Banner Corporation Reports Net Income of $45.2 Million, or $1.30 Per Diluted Share, for Third Quarter 2024; Declares Quarterly Cash Dividend of $0.48 Per Share

Banner Corporation (NASDAQ: BANR) (“Banner”), the parent company of Banner Bank, today reported net income of $45.2 million, or $1.30 per diluted share, for the third quarter of 2024, compared to $39.8 million, or $1.15 per diluted share, for the preceding quarter and $45.9 million, or $1.33 per diluted share, for the third quarter of 2023. Net interest income was $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago. The increase in net interest income compared to the preceding quarter reflects an increase in interest-earning assets and net interest margin. The decrease in net interest income compared to the prior year quarter reflects an increase in funding costs, partially offset by an increase in yields on earning assets. Banner’s results for the preceding quarter included a $562,000 net loss on the sale of securities and for the third quarter a year ago a $2.7 million net loss recorded on the sale of securities, compared to no gain or loss during the current quarter as no securities were sold during the third quarter of 2024. Third quarter 2024 results included a $1.7 million provision for credit losses, down from $2.4 million in the preceding quarter and $2.0 million in the third quarter of 2023.

Net income was $122.5 million, or $3.54 per diluted share, for the nine months ended September 30, 2024, compared to $141.0 million, or $4.09 per diluted share, for the nine months ended September 30, 2023. Results for the nine months ended September 30, 2024 included a $4.6 million provision for credit losses, a $5.5 million net loss on the sale of securities and a $1.1 million net decrease in the fair value adjustments on financial instruments carried at fair value, compared to an $8.3 million provision for credit losses, a $14.4 million net loss on the sale of securities and a $4.4 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 payable November 15, 2024, to common shareholders of record on November 5, 2024.

“Banner’s third quarter operating results reflect the continued successful execution of our super community bank strategy, which emphasizes growing new client relationships, maintaining our core funding position, promoting client loyalty and advocacy through our responsive service model, and sustaining a moderate risk profile,” said Mark Grescovich, President and CEO. “Our earnings for the third quarter of 2024 benefited from our solid year over year loan growth coupled with our expanded net interest margin. Additionally, Banner's credit metrics continue to be strong, our reserve for loan losses remained solid, and our capital base continues to be robust. We continue to benefit from a strong core deposit base that has been resilient in a highly competitive environment, with core deposits representing 89% of total deposits at quarter end. Banner has upheld its core values for the past 133 years, which are to do the right thing for our clients, communities, colleagues, company and shareholders; and to provide consistent and reliable strength through all economic cycles and change events.”

At September 30, 2024, Banner, on a consolidated basis, had $16.19 billion in assets, $11.07 billion in net loans and $13.54 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.

Third Quarter 2024 Highlights

  • Revenue was $153.7 million for the third quarter of 2024, compared to $149.7 million in the preceding quarter and $154.4 million in the third 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 $153.7 million in the third quarter of 2024, compared to $150.5 million in the preceding quarter and $157.7 million in the third quarter a year ago.
  • Net interest income was $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago.
  • Net interest margin, on a tax equivalent basis, was 3.72%, compared to 3.70% in the preceding quarter and 3.93% in the third quarter a year ago.
  • Mortgage banking operations revenue was $3.2 million for the third quarter of 2024, compared to $3.0 million in the preceding quarter and $2.0 million in the third quarter a year ago.
  • Return on average assets was 1.13%, compared to 1.02% in the preceding quarter and 1.17% in the third quarter a year ago.
  • Net loans receivable increased 1% to $11.07 billion at September 30, 2024, compared to $10.99 billion at June 30, 2024, and increased 6% compared to $10.46 billion at September 30, 2023.
  • Non-performing assets were $45.2 million, or 0.28% of total assets, at September 30, 2024, compared to $33.3 million, or 0.21% of total assets, at June 30, 2024 and $26.8 million, or 0.17% of total assets, at September 30, 2023.
  • The allowance for credit losses - loans was $154.6 million, or 1.38% of total loans receivable, as of September 30, 2024, compared to $152.8 million, or 1.37% of total loans receivable, as of June 30, 2024 and $147.0 million, or 1.38% of total loans receivable, as of September 30, 2023.
  • Total deposits increased to $13.54 billion at September 30, 2024, compared to $13.08 billion at June 30, 2024 and $13.17 billion at September 30, 2023.
  • Core deposits represented 89% of total deposits at September 30, 2024.
  • Dividends paid to shareholders were $0.48 per share in the quarter ended September 30, 2024.
  • Common shareholders’ equity per share increased 6% to $52.06 at September 30, 2024, compared to $49.07 at the preceding quarter end, and increased 18% from $44.27 at September 30, 2023.
  • Tangible common shareholders’ equity per share* increased 8% to $41.12 at September 30, 2024, compared to $38.12 at the preceding quarter end, and increased 24% from $33.22 at September 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 $135.7 million in the third quarter of 2024, compared to $132.5 million in the preceding quarter and $141.8 million in the third quarter a year ago. Net interest margin on a tax equivalent basis increased two basis points to 3.72% for the third quarter of 2024, compared to 3.70% in the preceding quarter, and decreased compared to 3.93% in the third quarter a year ago. Net interest margin for the current quarter benefited from increased yields on loans due to new loans being originated at higher interest rates and adjustable rate loans repricing higher, partially offset by increased funding costs. On September 18, 2024, the Federal Open Market Committee of the Federal Reserve System decreased the target range for the federal funds rate by 50 basis points, and as the change occurred late in the third quarter of 2024, it had minimal impact on our current quarter net interest margin.

Average yields on interest-earning assets increased eight basis points to 5.33% for the third quarter of 2024, compared to 5.25% for the preceding quarter, and increased compared to 4.94% in the third quarter a year ago. Average loan yields increased eight basis points to 6.04%, compared to 5.96% in the preceding quarter, and increased compared to 5.65% in the third 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 11 basis points to 1.61% in the third quarter of 2024, compared to 1.50% in the preceding quarter, and increased compared to 0.94% in the third quarter a year ago. The increase in deposit costs was due to a larger percentage of growth in higher costing deposits during the quarter. The average rate paid on borrowings increased one basis-point to 5.08% in the third quarter of 2024, compared to 5.07% in the preceding quarter, and increased compared to 4.64% in the third quarter a year ago. The total cost of funding liabilities increased seven basis points to 1.73% during the third quarter of 2024, compared to 1.66% in the preceding quarter, and increased compared to 1.08% in the third quarter a year ago.

A $1.7 million provision for credit losses was recorded in the current quarter (comprised of a $2.0 million provision for credit losses - loans, a $262,000 recapture of provision for credit losses - unfunded loan commitments and a $13,000 recapture of provision for credit losses - held-to-maturity debt securities). This compares to a $2.4 million provision for credit losses in the prior 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) and a $2.0 million provision for credit losses in the third quarter a year ago (comprised of a $2.9 million provision for credit losses - loans, a $346,000 provision for credit losses - unfunded loan commitments, a $1.3 million recapture of provision for credit losses - available for sale securities and a $12,000 recapture of provision for credit losses - held-to-maturity debt securities). The provision for credit losses for the current quarter primarily reflected an increase in the reserve for non-performing collateral dependent loans.

Total non-interest income was $18.1 million in the third quarter of 2024, compared to $17.2 million in the preceding quarter and $12.7 million in the third quarter a year ago. The increase in non-interest income during the current quarter compared to the preceding quarter was primarily due to a $562,000 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 $1.1 million increase in mortgage banking operations revenue, a $2.7 million decrease in the net loss recognized on the sale of securities and a $693,000 decrease in the net loss recognized for fair value adjustments on financial instruments carried at fair value. Total non-interest income was $46.9 million for the nine months ended September 30, 2024, compared to $30.4 million for the same period a year earlier.

Mortgage banking operations revenue was $3.2 million in the third quarter of 2024, compared to $3.0 million in the preceding quarter and $2.0 million in the third quarter a year ago. The volume of one- to four-family loans sold during the current quarter increased compared to the preceding and prior year quarters, although overall volumes remained low due to reduced refinancing and purchase activity in the current rate environment. The increase in mortgage banking operations revenue from the preceding quarter was also impacted by increases in the pricing on the one- to four-family loans sold during the current quarter. Home purchase activity accounted for 88% of one- to four-family mortgage loan originations in the third quarter of 2024, 89% in the preceding quarter and 90% in the third quarter of 2023.

