Banner Corporation (NASDAQ: BANR) (“Banner”), the parent company
of Banner Bank, today reported net income of $39.8 million, or
$1.15 per diluted share, for the second quarter of 2024, compared
to $37.6 million, or $1.09 per diluted share, for the preceding
quarter and $39.6 million, or $1.15 per diluted share, for the
second quarter of 2023. Net interest income was $132.5 million in
the second quarter of 2024, compared to $133.0 million in the
preceding quarter and $142.5 million in the second 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 second quarter 2024 results included a $562,000 net loss
on the sale of securities, compared to a $4.9 million net loss on
the sale of securities in the preceding quarter and a $4.5 million
net loss on the sale of securities in the second quarter of 2023.
Banner’s second quarter 2024 results also included a $2.4 million
provision for credit losses, compared to a $520,000 provision for
credit losses in the preceding quarter and a $6.8 million provision
for credit losses in the second quarter of 2023. Net income was
$77.4 million, or $2.24 per diluted share, for the six months ended
June 30, 2024, compared to net income of $95.1 million, or $2.76
per diluted share, for the six months ended June 30, 2023. Banner’s
results for the six months ended June 30, 2024 include a $2.9
million provision for credit losses, a $5.5 million net loss on the
sale of securities and a $1.2 million net decrease in the fair
value adjustments on financial instruments carried at fair value,
compared to a $6.2 million provision for credit losses, an $11.8
million net loss on the sale of securities and a $3.7 million net
decrease in the fair value adjustments on financial instruments
carried at fair value during the same period in 2023.
Banner announced that its Board of Directors declared a regular
quarterly cash dividend of $0.48 per share. The dividend will be
payable August 16, 2024, to common shareholders of record on August
6, 2024.
“Banner’s second quarter operating results reflect the continued
successful execution of our super community bank strategy, which
emphasizes strong relationship banking and a moderate risk
profile,” said Mark Grescovich, President and CEO. “Our earnings
for the second quarter of 2024 benefited from solid growth in loans
and higher yields on interest-earning assets. The continued high
interest rate environment and its effect on funding costs, however,
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 that has been
resilient in a highly competitive environment, with core deposits
representing 88% 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 June 30, 2024, Banner, on a consolidated basis, had $15.82
billion in assets, $10.99 billion in net loans and $13.08 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.
Second Quarter 2024 Highlights
- Revenue was $149.7 million for the second quarter of 2024,
compared to $144.6 million in the preceding quarter and $150.9
million in the second 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 $150.5 million in the second quarter of 2024,
compared to $150.4 million in the preceding quarter and $158.6
million in the second quarter a year ago.
- Net interest income was $132.5 million in the second quarter of
2024, compared to $133.0 million in the preceding quarter and
$142.5 million in the second quarter a year ago.
- Net interest margin, on a tax equivalent basis, was 3.70%,
compared to 3.74% in the preceding quarter and 4.00% in the second
quarter a year ago.
- Mortgage banking operations revenue was $3.0 million for the
second quarter of 2024, compared to $2.3 million in the preceding
quarter and $1.7 million in the second quarter a year ago.
- Return on average assets was 1.02%, compared to 0.97% in the
preceding quarter and 1.02% in the second quarter a year ago.
- Net loans receivable increased 3% to $10.99 billion at June 30,
2024, compared to $10.72 billion at March 31, 2024, and increased
6% compared to $10.33 billion at June 30, 2023.
- Non-performing assets were $33.3 million, or 0.21% of total
assets, at June 30, 2024, compared to $29.9 million, or 0.19% of
total assets, at March 31, 2024 and $28.7 million, or 0.18% of
total assets, at June 30, 2023.
- The allowance for credit losses - loans was $152.8 million, or
1.37% of total loans receivable, as of June 30, 2024, compared to
$151.1 million, or 1.39% of total loans receivable, as of March 31,
2024 and $144.7 million, or 1.38% of total loans receivable, as of
June 30, 2023.
- Total deposits decreased to $13.08 billion at June 30, 2024,
compared to $13.16 billion at March 31, 2024 and $13.10 billion at
June 30, 2023.
- Core deposits represented 88% of total deposits at June 30,
2024.
- Available borrowing capacity was $4.73 billion at June 30,
2024, compared to $5.05 billion at March 31, 2024.
- On-balance sheet liquidity was $2.83 billion at June 30, 2024,
compared to $2.77 billion at March 31, 2024.
- Dividends paid to shareholders were $0.48 per share in the
quarter ended June 30, 2024.
- Common shareholders’ equity per share increased 1% to $49.07 at
June 30, 2024, compared to $48.39 at the preceding quarter end, and
increased 9% from $44.91 at June 30, 2023.
- Tangible common shareholders’ equity per share* increased 2% to
$38.12 at June 30, 2024, compared to $37.40 at the preceding
quarter end, and increased 13% from $33.83 at June 30, 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 $132.5 million in the second quarter of
2024, compared to $133.0 million in the preceding quarter and
$142.5 million in the second quarter a year ago. Net interest
margin on a tax equivalent basis decreased four basis points to
3.70% for the second quarter of 2024, compared to 3.74% in the
preceding quarter, and decreased compared to 4.00% in the second
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
and adjustable rate loans repricing higher.
Average yields on interest-earning assets increased nine basis
points to 5.25% for the second quarter of 2024, compared to 5.16%
for the preceding quarter, and increased compared to 4.80% in the
second quarter a year ago. Average loan yields increased nine basis
points to 5.96%, compared to 5.87% in the preceding quarter, and
increased compared to 5.51% in the second quarter a year ago. The
increase in average yields, especially loans, during the current
quarter reflects the benefit of originating new loans at higher
interest rates as well as adjustable rate loans repricing higher.
Total deposit costs increased 13 basis points to 1.50% in the
second quarter of 2024, compared to 1.37% in the preceding quarter,
and compared to 0.64% in the second quarter a year ago. The
increase in deposit costs 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 nine basis points to 5.07% in the second
quarter of 2024, compared to 4.98% in the preceding quarter, and
compared to 4.60% in the second quarter a year ago. The total cost
of funding liabilities increased 13 basis points to 1.66% during
the second quarter of 2024, compared to 1.53% in the preceding
quarter, and compared to 0.86% in the second quarter a year
ago.
