Exhibit 99.1
 |  | Contact: Mark J. Grescovich, President & CEO Lloyd W. Baker, CFO (509) 527-3636 News Release |
Banner Corporation Earns $14.8 Million, or $0.76 Per Diluted Share, in Third Quarter 2014;
Third Quarter Highlighted by Strong Revenue Generation, Loan and Deposit Growth
Walla Walla, WA - October 22, 2014 - Banner Corporation (NASDAQ GSM: BANR), the parent company of Banner Bank and Islanders Bank, today reported net income in the third quarter of 2014 increased 27% to $14.8 million, or $0.76 per diluted share, compared to $11.7 million, or $0.60 per diluted share, for the third quarter a year ago. In the preceding quarter, net income was $17.0 million, or $0.88 per diluted share, which was augmented by a bargain purchase gain related to the acquisition of six branches in Oregon, which net of related expenses added $0.23 to earnings per share. In the first nine months of 2014, net income increased 21% to $42.4 million, or $2.19 per diluted share, compared to $35.0 million, or $1.80 per diluted share, in the first nine months of 2013.
“Our third quarter results again reflect record revenue generation from core operations*, driven by balance sheet growth, client acquisition and improved mortgage banking activity, as we continue to successfully execute our strategies designed to deliver sustainable profitability to our shareholders,” said Mark J. Grescovich, President and Chief Executive Officer. “In the third quarter, we achieved additional loan growth and significantly increased core deposits while maintaining strong margins and excellent asset quality, which resulted in a substantial increase in net interest income. We also achieved meaningful increases in revenues from deposit fees and service charges as well as from mortgage banking.”
“Throughout 2014 we have continued to invest in our franchise,” Grescovich continued. “In August, we announced the signing of a definitive merger agreement between Banner and Siuslaw Financial Group, the holding company for Siuslaw Bank. This transaction presents a unique opportunity for us to expand our presence in Oregon, including our entry into Eugene which is the second largest metropolitan market in the state. Closing this acquisition is subject to approval of Siuslaw shareholders and the regulatory agencies as well as other customary closing conditions. During the second quarter we completed the purchase of six branches from Umpqua Bank, which also added to our presence in Oregon and contributed to our strong third quarter results. We will continue to look for strategic growth opportunities, both organic and through acquisitions, that will complement our business model and add to our revenue generation.”
Third Quarter 2014 Highlights (compared to third quarter 2013, except as noted)
| • | Net income increased 27% to $14.8 million, or $0.76 per diluted share, compared to $11.7 million, or $0.60 per diluted share in the third quarter of 2013. |
| • | Annualized return on average assets was 1.23%. |
| • | Annualized return on average equity was 10.29%. |
| • | Revenues from core operations* increased 13% to $59.0 million, compared to $52.4 million in the third quarter a year ago. |
| • | Net interest margin was 4.07% for the current quarter, compared to 4.06% in the second quarter of 2014 and 4.09% in the third quarter a year ago. |
| • | Core deposits increased 19% and represent 79% of total deposits. |
| • | Deposit fees and other service charges increased 19% to $8.3 million. |
| • | Total loans increased $44.1 million during the quarter and increased 16% compared to a year ago. |
| • | Non-performing assets decreased slightly compared to the prior quarter to $23.8 million, or 0.50% of total assets, at September 30, 2014, and declined 20% from a year earlier. |
| • | Common stockholders' tangible equity per share* increased to $29.16 at September 30, 2014 compared to $28.57 in the preceding quarter and $27.02 in the third quarter a year ago. |
| • | The ratio of tangible common stockholders' equity to tangible assets* remained strong at 12.00% at September 30, 2014. |
*Revenues from core operations and other operating income from core operations (both of which exclude acquisition bargain purchase gain, gain on sale of securities, fair value and other-than-temporary impairment (OTTI) adjustments) and references to tangible equity
BANR - Third Quarter 2014 Results
October 22, 2014
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per share and the ratio of tangible common equity to tangible assets (both of which exclude other intangible assets) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the final page of this press release.
Income Statement Review
Reflecting strong balance sheet growth, Banner’s third quarter net interest income, before the provision for loan losses, increased 7% to $47.1 million, compared to $43.8 million in the preceding quarter and increased 12% compared to $41.9 million in the third quarter a year ago. For the first nine months of 2014, net interest income increased 6% to $133.2 million, compared to $125.1 million in the first nine months of 2013.