Total non-interest expense was $96.3 million in the third quarter of 2024, compared to $98.1 million in the preceding quarter and $95.9 million in the third quarter of 2023. The decrease in non-interest expense for the current quarter compared to the prior quarter reflects a $2.0 million decrease in salary and employee benefits, primarily resulting from decreased medical premiums expense and unemployment and workers compensation expense. The increase in non-interest expense for the current quarter compared to the same quarter a year ago primarily reflects increases in salary and employee benefits and real estate operations, net expenses, partially offset by a decrease in professional and legal expenses. For the nine months ended September 30, 2024, total non-interest expense was $292.1 million, compared to $285.9 million for the nine months ended September 30, 2023. Banner’s efficiency ratio was 62.63% for the third quarter of 2024, compared to 65.53% in the preceding quarter and 62.10% in the same quarter a year ago. Banner’s adjusted efficiency ratio, a non-GAAP financial measure, was 61.27% for the third quarter of 2024, compared to 63.60% in the preceding quarter and 59.00% 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.

Balance Sheet Review

Total assets increased to $16.19 billion at September 30, 2024, compared to $15.82 billion at June 30, 2024, and $15.51 billion at September 30, 2023. Securities and interest-bearing deposits held at other banks totaled $3.50 billion at September 30, 2024, compared to $3.27 billion at June 30, 2024 and $3.44 billion at September 30, 2023. The increase compared to the prior quarter was primarily due to an increase in interest-bearing deposit balances. The average effective duration of the securities portfolio was approximately 6.3 years at September 30, 2024, compared to 6.8 years at September 30, 2023.

Total loans receivable increased to $11.22 billion at September 30, 2024, compared to $11.14 billion at June 30, 2024, and $10.61 billion at September 30, 2023. One- to four-family residential loans decreased 2% to $1.58 billion at September 30, 2024, compared to $1.60 billion at June 30, 2024, and increased 9% compared to $1.44 billion at September 30, 2023. The decrease in one- to four-family residential loans from the prior quarter was primarily the result of the transfer of $47.5 million of one- to four-family residential loans from portfolio to held for sale. The increase in one- to four-family residential loans from the prior year was primarily the result of one- to four-family construction loans converting to one- to four-family portfolio loans upon the completion of the construction phase and new loan production. Multifamily real estate loans increased 24% to $889.9 million at September 30, 2024, compared to $717.1 million at June 30, 2024, and increased 16% compared to $766.6 million at September 30, 2023. The increase in multifamily real estate loans from June 30, 2024 and September 30, 2023 was primarily the result of the conversion of multifamily construction loans to the multifamily portfolio upon the completion of the construction phase. The increase from the prior year also reflects 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 loans. Construction, land and land development loans decreased 9% to $1.53 billion at September 30, 2024, compared to $1.68 billion at June 30, 2024, and increased 1% compared to $1.50 billion at September 30, 2023. The decrease in construction, land and land development loans was primarily the result of multifamily construction loans converting to multifamily portfolio loans upon the completion of the construction phase. Agricultural business loans increased 4% to $346.7 million at September 30, 2024, compared to $334.6 million at June 30, 2024 and increased 4% compared to $334.6 million at September 30, 2023, primarily due to advances on agricultural lines of credit.

Loans held for sale were $78.8 million at September 30, 2024, compared to $13.4 million at June 30, 2024 and $54.2 million at September 30, 2023. One- to four-family residential mortgage held for sale loans sold in the current quarter totaled $95.0 million, compared to $75.0 million in the preceding quarter and $87.3 million in the third quarter a year ago. The increase in loans held for sale was primarily the result of the transfer of $47.5 million of one- to four-family residential loans from portfolio to held for sale during the current quarter. The increase from the prior year was partially offset by 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 September 30, 2024 or June 30, 2024.

Total deposits increased to $13.54 billion at September 30, 2024, compared to $13.08 billion at June 30, 2024 and $13.17 billion a year ago. Core deposits increased 4% to $12.02 billion at September 30, 2024, compared to $11.55 billion at June 30, 2024, and increased 3% compared to $11.72 billion at September 30, 2023. The increase in core deposits compared to the prior quarter primarily reflects normal seasonal increases primarily from agricultural clients. The increase in core deposits compared to the prior year quarter primarily reflects an increase in third-party insured sweep accounts. Core deposits were 89% of total deposits at September 30, 2024, compared to 88% of total deposits at June 30, 2024 and 89% of total deposits at September 30, 2023. Certificates of deposit decreased slightly to $1.52 billion at September 30, 2024, compared to $1.53 billion at June 30, 2024, and increased 4% compared to $1.46 billion a year earlier. The decrease in certificates of deposit during the current quarter compared to the preceding quarter was principally due to a $55.0 million decrease in brokered deposits. The increase in certificates of deposit during the current quarter compared to the third quarter a year ago was principally due to clients seeking higher yields moving funds from core deposit accounts to higher yielding certificates of deposits, partially offset by a $112.5 million decrease in brokered deposits.

FHLB advances were $230.0 million at September 30, 2024, compared to $398.0 million at June 30, 2024 and $140.0 million a year ago. At September 30, 2024, off-balance sheet liquidity included additional borrowing capacity of $3.23 billion at the FHLB and $1.53 billion at the Federal Reserve as well as federal funds line of credit agreements with other financial institutions of $125.0 million.

At September 30, 2024, total common shareholders’ equity was $1.79 billion, or 11.08% of total assets, compared to $1.69 billion or 10.69% of total assets at June 30, 2024, and $1.52 billion or 9.81% of total assets at September 30, 2023. The increase in total common shareholders’ equity at September 30, 2024 compared to June 30, 2024 was due to a $28.4 million increase in retained earnings as a result of $45.2 million in net income, partially offset by the accrual of $16.7 million of cash dividends during the third quarter of 2024, as well as a decrease in accumulated other comprehensive loss of $72.0 million as the result of an increase in the fair value of the security portfolio. At September 30, 2024, tangible common shareholders’ equity, a non-GAAP financial measure, was $1.42 billion, or 8.96% of tangible assets, compared to $1.31 billion, or 8.51% of tangible assets, at June 30, 2024, and $1.14 billion, or 7.54% 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 September 30, 2024, Banner’s estimated common equity Tier 1 capital ratio was 12.30%, its estimated Tier 1 leverage capital to average assets ratio was 10.91%, and its estimated total capital to risk-weighted assets ratio was 14.92%. These regulatory capital ratios are estimates, pending completion and filing of Banner’s regulatory reports.

Credit Quality

The allowance for credit losses - loans was $154.6 million, or 1.38% of total loans receivable and 359% of non-performing loans, at September 30, 2024, compared to $152.8 million, or 1.37% of total loans receivable and 498% of non-performing loans, at June 30, 2024, and $147.0 million, or 1.38% of total loans receivable and 560% of non-performing loans, at September 30, 2023. In addition to the allowance for credit losses - loans, Banner maintains an allowance for credit losses - unfunded loan commitments, which was $13.8 million at September 30, 2024, compared to $14.0 million at June 30, 2024, and $15.0 million at September 30, 2023. Net loan charge-offs totaled $230,000 in the third quarter of 2024, compared to $245,000 in the preceding quarter and $663,000 in the third quarter a year ago. Non-performing loans were $43.0 million at September 30, 2024, compared to $30.7 million at June 30, 2024, and $26.3 million a year ago.

An increase in adversely classified loans, offset in part by payoffs and paydowns, resulted in total substandard loans of $150.1 million as of September 30, 2024. This compares to $122.0 million as of June 30, 2024 and $124.5 million a year ago.

Total non-performing assets were $45.2 million, or 0.28% of total assets, at September 30, 2024, compared to $33.3 million, or 0.21% of total assets, at June 30, 2024, and $26.8 million, or 0.17% of total assets, a year ago.

Conference Call

Banner will host a conference call on Thursday, October 17, 2024, at 8:00 a.m. PDT, to discuss its third 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 433614 to participate in the call. A replay of the call will be available at www.bannerbank.com.