A $2.4 million provision for credit losses was recorded in the
current quarter (comprised of a $2.0 million provision for credit
losses - loans, a $430,000 provision for credit losses - unfunded
loan commitments and a $14,000 recapture of provision for credit
losses - held-to-maturity debt securities). This compares to a
$520,000 provision for credit losses in the prior 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) and a $6.8 million
provision for credit losses in the second quarter a year ago
(comprised of a $3.6 million provision for credit losses - loans, a
$1.2 million provision for credit losses - unfunded loan
commitments, a $2.0 million provision for credit losses - available
for sale securities and a $16,000 recapture of provision for credit
losses - held-to-maturity debt securities). The provision for
credit losses for the current quarter primarily reflected loan
growth and an increase in the reserve for collateral dependent
loans. The provision for credit losses for the preceding quarter
primarily reflected 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.
Total non-interest income was $17.2 million in the second
quarter of 2024, compared to $11.6 million in the preceding quarter
and $8.4 million in the second quarter a year ago. The increase in
non-interest income during the current quarter compared to the
preceding quarter was primarily due to a $4.3 million decrease in
the net loss recognized on the sale of securities. The increase in
non-interest income during the current quarter compared to the
prior year quarter was primarily due to a $1.3 million increase in
mortgage banking operations revenue, a $4.0 million decrease in the
net loss recognized on the sale of securities and a $3.0 million
decrease in the net loss recognized for fair value adjustments on
financial instruments carried at fair value. Total non-interest
income was $28.8 million for the six months ended June 30, 2024,
compared to $17.7 million for the same period a year earlier.
Mortgage banking operations revenue was $3.0 million in the
second quarter of 2024, compared to $2.3 million in the preceding
quarter and $1.7 million in the second quarter a year ago. 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. The increase from the
preceding quarter included a $284,000 gain related to the sale of
$19.8 million of one- to four-family portfolio loans during the
second quarter of 2024. The increase from the preceding quarter
also reflects an increase in the percentage of loan sold servicing
retained. Home purchase activity accounted for 89% of one- to
four-family mortgage loan originations in both the second quarter
of 2024 and the preceding quarter and 93% in the second quarter of
2023.
During the second quarter of 2024, non-interest income included
a $190,000 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 $562,000 net loss on the sale of securities, related to a
security with a premium that was called early. In the preceding
quarter, non-interest income included a $992,000 net loss for fair
value adjustments and a $4.9 million net loss on the sale of
securities. In the second quarter a year ago, non-interest income
included a $3.2 million net loss for fair value adjustments and a
$4.5 million net loss on the sale of securities.
Total non-interest expense was $98.1 million in the second
quarter of 2024, compared to $97.6 million in the preceding quarter
and $95.4 million in the second quarter of 2023. The increase in
non-interest expense for the current quarter compared to the prior
quarter reflects a $1.5 million increase in salary and employee
benefits, primarily resulting from normal annual salary and wage
increases and an increase in loan production related commission
expense, partially offset by a $963,000 increase in capitalized
loan origination costs, primarily due to increased loan production.
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 and payment and card
processing services expense, partially offset by a decrease in
professional and legal expenses. For the six months ended June 30,
2024, total non-interest expense was $195.8 million, compared to
$190.0 million for the six months ended June 30, 2023. Banner’s
efficiency ratio was 65.53% for the second quarter of 2024,
compared to 67.55% in the preceding quarter and 63.21% in the same
quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP
financial measure, was 63.60% for the second quarter of 2024,
compared to 63.70% in the preceding quarter and 58.58% in the year
ago quarter. 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 $9.5 million for
the second quarter of 2024 resulting in an effective tax rate of
19.2%, reflecting the benefits from tax exempt income. Banner’s
statutory income tax rate for the quarter ended June 30, 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 increased to $15.82 billion at June 30, 2024,
compared to $15.52 billion at March 31, 2024, and $15.58 billion at
June 30, 2023. Securities and interest-bearing deposits held at
other banks totaled $3.27 billion at June 30, 2024, compared to
$3.32 billion at March 31, 2024 and $3.64 billion at June 30, 2023.
The decrease compared to the prior quarter was primarily due to
normal cash flows from the securities portfolio. The average
effective duration of the securities portfolio was approximately
6.5 years at June 30, 2024, compared to 6.8 years at June 30,
2023.
Total loans receivable increased to $11.14 billion at June 30,
2024, compared to $10.87 billion at March 31, 2024, and $10.47
billion at June 30, 2023. One- to four-family residential loans
increased 2% to $1.60 billion at June 30, 2024, compared to $1.57
billion at March 31, 2024, and increased 20% compared to $1.34
billion at June 30, 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, partially offset by the sale of $19.8 million of one-
to four-family portfolio loans. Multifamily real estate loans
decreased 11% to $717.1 million at June 30, 2024, compared to
$809.1 million at March 31, 2024, and increased 2% compared to
$699.8 million at June 30, 2023. The decrease in multifamily real
estate compared to March 31, 2024 was primarily due to certain
affordable housing loans transferring to small balance commercial
real estate. The increase in multifamily real estate loans from
June 30, 2023 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, partially offset by the transfer of certain
affordable housing loans to small balance commercial real estate.
Construction, land and land development loans increased 7% to $1.68
billion at June 30, 2024, compared to $1.57 billion at March 31,
2024, and increased 11% compared to $1.51 billion at June 30, 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 increased 5% to
$334.6 million at June 30, 2024, compared to $318.0 million at
March 31, 2024 and increased 8% compared to $310.1 million at June
30, 2023, primarily due to new loan production and advances on
agricultural lines of credit.
Loans held for sale were $13.4 million at June 30, 2024,
compared to $9.4 million at March 31, 2024 and $60.6 million at
June 30, 2023. One- to four- family residential mortgage held for
sale loans sold in the current quarter totaled $75.0 million,
compared to $65.9 million in the preceding quarter and $62.6
million in the second quarter a year ago. The decrease in loans
held for sale compared to June 30, 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 June 30, 2024 or March
31, 2024.
Total deposits decreased to $13.08 billion at June 30, 2024,
compared to $13.16 billion at March 31, 2024 and $13.10 billion a
year ago. Core deposits decreased 1% to $11.55 billion at June 30,
2024, compared to $11.67 billion at March 31, 2024, and decreased
2% compared to $11.74 billion at June 30, 2023. The decrease in
core deposits primarily reflects clients using deposits for
seasonal tax payments. Core deposits were 88% of total deposits at
June 30, 2024, compared to 89% of total deposits at March 31, 2024
and 90% of total deposits at June 30, 2023. Certificates of deposit
increased 3% to $1.53 billion at June 30, 2024, compared to $1.49
billion at March 31, 2024, and increased 12% compared to $1.36
billion a year earlier. The increase in certificates of deposit
during the current quarter compared to the preceding quarter and
second 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 second quarter a year ago was partially offset by
a $98.3 million decrease in brokered deposits.
