Exhibit 99.1 |
![]() | ![]() | Contact: D. Michael Jones, President and CEO Lloyd W. Baker, CFO (509) 527-3636 News Release |
Banner Corporation Announces First Quarter Results;
Adds $22 Million to Allowance for Loan Loss
Walla Walla, WA – April 29, 2009 - Banner Corporation (NASDAQ GMS: BANR), the parent company of Banner Bank and Islanders Bank, today reported that it had a net loss of $9.3 million for the quarter ended March 31, 2009, compared to net income of $3.8 million for the quarter ended March 31, 2008. The current quarter’s results include a $22.0 million provision for loan losses and a $3.3 million decrease in valuation of financial instruments carried at fair value.
“Deteriorating economic conditions and ongoing strains in the financial and housing markets, which accelerated throughout 2008 and continued in the current quarter, have presented an unusually challenging environment for banks and their holding companies, including Banner Corporation,” said D. Michael Jones, President and CEO. “This has been particularly evident in our need to provide for credit losses during the past 15 months at a significantly higher level than our historical experience and has also affected our net interest income and other operating revenues.”
“Similar to recent quarters, the significant provision for loan losses during the current quarter reflects material increases in delinquencies, non-performing loans and net charge-offs, particularly for loans for the construction of one-to-four family homes and for acquisition and development of land for residential properties,” Jones continued. “While the provision for loan losses decreased compared to the immediately preceding quarter, the housing market remained weak in many of our primary service areas, resulting in the increase in delinquencies and non-performing assets, deterioration in property values and the need to provide for an elevated level of losses. By contrast, other non-housing related segments of the loan portfolio, while showing some signs of stress, have performed as expected with only normal levels of credit problems given the serious economic slowdown.”
In the fourth quarter of 2008, Banner issued $124 million of senior preferred stock to the U.S. Treasury as a participant in the Treasury’s Capital Purchase Program. In the quarter ended March 31, 2009, Banner paid a $1.6 million dividend on this preferred stock and accrued $373,000 for related discount accretion. Including the preferred stock dividend and related accretion, the net loss available to common shareholders was $11.2 million, or $0.65 per diluted share, compared to net income of $3.8 million, or $0.24 per diluted share, for the quarter ended March 31, 2008.
“A highlight of the quarter was our Great Northwest Home Rush promotion, which we began initially in the Portland market and more recently have expanded to the Puget Sound region, with the goal of bringing Banner Bank, its subsidiary Community Financial Corporation, and Banner’s builder partners together to deliver customers excellent prices on new homes and equally attractive home loan rates,” said Jones. The excitement surrounding this promotion has been encouraging and through the date of this announcement we have committed to finance the purchase of 147 homes under this program, with 21 of those sales having closed as of March 31, 2009.
Also notable in the current quarter was very strong mortgage banking activity and revenues as exceptionally low interest rates resulted in significant refinancing opportunities for many of our customers.
Credit Quality
“Due to the continuing weakness of the housing market in many of our primary service areas, delinquencies and non-performing assets increased in the first quarter of 2009, again primarily centered in our construction and land development loan portfolios. As a result, our provision for loan losses was at a significantly higher amount than a year ago and in excess of our normal expectations.” said Jones. “While property values have continued to decline, our reserve levels are substantial and both our impairment analysis and charge-off actions reflect current appraisals and valuation estimates. We remain confident that we can work our way through the housing market-related problems and recently have been encouraged by the positive response to our Great Northwest Home Rush program.”
Banner added $22.0 million to its provision for loan losses in the first quarter of 2009, compared to $33.0 million in the fourth quarter of 2008 and $6.5 million in the first quarter of 2008. The allowance for loan losses at March 31, 2009 was $79.7 million, representing 2.04% of total loans outstanding. Non-performing loans were $224.1 million at March 31, 2009, compared to $187.3 million in the preceding quarter and $54.4 million at March 31, 2008. In addition, Banner’s real estate owned and repossessed assets totaled $39.1 million at March 31, 2009 compared to $21.9 million in the previous quarter and $7.6 million at March 31, 2008. Banner’s net charge-offs in the current quarter totaled $17.5 million, or 0.44% of average loans.
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BANR-First Quarter 2009 Results
April 29, 2009
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At March 31, 2009, the geographic distribution of our construction and land development loans, including residential and commercial properties, is approximately 30% in the greater Puget Sound market, 42% in the greater Portland, Oregon market, and 8% in the greater Boise, Idaho market, with the remaining 20% distributed in various eastern Washington, eastern Oregon and northern Idaho markets served by Banner Bank. One-to-four family residential construction and related lot and land loans represent 20% of the total loan portfolio and 80% of non-performing assets. The geographic distribution of non-performing construction, land and land development loans and real estate owned included approximately $96.8 million, or 45%, in the Puget Sound region, $75.1 million, or 35%, in the greater Portland market area and $14.1 million, or 7%, in the greater Boise market area.