About the Company

Banner Corporation is a $16.19 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) 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 recession or slowed economic growth, or increased political instability due to acts of war; (2) changes in the interest rate environment, including increases or decreases in the Board of Governors of the Federal Reserve System (the “Federal Reserve”) benchmark rate and duration at which such interest rate levels are maintained, which could affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; (3) the impact of 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

 

Nine Months Ended

(in thousands except shares and per share data)

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

 

Sep 30, 2024

 

Sep 30, 2023

INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

Loans receivable

 

$

168,338

 

 

$

161,191

 

 

$

149,254

 

 

$

486,004

 

 

$

423,359

 

Mortgage-backed securities

 

 

16,357

 

 

 

16,708

 

 

 

17,691

 

 

 

49,999

 

 

 

54,954

 

Securities and cash equivalents

 

 

11,146

 

 

 

11,239

 

 

 

12,119

 

 

 

33,664

 

 

 

39,521

 

Total interest income

 

 

195,841

 

 

 

189,138

 

 

 

179,064

 

 

 

569,667

 

 

 

517,834

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

53,785

 

 

 

48,850

 

 

 

31,001

 

 

 

147,248

 

 

 

60,784

 

Federal Home Loan Bank (FHLB) advances

 

 

2,263

 

 

 

3,621

 

 

 

2,233

 

 

 

8,856

 

 

 

8,654

 

Other borrowings

 

 

1,147

 

 

 

1,160

 

 

 

1,099

 

 

 

3,482

 

 

 

2,251

 

Subordinated debt

 

 

2,971

 

 

 

2,961

 

 

 

2,965

 

 

 

8,901

 

 

 

8,549

 

Total interest expense

 

 

60,166

 

 

 

56,592

 

 

 

37,298

 

 

 

168,487

 

 

 

80,238

 

Net interest income

 

 

135,675

 

 

 

132,546

 

 

 

141,766

 

 

 

401,180

 

 

 

437,596

 

PROVISION FOR CREDIT LOSSES

 

 

1,692

 

 

 

2,369

 

 

 

2,027

 

 

 

4,581

 

 

 

8,267

 

Net interest income after provision for credit losses

 

 

133,983

 

 

 

130,177

 

 

 

139,739

 

 

 

396,599

 

 

 

429,329

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

Deposit fees and other service charges

 

 

10,741

 

 

 

10,590

 

 

 

10,916

 

 

 

32,353

 

 

 

32,078

 

Mortgage banking operations

 

 

3,180

 

 

 

3,006

 

 

 

2,049

 

 

 

8,521

 

 

 

6,426

 

Bank-owned life insurance

 

 

2,445

 

 

 

2,367

 

 

 

2,062

 

 

 

7,049

 

 

 

6,636

 

Miscellaneous

 

 

1,658

 

 

 

1,988

 

 

 

942

 

 

 

5,538

 

 

 

4,010

 

 

 

 

18,024

 

 

 

17,951

 

 

 

15,969

 

 

 

53,461

 

 

 

49,150

 

Net loss on sale of securities

 

 

 

 

 

(562

)

 

 

(2,657

)

 

 

(5,465

)

 

 

(14,436

)

Net change in valuation of financial instruments carried at fair value

 

 

39

 

 

 

(190

)

 

 

(654

)

 

 

(1,143

)

 

 

(4,357

)

Total non-interest income

 

 

18,063

 

 

 

17,199

 

 

 

12,658

 

 

 

46,853

 

 

 

30,357

 

NON-INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

Salary and employee benefits

 

 

61,832

 

 

 

63,831

 

 

 

61,091

 

 

 

188,032

 

 

 

184,452

 

Less capitalized loan origination costs

 

 

(4,354

)

 

 

(4,639

)

 

 

(4,498

)

 

 

(12,669

)

 

 

(12,386

)

Occupancy and equipment

 

 

12,040

 

 

 

12,128

 

 

 

11,722

 

 

 

36,630

 

 

 

35,686

 

Information and computer data services

 

 

7,134

 

 

 

7,240

 

 

 

7,118

 

 

 

21,694

 

 

 

21,347

 

Payment and card processing services

 

 

5,346

 

 

 

5,691

 

 

 

5,172

 

 

 

16,747

 

 

 

14,459

 

Professional and legal expenses

 

 

2,102

 

 

 

1,201

 

 

 

3,042

 

 

 

4,833

 

 

 

7,563

 

Advertising and marketing

 

 

1,161

 

 

 

1,198

 

 

 

1,362

 

 

 

3,438

 

 

 

3,108

 

Deposit insurance

 

 

2,874

 

 

 

2,858

 

 

 

2,874

 

 

 

8,541

 

 

 

7,603

 

State and municipal business and use taxes

 

 

1,432

 

 

 

1,394

 

 

 

1,359

 

 

 

4,130

 

 

 

3,888

 

Real estate operations, net

 

 

103

 

 

 

297

 

 

 

(383

)

 

 

180

 

 

 

(585

)

Amortization of core deposit intangibles

 

 

590

 

 

 

724

 

 

 

857

 

 

 

2,037

 

 

 

2,898

 

Miscellaneous

 

 

6,031

 

 

 

6,205

 

 

 

6,175

 

 

 

18,467

 

 

 

17,884

 

Total non-interest expense

 

 

96,291

 

 

 

98,128

 

 

 

95,891

 

 

 

292,060

 

 

 

285,917

 

Income before provision for income taxes

 

 

55,755

 

 

 

49,248

 

 

 

56,506

 

 

 

151,392

 

 

 

173,769

 

PROVISION FOR INCOME TAXES

 

 

10,602

 

 

 

9,453

 

 

 

10,652

 

 

 

28,885

 

 

 

32,769

 

NET INCOME

 

$

45,153

 

 

$

39,795

 

 

$

45,854

 

 

$

122,507

 

 

$

141,000

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.31

 

 

$

1.15

 

 

$

1.33

 

 

$

3.56

 

 

$

4.11

 

Diluted

 

$

1.30

 

 

$

1.15

 

 

$

1.33

 

 

$

3.54

 

 

$

4.09

 

Cumulative dividends declared per common share

 

$

0.48

 

 

$

0.48

 

 

$

0.48

 

 

$

1.44

 

 

$

1.44

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

34,498,830

 

 

 

34,488,163

 

 

 

34,379,865

 

 

 

34,459,662

 

 

 

34,331,458

 

Diluted

 

 

34,650,322

 

 

 

34,537,012

 

 

 

34,429,726

 

 

 

34,575,498

 

 

 

34,439,214

 

Increase in common shares outstanding

 

 

936

 

 

 

60,531

 

 

 

1,322

 

 

 

108,319

 

 

 

151,931

 

FINANCIAL CONDITION

 

 

 

 

 

 

 

 

 

Percentage Change

(in thousands except shares and per share data)

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Prior Qtr

 

Prior Yr Qtr

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

226,568

 

 

$

195,163

 

 

$

209,634

 

 

$

207,171

 

 

16

%

 

9

%

Interest-bearing deposits

 

 

252,227

 

 

 

52,295

 

 

 

44,830

 

 

 

44,535

 

 

382

%

 

466

%

Total cash and cash equivalents

 

 

478,795

 

 

 

247,458

 

 

 

254,464

 

 

 

251,706

 

 

93

%

 

90

%

Securities – trading

 

 

 

 

 

 

 

 

 

 

 

25,268

 

 

nm

 

(100

)%

Securities - available for sale, amortized cost $2,523,968, $2,572,544, $2,729,980 and $2,774,972, respectively

 

 

2,237,939

 

 

 

2,197,693

 

 

 

2,373,783

 

 

 

2,287,993

 

 

2

%

 

(2

)%

Securities - held to maturity, fair value $879,278, $852,709, $907,514 and $853,653, respectively

 

 

1,013,903

 

 

 

1,023,028

 

 

 

1,059,055

 

 

 

1,082,156

 

 

(1

)%

 

(6

)%

Total securities

 

 

3,251,842

 

 

 

3,220,721

 

 

 

3,432,838

 

 

 

3,395,417

 

 

1

%

 

(4

)%

FHLB stock

 

 

19,751

 

 

 

27,311

 

 

 

24,028

 

 

 

15,600

 

 

(28

)%

 

27

%

Loans held for sale

 

 

78,841

 

 

 

13,421

 

 

 

11,170

 

 

 

54,158

 

 

487

%

 

46

%

Loans receivable

 

 

11,224,606

 

 

 

11,143,848

 

 

 

10,810,455

 

 

 

10,611,417

 

 

1

%

 

6

%

Allowance for credit losses – loans

 

 

(154,585

)

 

 

(152,848

)

 

 

(149,643

)

 

 

(146,960

)

 

1

%

 

5

%

Net loans receivable

 

 

11,070,021

 

 

 

10,991,000

 

 

 

10,660,812

 

 

 

10,464,457

 

 

1

%

 

6

%

Accrued interest receivable

 

 

66,981

 

 

 

67,520

 

 

 

63,100

 

 

 

61,040

 

 

(1

)%

 

10

%

Property and equipment, net

 

 

125,256

 

 

 

126,465

 

 

 

132,231

 

 

 

136,504

 

 

(1

)%

 

(8

)%

Goodwill

 

 

373,121

 

 

 

373,121

 

 

 

373,121

 

 

 

373,121

 

 

%

 

%

Other intangibles, net

 

 

3,647

 

 

 

4,237

 

 

 

5,684

 

 

 

6,542

 

 

(14

)%

 

(44

)%

Bank-owned life insurance

 

 