Banner Bank’s estimated uninsured deposits were $4.09 billion or
31% of total deposits at June 30, 2024, compared to $4.18 billion
or 31% of total deposits at March 31, 2024. The uninsured deposit
calculation includes $326.5 million and $316.6 million of
collateralized public deposits at June 30, 2024 and March 31, 2024,
respectively. Uninsured deposits also include cash held by the
holding company of $63.9 million and $113.9 million at June 30,
2024 and March 31, 2024, 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 June 30, 2024 and March 31, 2024.
Banner had $398.0 million of FHLB advances at June 30, 2024,
compared to $52.0 million at March 31, 2024 and $270.0 million a
year ago. At June 30, 2024, Banner’s off-balance sheet liquidity
included additional borrowing capacity of $3.02 billion at the FHLB
and $1.59 billion at the Federal Reserve as well as federal funds
line of credit agreements with other financial institutions of
$125.0 million.
At June 30, 2024, total common shareholders’ equity was $1.69
billion, or 10.69% of total assets, compared to $1.66 billion or
10.73% of total assets at March 31, 2024, and $1.54 billion or
9.90% of total assets at June 30, 2023. The increase in total
common shareholders’ equity at June 30, 2024 compared to March 31,
2024 was primarily due to a $23.1 million increase in retained
earnings as a result of $39.8 million in net income, partially
offset by the accrual of $16.7 million of cash dividends during the
second quarter of 2024. At June 30, 2024, tangible common
shareholders’ equity, a non-GAAP financial measure, was $1.31
billion, or 8.51% of tangible assets, compared to $1.29 billion, or
8.50% of tangible assets, at March 31, 2024, and $1.16 billion, or
7.64% of tangible assets, a year ago. 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 June 30, 2024, Banner’s estimated common equity Tier 1 capital
ratio was 12.02%, its estimated Tier 1 leverage capital to average
assets ratio was 10.80%, and its estimated total capital to
risk-weighted assets ratio was 14.62%. These regulatory capital
ratios are estimates, pending completion and filing of Banner’s
regulatory reports.
Credit Quality
The allowance for credit losses - loans was $152.8 million, or
1.37% of total loans receivable and 498% of non-performing loans,
at June 30, 2024, compared to $151.1 million, or 1.39% of total
loans receivable and 513% of non-performing loans, at March 31,
2024, and $144.7 million, or 1.38% of total loans receivable and
513% of non-performing loans, at June 30, 2023. In addition to the
allowance for credit losses - loans, Banner maintains an allowance
for credit losses - unfunded loan commitments, which was $14.0
million at June 30, 2024, compared to $13.6 million at March 31,
2024, and $14.7 million at June 30, 2023. Net loan charge-offs
totaled $245,000 in the second quarter of 2024, compared to net
loan recoveries of $73,000 in the preceding quarter and net loan
charge-offs of $336,000 in the second quarter a year ago.
Non-performing loans were $30.7 million at June 30, 2024, compared
to $29.5 million at March 31, 2024, and $28.2 million a year
ago.
Substandard loans were $122.0 million at June 30, 2024, compared
to $116.1 million at March 31, 2024 and $145.0 million a year ago.
The increase from the prior quarter reflects downgrades of loans,
partially offset by paydowns and payoffs of substandard loans. The
decrease from the prior year quarter primarily reflects paydowns
and payoffs of substandard loans as well as risk rating
upgrades.
Total non-performing assets were $33.3 million, or 0.21% of
total assets, at June 30, 2024, compared to $29.9 million, or 0.19%
of total assets, at March 31, 2024, and $28.7 million, or 0.18% of
total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday July 18, 2024, at
8:00 a.m. PDT, to discuss its second 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 005428 to participate in the call. A replay of the call
will be available at www.bannerbank.com.
About the Company
Banner Corporation is a $15.82 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)
expectations regarding key growth initiatives and strategic
priorities; (7) 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; (8) 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; (9) competitive pressures among
depository institutions; (10) the effect of inflation on interest
rate movements and their impact on client behavior and net interest
margin; (11) the impact of repricing and competitors’ pricing
initiatives on loan and deposit products; (12) fluctuations in real
estate values; (13) the ability to adapt successfully to
technological changes to meet clients’ needs and developments in
the market place; (14) the ability to access cost-effective
funding; (15) 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; (16) changes in financial markets;
(17) changes in economic conditions in general and in Washington,
Idaho, Oregon and California in particular; (18) the costs, effects
and outcomes of litigation; (19) 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; (20) changes in
accounting principles, policies or guidelines; (21) future
acquisitions by Banner of other depository institutions or lines of
business; (22) future goodwill impairment due to changes in
Banner’s business or changes in market conditions; (23) 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; (24) environmental, social and governance
goals and targets; (25) other economic, competitive, governmental,
regulatory, and technological factors affecting our operations,
pricing, products and services; and (26) 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
Six Months Ended
(in thousands except shares and per share