“Our solid third quarter net interest margin was a result of our improved earning asset mix and reduced cost of funds, which generally offset the continuing downward pressure on loan yields,” said Grescovich. Banner's net interest margin was 4.07% for the third quarter of 2014, compared to 4.06% in the preceding quarter and 4.09% in the third quarter a year ago. In the first nine months of the year, Banner’s net interest margin was 4.07% compared to 4.15% for the same period a year earlier.
Earning asset yields remained unchanged compared to the preceding quarter but decreased nine basis points from the third quarter a year ago. Loan yields decreased by two basis points compared to the preceding quarter and were 25 basis points lower than the third quarter a year ago. Deposit costs decreased by two basis points in the third quarter compared to the preceding quarter and decreased by seven basis points compared to the third quarter a year ago. The total cost of funds decreased by three basis points in the third quarter compared to the preceding quarter and eight basis points compared to the third quarter a year ago.
“Banner’s mortgage banking activities further improved during the third quarter of 2014, reflecting a strong home purchase market and our increased market presence. While the mortgage refinance market is slower than the elevated pace in certain prior periods, including the first six months of 2013, our originations for home purchases have continued to increase in recent periods reflecting our increased investment in this business line," said Grescovich. Mortgage banking operations contributed $2.8 million to third quarter revenues compared to $2.6 million in both the preceding quarter and the third quarter of 2013. In the first nine months of the year, mortgage banking operations contributed $7.3 million to revenues, compared to $9.0 million in the first nine months of 2013.
Deposit fees and other service charges were $8.3 million in the third quarter of 2014, a 13% increase compared to $7.3 million in the preceding quarter and a 19% increase compared to $7.0 million in the third quarter a year ago. These increases reflect growth in the number of deposit accounts, increased transaction activity and our decision to change our debit card relationship to MasterCard®. The current quarter also included a $560,000 adjustment related to the under-accrual of interchange revenue in prior periods. In the first nine months of 2014, deposit fees and other service charges increased 12% to $22.2 million, compared to $19.9 million in the first nine months of 2013.
Revenues from core operations* (revenues excluding the bargain purchase gain, net gain on the sale of securities, other-than temporary impairment recovery and net change in valuation of financial instruments) were $59.0 million in the third quarter compared to $54.4 million in the preceding quarter and $52.4 million in the third quarter of 2013. In the first nine months of 2014, revenues from core operations* were $164.8 million, compared to $156.4 million in the first nine months of 2013. Total revenues were $60.4 million and $175.6 million for the quarter and nine-month period ended September 30, 2014, respectively, compared to $52.0 million and $155.9 million for the quarter and nine-month period ended September 30, 2013, respectively.
Banner’s third quarter 2014 results included a $1.5 million net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value and a $6,000 gain on sale of securities. In the preceding quarter, Banner's results included a $9.1 million acquisition bargain purchase gain based upon preliminary estimates of the fair value of the assets acquired and liabilities assumed as a result of the completed purchase of six branches from Umpqua Bank, as successor to Sterling Savings Bank, as well as a $464,000 net gain for fair value adjustments. In the third quarter of 2013, Banner recorded a net loss of $352,000 for fair value adjustments and a $2,000 gain on sale of securities.
Total other operating income, which includes the net gain on sale of securities, changes in the valuation of financial instruments and, in the previous quarter and year-to-date period, the bargain purchase gain, was $13.4 million in the third quarter of 2014, compared to $20.1 million in the second quarter of 2014 and $10.1 million in the third quarter a year ago. Year-to-date total other operating income was $42.3 million compared to $30.8 million in the first nine months of 2013. Other operating income from core operations,* which excludes the gain on sale of securities, net changes in the valuation of financial instruments and, in the previous quarter and year-to-date, the bargain purchase gain, was $11.9 million for the third quarter of 2014, compared to $10.6 million for the preceding
BANR - Third Quarter 2014 Results
October 22, 2014
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quarter and $10.5 million for the third quarter a year ago. In the first nine months of 2014, other operating income from core operations* was $31.6 million compared to $31.3 million in the first nine months of 2013.
Banner’s total other operating expenses (non-interest expenses) were $38.5 million in the third quarter of 2014, compared to $38.4 million in the preceding quarter and $34.5 million in the third quarter of 2013. Year-to-date, Banner’s operating expenses were $112.5 million compared to $104.0 million in the first nine months of 2013. The increase in operating expenses is largely attributable to acquisition-related costs and incremental costs associated with operating the acquired branches as well as generally increased compensation expenses.
For the third quarter of 2014, Banner recorded $7.1 million in state and federal income tax expense for an effective tax rate of 32.3%, which reflects normal marginal tax rates reduced by the impact of tax-exempt income and certain tax credits.