310,400

 

 

 

307,948

 

 

 

304,366

 

 

 

303,347

 

 

1

%

 

2

%

Operating lease right-of-use assets

 

 

38,192

 

 

 

39,628

 

 

 

43,731

 

 

 

43,447

 

 

(4

)%

 

(12

)%

Other assets

 

 

371,829

 

 

 

397,364

 

 

 

364,846

 

 

 

402,541

 

 

(6

)%

 

(8

)%

Total assets

 

$

16,188,676

 

 

$

15,816,194

 

 

$

15,670,391

 

 

$

15,507,880

 

 

2

%

 

4

%

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing

 

$

4,688,244

 

 

$

4,537,803

 

 

$

4,792,369

 

 

$

5,197,854

 

 

3

%

 

(10

)%

Interest-bearing transaction and savings accounts

 

 

7,328,051

 

 

 

7,016,327

 

 

 

6,759,661

 

 

 

6,518,385

 

 

4

%

 

12

%

Interest-bearing certificates

 

 

1,521,853

 

 

 

1,525,133

 

 

 

1,477,467

 

 

 

1,458,313

 

 

%

 

4

%

Total deposits

 

 

13,538,148

 

 

 

13,079,263

 

 

 

13,029,497

 

 

 

13,174,552

 

 

4

%

 

3

%

Advances from FHLB

 

 

230,000

 

 

 

398,000

 

 

 

323,000

 

 

 

140,000

 

 

(42

)%

 

64

%

Other borrowings

 

 

154,533

 

 

 

165,956

 

 

 

182,877

 

 

 

188,440

 

 

(7

)%

 

(18

)%

Subordinated notes, net

 

 

80,170

 

 

 

89,561

 

 

 

92,851

 

 

 

92,748

 

 

(10

)%

 

(14

)%

Junior subordinated debentures at fair value

 

 

66,257

 

 

 

66,831

 

 

 

66,413

 

 

 

66,284

 

 

(1

)%

 

%

Operating lease liabilities

 

 

42,318

 

 

 

44,056

 

 

 

48,659

 

 

 

48,642

 

 

(4

)%

 

(13

)%

Accrued expenses and other liabilities

 

 

237,128

 

 

 

235,515

 

 

 

228,428

 

 

 

231,478

 

 

1

%

 

2

%

Deferred compensation

 

 

46,401

 

 

 

46,246

 

 

 

45,975

 

 

 

45,129

 

 

%

 

3

%

Total liabilities

 

 

14,394,955

 

 

 

14,125,428

 

 

 

14,017,700

 

 

 

13,987,273

 

 

2

%

 

3

%

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

1,304,792

 

 

 

1,302,236

 

 

 

1,299,651

 

 

 

1,297,307

 

 

%

 

1

%

Retained earnings

 

 

714,472

 

 

 

686,079

 

 

 

642,175

 

 

 

616,215

 

 

4

%

 

16

%

Accumulated other comprehensive loss

 

 

(225,543

)

 

 

(297,549

)

 

 

(289,135

)

 

 

(392,915

)

 

(24

)%

 

(43

)%

Total shareholders’ equity

 

 

1,793,721

 

 

 

1,690,766

 

 

 

1,652,691

 

 

 

1,520,607

 

 

6

%

 

18

%

Total liabilities and shareholders’ equity

 

$

16,188,676

 

 

$

15,816,194

 

 

$

15,670,391

 

 

$

15,507,880

 

 

2

%

 

4

%

Common Shares Issued:

 

 

 

 

 

 

 

 

 

 

 

 

Shares outstanding at end of period

 

 

34,456,688

 

 

 

34,455,752

 

 

 

34,348,369

 

 

 

34,345,949

 

 

 

 

 

Common shareholders’ equity per share (1)

 

$

52.06

 

 

$

49.07

 

 

$

48.12

 

 

$

44.27

 

 

 

 

 

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

 

$

41.12

 

 

$

38.12

 

 

$

37.09

 

 

$

33.22

 

 

 

 

 

Common shareholders’ equity to total assets

 

 

11.08

%

 

 

10.69

%

 

 

10.55

%

 

 

9.81

%

 

 

 

 

Common shareholders’ tangible equity to tangible assets (2)

 

 

8.96

%

 

 

8.51

%

 

 

8.33

%

 

 

7.54

%

 

 

 

 

Consolidated Tier 1 leverage capital ratio

 

 

10.91

%

 

 

10.80

%

 

 

10.56

%

 

 

10.40

%

 

 

 

 

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

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Prior Qtr

 

Prior Yr Qtr

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate (CRE):

 

 

 

 

 

 

 

 

 

 

 

 

Owner-occupied

 

$

990,516

 

 

$

950,922

 

 

$

915,897

 

 

$

911,540

 

 

4

%

 

9

%

Investment properties

 

 

1,583,863

 

 

 

1,536,142

 

 

 

1,541,344

 

 

 

1,530,087

 

 

3

%

 

4

%

Small balance CRE

 

 

1,218,822

 

 

 

1,234,302

 

 

 

1,178,500

 

 

 

1,169,828

 

 

(1

)%

 

4

%

Multifamily real estate

 

 

889,866

 

 

 

717,089

 

 

 

811,232

 

 

 

766,571

 

 

24

%

 

16

%

Construction, land and land development:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial construction

 

 

124,051

 

 

 

173,296

 

 

 

170,011

 

 

 

168,061

 

 

(28

)%

 

(26

)%

Multifamily construction

 

 

524,108

 

 

 

663,989

 

 

 

503,993

 

 

 

453,129

 

 

(21

)%

 

16

%

One- to four-family construction

 

 

507,350

 

 

 

490,237

 

 

 

526,432

 

 

 

536,349

 

 

3

%

 

(5

)%

Land and land development

 

 

370,690

 

 

 

352,184

 

 

 

336,639

 

 

 

346,362

 

 

5

%

 

7

%

Commercial business:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial business

 

 

1,281,615

 

 

 

1,298,134

 

 

 

1,255,734

 

 

 

1,263,747

 

 

(1

)%

 

1

%

Small business scored

 

 

1,087,714

 

 

 

1,074,465

 

 

 

1,022,154

 

 

 

1,000,714

 

 

1

%

 

9

%

Agricultural business, including secured by farmland:

 

 

 

 

 

 

 

 

 

 

 

 

Agricultural business, including secured by farmland

 

 

346,686

 

 

 

334,583

 

 

 

331,089

 

 

 

334,626

 

 

4

%

 

4

%

One- to four-family residential

 

 

1,575,164

 

 

 

1,603,266

 

 

 

1,518,046

 

 

 

1,438,694

 

 

(2

)%

 

9

%

Consumer:

 

 

 

 

 

 

 

 

 

 

 

 

Consumer—home equity revolving lines of credit

 

 

622,615

 

 

 

611,739

 

 

 

588,703

 

 

 

579,836

 

 

2

%

 

7

%

Consumer—other

 

 

101,546

 

 

 

103,500

 

 

 

110,681

 

 

 

111,873

 

 

(2

)%

 

(9

)%

Total loans receivable

 

$

11,224,606

 

 

$

11,143,848

 

 

$

10,810,455

 

 

$

10,611,417

 

 

1

%

 

6

%

Loans 30 - 89 days past due and on accrual

 

$

13,030

 

 

$

11,850

 

 

$

19,744

 

 

$

6,108

 

 

 

 

 

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

 

$

44,656

 

 

$

32,081

 

 

$

43,164

 

 

$

28,312

 

 

 

 

 

Total delinquent loans / Total loans receivable

 

 

0.40

%

 

 

0.29

%

 

 

0.40

%

 

 

0.27

%

 

 

 

 

LOANS BY GEOGRAPHIC LOCATION

 

 

 

 

 

 

 

 

 

 

 

Percentage Change

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Prior Qtr

 

Prior Yr Qtr

 

 

Amount

 

Percentage

 

Amount

 

Amount

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington

 

$

5,203,637

 

46

%

 

$

5,182,378

 

$

5,095,602

 

$

5,046,028

 

%

 

3

%

California

 

 

2,796,965

 

 

25

%

 

 

2,787,190

 

 

 

2,670,923

 

 

 

2,570,175

 

 

%

 

9

%

Oregon

 

 

2,108,229

 

 

19

%

 

 

2,072,153

 

 

 

1,974,001

 

 

 

1,929,531

 

 

2

%

 

9

%

Idaho

 

 

652,148

 

 

6

%

 

 

641,209

 

 

 

610,064

 

 

 

600,648

 

 

2

%

 

9

%

Utah

 

 

85,316

 

 

1

%

 

 

80,295

 

 

 

68,931

 

 

 