data)
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Jun 30, 2024
Jun 30, 2023
INTEREST INCOME:
Loans receivable
$
161,191
$
156,475
$
140,848
$
317,666
$
274,105
Mortgage-backed securities
16,708
16,934
18,285
33,642
37,263
Securities and cash equivalents
11,239
11,279
12,676
22,518
27,402
Total interest income
189,138
184,688
171,809
373,826
338,770
INTEREST EXPENSE:
Deposits
48,850
44,613
20,539
93,463
29,783
Federal Home Loan Bank (FHLB) advances
3,621
2,972
5,157
6,593
6,421
Other borrowings
1,160
1,175
771
2,335
1,152
Subordinated debt
2,961
2,969
2,824
5,930
5,584
Total interest expense
56,592
51,729
29,291
108,321
42,940
Net interest income
132,546
132,959
142,518
265,505
295,830
PROVISION FOR CREDIT LOSSES
2,369
520
6,764
2,889
6,240
Net interest income after provision for
credit losses
130,177
132,439
135,754
262,616
289,590
NON-INTEREST INCOME:
Deposit fees and other service charges
10,590
11,022
10,600
21,612
21,162
Mortgage banking operations
3,006
2,335
1,686
5,341
4,377
Bank-owned life insurance
2,367
2,237
2,386
4,604
4,574
Miscellaneous
1,988
1,892
1,428
3,880
3,068
17,951
17,486
16,100
35,437
33,181
Net loss on sale of securities
(562
)
(4,903
)
(4,527
)
(5,465
)
(11,779
)
Net change in valuation of financial
instruments carried at fair value
(190
)
(992
)
(3,151
)
(1,182
)
(3,703
)
Total non-interest income
17,199
11,591
8,422
28,790
17,699
NON-INTEREST EXPENSE:
Salary and employee benefits
63,831
62,369
61,972
126,200
123,361
Less capitalized loan origination
costs
(4,639
)
(3,676
)
(4,457
)
(8,315
)
(7,888
)
Occupancy and equipment
12,128
12,462
11,994
24,590
23,964
Information and computer data services
7,240
7,320
7,082
14,560
14,229
Payment and card processing services
5,691
5,710
4,669
11,401
9,287
Professional and legal expenses
1,201
1,530
2,400
2,731
4,521
Advertising and marketing
1,198
1,079
940
2,277
1,746
Deposit insurance
2,858
2,809
2,839
5,667
4,729
State and municipal business and use
taxes
1,394
1,304
1,229
2,698
2,529
Real estate operations, net
297
(220
)
75
77
(202
)
Amortization of core deposit
intangibles
724
723
991
1,447
2,041
Miscellaneous
6,205
6,231
5,671
12,436
11,709
Total non-interest expense
98,128
97,641
95,405
195,769
190,026
Income before provision for income
taxes
49,248
46,389
48,771
95,637
117,263
PROVISION FOR INCOME TAXES
9,453
8,830
9,180
18,283
22,117
NET INCOME
$
39,795
$
37,559
$
39,591
$
77,354
$
95,146
Earnings per common share:
Basic
$
1.15
$
1.09
$
1.15
$
2.25
$
2.77
Diluted
$
1.15
$
1.09
$
1.15
$
2.24
$
2.76
Cumulative dividends declared per common
share
$
0.48
$
0.48
$
0.48
$
0.96
$
0.96
Weighted average number of common shares
outstanding:
Basic
34,488,163
34,391,564
34,373,434
34,439,863
34,306,853
Diluted
34,537,012
34,521,105
34,409,024
34,539,620
34,435,221
Increase in common shares outstanding
60,531
46,852
36,087
107,383
150,609
FINANCIAL
CONDITION
Percentage Change
(in thousands except shares and per share
data)
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Prior Qtr
Prior Yr Qtr
ASSETS
Cash and due from banks
$
195,163
$
168,427
$
209,634
$
229,918
15.9
%
(15.1
)%
Interest-bearing deposits
52,295
40,849
44,830
51,407
28.0
%
1.7
%
Total cash and cash equivalents
247,458
209,276
254,464
281,325
18.2
%
(12.0
)%
Securities - trading
—
—
—
25,659
nm
(100.0
)%
Securities - available for sale, amortized
cost $2,572,544, $2,617,986, $2,729,980 and $2,879,179,
respectively
2,197,693
2,244,939
2,373,783
2,465,960
(2.1
)%
(10.9
)%
Securities - held to maturity, fair value
$852,709, $869,097, $907,514 and $933,116, respectively
1,023,028
1,038,312
1,059,055
1,098,570
(1.5
)%
(6.9
)%
Total securities
3,220,721
3,283,251
3,432,838
3,590,189
(1.9
)%
(10.3
)%
FHLB stock
27,311
11,741
24,028
20,800
132.6
%
31.3
%
Loans held for sale
13,421
9,357
11,170
60,612
43.4
%
(77.9
)%
Loans receivable
11,143,848
10,869,096
10,810,455
10,472,407
2.5
%
6.4
%
Allowance for credit losses – loans
(152,848
)
(151,140
)
(149,643
)
(144,680
)
1.1
%
5.6
%
Net loans receivable
10,991,000
10,717,956
10,660,812
10,327,727
2.5
%
6.4
%
Accrued interest receivable
67,520
66,124
63,100
57,007
2.1
%
18.4
%
Property and equipment, net
126,465
129,889
132,231
135,414
(2.6
)%
(6.6
)%
Goodwill
373,121
373,121
373,121
373,121
—
%
—
%
Other intangibles, net
4,237
4,961
5,684
7,399
(14.6
)%
(42.7
)%
Bank-owned life insurance
307,948
306,600
304,366
301,260
0.4
%
2.2
%
Operating lease right-of-use assets
39,628
40,834
43,731
45,812
(3.0
)%
(13.5
)%
Other assets
397,364
365,169
364,846
384,070
8.8
%
3.5
%
Total assets
$
15,816,194
$
15,518,279
$
15,670,391
$
15,584,736
1.9
%
1.5
%
LIABILITIES
Deposits:
Non-interest-bearing
$
4,537,803
$
4,699,553
$
4,792,369
$
5,369,187
(3.4
)%
(15.5
)%
Interest-bearing transaction and savings
accounts
7,016,327
6,973,338
6,759,661
6,373,269
0.6
%
10.1
%
Interest-bearing certificates
1,525,133
1,485,880
1,477,467
1,356,600
2.6
%
12.4
%
Total deposits
13,079,263
13,158,771
13,029,497
13,099,056
(0.6
)%
(0.2
)%
Advances from FHLB
398,000
52,000
323,000
270,000
665.4
%
47.4
%
Other borrowings
165,956
183,341
182,877
193,019
(9.5
)%
(14.0
)%
Subordinated notes, net
89,561
89,456
92,851
92,646
0.1
%
(3.3
)%
Junior subordinated debentures at fair
value
66,831
66,586
66,413
67,237
0.4
%
(0.6
)%
Operating lease liabilities
44,056
45,524
48,659
51,234
(3.2
)%
(14.0
)%
Accrued expenses and other liabilities
235,515
211,578
228,428
223,565
11.3
%
5.3
%
Deferred compensation
46,246
46,515
45,975
45,466
(0.6
)%
1.7
%
Total liabilities
14,125,428
13,853,771
14,017,700
14,042,223
2.0
%
0.6
%
SHAREHOLDERS’
EQUITY
Common stock
1,302,236
1,300,969
1,299,651
1,294,934
0.1
%
0.6
%
Retained earnings
686,079
663,021
642,175
587,027
3.5
%
16.9
%
Accumulated other comprehensive loss
(297,549
)