Credit Quality
“Banner’s third quarter of 2014 credit quality metrics again clearly reflect our moderate risk profile. Our non-performing assets declined 2% compared to the second quarter of 2014, and 20% compared to September 30, 2013,” said Grescovich. “Additionally, our reserve levels remain substantial and no provision for loan losses was required during the third quarter despite continued loan growth.”
Banner's allowance for loan losses was $74.3 million at September 30, 2014, or 1.95% of total loans outstanding and 376% of non-performing loans. Banner had net recoveries of $21,000 in the third quarter, compared to net charge-offs of $61,000 in the second quarter, and net charge-offs of $196,000 in the third quarter a year ago. Banner did not record a provision for loan losses for the third quarter of 2014 or for either the preceding or year-ago quarter.
Non-performing loans were $19.8 million at September 30, 2014, compared to $19.7 million at June 30, 2014 and $24.9 million at September 30, 2013. REO and repossessed assets decreased to $4.0 million at September 30, 2014, compared to $4.5 million at June 30, 2014 and $4.9 million a year ago.
Banner's non-performing assets decreased to 0.50% of total assets at September 30, 2014, compared to 0.51% at June 30, 2014 and 0.70% a year ago. Non-performing assets declined to $23.8 million at September 30, 2014, compared to $24.2 million at June 30, 2014 and $29.8 million a year ago.
Balance Sheet Review
“Banner had another strong quarter for loan production and we continue to see significant potential for growth in our loan origination pipelines,” said Grescovich.
Net loans were $3.73 billion at September 30, 2014, compared to $3.69 billion at June 30, 2014, and $3.20 billion a year ago. Commercial real estate and multifamily real estate loans increased 3% to $1.58 billion at September 30, 2014, compared to $1.54 billion at June 30, 2014, and increased 26% compared to $1.26 billion a year ago. Commercial and agricultural business loans declined slightly to $969.1 million at September 30, 2014, compared to $980.9 million three months earlier, but increased 13% compared to $858.8 million a year ago. Total construction and land and land development loans increased 9% to $381.5 million at September 30, 2014, compared to $349.6 million at June 30, 2014, and increased 14 % compared to $333.6 million a year earlier.
Total assets increased slightly to $4.76 billion at September 30, 2014, compared to $4.75 billion at June 30, 2014 and increased 11% compared to $4.28 billion a year ago. The total of securities and interest-bearing deposits held at other banks was $700.6 million at September 30, 2014, compared to $712.9 million at June 30, 2014 and $744.5 million a year ago. The average effective duration of Banner's securities portfolio was approximately 3.2 years at September 30, 2014.
Banner’s total deposits increased 2% to $3.99 billion at September 30, 2014, compared to $3.92 billion at June 30, 2014 and increased 13% compared to $3.54 billion a year ago. Non-interest-bearing account balances increased 8% to $1.30 billion at September 30, 2014, compared to $1.21 billion three months earlier and increased 24% compared to $1.05 billion a year ago. Interest-bearing transaction and savings accounts increased 3% to $1.83 billion at September 30, 2014, compared to $1.77 billion at June 30, 2014 and increased 16% compared to $1.58 billion a year ago. Certificates of deposit decreased 9% to $853.0 million at September 30, 2014, compared to $937.0 million at June 30, 2014, and declined 5% compared to $900.0 million a year earlier. Brokered deposits totaled $41.2 million at September 30, 2014 compared to $88.2 million at June 30, 2014 and $4.5 million at September 30, 2013.
“We continue to focus on enhancing our core deposit franchise, which includes reducing our funding costs by remixing our deposits away from higher-priced certificates of deposit, adding new client relationships and improving our core funding position,” said Grescovich. “To that point, our total core deposits increased by 5% during the quarter and increased by 19% compared to the same quarter a year ago."
Banner’s core deposits represented 79% of total deposits at September 30, 2014, compared to 75% of total deposits a year earlier. The cost of deposits declined two basis points to 0.19% for the quarter ended September 30, 2014, compared to 0.21% for the quarter ended June 30, 2014, and declined seven basis points from 0.26% for the quarter ended September 30, 2013.
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October 22, 2014
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At September 30, 2014, total common stockholders' equity was $574.1 million, or $29.33 per share, compared to $563.0 million at June 30, 2014, and to $530.0 million a year ago. Banner had 19.6 million shares of common stock outstanding at September 30, 2014, compared to 19.5 million shares one year earlier. At quarter end, tangible common stockholders' equity*, which excludes other intangible assets, was $570.7 million, or 12.00% of tangible assets*, compared to $559.1 million, or 11.79% of tangible assets, at June 30, 2014, and $527.1 million, or 12.32% of tangible assets, a year ago. Banner's tangible book value per share* increased by 8% to $29.16 at September 30, 2014, compared to $27.02 per share a year ago.