57,711

 

 

6

%

 

48

%

Other

 

 

378,311

 

 

3

%

 

 

380,623

 

 

 

390,934

 

 

 

407,324

 

 

(1

)%

 

(7

)%

Total loans receivable

 

$

11,224,606

 

 

100

%

 

$

11,143,848

 

 

$

10,810,455

 

 

$

10,611,417

 

 

1

%

 

6

%

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

LOAN ORIGINATIONS

Quarters Ended

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Commercial real estate

$

114,372

 

$

102,258

 

$

62,337

Multifamily real estate

 

314

 

 

 

2,774

 

 

 

12,725

 

Construction and land

 

472,506

 

 

 

546,675

 

 

 

421,656

 

Commercial business

 

179,871

 

 

 

167,168

 

 

 

157,833

 

Agricultural business

 

5,877

 

 

 

22,255

 

 

 

17,466

 

One- to four-family residential

 

24,488

 

 

 

34,498

 

 

 

43,622

 

Consumer

 

96,137

 

 

 

120,470

 

 

 

70,043

 

Total loan originations (excluding loans held for sale)

$

893,565

 

 

$

996,098

 

 

$

785,682

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

 

Quarters Ended

CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES – LOANS

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Balance, beginning of period

 

$

152,848

 

 

$

151,140

 

 

$

144,680

 

Provision for credit losses – loans

 

 

1,967

 

 

 

1,953

 

 

 

2,943

 

Recoveries of loans previously charged off:

 

 

 

 

 

 

Commercial real estate

 

 

65

 

 

 

98

 

 

 

170

 

Construction and land

 

 

 

 

 

 

 

 

29

 

One- to four-family real estate

 

 

14

 

 

 

17

 

 

 

59

 

Commercial business

 

 

613

 

 

 

324

 

 

 

403

 

Agricultural business, including secured by farmland

 

 

1

 

 

 

195

 

 

 

19

 

Consumer

 

 

41

 

 

 

112

 

 

 

126

 

 

 

 

734

 

 

 

746

 

 

 

806

 

Loans charged off:

 

 

 

 

 

 

Commercial real estate

 

 

 

 

 

(347

)

 

 

 

Construction and land

 

 

(145

)

 

 

 

 

 

 

Commercial business

 

 

(414

)

 

 

(137

)

 

 

(616

)

Agricultural business, including secured by farmland

 

 

 

 

 

 

 

 

(564

)

Consumer

 

 

(405

)

 

 

(507

)

 

 

(289

)

 

 

 

(964

)

 

 

(991

)

 

 

(1,469

)

Net charge-offs

 

 

(230

)

 

 

(245

)

 

 

(663

)

Balance, end of period

 

$

154,585

 

 

$

152,848

 

 

$

146,960

 

Net charge-offs / Average loans receivable

 

 

(0.002

)%

 

 

(0.002

)%

 

 

(0.006

)%

ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES – LOANS

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Commercial real estate

 

$

40,040

 

 

$

39,064

 

 

$

44,016

 

Multifamily real estate

 

 

10,233

 

 

 

8,253

 

 

 

8,804

 

Construction and land

 

 

28,322

 

 

 

31,597

 

 

 

29,389

 

One- to four-family real estate

 

 

20,463

 

 

 

20,906

 

 

 

17,925

 

Commercial business

 

 

39,779

 

 

 

38,835

 

 

 

34,065

 

Agricultural business, including secured by farmland

 

 

5,340

 

 

 

4,045

 

 

 

3,718

 

Consumer

 

 

10,408

 

 

 

10,148

 

 

 

9,043

 

Total allowance for credit losses – loans

 

$

154,585

 

 

$

152,848

 

 

$

146,960

 

Allowance for credit losses - loans / Total loans receivable

 

 

1.38

%

 

 

1.37

%

 

 

1.38

%

Allowance for credit losses - loans / Non-performing loans

 

 

359

%

 

 

498

%

 

 

560

%

 

 

Quarters Ended

CHANGE IN THE ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN COMMITMENTS

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Balance, beginning of period

 

$

14,027

 

 

$

13,597

 

$

14,664

(Recapture) provision for credit losses - unfunded loan commitments

 

 

(262

)

 

 

430

 

 

 

346

 

Balance, end of period

 

$

13,765

 

 

$

14,027

 

 

$

15,010

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

NON-PERFORMING ASSETS

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

Loans on non-accrual status:

 

 

 

 

 

 

 

Secured by real estate:

 

 

 

 

 

 

 

Commercial

$

2,127

 

 

$

2,326

 

 

$

2,677

 

 

$

1,365

 

Construction and land

 

4,286

 

 

 

3,999

 

 

 

3,105

 

 

 

5,538

 

One- to four-family

 

9,592

 

 

 

8,184

 

 

 

5,702

 

 

 

5,480

 

Commercial business

 

10,705

 

 

 

8,694

 

 

 

9,002

 

 

 

5,289

 

Agricultural business, including secured by farmland

 

7,703

 

 

 

1,586

 

 

 

3,167

 

 

 

3,170

 

Consumer

 

4,636

 

 

 

3,380

 

 

 

3,204

 

 

 

3,378

 

 

 

39,049

 

 

 

28,169

 

 

 

26,857

 

 

 

24,220

 

Loans more than 90 days delinquent, still on accrual:

 

 

 

 

 

 

 

Secured by real estate:

 

 

 

 

 

 

 

Commercial

 

2,258

 

 

 

 

 

 

 

 

 

 

Construction and land

 

380

 

 

 

 

 

 

1,138

 

 

 

 

One- to four-family

 

961

 

 

 

1,861

 

 

 

1,205

 

 

 

1,799

 

Commercial business

 

 

 

 

 

 

 

1

 

 

 

 

Consumer

 

359

 

 

 

692

 

 

 

401

 

 

 

245

 

 

 

3,958

 

 

 

2,553

 

 

 

2,745

 

 

 

2,044

 

Total non-performing loans

 

43,007

 

 

 

30,722

 

 

 

29,602

 

 

 

26,264

 

REO

 

2,221

 

 

 

2,564

 

 

 

526

 

 

 

546

 

Total non-performing assets

$

45,228

 

 

$

33,286

 

 

$

30,128

 

 

$

26,810

 

Total non-performing assets to total assets

 

0.28

%

 

 

0.21

%

 

 

0.19

%

 

 

0.17

%

LOANS BY CREDIT RISK RATING

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

Pass

$

11,022,014

 

$

10,971,850

 

$

10,671,281

 

$

10,467,498

Special Mention

 

52,497

 

 

 

50,027

 

 

 

13,732

 

 

 

19,394

 

Substandard

 

150,095

 

 

 

121,971

 

 

 

125,442

 

 

 

124,525

 

Total

$

11,224,606

 

 

$

11,143,848

 

 

$

10,810,455

 

 

$

10,611,417

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPOSIT COMPOSITION

 

 

 

 

 

 

 

 

 

Percentage Change

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Prior Qtr

 

Prior Yr Qtr

Non-interest-bearing

 

$

4,688,244

 

$

4,537,803

 

$

4,792,369

 

$

5,197,854

 

3

%

 

(10

)%

Interest-bearing checking

 

 

2,344,561

 

 

 

2,208,742

 

 

 

2,098,526

 

 

 

2,006,866

 

 

6

%

 

17

%

Regular savings accounts

 

 

3,339,859

 

 

 

3,192,036

 

 

 

2,980,530

 

 

 

2,751,453

 

 

5

%

 

21

%

Money market accounts

 

 

1,643,631

 

 

 

1,615,549

 

 

 

1,680,605

 

 

 

1,760,066

 

 

2

%

 

(7

)%

Total interest-bearing transaction and savings accounts

 

 

7,328,051

 

 

 

7,016,327

 

 

 

6,759,661

 

 

 

6,518,385

 

 

4

%

 

12

%

Total core deposits

 

 

12,016,295

 

 

 

11,554,130

 

 

 

11,552,030

 

 

 

11,716,239

 

 

4

%

 

3

%

Interest-bearing certificates

 

 

1,521,853

 

 

 

1,525,133

 

 

 

1,477,467

 

 

 

1,458,313

 

 

%

 

4

%

Total deposits

 

$

13,538,148

 

 

$

13,079,263

 

 

$

13,029,497

 

 

$

13,174,552

 

 

4

%

 

3

%

GEOGRAPHIC CONCENTRATION OF DEPOSITS

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

 

Percentage Change

 

 

Amount

 

Percentage

 

Amount

 

Amount

 

Amount

 

Prior Qtr

 

Prior Yr Qtr

Washington

 

$

7,413,414

 

55

%

 

$

7,171,699

 

$

7,247,392

 

