 511,149 | 5.2 | % | 532,824 | 552,514 | (4.1 | )% | (7.5 | )% | ||||||||||||
Total loans receivable | $ | 9,947,697 | 100.0 | % | $ | 9,870,982 | $ | 9,285,744 | 0.8 | % | 7.1 | % |
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
The following table shows loan originations (excluding loans held for sale) activity for the quarters ending March 31, 2021, December 31, 2020, and March 31, 2020 (in thousands).
LOAN ORIGINATIONS | Quarters Ended | ||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
Commercial real estate | $ | 199,294 | $ | 93,838 | $ | 76,359 | |||||
Multifamily real estate | 13,271 | 7,900 | 10,171 | ||||||||
Construction and land | 451,545 | 515,280 | 369,613 | ||||||||
Commercial business: | |||||||||||
Commercial business | 168,049 | 133,112 | 199,873 | ||||||||
SBA PPP | 428,180 | — | — | ||||||||
Agricultural business | 27,267 | 11,552 | 31,261 | ||||||||
One-to four-family residential | 64,286 | 28,402 | 31,041 | ||||||||
Consumer | 131,671 | 97,416 | 67,357 | ||||||||
Total loan originations (excluding loans held for sale) | $ | 1,483,563 | $ | 887,500 | $ | 785,675 |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||
(dollars in thousands) | ||||||||||||
Quarters Ended | ||||||||||||
CHANGE IN THE | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
ALLOWANCE FOR CREDIT LOSSES - LOANS | ||||||||||||
Balance, beginning of period | $ | 167,279 | $ | 167,965 | $ | 100,559 | ||||||
Beginning balance adjustment for adoption of ASC 326 | — | — | 7,812 | |||||||||
(Recapture)/provision for credit losses - loans | (8,035 | ) | (593 | ) | 21,713 | |||||||
Recoveries of loans previously charged off: | ||||||||||||
Commercial real estate | 24 | 31 | 167 | |||||||||
Construction and land | 100 | — | — | |||||||||
One- to four-family real estate | 113 | 194 | 148 | |||||||||
Commercial business | 979 | 2,444 | 205 | |||||||||
Agricultural business, including secured by farmland | — | 51 | 1,750 | |||||||||
Consumer | 296 | 90 | 96 | |||||||||
1,512 | 2,810 | 2,366 | ||||||||||
Loans charged off: | ||||||||||||
Commercial real estate | (3,763 | ) | (1,375 | ) | (100 | ) | ||||||
Multifamily real estate | — | — | (66 | ) | ||||||||
One- to four-family real estate | — | — | (64 | ) | ||||||||
Commercial business | (789 | ) | (1,019 | ) | (1,384 | ) | ||||||
Agricultural business, including secured by farmland | — | (37 | ) | — | ||||||||
Consumer | (150 | ) | (472 | ) | (348 | ) | ||||||
(4,702 | ) | (2,903 | ) | (1,962 | ) | |||||||
Net charge-offs | (3,190 | ) | (93 | ) | 404 | |||||||
Balance, end of period | $ | 156,054 | $ | 167,279 | $ | 130,488 | ||||||
Net charge-offs / Average loans receivable | (0.032 | )% | (0.001 | )% | 0.004 | % |
ALLOCATION OF | ||||||||||||
ALLOWANCE FOR CREDIT LOSSES - LOANS | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
Specific or allocated credit loss allowance: | ||||||||||||
Commercial real estate | $ | 59,411 | $ | 57,791 | $ | 29,339 | ||||||
Multifamily real estate | 4,367 | 3,893 | 2,805 | |||||||||
Construction and land | 36,440 | 41,295 | 34,217 | |||||||||
One- to four-family real estate | 7,988 | 9,913 | 11,884 | |||||||||
Commercial business | 31,411 | 35,007 | 31,648 | |||||||||
Agricultural business, including secured by farmland | 4,617 | 4,914 | 4,513 | |||||||||
Consumer | 11,820 | 14,466 | 16,082 | |||||||||
Total allowance for credit losses - loans | $ | 156,054 | $ | 167,279 | $ | 130,488 | ||||||
Allowance for credit losses - loans / Total loans receivable | 1.57 | % | 1.69 | % | 1.41 | % | ||||||