Banner Corporation and its subsidiary banks continue to maintain capital levels significantly in excess of the requirements to be categorized as “well-capitalized” under applicable regulatory standards. Banner Corporation's Tier 1 leverage capital to average assets ratio was 13.14% and its total capital to risk-weighted assets ratio was 16.59% at September 30, 2014.
Conference Call
Banner will host a conference call on Thursday, October 23, 2014, at 8:00 a.m. PDT, to discuss its third quarter results. To listen to the call on-line, go to the Company's website at www.bannerbank.com. Investment professionals are invited to dial (888) 235-9915 to participate in the call. A replay will be available for one month at (877) 344-7529 using access code 10052662, or at www.bannerbank.com.
About the Company
Banner Corporation is a $4.76 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.
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 “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” 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. 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. Statements about the expected timing, completion and effects of the proposed merger and all other statements in this release other than historical facts constitute forward-looking statements.
Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from the proposed merger of Banner and Siuslaw (the “Merger”) might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the requisite shareholder and regulatory approvals for the Merger might not be obtained; (3) 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 loan losses, which could necessitate additional provisions for loan losses, resulting both from loans originated and loans acquired from other financial institutions; (4) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for loan losses or writing down of assets; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (10) the ability to access cost-effective funding; (11) changes in financial markets; (12) changes in economic conditions in general and in Washington, Idaho and Oregon in particular; (13) the costs, effects and outcomes of litigation; (14) new legislation or regulatory changes, including but not limited to the Dodd-Frank Act and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (15) changes in accounting principles, policies or guidelines; (16) future acquisitions by Banner of other depository institutions or lines of business; and (17) future goodwill impairment due to changes in Banner’s business, changes in market conditions, or other factors.
Banner does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
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October 22, 2014
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Additional Information
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Banner has filed a registration statement on Form S-4 with the SEC in connection with the Merger. The registration statement includes a proxy statement of Siuslaw that also constitutes a prospectus of Banner, which will be sent to the shareholders of Siuslaw. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER BECAUSE THEY CONTAIN, OR WILL CONTAIN, IMPORTANT INFORMATION ABOUT BANNER, SIUSLAW AND THE MERGER. This document and other documents relating to the Merger can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing Banner’s website at:
http://www.bannerbank.com/AboutUs/InvestorRelations/SecuritiesandExchangeCommission(SEC)Filings/Pages/default.aspx or by accessing Siuslaw’s website at http://www.siuslawbank.com/Investor-Relations.aspx.
Alternatively, these documents can be obtained free of charge from Banner upon written request to Banner Corporation, Attn: Investor Relations, 10 South First Avenue, Walla Walla, Washington 99362 or by calling (509) 527-3636, or from Siuslaw, upon written request to Siuslaw Financial Group, Inc., Attn: Investor Relations, P.O. Box 280, Florence, Oregon 97439 or by calling (541) 997-3486.
Banner Corporation and Siuslaw Financial Group, Inc., and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Siuslaw shareholders in connection with the merger. Information about the directors and executive officers of Siuslaw and the interests of these participants may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.