(299,482
)
(289,135
)
(339,448
)
(0.6
)%
(12.3
)%
Total shareholders’ equity
1,690,766
1,664,508
1,652,691
1,542,513
1.6
%
9.6
%
Total liabilities and shareholders’
equity
$
15,816,194
$
15,518,279
$
15,670,391
$
15,584,736
1.9
%
1.5
%
Common Shares Issued:
Shares outstanding at end of period
34,455,752
34,395,221
34,348,369
34,344,627
Common shareholders’ equity per share
(1)
$
49.07
$
48.39
$
48.12
$
44.91
Common shareholders’ tangible equity per
share (1) (2)
$
38.12
$
37.40
$
37.09
$
33.83
Common shareholders’ equity to total
assets
10.69
%
10.73
%
10.55
%
9.90
%
Common shareholders’ tangible equity to
tangible assets (2)
8.51
%
8.50
%
8.33
%
7.64
%
Consolidated Tier 1 leverage capital
ratio
10.80
%
10.71
%
10.56
%
10.22
%
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
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Prior Qtr
Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied
$
950,922
$
905,063
$
915,897
$
894,876
5.1
%
6.3
%
Investment properties
1,536,142
1,544,885
1,541,344
1,558,176
(0.6
)%
(1.4
)%
Small balance CRE
1,234,302
1,159,355
1,178,500
1,172,825
6.5
%
5.2
%
Multifamily real estate
717,089
809,101
811,232
699,830
(11.4
)%
2.5
%
Construction, land and land
development:
Commercial construction
173,296
158,011
170,011
183,765
9.7
%
(5.7
)%
Multifamily construction
663,989
573,014
503,993
433,868
15.9
%
53.0
%
One- to four-family construction
490,237
495,931
526,432
547,200
(1.1
)%
(10.4
)%
Land and land development
352,184
344,563
336,639
345,053
2.2
%
2.1
%
Commercial business:
Commercial business
1,298,134
1,262,716
1,255,734
1,313,226
2.8
%
(1.1
)%
Small business scored
1,074,465
1,028,067
1,022,154
982,283
4.5
%
9.4
%
Agricultural business, including secured
by farmland:
Agricultural business, including secured
by farmland
334,583
317,958
331,089
310,120
5.2
%
7.9
%
One- to four-family residential
1,603,266
1,566,834
1,518,046
1,340,126
2.3
%
19.6
%
Consumer:
Consumer—home equity revolving lines of
credit
611,739
597,060
588,703
577,725
2.5
%
5.9
%
Consumer—other
103,500
106,538
110,681
113,334
(2.9
)%
(8.7
)%
Total loans receivable
$
11,143,848
$
10,869,096
$
10,810,455
$
10,472,407
2.5
%
6.4
%
Loans 30 - 89 days past due and on
accrual
$
11,850
$
19,649
$
19,744
$
6,259
Total delinquent loans (including loans on
non-accrual), net
$
32,081
$
39,429
$
43,164
$
29,135
Total delinquent loans / Total loans
receivable
0.29
%
0.36
%
0.40
%
0.28
%
LOANS BY
GEOGRAPHIC LOCATION
Percentage Change
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Prior Qtr
Prior Yr Qtr
Amount
Percentage
Amount
Amount
Amount
Washington
$
5,182,378
46.5
%
$
5,091,912
$
5,095,602
$
4,945,074
1.8
%
4.8
%
California
2,787,190
25.0
%
2,687,114
2,670,923
2,537,121
3.7
%
9.9
%
Oregon
2,072,153
18.6
%
2,013,453
1,974,001
1,913,929
2.9
%
8.3
%
Idaho
641,209
5.8
%
613,155
610,064
595,065
4.6
%
7.8
%
Utah
80,295
0.7
%
72,652
68,931
62,720
10.5
%
28.0
%
Other
380,623
3.4
%
390,810
390,934
418,498
(2.6
)%
(9.1
)%
Total loans receivable
$
11,143,848
100.0
%
$
10,869,096
$
10,810,455
$
10,472,407
2.5
%
6.4
%
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
LOAN
ORIGINATIONS
Quarters Ended
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Commercial real estate
$
102,258
$
67,362
$
94,640
Multifamily real estate
2,774
385
3,441
Construction and land
546,675
437,273
488,980
Commercial business
167,168
154,715
128,404
Agricultural business
22,255
34,406
28,367
One-to four-family residential
34,498
17,568
52,618
Consumer
120,470
66,145
112,555
Total loan originations (excluding loans
held for sale)
$
996,098
$
777,854
$
909,005
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
Quarters Ended
CHANGE IN THE
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
ALLOWANCE FOR
CREDIT LOSSES – LOANS
Balance, beginning of period
$
151,140
$
149,643
$
141,457
Provision for credit losses – loans
1,953
1,424
3,559
Recoveries of loans previously charged
off:
Commercial real estate
98
1,389
74
One- to four-family real estate
17
16
36
Commercial business
324
781
524
Agricultural business, including secured
by farmland
195
106
2
Consumer
112
159
117
746
2,451
753
Loans charged off:
Commercial real estate
(347
)
—
—
Construction and land
—
—
(156
)
One- to four-family real estate
—
—
(4
)
Commercial business
(137
)
(1,809
)
(566
)
Consumer
(507
)
(569
)
(363
)
(991
)
(2,378
)
(1,089
)
Net (charge-offs) recoveries
(245
)
73
(336
)
Balance, end of period
$
152,848
$
151,140
$
144,680
Net (charge-offs) recoveries / Average
loans receivable
(0.002
)%
0.001
%
(0.003
)%
ALLOCATION OF
ALLOWANCE FOR
CREDIT LOSSES – LOANS
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Commercial real estate
$
39,064
$
43,555
$
43,636
Multifamily real estate
8,253
9,293
8,039
Construction and land
31,597
28,908
29,844
One- to four-family real estate
20,906
20,432
16,737
Commercial business
38,835
35,544
33,880
Agricultural business, including secured
by farmland
4,045
3,890
3,573
Consumer
10,148
9,518
8,971
Total allowance for credit losses –
loans
$
152,848
$
151,140
$
144,680
Allowance for credit losses - loans /
Total loans receivable
1.37
%
1.39
%
1.38
%
Allowance for credit losses - loans /
Non-performing loans
498
%
513
%
513
%
Quarters Ended
CHANGE IN THE
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
ALLOWANCE FOR
CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS
Balance, beginning of period
$
13,597
$
14,484
$
13,443
Provision/(recapture) for credit losses -
unfunded loan commitments
430
(887
)
1,221
Balance, end of period
$
14,027
$
13,597
$
14,664
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
NON-PERFORMING
ASSETS
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Loans on non-accrual status:
Secured by real estate:
Commercial
$
2,326
$