Income Statement Review
Banner’s net interest margin was 3.26% for the first quarter of 2009, compared to 3.24% in the preceding quarter and 3.63% for the first quarter of 2008. Funding costs decreased 27 basis points compared to the previous quarter and decreased 96 basis points from the first quarter a year earlier, while asset yields decreased 27 basis points from the prior linked quarter and 136 basis points from the first quarter a year ago, all reflecting the much lower interest rate environment engineered by the Federal Reserve.
“Funding costs improved as expected, which helped our net interest margin improve slightly from the previous quarter, despite the higher level of delinquencies,” said Jones. Non-accruing loans reduced the margin by approximately 38 basis points in this year’s first quarter compared to approximately 34 basis points in the fourth quarter of 2008 and approximately 12 basis points in the first quarter of 2008
For the first quarter of 2009, net interest income before the provision for loan losses was $35.0 million, compared to $35.7 million in the preceding quarter and $37.4 million in the first quarter a year ago. Revenues from core operations* (net interest income before the provision for loan losses plus total other operating income excluding fair value adjustments) were $42.9 million in the first quarter of 2009, the same as in the fourth quarter of 2008 and compared to $44.7 million for the first quarter a year ago.
Banner’s results for the first quarter of 2009 included a net loss of $3.3 million ($2.1 million after tax), compared to a net gain of $823,000 ($527,000 after tax) in the first quarter of 2008, for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value in accordance with the adoption of Statement of Financial Accounting Standards (SFAS) Nos. 157 and 159. The fair value adjustments in the current quarter predominantly reflect changes in the valuation of trust preferred securities and junior subordinated debentures, both owned and issued by the Company.
Total other operating income, which includes changes in the valuation of financial instruments carried at fair value, for the first quarter was $4.6 million, compared to $21.0 million in the preceding quarter and $8.1 million for the same quarter a year ago. Total other operating income from core operations* (excluding fair value adjustments) for the first quarter was $7.9 million, compared to $7.2 million in the preceding quarter and $7.3 million for the same quarter a year ago. Primarily reflecting a recent slow-down in customer transaction volumes, income from deposit fees and other service charges decreased to $4.9 million in the first quarter of 2009, compared to $5.3 million for the preceding quarter and $5.0 million in the first quarter a year ago. By contrast, income from mortgage banking operations increased substantially in the first quarter to $2.7 million compared to $1.4 million in the preceding quarter and $1.6 million in the same quarter a year ago. “The slowing economy adversely affected our payment processing business again this quarter as activity levels for deposit customers, cardholders and merchants clearly declined; however, we are pleased with the year-over-year growth in our customer base,” said Jones. “We are also pleased that our mortgage banking revenues have nearly doubled compared to the year ago quarter due to strong mortgage refinancing activity. Unfortunately, the increased level of refinancing activity also resulted in accelerated termination of mortgage servicing rights as reflected in the impairment of loan servicing revenues in the quarter just ended. Amortization and write-off of mortgage servicing rights totaled $912,000 for the quarter ended March 31, 2009 compared to $193,000 in the preceding quarter and $261,000 in the first quarter a year ago.”
“Operating expenses were generally well managed in the first quarter, reflecting continuing efforts to improve our processes and efficiency, although collection and legal costs, including charges related to acquired real estate, remained high,” said Jones. “In addition, FDIC insurance expense increased approximately $1.2 million over the first quarter a year ago as a result of increased assessment rates for the current quarter and the depletion of offsetting credits that had held the prior year’s charges at a lower level. An additional, non-recurring expense for the current quarter was a $655,000 shared risk assessment from the Washington Public Deposit Protection Commission related to the failure of a Washington state commercial bank during the first quarter of 2009. Although we anticipate collection costs will continue to be above historical levels for a number of future quarters, we expect continued expense discipline will be a positive factor going forward.”
Total other operating expenses from core operations* (non-interest expenses excluding the goodwill write-off for the quarter ended December 31, 2008) were $33.8 million in the first quarter of 2009, a decline of 6% compared to $36.0 million in the preceding quarter and an increase of less than 1% compared to $33.7 million in the first quarter a year ago. Operating expenses from core operations as a percentage of average assets was 3.02% in the first quarter of 2009, compared to 3.06% in the previous quarter and 3.01% in the first quarter a year ago.
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BANR-First Quarter 2009 Results
April 29, 2009
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*Earnings information excluding the goodwill impairment charge and fair value adjustments (alternately referred to as total other operating income from core operations, total other operating expenses from core operations, revenues from core operations, or operating expenses from core operations) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company’s core operations reflected in the current quarter’s results. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures.