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October 22, 2014
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| Quarters Ended | Nine Months Ended | |||||||||||||||||||
| (in thousands except shares and per share data) | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||||
| INTEREST INCOME: | ||||||||||||||||||||
| Loans receivable | $ | 46,496 | $ | 43,199 | $ | 41,953 | $ | 131,439 | $ | 125,734 | ||||||||||
| Mortgage-backed securities | 1,459 | 1,446 | 1,281 | 4,376 | 3,847 | |||||||||||||||
| Securities and cash equivalents | 1,809 | 1,895 | 1,803 | 5,595 | 5,535 | |||||||||||||||
| 49,764 | 46,540 | 45,037 | 141,410 | 135,116 | ||||||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||||||
| Deposits | 1,903 | 1,910 | 2,330 | 5,776 | 7,539 | |||||||||||||||
| Federal Home Loan Bank advances | 20 | 51 | 28 | 110 | 92 | |||||||||||||||
| Other borrowings | 43 | 45 | 44 | 133 | 151 | |||||||||||||||
| Junior subordinated debentures | 734 | 726 | 742 | 2,180 | 2,225 | |||||||||||||||
| 2,700 | 2,732 | 3,144 | 8,199 | 10,007 | ||||||||||||||||
| Net interest income before provision for loan losses | 47,064 | 43,808 | 41,893 | 133,211 | 125,109 | |||||||||||||||
| PROVISION FOR LOAN LOSSES | — | — | — | — | — | |||||||||||||||
| Net interest income | 47,064 | 43,808 | 41,893 | 133,211 | 125,109 | |||||||||||||||
| OTHER OPERATING INCOME: | ||||||||||||||||||||
| Deposit fees and other service charges | 8,289 | 7,346 | 6,982 | 22,237 | 19,911 | |||||||||||||||
| Mortgage banking operations | 2,842 | 2,600 | 2,590 | 7,282 | 9,002 | |||||||||||||||
| Miscellaneous | 761 | 644 | 920 | 2,041 | 2,375 | |||||||||||||||
| 11,892 | 10,590 | 10,492 | 31,560 | 31,288 | ||||||||||||||||
| Net gain on sale of securities | 6 | — | 2 | 41 | 1,020 | |||||||||||||||
| Other-than-temporary impairment recovery | — | — | — | — | 409 | |||||||||||||||
| Net change in valuation of financial instruments carried at fair value | 1,452 | 464 | (352 | ) | 1,662 | (1,954 | ) | |||||||||||||
| Acquisition bargain purchase gain | — | 9,079 | — | 9,079 | — | |||||||||||||||
| Total other operating income | 13,350 | 20,133 | 10,142 | 42,342 | 30,763 | |||||||||||||||
| OTHER OPERATING EXPENSE: | ||||||||||||||||||||
| Salary and employee benefits | 22,971 | 22,330 | 21,244 | 66,457 | 63,197 | |||||||||||||||
| Less capitalized loan origination costs | (3,204 | ) | (3,282 | ) | (2,915 | ) | (8,680 | ) | (8,856 | ) | ||||||||||
| Occupancy and equipment | 5,819 | 5,540 | 5,317 | 17,055 | 16,061 | |||||||||||||||
| Information / computer data services | 2,131 | 1,918 | 1,710 | 5,984 | 5,353 | |||||||||||||||
| Payment and card processing services | 3,201 | 2,746 | 2,530 | 8,462 | 7,284 | |||||||||||||||
| Professional services | 784 | 1,109 | 1,074 | 2,900 | 2,799 | |||||||||||||||
| Advertising and marketing | 2,454 | 1,370 | 1,556 | 4,878 | 4,853 | |||||||||||||||
| Deposit insurance | 607 | 637 | 564 | 1,820 | 1,826 | |||||||||||||||
| State/municipal business and use taxes | 475 | 388 | 461 | 1,022 | 1,463 | |||||||||||||||
| Real estate operations | (190 | ) | (109 | ) | (601 | ) | (260 | ) | (1,047 | ) | ||||||||||
| Amortization of core deposit intangibles | 531 | 450 | 471 | 1,460 | 1,453 | |||||||||||||||
| Acquisition related costs | (494 | ) | 1,979 | — | 1,530 | — | ||||||||||||||
| Miscellaneous | 3,410 | 3,359 | 3,079 | 9,884 | 9,660 | |||||||||||||||
| Total other operating expense | 38,495 | 38,435 | 34,490 | 112,512 | 104,046 | |||||||||||||||
| Income before provision for income taxes | 21,919 | 25,506 | 17,545 | 63,041 | 51,826 | |||||||||||||||
| PROVISION FOR INCOME TAXES | 7,076 | 8,499 | 5,880 | 20,620 | 16,825 | |||||||||||||||
| NET INCOME | $ | 14,843 | $ | 17,007 | $ | 11,665 | $ | 42,421 | $ | 35,001 | ||||||||||