$

7,241,341

 

3

%

 

2

%

Oregon

 

 

2,997,843

 

 

22

%

 

 

2,909,838

 

 

 

2,852,677

 

 

 

2,918,446

 

 

3

%

 

3

%

California

 

 

2,423,295

 

 

18

%

 

 

2,331,793

 

 

 

2,269,557

 

 

 

2,342,345

 

 

4

%

 

3

%

Idaho

 

 

703,596

 

 

5

%

 

 

665,933

 

 

 

659,871

 

 

 

672,420

 

 

6

%

 

5

%

Total deposits

 

$

13,538,148

 

 

100

%

 

$

13,079,263

 

 

$

13,029,497

 

 

$

13,174,552

 

 

4

%

 

3

%

INCLUDED IN TOTAL DEPOSITS

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Public non-interest-bearing accounts

 

$

141,541

 

$

149,012

 

$

169,058

Public interest-bearing transaction & savings accounts

 

 

246,332

 

 

 

250,136

 

 

 

188,831

 

Public interest-bearing certificates

 

 

28,144

 

 

 

29,101

 

 

 

46,349

 

Total public deposits

 

$

416,017

 

 

$

428,249

 

 

$

404,238

 

Collateralized public deposits

 

$

317,960

 

 

$

326,524

 

 

$

300,189

 

Total brokered deposits

 

$

50,333

 

 

$

105,309

 

 

$

162,856

 

 

 

 

 

 

 

 

AVERAGE ACCOUNT BALANCE PER DEPOSIT ACCOUNT

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

Number of deposit accounts

 

 

459,127

 

 

 

460,107

 

 

 

466,159

 

Average account balance per account

 

$

30

 

 

$

29

 

 

$

28

 

ADDITIONAL FINANCIAL INFORMATION

(dollars in thousands)

ESTIMATED REGULATORY CAPITAL RATIOS AS OF SEPTEMBER 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

 

$

1,988,948

 

14.92

%

 

$

1,066,549

 

8.00

%

 

$

1,333,186

 

10.00

%

Tier 1 capital to risk-weighted assets

 

 

1,725,690

 

 

12.94

%

 

 

799,912

 

 

6.00

%

 

 

799,912

 

 

6.00

%

Tier 1 leverage capital to average assets

 

 

1,725,690

 

 

10.91

%

 

 

632,760

 

 

4.00

%

 

 

n/a

 

n/a

Common equity tier 1 capital to risk-weighted assets

 

 

1,639,190

 

 

12.30

%

 

 

599,934

 

 

4.50

%

 

 

n/a

 

n/a

Banner Bank:

 

 

 

 

 

 

 

 

 

 

 

 

Total capital to risk-weighted assets

 

 

1,862,242

 

 

13.95

%

 

 

1,067,758

 

 

8.00

%

 

 

1,334,697

 

 

10.00

%

Tier 1 capital to risk-weighted assets

 

 

1,698,984

 

 

12.73

%

 

 

800,818

 

 

6.00

%

 

 

1,067,758

 

 

8.00

%

Tier 1 leverage capital to average assets

 

 

1,698,984

 

 

10.74

%

 

 

632,851

 

 

4.00

%

 

 

791,063

 

 

5.00

%

Common equity tier 1 capital to risk-weighted assets

 

 

1,698,984

 

 

12.73

%

 

 

600,614

 

 

4.50

%

 

 

867,553

 

 

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

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 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

$

26,954

 

$

453

 

 

6.69

%

 

$

11,665

 

$

206

 

 

7.10

%

 

$

56,697

 

$

765

 

 

5.35

%

Mortgage loans

 

9,207,468

 

 

 

135,497

 

 

5.85

%

 

 

9,006,857

 

 

 

129,230

 

 

5.77

%

 

 

8,596,705

 

 

 

118,285

 

 

5.46

%

Commercial/agricultural loans

 

1,879,215

 

 

 

32,547

 

 

6.89

%

 

 

1,874,039

 

 

 

31,761

 

 

6.82

%

 

 

1,826,907

 

 

 

29,894

 

 

6.49

%

Consumer and other loans

 

128,548

 

 

 

2,154

 

 

6.67

%

 

 

132,661

 

 

 

2,156

 

 

6.54

%

 

 

138,723

 

 

 

2,226

 

 

6.37

%

Total loans (1)

 

11,242,185

 

 

 

170,651

 

 

6.04

%

 

 

11,025,222

 

 

 

163,353

 

 

5.96

%

 

 

10,619,032

 

 

 

151,170

 

 

5.65

%

Mortgage-backed securities

 

2,623,399

 

 

 

16,498

 

 

2.50

%

 

 

2,672,187

 

 

 

16,850

 

 

2.54

%

 

 

2,863,345

 

 

 

17,834

 

 

2.47

%

Other securities

 

943,310

 

 

 

11,120

 

 

4.69

%

 

 

958,809

 

 

 

11,181

 

 

4.69

%

 

 

1,071,389

 

 

 

12,128

 

 

4.49

%

Interest-bearing deposits with banks

 

51,604

 

 

 

493

 

 

3.80

%

 

 

58,022

 

 

 

578

 

 

4.01

%

 

 

43,594

 

 

 

529

 

 

4.81

%

FHLB stock

 

16,664

 

 

 

412

 

 

9.84

%

 

 

21,080

 

 

 

365

 

 

6.96

%

 

 

16,443

 

 

 

385

 

 

9.29

%

Total investment securities

 

3,634,977

 

 

 

28,523

 

 

3.12

%

 

 

3,710,098

 

 

 

28,974

 

 

3.14

%

 

 

3,994,771

 

 

 

30,876

 

 

3.07

%

Total interest-earning assets

 

14,877,162

 

 

 

199,174

 

 

5.33

%

 

 

14,735,320

 

 

 

192,327

 

 

5.25

%

 

 

14,613,803

 

 

 

182,046

 

 

4.94

%

Non-interest-earning assets

 

981,290

 

 

 

 

 

 

 

926,411

 

 

 

 

 

 

 

932,364

 

 

 

 

 

Total assets

$

15,858,452

 

 

 

 

 

 

$

15,661,731

 

 

 

 

 

 

$

15,546,167

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,295,723

 

 

 

9,497

 

 

1.65

%

 

$

2,156,214

 

 

 

7,621

 

 

1.42

%

 

$

1,971,179

 

 

 

4,190

 

 

0.84

%

Savings accounts

 

3,268,647

 

 

 

19,299

 

 

2.35

%

 

 

3,147,522

 

 

 

17,200

 

 

2.20

%

 

 

2,659,890

 

 

 

8,400

 

 

1.25

%

Money market accounts

 

1,611,543

 

 

 

9,184

 

 

2.27

%

 

 

1,659,327

 

 

 

9,124

 

 

2.21

%

 

 

1,793,953

 

 

 

6,639

 

 

1.47

%

Certificates of deposit

 

1,540,637

 

 

 

15,805

 

 

4.08

%

 

 

1,503,597

 

 

 

14,905

 

 

3.99

%

 

 

1,412,542

 

 

 

11,772

 

 

3.31

%

Total interest-bearing deposits

 

8,716,550

 

 

 

53,785

 

 

2.45

%

 

 

8,466,660

 

 

 

48,850

 

 

2.32

%

 

 

7,837,564

 

 

 

31,001

 

 

1.57

%

Non-interest-bearing deposits

 

4,601,755

 

 

 

 

 

%

 

 

4,634,738

 

 

 

 

 

%

 

 

5,316,023

 

 

 

 

 

%

Total deposits

 

13,318,305

 

 

 

53,785

 

 

1.61

%

 

 

13,101,398

 

 

 

48,850

 

 

1.50

%

 

 

13,153,587

 

 

 

31,001

 

 

0.94

%

Other interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FHLB advances

 

161,413

 

 

 

2,263

 

 

5.58

%

 

 

259,549

 

 

 

3,621

 

 

5.61

%

 

 

161,087

 

 

 

2,233

 

 

5.50

%

Other borrowings

 

159,439

 

 

 

1,147

 

 

2.86

%

 

 

175,518

 

 

 

1,160

 

 

2.66

%

 

 

194,659

 

 

 

1,099

 

 

2.24

%

Junior subordinated debentures and subordinated notes

 

179,075

 

 

 

2,971

 

 

6.60

%

 

 

179,178

 

 

 

2,961

 

 

6.65

%

 

 

182,678

 

 

 

2,965

 

 

6.44

%

Total borrowings

 

499,927

 

 

 

6,381

 

 

5.08

%

 

 

614,245

 

 

 

7,742

 

 

5.07

%

 

 

538,424

 

 

 

6,297

 

 