Balance Sheet Review
Total loans increased by $75.6 million, or 2%, to $3.92 billion at March 31, 2009 from $3.84 billion at March 31, 2008. “On a quarterly basis, reflecting the favorable interest rate environment and increased mortgage originations, residential mortgage loans increased by $44.5 million during the first quarter of 2009,” stated Jones. “In addition, commercial real estate loan balances increased by $22.6 million. By contrast, reflecting the slow economy, commercial business loans declined by $29.7 million. In addition, agricultural loans experienced an expected seasonal decline of $6.2 million which, combined with continued payoffs of construction loans, resulted in a modest decrease in total loan balances compared to the prior quarter end. Although still slower than historical levels, home sales have been sufficient to reduce the portfolio of one-to-four family construction loans by $206.3 million over the past twelve months, including a $55.3 million reduction in the most recent quarter. As a result, at March 31, 2009 our one-to-four family construction loans totaled $365.4 million and have declined by $289.2 million compared to their peak quarter-end balance of $654.6 million at June 30, 2007. In addition, our aggregate construction and land development loan balances, including commercial and multi-family real estate, have declined by $273.4 million, also compared to their peak quarter-end balances at June 30, 2007.” Net loans were $3.84 billion at March 31, 2009, compared to $3.79 billion a year earlier. Total assets were $4.51 billion at March 31, 2009, compared to $4.57 billion a year earlier.
Total deposits were $3.63 billion at March 31, 2009, compared to $3.69 billion a year earlier. Non-interest-bearing accounts increased 5% and certificates of deposit increased 6% during the twelve months ended March 31, 2009, while total transaction and savings accounts decreased 10%. “Deposits were down this quarter primarily because we allowed $125 million in public funds, including $76 million of interest-bearing transaction accounts, to run off since year-end in anticipation of the higher costs of collateralizing these deposits and to reduce the shared risk exposure under the new Washington and Oregon State regulations,” said Jones. “We anticipate further declines in public fund deposits over the next two or three quarters as we continue to adjust to these new regulations.”
On March 31, 2009, Banner Bank completed an offering of $50 million of qualifying senior bank notes covered by the FDIC’s Temporary Liquidity Guarantee Program (the “TLGP”) with a three-year maturity and fixed interest rate of 2.625%.
On November 21, 2008, Banner received $124 million from the U.S. Treasury Department as a part of the Treasury’s Capital Purchase Program. This funding marked Banner’s successful completion of the sale of $124 million in senior preferred stock, with a related warrant to purchase up to $18.6 million in common stock, to the U.S. Treasury. The warrant provides the Treasury the option to purchase up to 1,707,989 shares of Banner Corporation common stock at a price of $10.89 per share at any time during the next ten years. “The additional capital is being put to use by enhancing our capacity to support the communities we serve through expanded lending activities and economic development, including funding loans originated in connection with our Great Northwest Home Rush promotion,” said Jones.
Tangible stockholders’ equity at March 31, 2009 was $411.5 million, including $116.3 million attributable to preferred stock, compared to $292.6 million at March 31, 2008. Tangible common stockholders’ equity was $295.2 million at March 31, 2009, or 6.56% of tangible assets, compared to $292.6 million, or 6.60% of tangible assets at March 31, 2008. Tangible book value per common share was $16.96 at quarter-end, compared to $18.68 a year earlier. At March 31, 2009, Banner had 17.4 million shares outstanding, while it had 15.7 million shares outstanding a year ago.
Cash Dividend
On March 25, 2009, Banner’s Board of Directors declared a quarterly cash dividend of $0.01 per share, payable to shareholders of record as of the close of business on April 3, 2009. The dividend was paid on April 13, 2009. “Due to the current uncertainty in our markets, the Board believes it is prudent to preserve the Company’s capital position by reducing the cash dividend payment, while continuing to maintain our dividend reinvestment and stock purchase plan, which provides additional capital funding,” Jones concluded. “We believe that we will resume paying a higher level of cash dividends in the future when the recovery in the regional economy is more evident.”
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BANR-First Quarter 2009 Results
April 29, 2009
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Conference Call
Banner will host a conference call on Thursday, April 30, 2009, at 8:00 a.m. PDT, to discuss first quarter 2009 results. The conference call can be accessed live by telephone at 303-262-2075. To listen to the call online, go to the Company’s website at www.bannerbank.com. An archived recording of the call can be accessed by dialing 303-590-3000, passcode 11129077# until Thursday, May 7, 2009, or via the Internet at www.bannerbank.com.
About the Company
Banner Corporation is a $4.5 billion bank holding company operating two commercial banks in Washington, Oregon and Idaho. Banner serves the Pacific Northwest region with 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.