| Earnings per share available to common shareholders: | ||||||||||||||||||||
| Basic | $ | 0.77 | $ | 0.88 | $ | 0.60 | $ | 2.19 | $ | 1.81 | ||||||||||
| Diluted | $ | 0.76 | $ | 0.88 | $ | 0.60 | $ | 2.19 | $ | 1.80 | ||||||||||
| Cumulative dividends declared per common share | $ | 0.18 | $ | 0.18 | $ | 0.15 | $ | 0.54 | $ | 0.39 | ||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 19,372,740 | 19,342,023 | 19,338,564 | 19,352,575 | 19,347,502 | |||||||||||||||
| Diluted | 19,419,344 | 19,409,601 | 19,397,329 | 19,385,933 | 19,402,659 | |||||||||||||||
| Change in common shares outstanding | 2,801 | (7,831 | ) | (10,139 | ) | 27,736 | 88,085 | |||||||||||||
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October 22, 2014
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| (in thousands except shares and per share data) | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| ASSETS | ||||||||||||||||
| Cash and due from banks | $ | 69,023 | $ | 83,571 | $ | 69,340 | $ | 69,711 | ||||||||
| Federal funds and interest-bearing deposits | 82,702 | 62,990 | 106,625 | 67,638 | ||||||||||||
| Securities - trading | 51,076 | 61,393 | 63,887 | 62,472 | ||||||||||||
| Securities - available for sale | 433,745 | 455,353 | 477,407 | 470,280 | ||||||||||||
| Securities - held to maturity | 133,069 | 133,186 | 96,545 | 102,513 | ||||||||||||
| Federal Home Loan Bank stock | 29,106 | 31,191 | 35,708 | 35,390 | ||||||||||||
| Loans receivable: | ||||||||||||||||
| Held for sale | 6,949 | 7,322 | 8,394 | 2,734 | ||||||||||||
| Held for portfolio | 3,799,746 | 3,755,277 | 3,267,042 | 3,415,711 | ||||||||||||
| Allowance for loan losses | (74,331 | ) | (74,310 | ) | (75,925 | ) | (74,258 | ) | ||||||||
| 3,732,364 | 3,688,289 | 3,199,511 | 3,344,187 | |||||||||||||
| Accrued interest receivable | 17,062 | 15,579 | 15,164 | 13,996 | ||||||||||||
| Real estate owned held for sale, net | 3,928 | 4,388 | 4,818 | 4,044 | ||||||||||||
| Property and equipment, net | 91,291 | 91,912 | 89,092 | 90,267 | ||||||||||||
| Other intangibles, net | 3,362 | 3,892 | 2,937 | 2,449 | ||||||||||||
| Bank-owned life insurance | 63,293 | 62,815 | 61,442 | 61,945 | ||||||||||||
| Other assets | 49,368 | 50,740 | 60,809 | 64,006 | ||||||||||||
| $ | 4,759,389 | $ | 4,745,299 | $ | 4,283,285 | $ | 4,388,898 | |||||||||
| LIABILITIES | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Non-interest-bearing | $ | 1,304,720 | $ | 1,210,068 | $ | 1,051,831 | $ | 1,115,346 | ||||||||
| Interest-bearing transaction and savings accounts | 1,833,404 | 1,771,865 | 1,583,430 | 1,629,885 | ||||||||||||
| Interest-bearing certificates | 852,994 | 936,986 | 900,024 | 872,695 | ||||||||||||
| 3,991,118 | 3,918,919 | 3,535,285 | 3,617,926 | |||||||||||||
| Advances from Federal Home Loan Bank at fair value | 250 | 45,251 | 20,258 | 27,250 | ||||||||||||
| Customer repurchase agreements | 67,605 | 88,946 | 82,909 | 83,056 | ||||||||||||
| Junior subordinated debentures at fair value | 77,624 | 77,313 | 73,637 | 73,928 | ||||||||||||
| Accrued expenses and other liabilities | 32,375 | 35,619 | 25,562 | 31,324 | ||||||||||||
| Deferred compensation | 16,359 | 16,238 | 15,642 | 16,442 | ||||||||||||
| 4,185,331 | 4,182,286 | 3,753,293 | 3,849,926 | |||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||
| Common stock | 568,255 | 567,483 | 568,535 | 569,028 | ||||||||||||
| Retained earnings (accumulated deficit) | 6,780 | (4,541 | ) | (33,701 | ) | (25,073 | ) | |||||||||
| Other components of stockholders' equity | (977 | ) | 71 | (4,842 | ) | (4,983 | ) | |||||||||
| 574,058 | 563,013 | 529,992 | 538,972 | |||||||||||||
| $ | 4,759,389 | $ | 4,745,299 | $ | 4,283,285 | $ | 4,388,898 | |||||||||
| Common Shares Issued: | ||||||||||||||||