Allowance for credit losses - loans / Non-performing loans | 426 | % | 470 | % | 299 | % |
Quarters Ended | ||||||||||||
CHANGE IN THE | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS | ||||||||||||
Balance, beginning of period | $ | 13,297 | $ | 12,094 | $ | 2,716 | ||||||
Beginning balance adjustment for adoption of ASC 326 | — | — | 7,022 | |||||||||
(Recapture)/provision for credit losses - unfunded loan commitments | (1,220 | ) | 1,203 | 1,722 | ||||||||
Balance, end of period | $ | 12,077 | $ | 13,297 | $ | 11,460 |
ADDITIONAL FINANCIAL INFORMATION | |||||||||||
(dollars in thousands) | |||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
NON-PERFORMING ASSETS | |||||||||||
Loans on non-accrual status: | |||||||||||
Secured by real estate: | |||||||||||
Commercial | $ | 21,615 | $ | 18,199 | $ | 8,512 | |||||
Construction and land | 986 | 936 | 1,393 | ||||||||
One- to four-family | 4,456 | 3,556 | 3,045 | ||||||||
Commercial business | 4,194 | 5,407 | 25,027 | ||||||||
Agricultural business, including secured by farmland | 1,536 | 1,743 | 495 | ||||||||
Consumer | 2,244 | 2,719 | 1,812 | ||||||||
35,031 | 32,560 | 40,284 | |||||||||
Loans more than 90 days delinquent, still on accrual: | |||||||||||
Secured by real estate: | |||||||||||
Commercial | — | — | 24 | ||||||||
Construction and land | — | — | 1,407 | ||||||||
One- to four-family | 1,524 | 1,899 | 1,089 | ||||||||
Commercial business | 37 | 1,025 | 77 | ||||||||
Agricultural business, including secured by farmland | — | — | 461 | ||||||||
Consumer | — | 130 | 320 | ||||||||
1,561 | 3,054 | 3,378 | |||||||||
Total non-performing loans | 36,592 | 35,614 | 43,662 | ||||||||
Real estate owned (REO) | 340 | 816 | 2,402 | ||||||||
Other repossessed assets | 37 | 51 | 47 | ||||||||
Total non-performing assets | $ | 36,969 | $ | 36,481 | $ | 46,111 | |||||
Total non-performing assets to total assets | 0.23 | % | 0.24 | % | 0.36 | % |
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
LOANS BY CREDIT RISK RATING | |||||||||||
Pass | $ | 9,584,429 | $ | 9,494,147 | $ | 9,095,264 | |||||
Special Mention | 51,692 | 36,598 | 64,406 | ||||||||
Substandard | 311,576 | 340,237 | 126,074 | ||||||||
Total | $ | 9,947,697 | $ | 9,870,982 | $ | 9,285,744 |
Quarters Ended | |||||||||||
REAL ESTATE OWNED | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | ||||||||
Balance, beginning of period | $ | 816 | $ | 1,795 | $ | 814 | |||||
Additions from loan foreclosures | — | — | 1,588 | ||||||||
Proceeds from dispositions of REO | (783 | ) | (1,555 | ) | — | ||||||
Gain on sale of REO | 307 | 603 | — | ||||||||
Valuation adjustments in the period | — | (27 | ) | — | |||||||
Balance, end of period | $ | 340 | $ | 816 | $ | 2,402 |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||
DEPOSIT COMPOSITION | Percentage Change | |||||||||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Prior Qtr | Prior Yr Qtr | ||||||||||||||
Non-interest-bearing | $ | 5,994,693 | $ | 5,492,924 | $ | 4,107,262 | 9.1 | % | 46.0 | % | ||||||||
Interest-bearing checking | 1,722,085 | 1,569,435 | 1,331,860 | 9.7 | % | 29.3 | % | |||||||||||
Regular savings accounts | 2,597,731 | 2,398,482 | 1,997,265 | 8.3 | % | 30.1 | % | |||||||||||
Money market accounts | 2,327,380 | 2,191,135 | 1,846,844 | 6.2 | % | 26.0 | % | |||||||||||
Total interest-bearing transaction and savings accounts | 6,647,196 | 6,159,052 | 5,175,969 | 7.9 | % | 28.4 | % | |||||||||||
Total core deposits | 12,641,889 | 11,651,976 | 9,283,231 | 8.5 | % | 36.2 | % | |||||||||||