This press release contains statements that the Company believes are “forward-looking statements.” These statements relate to the Company’s financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially include, but are not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Board of Governors of the Federal Reserve System and our bank subsidiaries by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or to write-down assets; fluctuations in agricultural commodity prices, crop yields and weather conditions; our ability to control operating costs and expenses; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board; war or terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks detailed in Banner’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
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BANR-First Quarter 2009 Results
April 29, 2009
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RESULTS OF OPERATIONS | Quarters Ended | ||||||||||
(in thousands except shares and per share data) | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | ||||||||
INTEREST INCOME: | |||||||||||
Loans receivable | $ | 56,347 | $ | 60,674 | $ | 68,126 | |||||
Mortgage-backed securities | 1,801 | 1,359 | 1,153 | ||||||||
Securities and cash equivalents | 2,183 | 2,934 | 2,727 | ||||||||
60,331 | 64,967 | 72,006 | |||||||||
INTEREST EXPENSE: | |||||||||||
Deposits | 23,092 | 25,868 | 30,063 | ||||||||
Federal Home Loan Bank advances | 720 | 1,097 | 1,849 | ||||||||
Other borrowings | 227 | 397 | 610 | ||||||||
Junior subordinated debentures | 1,333 | 1,954 | 2,064 | ||||||||
25,372 | 29,316 | 34,586 | |||||||||
Net interest income before provision for loan losses | 34,959 | 35,651 | 37,420 | ||||||||
PROVISION FOR LOAN LOSSES | 22,000 | 33,000 | 6,500 | ||||||||
Net interest income | 12,959 | 2,651 | 30,920 | ||||||||
OTHER OPERATING INCOME: | |||||||||||
Deposit fees and other service charges | 4,936 | 5,263 | 5,013 | ||||||||
Mortgage banking operations | 2,715 | 1,351 | 1,615 | ||||||||
Loan servicing fees | (270) | 407 | 349 | ||||||||
Miscellaneous | 520 | 205 | 331 | ||||||||
7,901 | 7,226 | 7,308 | |||||||||
Increase (Decrease) in valuation of financial instruments carried at fair value | (3,253) | 13,740 | 823 | ||||||||
Total other operating income | 4,648 | 20,966 | 8,131 | ||||||||
OTHER OPERATING EXPENSE: | |||||||||||
Salary and employee benefits | 17,601 | 18,481 | 19,638 | ||||||||
Less capitalized loan origination costs | (2,116) | (1,730) | (2,241) | ||||||||
Occupancy and equipment | 6,054 | 6,197 | 5,868 | ||||||||
Information / computer data services | 1,534 | 1,309 | 1,989 | ||||||||
Payment and card processing services | 1,453 | 1,781 | 1,531 | ||||||||
Professional services | 1,194 | 1,175 | 755 | ||||||||
Advertising and marketing | 1,832 | 2,009 | 1,418 | ||||||||
Deposit insurance | 1,497 | 2,308 | 327 | ||||||||
State/municipal business and use taxes | 540 | 545 | 564 | ||||||||
Amortization of core deposit intangibles | 690 | 676 | 736 | ||||||||
Miscellaneous | 3,514 | 3,218 | 3,123 | ||||||||
33,793 | 35,969 | 33,708 | |||||||||
Goodwill write-off | - - | 71,121 | - - | ||||||||
Total other operating expense | 33,793 | 107,090 | 33,708 | ||||||||
Income (Loss) before provision (benefit) for income taxes | (16,186) | (83,473) | 5,343 | ||||||||
PROVISION FOR (BENEFIT FROM ) INCOME TAXES | (6,923) | (4,942) | 1,509 | ||||||||
NET INCOME (LOSS) | $ | (9,263) | $ | (78,531) | $ | 3,834 | |||||
PREFERRED STOCK DIVIDEND AND DISCOUNT ACCRETION | |||||||||||
Preferred stock dividend | 1,550 | 689 | - - | ||||||||
Preferred stock discount accretion | 373 | 161 | - - | ||||||||
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | (11,186) | $ | (79,381) | $ | 3,834 | |||||
Earnings (Loss) per share available to common shareholder | |||||||||||
Basic | $ | (0.65) | $ | (4.72) | $ | 0.24 | |||||
Diluted | $ | (0.65) | $ | (4.72) | $ | 0.24 | |||||
Cumulative dividends declared per common share | $ | 0.01 | $ | 0.05 | $ | 0.20 | |||||
Weighted average common shares outstanding | |||||||||||
Basic | 17,159,793 | 16,820,350 | 15,847,921 | ||||||||
Diluted | 17,159,793 | 16,820,350 | 15,965,032 | ||||||||
Common shares repurchased during the period | - - | 200 | 613,903 | ||||||||