4.64

%

Total funding liabilities

 

13,818,232

 

 

 

60,166

 

 

1.73

%

 

 

13,715,643

 

 

 

56,592

 

 

1.66

%

 

 

13,692,011

 

 

 

37,298

 

 

1.08

%

Other non-interest-bearing liabilities (2)

 

311,803

 

 

 

 

 

 

 

294,794

 

 

 

 

 

 

 

296,578

 

 

 

 

 

Total liabilities

 

14,130,035

 

 

 

 

 

 

 

14,010,437

 

 

 

 

 

 

 

13,988,589

 

 

 

 

 

Shareholders’ equity

 

1,728,417

 

 

 

 

 

 

 

1,651,294

 

 

 

 

 

 

 

1,557,578

 

 

 

 

 

Total liabilities and shareholders’ equity

$

15,858,452

 

 

 

 

 

 

$

15,661,731

 

 

 

 

 

 

$

15,546,167

 

 

 

 

 

Net interest income/rate spread (tax equivalent)

 

 

$

139,008

 

 

3.60

%

 

 

 

$

135,735

 

 

3.59

%

 

 

 

$

144,748

 

 

3.86

%

Net interest margin (tax equivalent)

 

 

 

 

3.72

%

 

 

 

 

 

3.70

%

 

 

 

 

 

3.93

%

Reconciliation to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments for taxable equivalent basis

 

 

 

(3,333

)

 

 

 

 

 

 

(3,189

)

 

 

 

 

 

 

(2,982

)

 

 

Net interest income and margin, as reported

 

 

$

135,675

 

 

3.63

%

 

 

 

$

132,546

 

 

3.62

%

 

 

 

$

141,766

 

 

3.85

%

Additional Key Financial Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

 

1.13

%

 

 

 

 

 

1.02

%

 

 

 

 

 

1.17

%

Adjusted return on average assets (4)

 

 

 

 

1.13

%

 

 

 

 

 

1.04

%

 

 

 

 

 

1.25

%

Return on average equity

 

 

 

 

10.39

%

 

 

 

 

 

9.69

%

 

 

 

 

 

11.68

%

Adjusted return on average equity (4)

 

 

 

 

10.39

%

 

 

 

 

 

9.83

%

 

 

 

 

 

12.51

%

Average equity/average assets

 

 

 

 

10.90

%

 

 

 

 

 

10.54

%

 

 

 

 

 

10.02

%

Average interest-earning assets/average interest-bearing liabilities

 

 

 

 

161.42

%

 

 

 

 

 

162.27

%

 

 

 

 

 

174.47

%

Average interest-earning assets/average funding liabilities

 

 

 

 

107.66

%

 

 

 

 

 

107.43

%

 

 

 

 

 

106.73

%

Non-interest income/average assets

 

 

 

 

0.45

%

 

 

 

 

 

0.44

%

 

 

 

 

 

0.32

%

Non-interest expense/average assets

 

 

 

 

2.42

%

 

 

 

 

 

2.52

%

 

 

 

 

 

2.45

%

Efficiency ratio

 

 

 

 

62.63

%

 

 

 

 

 

65.53

%

 

 

 

 

 

62.10

%

Adjusted efficiency ratio (4)

 

 

 

 

61.27

%

 

 

 

 

 

63.60

%

 

 

 

 

 

59.00

%

(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 $2.3 million, $2.2 million and $1.9 million for the quarters ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.0 million for both the quarters ended September 30, 2024 and June 30, 2024 and $1.1 million for the quarter ended September 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

Nine Months Ended

 

Sep 30, 2024

 

Sep 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

$

16,225

 

$

826

 

 

6.80

%

 

$

55,157

 

$

2,174

 

 

5.27

%

Mortgage loans

 

9,036,256

 

 

 

390,011

 

 

5.77

%

 

 

8,427,034

 

 

 

337,282

 

 

5.35

%

Commercial/agricultural loans

 

1,861,182

 

 

 

95,155

 

 

6.83

%

 

 

1,768,685

 

 

 

82,803

 

 

6.26

%

Consumer and other loans

 

131,676

 

 

 

6,506

 

 

6.60

%

 

 

138,246

 

 

 

6,478

 

 

6.26

%

Total loans (1)

 

11,045,339

 

 

 

492,498

 

 

5.96

%

 

 

10,389,122

 

 

 

428,737

 

 

5.52

%

Mortgage-backed securities

 

2,674,555

 

 

 

50,424

 

 

2.52

%

 

 

2,971,124

 

 

 

55,386

 

 

2.49

%

Other securities

 

962,183

 

 

 

33,802

 

 

4.69

%

 

 

1,220,074

 

 

 

40,155

 

 

4.40

%

Interest-bearing deposits with banks

 

51,630

 

 

 

1,530

 

 

3.96

%

 

 

47,330

 

 

 

1,694

 

 

4.79

%

FHLB stock

 

18,931

 

 

 

986

 

 

6.96

%

 

 

18,772

 

 

 

632

 

 

4.50

%

Total investment securities

 

3,707,299

 

 

 

86,742

 

 

3.13

%

 

 

4,257,300

 

 

 

97,867

 

 

3.07

%

Total interest-earning assets

 

14,752,638

 

 

 

579,240

 

 

5.24

%

 

 

14,646,422

 

 

 

526,604

 

 

4.81

%

Non-interest-earning assets

 

950,588

 

 

 

 

 

 

 

930,934

 

 

 

 

 

Total assets

$

15,703,226

 

 

 

 

 

 

$

15,577,356

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing checking accounts

$

2,185,796

 

 

 

23,834

 

 

1.46

%

 

$

1,874,518

 

 

 

7,427

 

 

0.53

%

Savings accounts

 

3,161,266

 

 

 

51,778

 

 

2.19

%

 

 

2,604,089

 

 

 

15,179

 

 

0.78

%

Money market accounts

 

1,648,208

 

 

 

26,696

 

 

2.16

%

 

 

1,971,514

 

 

 

16,445

 

 

1.12

%

Certificates of deposit

 

1,514,982

 

 

 

44,940

 

 

3.96

%

 

 

1,118,874

 

 

 

21,733

 

 

2.60

%

Total interest-bearing deposits

 

8,510,252

 

 

 

147,248

 

 

2.31

%

 

 

7,568,995

 

 

 

60,784

 

 

1.07

%

Non-interest-bearing deposits

 

4,649,297

 

 

 

 

 

%

 

 

5,571,896

 

 

 

 

 

%

Total deposits

 

13,159,549

 

 

 

147,248

 

 

1.49

%

 

 

13,140,891

 

 

 

60,784

 

 

0.62

%

Other interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

FHLB advances

 

211,135

 

 

 

8,856

 

 

5.60

%

 

 

219,461

 

 

 

8,654

 

 

5.27

%

Other borrowings

 

171,838

 

 

 

3,482

 

 

2.71

%

 

 

203,932

 

 

 

2,251

 

 

1.48

%

Junior subordinated debentures and subordinated notes

 

179,941

 

 

 

8,901

 

 

6.61

%

 

 

186,964

 

 

 

8,549

 

 

6.11

%

Total borrowings

 

562,914

 

 

 

21,239

 

 

5.04

%

 

 

610,357

 

 

 

19,454

 

 

4.26

%

Total funding liabilities

 

13,722,463

 

 

 

168,487

 

 

1.64

%

 

 

13,751,248

 

 

 

80,238

 

 

0.78

%

Other non-interest-bearing liabilities (2)

 

303,367

 

 

 

 

 

 

 

289,558

 

 

 

 

 

Total liabilities

 

14,025,830

 

 

 

 

 

 

 

14,040,806

 

 

 

 

 

Shareholders’ equity

 

1,677,396

 

 

 

 

 

 

 

1,536,550

 

 

 

 

 

Total liabilities and shareholders’ equity

$

15,703,226

 

 

 

 

 

 

$

15,577,356

 

 

 

 

 

Net interest income/rate spread (tax equivalent)

 

 

$

410,753

 

 

3.60

%

 

 

 

$

446,366

 

 

4.03

%

Net interest margin (tax equivalent)

 

 

 

 

3.72

%

 

 

 

 

 

4.07

%

Reconciliation to reported net interest income:

 

 

 

 

 

 

 

 

 

 

 

Adjustments for taxable equivalent basis

 

 

 

(9,573

)

 

 

 

 

 

 

(8,770

)

 

 

Net interest income and margin, as reported

 

 

$

401,180

 

 

3.63

%

 

 

 

$

437,596

 

 

3.99

%

Additional Key Financial Ratios:

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

 

1.04

%

 

 

 

 

 

1.21

%

Adjusted return on average assets (4)

 

 

 

 

1.08

%

 