| Shares outstanding at end of period | 19,571,505 | 19,568,704 | 19,543,050 | 19,543,769 | ||||||||||||
| Less unearned ESOP shares at end of period | — | — | 34,340 | 34,340 | ||||||||||||
| Shares outstanding at end of period excluding unearned ESOP shares | 19,571,505 | 19,568,704 | 19,508,710 | 19,509,429 | ||||||||||||
Common stockholders' equity per share (1) | $ | 29.33 | $ | 28.77 | $ | 27.17 | $ | 27.63 | ||||||||
Common stockholders' tangible equity per share (1) (2) | $ | 29.16 | $ | 28.57 | $ | 27.02 | $ | 27.50 | ||||||||
Common stockholders' tangible equity to tangible assets (2) | 12.00 | % | 11.79 | % | 12.31 | % | 12.23 | % | ||||||||
| Consolidated Tier 1 leverage capital ratio | 13.14 | % | 13.65 | % | 13.63 | % | 13.64 | % | ||||||||
| (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) | Common stockholders' tangible equity excludes other intangibles. Tangible assets exclude other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of the press release tables. |
BANR - Third Quarter 2014 Results
October 22, 2014
Page 8
| (dollars in thousands) | ||||||||||||||||
| Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | |||||||||||||
| LOANS (including loans held for sale): | ||||||||||||||||
| Commercial real estate: | ||||||||||||||||
| Owner occupied | $ | 546,333 | $ | 541,558 | $ | 508,341 | $ | 502,601 | ||||||||
| Investment properties | 854,284 | 807,499 | 613,757 | 692,457 | ||||||||||||
| Multifamily real estate | 183,944 | 188,792 | 133,770 | 137,153 | ||||||||||||
| Commercial construction | 18,606 | 12,638 | 18,730 | 12,168 | ||||||||||||
| Multifamily construction | 48,606 | 39,864 | 33,888 | 52,081 | ||||||||||||
| One- to four-family construction | 214,141 | 213,414 | 194,187 | 200,864 | ||||||||||||
| Land and land development: | ||||||||||||||||
| Residential | 89,649 | 73,030 | 75,576 | 75,695 | ||||||||||||
| Commercial | 10,505 | 10,679 | 11,231 | 10,450 | ||||||||||||
| Commercial business | 728,088 | 735,128 | 635,658 | 682,169 | ||||||||||||
| Agricultural business including secured by farmland | 240,048 | 245,742 | 223,187 | 228,291 | ||||||||||||
| One- to four-family real estate | 527,271 | 558,744 | 543,263 | 529,494 | ||||||||||||
| Consumer: | ||||||||||||||||
| Consumer secured by one- to four-family real estate | 215,385 | 209,511 | 170,019 | 173,188 | ||||||||||||
| Consumer-other | 129,835 | 126,000 | 113,829 | 121,834 | ||||||||||||
| Total loans outstanding | $ | 3,806,695 | $ | 3,762,599 | $ | 3,275,436 | $ | 3,418,445 | ||||||||
| Restructured loans performing under their restructured terms | $ | 30,387 | $ | 37,461 | $ | 50,430 | $ | 47,428 | ||||||||
| Loans 30 - 89 days past due and on accrual | $ | 6,925 | $ | 7,670 | $ | 9,313 | $ | 8,784 | ||||||||
| Total delinquent loans (including loans on non-accrual) | $ | 26,703 | $ | 27,415 | $ | 32,002 | $ | 22,010 | ||||||||
| Total delinquent loans / Total loans outstanding | 0.70 | % | 0.73 | % | 0.98 | % | 0.64 | % | ||||||||
| GEOGRAPHIC CONCENTRATION | ||||||||||||||||||||
| OF LOANS AT SEPTEMBER 30, 2014 | Washington | Oregon | Idaho | Other | Total | |||||||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Owner occupied | $ | 389,967 | $ | 85,032 | $ | 53,891 | $ | 17,443 | $ | 546,333 | ||||||||||
| Investment properties | 532,415 | 123,874 | 59,963 | 138,032 | 854,284 | |||||||||||||||
| Multifamily real estate | 141,337 | 27,685 | 14,847 | 75 | 183,944 | |||||||||||||||
| Commercial construction | 16,953 | — | 1,653 | — | 18,606 | |||||||||||||||
| Multifamily construction | 41,462 | 7,144 | — | — | 48,606 | |||||||||||||||
| One- to four-family construction | 128,882 | 82,656 | 2,603 | — | 214,141 | |||||||||||||||
| Land and land development: | ||||||||||||||||||||
| Residential | 50,257 | 38,327 | 1,065 | — | 89,649 | |||||||||||||||