2,753
$
2,677
$
2,478
Construction and land
3,999
5,029
3,105
2,280
One- to four-family
8,184
7,750
5,702
7,605
Commercial business
8,694
7,355
9,002
8,439
Agricultural business, including secured
by farmland
1,586
2,496
3,167
3,997
Consumer
3,380
3,411
3,204
3,272
28,169
28,794
26,857
28,071
Loans more than 90 days delinquent, still
on accrual:
Secured by real estate:
Construction and land
—
286
1,138
—
One- to four-family
1,861
409
1,205
60
Commercial business
—
—
1
—
Consumer
692
—
401
49
2,553
695
2,745
109
Total non-performing loans
30,722
29,489
29,602
28,180
REO
2,564
448
526
546
Total non-performing assets
$
33,286
$
29,937
$
30,128
$
28,726
Total non-performing assets to total
assets
0.21
%
0.19
%
0.19
%
0.18
%
LOANS BY CREDIT
RISK RATING
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Pass
$
10,971,850
$
10,731,015
$
10,671,281
$
10,315,687
Special Mention
50,027
22,029
13,732
11,745
Substandard
121,971
116,052
125,442
144,975
Total
$
11,143,848
$
10,869,096
$
10,810,455
$
10,472,407
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT
COMPOSITION
Percentage Change
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Prior Qtr
Prior Yr Qtr
Non-interest-bearing
$
4,537,803
$
4,699,553
$
4,792,369
$
5,369,187
(3.4
)%
(15.5
)%
Interest-bearing checking
2,208,742
2,112,799
2,098,526
1,908,402
4.5
%
15.7
%
Regular savings accounts
3,192,036
3,171,933
2,980,530
2,588,298
0.6
%
23.3
%
Money market accounts
1,615,549
1,688,606
1,680,605
1,876,569
(4.3
)%
(13.9
)%
Total interest-bearing transaction and
savings accounts
7,016,327
6,973,338
6,759,661
6,373,269
0.6
%
10.1
%
Total core deposits
11,554,130
11,672,891
11,552,030
11,742,456
(1.0
)%
(1.6
)%
Interest-bearing certificates
1,525,133
1,485,880
1,477,467
1,356,600
2.6
%
12.4
%
Total deposits
$
13,079,263
$
13,158,771
$
13,029,497
$
13,099,056
(0.6
)%
(0.2
)%
GEOGRAPHIC
CONCENTRATION OF DEPOSITS
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Percentage Change
Amount
Percentage
Amount
Amount
Amount
Prior Qtr
Prior Yr Qtr
Washington
$
7,171,699
54.8
%
$
7,258,785
$
7,247,392
$
7,255,731
(1.2
)%
(1.2
)%
Oregon
2,909,838
22.3
%
2,914,605
2,852,677
2,914,267
(0.2
)%
(0.2
)%
California
2,331,793
17.8
%
2,316,515
2,269,557
2,257,247
0.7
%
3.3
%
Idaho
665,933
5.1
%
668,866
659,871
671,811
(0.4
)%
(0.9
)%
Total deposits
$
13,079,263
100.0
%
$
13,158,771
$
13,029,497
$
13,099,056
(0.6
)%
(0.2
)%
INCLUDED IN TOTAL
DEPOSITS
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Public non-interest-bearing accounts
$
149,012
$
140,477
$
191,591
Public interest-bearing transaction &
savings accounts
250,136
251,161
189,140
Public interest-bearing certificates
29,101
28,821
45,840
Total public deposits
$
428,249
$
420,459
$
426,571
Collateralized public deposits
$
326,524
$
316,554
$
309,665
Total brokered deposits
$
105,309
$
107,527
$
203,649
AVERAGE ACCOUNT
BALANCE PER DEPOSIT ACCOUNT
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Number of deposit accounts
460,107
461,399
467,490
Average account balance per account
$
29
$
29
$
28
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
ESTIMATED
REGULATORY CAPITAL RATIOS AS OF JUNE 30, 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
$
1,955,333
14.62
%
$
1,069,904
8.00
%
$
1,337,380
10.00
%
Tier 1 capital to risk-weighted assets
1,693,543
12.66
%
802,428
6.00
%
802,428
6.00
%
Tier 1 leverage capital to average
assets
1,693,543
10.80
%
627,282
4.00
%
n/a
n/a
Common equity tier 1 capital to
risk-weighted assets
1,607,043
12.02
%
601,821
4.50
%
n/a
n/a
Banner Bank:
Total capital to risk-weighted assets
1,833,271
13.70
%
1,070,354
8.00
%
1,337,943
10.00
%
Tier 1 capital to risk-weighted assets
1,671,481
12.49
%
802,766
6.00
%
1,070,354
8.00
%
Tier 1 leverage capital to average
assets
1,671,481
10.66
%
627,468
4.00
%
784,335
5.00
%
Common equity tier 1 capital to
risk-weighted assets
1,671,481
12.49
%
602,074
4.50
%
869,663
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
Jun 30, 2024
Mar 31, 2024
Jun 30, 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
$
11,665
$
206
7.10
%
$
9,939
$
167
6.76
%
$
56,073
$
738
5.28
%
Mortgage loans
9,006,857
129,230
5.77
%
8,892,561
125,284
5.67
%
8,413,392
112,097
5.34
%
Commercial/agricultural loans
1,874,039
31,761
6.82
%
1,830,095
30,847
6.78
%
1,768,511
27,683
6.28
%
Consumer and other loans
132,661
2,156
6.54
%
133,854
2,196
6.60
%
138,902
2,137
6.17
%
Total loans (1)
11,025,222
163,353
5.96
%
10,866,449
158,494
5.87
%
10,376,878
142,655
5.51
%
Mortgage-backed securities
2,672,187
16,850
2.54
%
2,728,640
17,076
2.52
%
2,958,700
18,429
2.50
%
Other securities
958,809
11,181
4.69
%
984,639
11,501
4.70
%
1,184,503
12,932
4.38
%
Interest-bearing deposits with banks
58,022
578
4.01
%
45,264
459
4.08
%
44,922
557
4.97
%
FHLB stock
21,080
365
6.96
%
19,073
209
4.41
%
25,611
157
2.46
%
Total investment securities
3,710,098
28,974
3.14
%
3,777,616
29,245
3.11
%
4,213,736
32,075
3.05
%
Total interest-earning assets
14,735,320
192,327
5.25
%
14,644,065
187,739
5.16
%
14,590,614
174,730
4.80
%
Non-interest-earning assets
926,411
943,725
939,100
Total assets
$
15,661,731
$
15,587,790
$
15,529,714
Deposits:
Interest-bearing checking accounts
$
2,156,214
7,621
1.42
%
$
2,104,242
6,716
1.28
%
$
1,870,605
2,331
0.50
%
Savings accounts
3,147,522
17,200
2.20
%
3,066,448
15,279
2.00
%
2,536,713
4,895
0.77
%
Money market accounts
1,659,327
9,124
2.21
%
1,674,159
8,388
2.02
%
1,957,553
6,007
1.23
%
Certificates of deposit
1,503,597
14,905
3.99
%
1,500,429
14,230
3.81
%
1,126,647
7,306
2.60
%
Total interest-bearing deposits
8,466,660
48,850
2.32
%
8,345,278
44,613
2.15
%
7,491,518
20,539
1.10
%
Non-interest-bearing deposits
4,634,738
—
—
%
4,711,922
—
—
%
5,445,960
—
—
%
Total deposits
13,101,398
48,850
1.50