Interest-bearing certificates | 906,978 | 915,320 | 1,166,306 | (0.9 | )% | (22.2 | )% | |||||||||||
Total deposits | $ | 13,548,867 | $ | 12,567,296 | $ | 10,449,537 | 7.8 | % | 29.7 | % |
GEOGRAPHIC CONCENTRATION OF DEPOSITS | |||||||||||||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | Percentage Change | ||||||||||||||||||
Amount | Percentage | Amount | Amount | Prior Qtr | Prior Yr Qtr | ||||||||||||||||
Washington | $ | 7,504,389 | 55.4 | % | $ | 7,058,404 | $ | 6,037,864 | 6.3 | % | 24.3 | % | |||||||||
Oregon | 2,929,027 | 21.6 | % | 2,604,908 | 2,093,738 | 12.4 | % | 39.9 | % | ||||||||||||
California | 2,401,299 | 17.7 | % | 2,237,949 | 1,828,064 | 7.3 | % | 31.4 | % | ||||||||||||
Idaho | 714,152 | 5.3 | % | 666,035 | 489,871 | 7.2 | % | 45.8 | % | ||||||||||||
Total deposits | $ | 13,548,867 | 100.0 | % | $ | 12,567,296 | $ | 10,449,537 | 7.8 | % | 29.7 | % |
INCLUDED IN TOTAL DEPOSITS | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
Public non-interest-bearing accounts | $ | 151,850 | $ | 175,352 | $ | 115,354 | ||||||
Public interest-bearing transaction & savings accounts | 169,192 | 127,523 | 130,958 | |||||||||
Public interest-bearing certificates | 51,021 | 59,127 | 48,232 | |||||||||
Total public deposits | $ | 372,063 | $ | 362,002 | $ | 294,544 | ||||||
Total brokered deposits | $ | — | $ | — | $ | 250,977 |
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, 2021 | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Banner Corporation-consolidated: | |||||||||||||||||||||
Total capital to risk-weighted assets | $ | 1,594,230 | 14.74 | % | $ | 865,281 | 8.00 | % | $ | 1,081,602 | 10.00 | % | |||||||||
Tier 1 capital to risk-weighted assets | 1,358,958 | 12.56 | % | 648,961 | 6.00 | % | 648,961 | 6.00 | % | ||||||||||||
Tier 1 leverage capital to average assets | 1,358,958 | 9.10 | % | 597,434 | 4.00 | % | n/a | n/a | |||||||||||||
Common equity tier 1 capital to risk-weighted assets | 1,215,458 | 11.24 | % | 486,721 | 4.50 | % | n/a | n/a | |||||||||||||
Banner Bank: | |||||||||||||||||||||
Total capital to risk-weighted assets | 1,473,846 | 13.63 | % | 865,096 | 8.00 | % | 1,081,370 | 10.00 | % | ||||||||||||
Tier 1 capital to risk-weighted assets | 1,338,602 | 12.38 | % | 648,822 | 6.00 | % | 865,096 | 8.00 | % | ||||||||||||
Tier 1 leverage capital to average assets | 1,338,602 | 8.95 | % | 598,565 | 4.00 | % | 748,207 | 5.00 | % | ||||||||||||
Common equity tier 1 capital to risk-weighted assets | 1,338,602 | 12.38 | % | 486,616 | 4.50 | % | 702,890 | 6.50 | % |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||
(rates / ratios annualized) | ||||||||||||||||||||||||||||||||
ANALYSIS OF NET INTEREST SPREAD | Quarters Ended | |||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | ||||||||||||||||||||||||||||||
Average Balance | Interest and Dividends | Yield / Cost(3) | Average Balance | Interest and Dividends | Yield / Cost(3) | Average Balance | Interest and Dividends | Yield / Cost(3) | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||
Held for sale loans | $ | 119,341 | $ | 925 | 3.14 | % | $ | 110,414 | $ | 976 | 3.52 | % | $ | 152,627 | $ | 1,520 | 4.01 | % | ||||||||||||||
Mortgage loans | 7,144,770 | 80,580 | 4.57 | % | 7,251,101 | 84,634 | 4.64 | % | 7,310,115 | 93,061 | 5.12 | % | ||||||||||||||||||||
Commercial/agricultural loans | 2,691,554 | 26,711 | 4.02 | % | 2,752,352 | 29,145 | 4.21 | % | 1,884,006 | 22,959 | 4.90 | % | ||||||||||||||||||||