Common shares issued in connection with exercise of stock options or DRIP | 493,514 | 171,770 | 251,391 | ||||||||
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April 29, 2009
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FINANCIAL CONDITION | ||||||||||
(in thousands except shares and per share data) | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||
ASSETS | ||||||||||
Cash and due from banks | $ | 72,811 | $ | 89,964 | $ | 93,634 | ||||
Federal funds and interest-bearing deposits | 2,699 | 12,786 | 28,760 | |||||||
Securities - at fair value | 161,963 | 203,902 | 226,910 | |||||||
Securities - available for sale | 66,963 | 53,272 | - - | |||||||
Securities - held to maturity | 67,401 | 59,794 | 55,647 | |||||||
Federal Home Loan Bank stock | 37,371 | 37,371 | 37,371 | |||||||
Loans receivable: | ||||||||||
Held for sale | 11,071 | 7,413 | 6,118 | |||||||
Held for portfolio | 3,904,476 | 3,953,995 | 3,833,875 | |||||||
Allowance for loan losses | (79,724) | (75,197) | (50,446) | |||||||
3,835,823 | 3,886,211 | 3,789,547 | ||||||||
Accrued interest receivable | 20,821 | 21,219 | 23,795 | |||||||
Real estate owned held for sale, net | 38,951 | 21,782 | 7,572 | |||||||
Property and equipment, net | 97,847 | 97,647 | 98,808 | |||||||
Goodwill and other intangibles, net | 13,026 | 13,716 | 136,918 | |||||||
Bank-owned life insurance | 53,163 | 52,680 | 51,725 | |||||||
Other assets | 41,285 | 34,024 | 21,538 | |||||||
$ | 4,510,124 | $ | 4,584,368 | $ | 4,572,225 | |||||
LIABILITIES | ||||||||||
Deposits: | �� | |||||||||
Non-interest-bearing | $ | 508,593 | $ | 509,105 | $ | 486,201 | ||||
Interest-bearing transaction and savings accounts | 1,099,837 | 1,137,878 | 1,297,215 | |||||||
Interest-bearing certificates | 2,019,074 | 2,131,867 | 1,909,894 | |||||||
3,627,504 | 3,778,850 | 3,693,310 | ||||||||
Advances from Federal Home Loan Bank at fair value | 172,102 | 111,415 | 155,405 | |||||||
Customer repurchase agreements and other borrowings | 181,194 | 145,230 | 135,032 | |||||||
Junior subordinated debentures at fair value | 53,819 | 61,776 | 105,516 | |||||||
Accrued expenses and other liabilities | 37,759 | 40,600 | 41,200 | |||||||
Deferred compensation | 13,203 | 13,149 | 12,224 | |||||||
4,085,581 | 4,151,020 | 4,142,687 | ||||||||
STOCKHOLDERS' EQUITY | ||||||||||
Preferred stock -Series A | 116,288 | 115,915 | - - | |||||||
Common stock | 318,628 | 316,740 | 292,061 | |||||||
Retained earnings ( accumulated deficit ) | (9,210) | 2,150 | 139,722 | |||||||
Other components of stockholders' equity | (1,163) | (1,457) | (2,245) | |||||||
424,543 | 433,348 | 429,538 | ||||||||
$ | 4,510,124 | $ | 4,584,368 | $ | 4,572,225 | |||||
Common Shares Issued: | ||||||||||
Shares outstanding at end of period | 17,645,552 | 17,152,038 | 15,903,637 | |||||||
Less unearned ESOP shares at end of period | 240,381 | 240,381 | 240,381 | |||||||
Shares outstanding at end of period excluding unearned ESOP shares | 17,405,171 | 16,911,657 | 15,663,256 | |||||||
Common stockholders' equity per share (1) | $ | 17.71 | $ | 18.77 | $ | 27.42 | ||||
Common stockholders' tangible equity per share (1) (2) | $ | 16.96 | $ | 17.96 | $ | 18.68 | ||||
Tangible common stockholder's equity to tangible assets | 6.56% | 6.64% | 6.60% | |||||||
Consolidated Tier 1 leverage capital ratio | 10.27% | 10.32% | 9.15% | |||||||
(1) | - Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares | |||||||||
outstanding and excludes unallocated shares in the ESOP. | ||||||||||
(2) | - Tangible common equity excludes preferred stock, goodwill, core deposit and other intangibles. | |||||||||
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April 29, 2009
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ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||
(dollars in thousands) | |||||||||||||||
Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||||||||
LOANS (including loans held for sale): | |||||||||||||||
Commercial real estate | $ | 1,036,285 | $ | 1,013,709 | $ | 899,333 | |||||||||
Multifamily real estate | 149,442 | 151,274 | 163,110 | ||||||||||||
Commercial construction | 103,643 | 104,495 | 75,849 | ||||||||||||
Multifamily construction | 46,568 | 33,661 | 38,434 | ||||||||||||
One- to four-family construction | 365,421 | 420,673 | 571,720 | ||||||||||||