%
13,057,200
44,613
1.37
%
12,937,478
20,539
0.64
%
Other interest-bearing liabilities:
FHLB advances
259,549
3,621
5.61
%
212,989
2,972
5.61
%
390,705
5,157
5.29
%
Other borrowings
175,518
1,160
2.66
%
180,692
1,175
2.62
%
188,060
771
1.64
%
Junior subordinated debentures and
subordinated notes
179,178
2,961
6.65
%
181,579
2,969
6.58
%
185,096
2,824
6.12
%
Total borrowings
614,245
7,742
5.07
%
575,260
7,116
4.98
%
763,861
8,752
4.60
%
Total funding liabilities
13,715,643
56,592
1.66
%
13,632,460
51,729
1.53
%
13,701,339
29,291
0.86
%
Other non-interest-bearing liabilities
(2)
294,794
303,412
279,232
Total liabilities
14,010,437
13,935,872
13,980,571
Shareholders’ equity
1,651,294
1,651,918
1,549,143
Total liabilities and shareholders’
equity
$
15,661,731
$
15,587,790
$
15,529,714
Net interest income/rate spread (tax
equivalent)
$
135,735
3.59
%
$
136,010
3.63
%
$
145,439
3.94
%
Net interest margin (tax equivalent)
3.70
%
3.74
%
4.00
%
Reconciliation to
reported net interest income:
Adjustments for taxable equivalent
basis
(3,189
)
(3,051
)
(2,921
)
Net interest income and margin, as
reported
$
132,546
3.62
%
$
132,959
3.65
%
$
142,518
3.92
%
Additional Key Financial
Ratios:
Return on average assets
1.02
%
0.97
%
1.02
%
Adjusted return on average assets (4)
1.04
%
1.08
%
1.18
%
Return on average equity
9.69
%
9.14
%
10.25
%
Adjusted return on average equity (4)
9.83
%
10.24
%
11.80
%
Average equity/average assets
10.54
%
10.60
%
9.98
%
Average interest-earning assets/average
interest-bearing liabilities
162.27
%
164.16
%
176.74
%
Average interest-earning assets/average
funding liabilities
107.43
%
107.42
%
106.49
%
Non-interest income/average assets
0.44
%
0.30
%
0.22
%
Non-interest expense/average assets
2.52
%
2.52
%
2.46
%
Efficiency ratio
65.53
%
67.55
%
63.21
%
Adjusted efficiency ratio (4)
63.60
%
63.70
%
58.58
%
(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 $2.2 million, $2.0 million and $1.8
million for the quarters ended June 30, 2024, March 31, 2024 and
June 30, 2023, respectively. The tax equivalent yield adjustment to
interest earned on tax exempt securities was $1.0 million for both
the quarters ended June 30, 2024 and March 31, 2024 and $1.1
million for the quarter ended June 30, 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)
(rates / ratios annualized)
ANALYSIS OF NET
INTEREST SPREAD
Six Months Ended
Jun 30, 2024
Jun 30, 2023
Average Balance
Interest and Dividends
Yield/Cost (3)
Average Balance
Interest and Dividends
Yield/Cost (3)
Interest-earning assets:
Held for sale loans
$
10,802
$
373
6.94
%
$
54,375
$
1,409
5.23
%
Mortgage loans
8,949,709
254,514
5.72
%
8,340,792
218,997
5.29
%
Commercial/agricultural loans
1,852,067
62,608
6.80
%
1,739,091
52,909
6.14
%
Consumer and other loans
133,258
4,352
6.57
%
138,004
4,252
6.21
%
Total loans (1)
10,945,836
321,847
5.91
%
10,272,262
277,567
5.45
%
Mortgage-backed securities
2,700,413
33,926
2.53
%
3,025,907
37,552
2.50
%
Other securities
971,724
22,682
4.69
%
1,294,743
28,027
4.37
%
Interest-bearing deposits with banks
51,643
1,037
4.04
%
49,229
1,165
4.77
%
FHLB stock
20,077
574
5.75
%
19,955
247
2.50
%
Total investment securities
3,743,857
58,219
3.13
%
4,389,834
66,991
3.08
%
Total interest-earning assets
14,689,693
380,066
5.20
%
14,662,096
344,558
4.74
%
Non-interest-earning assets
935,068
930,208
Total assets
$
15,624,761
$
15,592,304
Deposits:
Interest-bearing checking accounts
$
2,130,228
14,337
1.35
%
$
1,825,386
3,237
0.36
%
Savings accounts
3,106,985
32,479
2.10
%
2,575,726
6,779
0.53
%
Money market accounts
1,666,743
17,512
2.11
%
2,061,767
9,806
0.96
%
Certificates of deposit
1,502,013
29,135
3.90
%
969,607
9,961
2.07
%
Total interest-bearing deposits
8,405,969
93,463
2.24
%
7,432,486
29,783
0.81
%
Non-interest-bearing deposits
4,673,330
—
—
%
5,701,953
—
—
%
Total deposits
13,079,299
93,463
1.44
%
13,134,439
29,783
0.46
%
Other interest-bearing liabilities:
FHLB advances
236,269
6,593
5.61
%
249,131
6,421
5.20
%
Other borrowings
178,105
2,335
2.64
%
208,645
1,152
1.11
%
Junior subordinated debentures and
subordinated notes
180,379
5,930
6.61
%
188,142
5,584
5.99
%
Total borrowings
594,753
14,858
5.02
%
645,918
13,157
4.11
%
Total funding liabilities
13,674,052
108,321
1.59
%
13,780,357
42,940
0.63
%
Other non-interest-bearing liabilities
(2)
299,103
286,084
Total liabilities
13,973,155
14,066,441
Shareholders’ equity
1,651,606
1,525,863
Total liabilities and shareholders’
equity
$
15,624,761
$
15,592,304
Net interest income/rate spread (tax
equivalent)
$
271,745
3.61
%
$
301,618
4.11
%
Net interest margin (tax equivalent)
3.72
%
4.15
%
Reconciliation to
reported net interest income:
Adjustments for taxable equivalent
basis
(6,240
)
(5,788
)
Net interest income and margin, as
reported
$
265,505
3.63
%
$
295,830
4.07
%
Additional Key Financial
Ratios:
Return on average assets
1.00
%
1.23
%
Adjusted return on average assets (4)
1.06
%
1.39
%
Return on average equity
9.42
%
12.57
%
Adjusted return on average equity (4)
10.03
%
14.16
%
Average equity/average assets
10.57
%
9.79
%
Average interest-earning assets/average
interest-bearing liabilities
163.21
%
181.50
%
Average interest-earning assets/average
funding liabilities
107.43
%
106.40
%
Non-interest income/average assets
0.37
%
0.23
%
Non-interest expense/average assets
2.52
%
2.46
%
Efficiency ratio
66.52
%
60.61
%
Adjusted efficiency ratio (4)
63.65
%
56.33
%
(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 $4.2 million and $3.5 million for the
six months ended June 30, 2024 and June 30, 2023, respectively. The
tax equivalent yield adjustment to interest earned on tax exempt
securities was $2.1 million and $2.3 million for the six months
ended June 30, 2024 and June 30, 2023, respectively.