Consumer and other loans | 127,469 | 1,947 | 6.19 | % | 135,498 | 2,057 | 6.04 | % | 163,098 | 2,595 | 6.40 | % | ||||||||||||||||||||
Total loans(1)(3) | 10,083,134 | 110,163 | 4.43 | % | 10,249,365 | 116,812 | 4.53 | % | 9,509,846 | 120,135 | 5.08 | % | ||||||||||||||||||||
Mortgage-backed securities | 1,953,820 | 9,472 | 1.97 | % | 1,429,635 | 7,536 | 2.10 | % | 1,354,585 | 9,236 | 2.74 | % | ||||||||||||||||||||
Other securities | 1,048,856 | 6,687 | 2.59 | % | 975,166 | 6,634 | 2.71 | % | 458,116 | 3,310 | 2.91 | % | ||||||||||||||||||||
Equity securities | 1,742 | — | — | % | 234,822 | 64 | 0.11 | % | — | — | — | % | ||||||||||||||||||||
Interest-bearing deposits with banks | 1,032,138 | 262 | 0.10 | % | 611,234 | 219 | 0.14 | % | 92,659 | 393 | 1.71 | % | ||||||||||||||||||||
FHLB stock | 15,952 | 161 | 4.09 | % | 16,361 | 162 | 3.94 | % | 26,522 | 322 | 4.88 | % | ||||||||||||||||||||
Total investment securities (3) | 4,052,508 | 16,582 | 1.66 | % | 3,267,218 | 14,615 | 1.78 | % | 1,931,882 | 13,261 | 2.76 | % | ||||||||||||||||||||
Total interest-earning assets | 14,135,642 | 126,745 | 3.64 | % | 13,516,583 | 131,427 | 3.87 | % | 11,441,728 | 133,396 | 4.69 | % | ||||||||||||||||||||
Non-interest-earning assets | 1,237,281 | 1,349,055 | 1,193,256 | |||||||||||||||||||||||||||||
Total assets | $ | 15,372,923 | $ | 14,865,638 | $ | 12,634,984 | ||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||
Interest-bearing checking accounts | $ | 1,616,824 | 315 | 0.08 | % | $ | 1,483,183 | 315 | 0.08 | % | $ | 1,266,647 | 469 | 0.15 | % | |||||||||||||||||
Savings accounts | 2,486,820 | 521 | 0.08 | % | 2,375,015 | 691 | 0.12 | % | 2,039,857 | 1,755 | 0.35 | % | ||||||||||||||||||||
Money market accounts | 2,242,748 | 775 | 0.14 | % | 2,165,960 | 1,047 | 0.19 | % | 1,743,118 | 2,439 | 0.56 | % | ||||||||||||||||||||
Certificates of deposit | 913,053 | 1,998 | 0.89 | % | 916,286 | 2,339 | 1.02 | % | 1,124,994 | 4,087 | 1.46 | % | ||||||||||||||||||||
Total interest-bearing deposits | 7,259,445 | 3,609 | 0.20 | % | 6,940,444 | 4,392 | 0.25 | % | 6,174,616 | 8,750 | 0.57 | % | ||||||||||||||||||||
Non-interest-bearing deposits | 5,663,820 | — | — | % | 5,499,240 | — | — | % | 3,965,380 | — | — | % | ||||||||||||||||||||
Total deposits | 12,923,265 | 3,609 | 0.11 | % | 12,439,684 | 4,392 | 0.14 | % | 10,139,996 | 8,750 | 0.35 | % | ||||||||||||||||||||
Other interest-bearing liabilities: | ||||||||||||||||||||||||||||||||
FHLB advances | 144,444 | 934 | 2.62 | % | 150,000 | 987 | 2.62 | % | 405,429 | 2,064 | 2.05 | % | ||||||||||||||||||||
Other borrowings | 202,930 | 109 | 0.22 | % | 187,560 | 121 | 0.26 | % | 124,771 | 116 | 0.37 | % | ||||||||||||||||||||
Junior subordinated debentures and subordinated notes | 247,944 | 2,208 | 3.61 | % | 247,944 | 2,216 | 3.56 | % | 147,944 | 1,477 | 4.02 | % | ||||||||||||||||||||
Total borrowings | 595,318 | 3,251 | 2.21 | % | 585,504 | 3,324 | 2.26 | % | 678,144 | 3,657 | 2.17 | % | ||||||||||||||||||||
Total funding liabilities | 13,518,583 | 6,860 | 0.21 | % | 13,025,188 | 7,716 | 0.24 | % | 10,818,140 | 12,407 | 0.46 | % | ||||||||||||||||||||
Other non-interest-bearing liabilities(2) | 207,560 | 195,965 | 212,162 | |||||||||||||||||||||||||||||
Total liabilities | 13,726,143 | 13,221,153 | 11,030,302 | |||||||||||||||||||||||||||||
Shareholders’ equity | 1,646,780 | 1,644,485 | 1,604,682 | |||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 15,372,923 | $ | 14,865,638 | $ | 12,634,984 | ||||||||||||||||||||||||||