Land and land development | 446,128 | 486,130 | 502,077 | ||||||||||||
Commercial business | 650,123 | 679,867 | 735,802 | ||||||||||||
Agricultural business including secured by farmland | 197,972 | 204,142 | 181,403 | ||||||||||||
One- to four-family real estate | 643,705 | 599,169 | 456,199 | ||||||||||||
Consumer | 276,260 | 268,288 | 216,066 | ||||||||||||
Total loans outstanding | $ | 3,915,547 | $ | 3,961,408 | $ | 3,839,993 | |||||||||
Restructured loans performing under their restructured terms | $ | 27,550 | $ | 23,635 | $ | 2,026 | |||||||||
Total loans 30 days past due and on non-accrual | $ | 335,780 | $ | 248,469 | $ | 85,927 | |||||||||
Total delinquent loans / Total loans outstanding | 8.58% | 6.27% | 2.24% | ||||||||||||
GEOGRAPHIC CONCENTRATION OF LOANS AT | |||||||||||||||
March 31, 2009 | Washington | Oregon | Idaho | Other | Total | ||||||||||
Commercial real estate | $ | 777,568 | $ | 163,994 | $ | 81,911 | $ | 12,812 | $ | 1,036,285 | |||||
Multifamily real estate | 124,786 | 12,478 | 8,804 | 3,374 | 149,442 | ||||||||||
Commercial construction | 59,181 | 33,431 | 10,081 | 950 | 103,643 | ||||||||||
Multifamily construction | 28,428 | 18,140 | - - | - - | 46,568 | ||||||||||
One- to four-family construction | 177,349 | 171,780 | 16,292 | - - | 365,421 | ||||||||||
Land and land development | 223,752 | 163,179 | 59,197 | - - | 446,128 | ||||||||||
Commercial business | 483,004 | 74,744 | 76,819 | 15,556 | 650,123 | ||||||||||
Agricultural business including secured by farmland | 89,053 | 45,080 | 63,839 | - - | 197,972 | ||||||||||
One- to four-family real estate | 492,774 | 106,383 | 39,504 | 5,044 | 643,705 | ||||||||||
Consumer | 199,684 | 57,892 | 18,183 | 501 | 276,260 | ||||||||||
Total loans outstanding | $ | 2,655,579 | $ | 847,101 | $ | 374,630 | $ | 38,237 | $ | 3,915,547 | |||||
Percent of total loans | 67.8% | 21.6% | 9.6% | 1.0% | 100.0% | ||||||||||
DETAIL OF LAND AND LAND DEVELOPMENT LOANS AT | |||||||||||||||
March 31, 2009 | Washington | Oregon | Idaho | Other | Total | ||||||||||
Residential | |||||||||||||||
Acquisition & development | $ | 113,083 | $ | 118,945 | $ | 23,291 | $ | - - | $ | 255,319 | |||||
Improved lots | 53,563 | 30,321 | 5,467 | - - | 89,351 | ||||||||||
Unimproved land | 25,109 | 12,010 | 25,159 | - - | 62,278 | ||||||||||
Commercial & industrial | |||||||||||||||
Acquisition & development | 3,904 | - - | 194 | - - | 4,098 | ||||||||||
Improved land | 17,207 | 699 | 402 | - - | 18,308 | ||||||||||
Unimproved land | 10,886 | 1,204 | 4,684 | - - | 16,774 | ||||||||||
Total land & land development loans outstanding | $ | 223,752 | $ | 163,179 | $ | 59,197 | $ | - - | $ | 446,128 | |||||
ADDITIONAL INFORMATION ON DEPOSITS & OTHER BORROWINGS | |||||||||||||||
BREAKDOWN OF DEPOSITS | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | ||||||||||||
Non-interest-bearing | $ | 508,593 | $ | 509,105 | $ | 486,201 | |||||||||
Interest-bearing checking | 307,741 | 378,952 | 452,531 | ||||||||||||
Regular savings accounts | 490,239 | 474,885 | 610,085 | ||||||||||||
Money market accounts | 301,857 | 284,041 | 234,599 | ||||||||||||
Interest-bearing transaction & savings accounts | 1,099,837 | 1,137,878 | 1,297,215 | ||||||||||||
Interest-bearing certificates | 2,019,074 | 2,131,867 | 1,909,894 | ||||||||||||
Total deposits | $ | 3,627,504 | $ | 3,778,850 | $ | 3,693,310 | |||||||||
INCLUDED IN OTHER BORROWINGS | |||||||||||||||
Customer repurchase agreements / "Sweep accounts" | $ | 131,224 | $ | 145,230 | $ | 85,032 | |||||||||
Washington | Oregon | Idaho | Total | ||||||||||||
GEOGRAPHIC CONCENTRATION OF DEPOSITS AT | |||||||||||||||
March 31, 2009 | $ | 2,843,305 | $ | 559,972 | $ | 224,227 | $ | 3,627,504 | |||||||
(more)
BANR-First Quarter 2009 Results
April 29, 2009
Page 8
ADDITIONAL FINANCIAL INFORMATION | ||||||||||
(dollars in thousands) | ||||||||||
CHANGE IN THE | Quarters Ended | |||||||||
ALLOWANCE FOR LOAN LOSSES | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||
Balance, beginning of period | ||||||||||
Provision | �� | $ | 75,197 | $ | 58,846 | $ | 45,827 | |||
22,000 | 33,000 | 6,500 | ||||||||
Recoveries of loans previously charged off | ||||||||||
Loans charged-off | 155 | 715 | 144 | |||||||