(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
Six Months Ended
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Jun 30, 2024
Jun 30, 2023
Net interest income (GAAP)
$
132,546
$
132,959
$
142,518
$
265,505
$
295,830
Non-interest income (GAAP)
17,199
11,591
8,422
28,790
17,699
Total revenue (GAAP)
149,745
144,550
150,940
294,295
313,529
Exclude: Net loss on sale of
securities
562
4,903
4,527
5,465
11,779
Net change in valuation of financial
instruments carried at fair value
190
992
3,151
1,182
3,703
Adjusted revenue (non-GAAP)
$
150,497
$
150,445
$
158,618
$
300,942
$
329,011
ADJUSTED EARNINGS
Quarters Ended
Six Months Ended
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Jun 30, 2024
Jun 30, 2023
Net income (GAAP)
$
39,795
$
37,559
$
39,591
$
77,354
$
95,146
Exclude: Net loss on sale of
securities
562
4,903
4,527
5,465
11,779
Net change in valuation of financial
instruments carried at fair value
190
992
3,151
1,182
3,703
Banner Forward expenses (1)
—
—
195
—
338
Related net tax benefit
(180
)
(1,415
)
(1,890
)
(1,595
)
(3,797
)
Total adjusted earnings (non-GAAP)
$
40,367
$
42,039
$
45,574
$
82,406
$
107,169
Diluted earnings per share (GAAP)
$
1.15
$
1.09
$
1.15
$
2.24
$
2.76
Diluted adjusted earnings per share
(non-GAAP)
$
1.17
$
1.22
$
1.32
$
2.39
$
3.11
Return on average assets
1.02
%
0.97
%
1.02
%
1.00
%
1.23
%
Adjusted return on average assets (2)
1.04
%
1.08
%
1.18
%
1.06
%
1.39
%
Return on average equity
9.69
%
9.14
%
10.25
%
9.42
%
12.57
%
Adjusted return on average equity (3)
9.83
%
10.24
%
11.80
%
10.03
%
14.16
%
(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
Six Months Ended
Jun 30, 2024
Mar 31, 2024
Jun 30, 2023
Jun 30, 2024
Jun 30, 2023
Non-interest expense (GAAP)
$
98,128
$
97,641
$
95,405
$
195,769
$
190,026
Exclude: Banner Forward expenses (1)
—
—
(195
)
—
(338
)
CDI amortization
(724
)
(723
)
(991
)
(1,447
)
(2,041
)
State/municipal tax expense
(1,394
)
(1,304
)
(1,229
)
(2,698
)
(2,529
)
REO operations
(297
)
220
(75
)
(77
)
202
Adjusted non-interest expense
(non-GAAP)
$
95,713
$
95,834
$
92,915
$
191,547
$
185,320
Net interest income (GAAP)
$
132,546
$
132,959
$
142,518
$
265,505
$
295,830
Non-interest income (GAAP)
17,199
11,591
8,422
28,790
17,699
Total revenue (GAAP)
149,745
144,550
150,940
294,295
313,529
Exclude: Net loss on sale of
securities
562
4,903
4,527
5,465
11,779
Net change in valuation of financial
instruments carried at fair value
190
992
3,151
1,182
3,703
Adjusted revenue (non-GAAP)
$
150,497
$
150,445
$
158,618
$
300,942
$
329,011
Efficiency ratio (GAAP)
65.53
%
67.55
%
63.21
%
66.52
%
60.61
%
Adjusted efficiency ratio (non-GAAP)
(2)
63.60
%
63.70
%
58.58
%
63.65
%
56.33
%
(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
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Jun 30, 2023
Shareholders’ equity (GAAP)
$
1,690,766
$
1,664,508
$
1,652,691
$
1,542,513
Exclude goodwill and other intangible
assets, net
377,358
378,082
378,805
380,520
Tangible common shareholders’ equity
(non-GAAP)
$
1,313,408
$
1,286,426
$
1,273,886
$
1,161,993
Total assets (GAAP)
$
15,816,194
$
15,518,279
$
15,670,391
$
15,584,736
Exclude goodwill and other intangible
assets, net
377,358
378,082
378,805
380,520
Total tangible assets (non-GAAP)
$
15,438,836
$
15,140,197
$
15,291,586
$
15,204,216
Common shareholders’ equity to total
assets (GAAP)
10.69
%
10.73
%
10.55
%
9.90
%
Tangible common shareholders’ equity to
tangible assets (non-GAAP)
8.51
%
8.50
%
8.33
%
7.64
%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY
PER SHARE
Shareholders’ equity (GAAP)
$
1,690,766
$
1,664,508
$
1,652,691
$
1,542,513
Tangible common shareholders’ equity
(non-GAAP)
$
1,313,408
$
1,286,426
$
1,273,886
$
1,161,993
Common shares outstanding at end of
period
34,455,752
34,395,221
34,348,369
34,344,627
Common shareholders’ equity (book value)
per share (GAAP)
$
49.07
$
48.39
$
48.12
$
44.91
Tangible common shareholders’ equity
(tangible book value) per share (non-GAAP)
$
38.12
$
37.40
$
37.09
$
33.83
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240717812042/en/
MARK J. GRESCOVICH, PRESIDENT & CEO ROBERT G. BUTTERFIELD,
CFO (509) 527-3636
Banner (NASDAQ:BANR)
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