Net interest income/rate spread (tax equivalent) | $ | 119,885 | 3.43 | % | $ | 123,711 | 3.63 | % | $ | 120,989 | 4.23 | % | ||||||||||||||||||||
Net interest margin (tax equivalent) | 3.44 | % | 3.64 | % | 4.25 | % | ||||||||||||||||||||||||||
Reconciliation to reported net interest income: | ||||||||||||||||||||||||||||||||
Adjustments for taxable equivalent basis | (2,224 | ) | (2,274 | ) | (1,731 | ) | ||||||||||||||||||||||||||
Net interest income and margin, as reported | $ | 117,661 | 3.38 | % | $ | 121,437 | 3.57 | % | $ | 119,258 | 4.19 | % | ||||||||||||||||||||
Additional Key Financial Ratios: | ||||||||||||||||||||||||||||||||
Return on average assets | 1.24 | % | 1.04 | % | 0.54 | % | ||||||||||||||||||||||||||
Return on average equity | 11.54 | % | 9.42 | % | 4.23 | % | ||||||||||||||||||||||||||
Average equity/average assets | 10.71 | % | 11.06 | % | 12.70 | % | ||||||||||||||||||||||||||
Average interest-earning assets/average interest-bearing liabilities | 179.96 | % | 179.60 | % | 166.97 | % | ||||||||||||||||||||||||||
Average interest-earning assets/average funding liabilities | 104.56 | % | 103.77 | % | 105.76 | % | ||||||||||||||||||||||||||
Non-interest income/average assets | 0.64 | % | 0.63 | % | 0.61 | % | ||||||||||||||||||||||||||
Non-interest expense/average assets | 2.44 | % | 2.59 | % | 3.03 | % | ||||||||||||||||||||||||||
Efficiency ratio(4) | 65.04 | % | 66.76 | % | 68.76 | % | ||||||||||||||||||||||||||
Adjusted efficiency ratio(5) | 63.85 | % | 64.31 | % | 62.26 | % |
(1) Average balances include loans accounted for on a nonaccrual basis and loans 90 days or more past due. Amortization of net deferred loan fees/costs is included with interest on loans.
(2) Average other non-interest-bearing liabilities include fair value adjustments related to junior subordinated debentures.
(3) Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was
(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. These represent non-GAAP financial measures. See the non-GAAP Financial Measures on the final two pages of the press release tables.
ADDITIONAL FINANCIAL INFORMATION | |||||||||||
(dollars in thousands) | |||||||||||
* Non-GAAP Financial Measures | |||||||||||
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner’s core operations reflected in the current quarter’s results and facilitate the comparison of our performance with the performance of our peers. However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. Where applicable, comparable earnings information using GAAP financial measures is also presented. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. For a reconciliation of these non-GAAP financial measures, see the tables below: | |||||||||||
ADJUSTED REVENUE | Quarters Ended | ||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
Net interest income before (recapture)/provision for credit losses | $ | 117,661 | $ | 121,437 | $ | 119,258 | |||||
Total non-interest income | 24,272 | 23,509 | 19,165 | ||||||||
Total GAAP revenue | 141,933 | 144,946 | 138,423 | ||||||||
Exclude net gain on sale of securities | (485 | ) | (197 | ) | (78 | ) | |||||
Exclude net change in valuation of financial instruments carried at fair value | (59 | ) | (1,704 | ) | 4,596 | ||||||
Adjusted revenue (non-GAAP) | $ | 141,389 | $ | 143,045 | $ | 142,941 |
ADJUSTED EARNINGS | Quarters Ended | |||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | ||||||||||
Net income (GAAP) | $ | 46,855 | $ | 38,957 | $ | 16,882 | ||||||
Exclude net gain on sale of securities | (485 | ) | (197 | ) | (78 | ) | ||||||