(17,628) | (17,364) | (2,025) | ||||||||
Net (charge-offs) recoveries | (17,473) | (16,649) | (1,881) | |||||||
Balance, end of period | $ | 79,724 | $ | 75,197 | $ | 50,446 | ||||
Net charge-offs (recoveries) / Average loans outstanding | 0.44% | 0.42% | 0.05% | |||||||
ALLOCATION OF | ||||||||||
ALLOWANCE FOR LOAN LOSSES | ||||||||||
Specific or allocated loss allowance | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||
Commercial real estate | $ | 4,972 | $ | 4,199 | $ | 4,180 | ||||
Multifamily real estate | 84 | 87 | 587 | |||||||
Construction and land | 46,297 | 38,253 | 11,117 | |||||||
One- to four-family real estate | 814 | 752 | 2,054 | |||||||
Commercial business | 18,186 | 16,533 | 17,842 | |||||||
Agricultural business, including secured by farmland | 587 | 530 | 1,397 | |||||||
Consumer | 1,682 | 1,730 | 2,807 | |||||||
Total allocated | 72,622 | 62,084 | 39,984 | |||||||
Estimated allowance for undisbursed commitments | 1,358 | 1,108 | 599 | |||||||
Unallocated | 5,744 | 12,005 | 9,863 | |||||||
Total allowance for loan losses | $ | 79,724 | $ | 75,197 | $ | 50,446 | ||||
Allowance for loan losses / Total loans outstanding | 2.04% | 1.90% | 1.31% |
REGULATORY CAPITAL RATIOS AT | Actual | Minimum for Capital Adequacy or "Well Capitalized" | ||||||||||
March 31, 2009 | Amount | Ratio | Amount | Ratio | ||||||||
Banner Corporation-consolidated | ||||||||||||
Total capital to risk-weighted assets | $ | 515,432 | 12.87% | $ | 320,271 | 8.00% | ||||||
Tier 1 capital to risk-weighted assets | 465,039 | 11.62% | 160,135 | 4.00% | ||||||||
Tier 1 leverage capital to average assets | 465,039 | 10.27% | 181,200 | 4.00% | ||||||||
Banner Bank | ||||||||||||
Total capital to risk-weighted assets | 464,079 | 12.09% | 383,774 | 10.00% | ||||||||
Tier 1 capital to risk-weighted assets | 415,730 | 10.83% | 230,265 | 6.00% | ||||||||
Tier 1 leverage capital to average assets | 415,730 | 9.56% | 217,341 | 5.00% | ||||||||
Islanders Bank | ||||||||||||
Total capital to risk-weighted assets | 24,860 | 13.56% | 18,329 | 10.00% | ||||||||
Tier 1 capital to risk-weighted assets | 23,631 | 12.89% | 10,997 | 6.00% | ||||||||
Tier 1 leverage capital to average assets | 23,631 | 11.73% | 10,072 | 5.00% |
(more)
BANR-First Quarter 2009 Results
April 29, 2009
Page 9
ADDITIONAL FINANCIAL INFORMATION | |||||||||||||||
(dollars in thousands) | |||||||||||||||
Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||||||||
NON-PERFORMING ASSETS | |||||||||||||||
Loans on non-accrual status | |||||||||||||||
Secured by real estate: | |||||||||||||||
Commercial | $ | 15,180 | $ | 12,879 | $ | 3,273 | |||||||||
Multifamily | 968 | - - | - - | ||||||||||||
Construction and land | 175,794 | 154,823 | 44,192 | ||||||||||||
One- to four-family | 21,900 | 8,649 | 2,869 | ||||||||||||
Commercial business | 7,500 | 8,617 | 3,114 | ||||||||||||
Agricultural business, including secured by farmland | 2,176 | 1,880 | 386 | ||||||||||||
Consumer | 275 | 130 | 40 | ||||||||||||
223,793 | 186,978 | 53,874 | |||||||||||||
Loans more than 90 days delinquent, still on accrual | |||||||||||||||
Secured by real estate: | |||||||||||||||
Commercial | - - | - - | - - | ||||||||||||
Multifamily | - - | - - | - - | ||||||||||||
Construction and land | - - | - - | - - | ||||||||||||
One- to four-family | 161 | 124 | 488 | ||||||||||||
Commercial business | - - | - - | - - | ||||||||||||
Agricultural business, including secured by farmland | - - | - - | - - | ||||||||||||
Consumer | 143 | 243 | 73 | ||||||||||||
304 | 367 | 561 | |||||||||||||
Total non-performing loans | 224,097 | 187,345 | 54,435 | ||||||||||||
Securities on non - accrual at fair value | 160 | - - | - - | ||||||||||||
Real estate owned (REO) / Repossessed assets | 39,109 | 21,886 | 7,579 | ||||||||||||
Total non-performing assets | $ | 263,366 | $ | 209,231 | $ | 62,014 | |||||||||
Total non-performing assets / Total assets | 5.84% | 4.56% | 1.36% | ||||||||||||
DETAIL & GEOGRAPHIC CONCENTRATION OF | |||||||||||||||
NON-PERFORMING ASSETS AT | |||||||||||||||
March 31, 2009 | Washington | Oregon | Idaho | Other | Total | ||||||||||
Secured by real estate: | |||||||||||||||
Commercial | $ | 7,774 | $ | 7,406 | $ | - - | $ | - - | $ | 15,180 | |||||
Multifamily | 968 | - - | - - | - - | 968 | ||||||||||