 

 

 

 

1.34

%

Return on average equity

 

 

 

 

9.76

%

 

 

 

 

 

12.27

%

Adjusted return on average equity (4)

 

 

 

 

10.16

%

 

 

 

 

 

13.60

%

Average equity/average assets

 

 

 

 

10.68

%

 

 

 

 

 

9.86

%

Average interest-earning assets/average interest-bearing liabilities

 

 

 

 

162.60

%

 

 

 

 

 

179.07

%

Average interest-earning assets/average funding liabilities

 

 

 

 

107.51

%

 

 

 

 

 

106.51

%

Non-interest income/average assets

 

 

 

 

0.40

%

 

 

 

 

 

0.26

%

Non-interest expense/average assets

 

 

 

 

2.48

%

 

 

 

 

 

2.45

%

Efficiency ratio

 

 

 

 

65.19

%

 

 

 

 

 

61.10

%

Adjusted efficiency ratio (4)

 

 

 

 

62.84

%

 

 

 

 

 

57.19

%

(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 $6.5 million and $5.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.1 million and $3.4 million for the nine months ended September 30, 2024 and September 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

 

Nine Months Ended

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

 

Sep 30, 2024

 

Sep 30, 2023

Net interest income (GAAP)

$

135,675

 

 

$

132,546

 

$

141,766

 

$

401,180

 

$

437,596

Non-interest income (GAAP)

 

18,063

 

 

 

17,199

 

 

 

12,658

 

 

 

46,853

 

 

 

30,357

 

Total revenue (GAAP)

 

153,738

 

 

 

149,745

 

 

 

154,424

 

 

 

448,033

 

 

 

467,953

 

Exclude: Net loss on sale of securities

 

 

 

 

562

 

 

 

2,657

 

 

 

5,465

 

 

 

14,436

 

Net change in valuation of financial instruments carried at fair value

 

(39

)

 

 

190

 

 

 

654

 

 

 

1,143

 

 

 

4,357

 

Adjusted revenue (non-GAAP)

$

153,699

 

 

$

150,497

 

 

$

157,735

 

 

$

454,641

 

 

$

486,746

 

ADJUSTED EARNINGS

Quarters Ended

 

Nine Months Ended

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

 

Sep 30, 2024

 

Sep 30, 2023

Net income (GAAP)

$

45,153

 

 

$

39,795

 

 

$

45,854

 

 

$

122,507

 

 

$

141,000

 

Exclude: Net loss on sale of securities

 

 

 

 

562

 

 

 

2,657

 

 

 

5,465

 

 

 

14,436

 

Net change in valuation of financial instruments carried at fair value

 

(39

)

 

 

190

 

 

 

654

 

 

 

1,143

 

 

 

4,357

 

Banner Forward expenses (1)

 

 

 

 

 

 

 

996

 

 

 

 

 

 

1,334

 

Related net tax expense (benefit)

 

9

 

 

 

(180

)

 

 

(1,033

)

 

 

(1,586

)

 

 

(4,830

)

Total adjusted earnings (non-GAAP)

$

45,123

 

 

$

40,367

 

 

$

49,128

 

 

$

127,529

 

 

$

156,297

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (GAAP)

$

1.30

 

 

$

1.15

 

 

$

1.33

 

 

$

3.54

 

 

$

4.09

 

Diluted adjusted earnings per share (non-GAAP)

$

1.30

 

 

$

1.17

 

 

$

1.43

 

 

$

3.69

 

 

$

4.54

 

Return on average assets

 

1.13

%

 

 

1.02

%

 

 

1.17

%

 

 

1.04

%

 

 

1.21

%

Adjusted return on average assets (2)

 

1.13

%

 

 

1.04

%

 

 

1.25

%

 

 

1.08

%

 

 

1.34

%

Return on average equity

 

10.39

%

 

 

9.69

%

 

 

11.68

%

 

 

9.76

%

 

 

12.27

%

Adjusted return on average equity (3)

 

10.39

%

 

 

9.83

%

 

 

12.51

%

 

 

10.16

%

 

 

13.60

%

(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

 

Nine Months Ended

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Sep 30, 2023

 

Sep 30, 2024

 

Sep 30, 2023

Non-interest expense (GAAP)

 

$

96,291

 

 

$

98,128

 

 

$

95,891

 

 

$

292,060

 

 

$

285,917

 

Exclude: Banner Forward expenses (1)

 

 

 

 

 

 

 

 

(996

)

 

 

 

 

 

(1,334

)

CDI amortization

 

 

(590

)

 

 

(724

)

 

 

(857

)

 

 

(2,037

)

 

 

(2,898

)

State/municipal tax expense

 

 

(1,432

)

 

 

(1,394

)

 

 

(1,359

)

 

 

(4,130

)

 

 

(3,888

)

REO operations

 

 

(103

)

 

 

(297

)

 

 

383

 

 

 

(180

)

 

 

585

 

Adjusted non-interest expense (non-GAAP)

 

$

94,166

 

 

$

95,713

 

 

$

93,062

 

 

$

285,713

 

 

$

278,382

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

$

135,675

 

 

$

132,546

 

 

$

141,766

 

 

$

401,180

 

 

$

437,596

 

Non-interest income (GAAP)

 

 

18,063

 

 

 

17,199

 

 

 

12,658

 

 

 

46,853

 

 

 

30,357

 

Total revenue (GAAP)

 

 

153,738

 

 

 

149,745

 

 

 

154,424

 

 

 

448,033

 

 

 

467,953

 

Exclude: Net loss on sale of securities

 

 

 

 

 

562

 

 

 

2,657

 

 

 

5,465

 

 

 

14,436

 

Net change in valuation of financial instruments carried at fair value

 

 

(39

)

 

 

190

 

 

 

654

 

 

 

1,143

 

 

 

4,357

 

Adjusted revenue (non-GAAP)

 

$

153,699

 

 

$

150,497

 

 

$

157,735

 

 

$

454,641

 

 

$

486,746

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (GAAP)

 

 

62.63

%

 

 

65.53

%

 

 

62.10

%

 

 

65.19

%

 

 

61.10

%

Adjusted efficiency ratio (non-GAAP) (2)

 

 

61.27

%

 

 

63.60

%

 

 

59.00

%

 

 

62.84

%

 

 

57.19

%

(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

 

 

 

 

 

 

 

 

 

 

Sep 30, 2024

 

Jun 30, 2024

 

Dec 31, 2023

 

Sep 30, 2023

Shareholders’ equity (GAAP)

 

$

1,793,721

 

 

$

1,690,766

 

 

$

1,652,691

 

 

$

1,520,607

 

Exclude goodwill and other intangible assets, net

 

 

376,768

 

 

 

377,358

 

 

 

378,805

 

 

 

379,663

 

Tangible common shareholders’ equity (non-GAAP)

 

$

1,416,953

 

 

$

1,313,408

 

 

$

1,273,886

 

 

$

1,140,944

 

 

 

 

 

 

 

 

 

 

Total assets (GAAP)

 

$

16,188,676

 

 

$

15,816,194

 

 

$

15,670,391

 

 

$

15,507,880

 

Exclude goodwill and other intangible assets, net

 

 

376,768

 

 

 

377,358

 

 

 

378,805

 

 

 

379,663

 

Total tangible assets (non-GAAP)

 

$

15,811,908

 

 

$

15,438,836

 

 

$

15,291,586

 

 

$

15,128,217

 

Common shareholders’ equity to total assets (GAAP)

 

 

11.08

%

 

 

10.69

%

 

 

10.55

%

 

 

9.81

%

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

 

 

8.96

%

 

 

8.51

%

 

 

8.33

%

 

 

7.54

%

 

 

 

 

 

 

 

 

 

TANGIBLE COMMON SHAREHOLDERS’ EQUITY PER SHARE

 

 

 

 

 

 

 

 

Shareholders’ equity (GAAP)

 

$

1,793,721

 

 

$

1,690,766

 

 

$

1,652,691

 

 

$

1,520,607

 

Tangible common shareholders’ equity (non-GAAP)

 

$

1,416,953

 

 

$

1,313,408

 

 

$

1,273,886

 

 

$

1,140,944

 

Common shares outstanding at end of period

 

 

34,456,688

 

 

 

34,455,752

 

 

 

34,348,369

 

 

 

34,345,949

 

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

 

$

52.06

 

 

$

49.07

 

 

$

48.12

 

 

$

44.27

 

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

 

$

41.12

 

 

$

38.12

 

 

$

37.09

 

 

$

33.22

 

 

Contacts

MARK J. GRESCOVICH, PRESIDENT & CEO

ROBERT G. BUTTERFIELD, CFO

(509) 527-3636

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