Exclude net change in valuation of financial instruments carried at fair value | (59 | ) | (1,704 | ) | 4,596 | |||||||
Exclude merger and acquisition-related expenses | 571 | 579 | 1,142 | |||||||||
Exclude COVID-19 expenses | 148 | 333 | 239 | |||||||||
Exclude related net tax (benefit) expense | (42 | ) | 237 | (1,405 | ) | |||||||
Total adjusted earnings (non-GAAP) | $ | 46,988 | $ | 38,205 | $ | 21,376 | ||||||
Diluted earnings per share (GAAP) | $ | 1.33 | $ | 1.10 | $ | 0.47 | ||||||
Diluted adjusted earnings per share (non-GAAP) | $ | 1.33 | $ | 1.08 | $ | 0.60 |
ADDITIONAL FINANCIAL INFORMATION | ||||||||||||
(dollars in thousands) | ||||||||||||
ADJUSTED EFFICIENCY RATIO | Quarters Ended | |||||||||||
Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | ||||||||||
Non-interest expense (GAAP) | $ | 92,307 | $ | 96,759 | $ | 95,185 | ||||||
Exclude merger and acquisition-related expenses | (571 | ) | (579 | ) | (1,142 | ) | ||||||
Exclude COVID-19 expenses | (148 | ) | (333 | ) | (239 | ) | ||||||
Exclude CDI amortization | (1,711 | ) | (1,865 | ) | (2,001 | ) | ||||||
Exclude state/municipal tax expense | (1,065 | ) | (1,071 | ) | (984 | ) | ||||||
Exclude REO operations | 242 | 283 | (100 | ) | ||||||||
Exclude recapture/(provision) for credit losses - unfunded loan commitments | 1,220 | (1,203 | ) | (1,722 | ) | |||||||
Adjusted non-interest expense (non-GAAP) | $ | 90,274 | $ | 91,991 | $ | 88,997 | ||||||
Net interest income before (recapture)/provision for credit losses (GAAP) | $ | 117,661 | $ | 121,437 | $ | 119,258 | ||||||
Non-interest income (GAAP) | 24,272 | 23,509 | 19,165 | |||||||||
Total revenue | 141,933 | 144,946 | 138,423 | |||||||||
Exclude net gain on sale of securities | (485 | ) | (197 | ) | (78 | ) | ||||||
Exclude net change in valuation of financial instruments carried at fair value | (59 | ) | (1,704 | ) | 4,596 | |||||||
Adjusted revenue (non-GAAP) | $ | 141,389 | $ | 143,045 | $ | 142,941 | ||||||
Efficiency ratio (GAAP) | 65.04 | % | 66.76 | % | 68.76 | % | ||||||
Adjusted efficiency ratio (non-GAAP) | 63.85 | % | 64.31 | % | 62.26 | % |
TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO TANGIBLE ASSETS | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | |||||||||
Shareholders’ equity (GAAP) | $ | 1,618,817 | $ | 1,666,264 | $ | 1,601,700 | ||||||
Exclude goodwill and other intangible assets, net | 392,836 | 394,547 | 400,278 | |||||||||
Tangible common shareholders’ equity (non-GAAP) | $ | 1,225,981 | $ | 1,271,717 | $ | 1,201,422 | ||||||
Total assets (GAAP) | $ | 16,119,792 | $ | 15,031,623 | $ | 12,780,950 | ||||||
Exclude goodwill and other intangible assets, net | 392,836 | 394,547 | 400,278 | |||||||||
Total tangible assets (non-GAAP) | $ | 15,726,956 | $ | 14,637,076 | $ | 12,380,672 | ||||||
Common shareholders’ equity to total assets (GAAP) | 10.04 | % | 11.09 | % | 12.53 | % | ||||||
Tangible common shareholders’ equity to tangible assets (non-GAAP) | 7.80 | % | 8.69 | % | 9.70 | % | ||||||
TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE | ||||||||||||
Tangible common shareholders’ equity (non-GAAP) | $ | 1,225,981 | $ | 1,271,717 | $ | 1,201,422 | ||||||
Common shares outstanding at end of period | 34,735,343 | 35,159,200 | 35,102,459 | |||||||||
Common shareholders’ equity (book value) per share (GAAP) | $ | 46.60 | $ | 47.39 | $ | 45.63 | ||||||
Tangible common shareholders’ equity (tangible book value) per share (non-GAAP) | $ | 35.29 | $ | 36.17 | $ | 34.23 |
FAQ
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