Construction and land | |||||||||||||||
One- to four-family construction | 34,927 | 25,885 | 6,376 | - - | 67,188 | ||||||||||
Residential land acquisition & development | 30,555 | 36,678 | 6,533 | - - | 73,766 | ||||||||||
Residential land improved lots | 11,133 | 3,058 | 2,006 | - - | 16,197 | ||||||||||
Residential land unimproved | 8,415 | 200 | 5,543 | - - | 14,158 | ||||||||||
Commercial land acquisition & development | - - | - - | - - | - - | - - | ||||||||||
Commercial land improved | - - | - - | - - | - - | - - | ||||||||||
Commercial land unimproved | 4,076 | 409 | - - | - - | 4,485 | ||||||||||
Total construction and land | 89,106 | 66,230 | 20,458 | - - | 175,794 | ||||||||||
One- to four-family | 9,442 | 2,820 | 8,667 | 1,132 | 22,061 | ||||||||||
Commercial business | 6,115 | 1,118 | 267 | - - | 7,500 | ||||||||||
Agricultural business, including secured by farmland | 774 | 417 | 985 | - - | 2,176 | ||||||||||
Consumer | 418 | - - | - - | - - | 418 | ||||||||||
Total non-performing loans | 114,597 | 77,991 | 30,377 | 1,132 | 224,097 | ||||||||||
Securities on non - accrual | - - | - - | - - | 160 | 160 | ||||||||||
Real estate owned (REO) and repossessed assets | 23,390 | 12,650 | 3,069 | - - | 39,109 | ||||||||||
Total non-performing assets at end of the period | $ | 137,987 | $ | 90,641 | $ | 33,446 | $ | 1,292 | $ | 263,366 | |||||
(more)
BANR-First Quarter 2009 Results
April 29, 2009
Page 10
ADDITIONAL FINANCIAL INFORMATION | ||||||||||
(dollars in thousands) | ||||||||||
(rates / ratios annualized) | ||||||||||
Quarters Ended | ||||||||||
OPERATING PERFORMANCE | Mar 31, 2009 | Dec 31, 2008 | Mar 31, 2008 | |||||||
Average loans | $ | 3,942,917 | $ | 3,988,531 | $ | 3,830,992 | ||||
Average securities and deposits | 403,514 | 391,560 | 312,596 | |||||||
Average non-interest-earning assets | 193,188 | 296,927 | 359,474 | |||||||
Total average assets | $ | 4,539,619 | $ | 4,677,018 | $ | 4,503,062 | ||||
Average deposits | $ | 3,693,345 | $ | 3,750,383 | $ | 3,606,121 | ||||
Average borrowings | 416,927 | 456,383 | 411,560 | |||||||
Average non-interest-bearing liabilities | (7,922) | 25,459 | 42,997 | |||||||
Total average liabilities | 4,102,350 | 4,232,225 | 4,060,678 | |||||||
Total average stockholders' equity | 437,269 | 444,793 | 442,384 | |||||||
` | ||||||||||
Total average liabilities and equity | $ | 4,539,619 | $ | 4,677,018 | $ | 4,503,062 | ||||
Interest rate yield on loans | 5.80% | 6.05% | 7.15% | |||||||
Interest rate yield on securities and deposits | 4.00% | 4.36% | 4.99% | |||||||
Interest rate yield on interest-earning assets | 5.63% | 5.90% | 6.99% | |||||||
Interest rate expense on deposits | 2.54% | 2.74% | 3.35% | |||||||
Interest rate expense on borrowings | 2.22% | 3.01% | 4.42% | |||||||
Interest rate expense on interest-bearing liabilities | 2.50% | 2.77% | 3.46% | |||||||
Interest rate spread | 3.13% | 3.13% | 3.53% | |||||||
Net interest margin | 3.26% | 3.24% | 3.63% | |||||||
Other operating income / Average assets | 0.42% | 1.78% | 0.73% | |||||||
Other operating income (loss) EXCLUDING change in valuation of | ||||||||||
financial instruments carried at fair value / Average assets (1) | 0.71% | 0.61% | 0.65% | |||||||
Other operating expense / Average assets | 3.02% | 9.11% | 3.01% | |||||||
Other operating expense EXCLUDING goodwill write-off / Average assets (1) | 3.02% | 3.06% | 3.01% | |||||||
Efficiency ratio (other operating expense / revenue) | 85.32% | 189.15% | 74.00% | |||||||
Return (Loss) on average assets | (0.83%) | (6.68%) | 0.34% | |||||||
Return (Loss) on average equity | (8.59%) | (70.24%) | 3.49% | |||||||
Return (Loss) on average tangible equity (2) | (8.86%) | (86.69%) | 5.05% | |||||||
Average equity / Average assets | 9.63% | 9.51% | 9.82% | |||||||
(1) | - Earnings information excluding the fair value adjustments and goodwill impairment charge (alternately referred to as operating | |||||||||
income (loss) from recurring operations and expenses from recurring operations) represent non-GAAP (Generally Accepted | ||||||||||
Accounting Principles) financial measures. | ||||||||||
(2) | - Average tangible equity excludes goodwill, core deposit and other intangibles. |
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