| Commercial | 5,055 | 2,569 | 2,881 | — | 10,505 | |||||||||||||||
| Commercial business | 392,334 | 121,078 | 80,262 | 134,414 | 728,088 | |||||||||||||||
| Agricultural business including secured by farmland | 123,910 | 63,146 | 52,992 | — | 240,048 | |||||||||||||||
| One- to four-family real estate | 329,751 | 173,384 | 23,371 | 765 | 527,271 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Consumer secured by one- to four-family real estate | 130,312 | 69,121 | 15,313 | 639 | 215,385 | |||||||||||||||
| Consumer-other | 83,379 | 39,818 | 6,241 | 397 | 129,835 | |||||||||||||||
| Total loans outstanding | $ | 2,366,014 | $ | 833,834 | $ | 315,082 | $ | 291,765 | $ | 3,806,695 | ||||||||||
| Percent of total loans | 62.1 | % | 21.9 | % | 8.3 | % | 7.7 | % | 100.0 | % | ||||||||||
BANR - Third Quarter 2014 Results
October 22, 2014
Page 9
| (dollars in thousands) | ||||||||||||||||||||
| Quarters Ended | Nine Months Ended | |||||||||||||||||||
| CHANGE IN THE | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||||
| ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||||
| Balance, beginning of period | $ | 74,310 | $ | 74,371 | $ | 76,121 | $ | 74,258 | $ | 76,759 | ||||||||||
| Provision | — | — | — | — | — | |||||||||||||||
| Recoveries of loans previously charged off: | ||||||||||||||||||||
| Commercial real estate | 94 | 274 | 331 | 664 | 2,295 | |||||||||||||||
| Construction and land | 84 | 472 | 507 | 788 | 945 | |||||||||||||||
| One- to four-family real estate | 143 | 204 | 19 | 535 | 138 | |||||||||||||||
| Commercial business | 256 | 286 | 339 | 835 | 1,391 | |||||||||||||||
| Agricultural business, including secured by farmland | 587 | 311 | 265 | 1,248 | 612 | |||||||||||||||
| Consumer | 53 | 58 | 68 | 393 | 287 | |||||||||||||||
| 1,217 | 1,605 | 1,529 | 4,463 | 5,668 | ||||||||||||||||
| Loans charged off: | ||||||||||||||||||||
| Commercial real estate | — | (1,001 | ) | (850 | ) | (1,239 | ) | (1,616 | ) | |||||||||||
| Multifamily real estate | (20 | ) | — | — | (20 | ) | — | |||||||||||||
| Construction and land | — | (207 | ) | — | (207 | ) | (854 | ) | ||||||||||||
| One- to four-family real estate | (239 | ) | (14 | ) | (207 | ) | (632 | ) | (1,260 | ) | ||||||||||
| Commercial business | (83 | ) | (260 | ) | (246 | ) | (1,081 | ) | (1,573 | ) | ||||||||||
| Agricultural business, including secured by farmland | (125 | ) | — | (248 | ) | (125 | ) | (248 | ) | |||||||||||
| Consumer | (729 | ) | (184 | ) | (174 | ) | (1,086 | ) | (951 | ) | ||||||||||
| (1,196 | ) | (1,666 | ) | (1,725 | ) | (4,390 | ) | (6,502 | ) | |||||||||||
| Net (charge-offs) recoveries | 21 | (61 | ) | (196 | ) | 73 | (834 | ) | ||||||||||||
| Balance, end of period | $ | 74,331 | $ | 74,310 | $ | 75,925 | $ | 74,331 | $ | 75,925 | ||||||||||
| Net charge-offs / Average loans outstanding | (0.001 | )% | 0.002 | % | 0.006 | % | (0.002 | )% | 0.026 | % | ||||||||||
| ALLOCATION OF | ||||||||||||||||
| ALLOWANCE FOR LOAN LOSSES | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| Specific or allocated loss allowance: | ||||||||||||||||
| Commercial real estate | $ | 19,505 | $ | 18,884 | $ | 15,618 | $ | 16,759 | ||||||||
| Multifamily real estate | 4,892 | 5,765 | 5,283 | 5,306 | ||||||||||||
| Construction and land | 20,779 | 17,837 | 16,672 | 17,640 | ||||||||||||
| One- to four-family real estate | 9,136 | 9,270 | 13,187 | 11,486 | ||||||||||||
| Commercial business | 12,677 | 12,014 | 10,676 | 11,773 | ||||||||||||
| Agricultural business, including secured by farmland | 2,947 | 2,824 | 3,411 | 2,841 | ||||||||||||
| Consumer | 675 | 748 | 948 | 1,335 | ||||||||||||
| Total allocated | 70,611 | 67,342 | 65,795 | 67,140 | ||||||||||||
| Unallocated | 3,720 | 6,968 | 10,130 | 7,118 | ||||||||||||
| Total allowance for loan losses | $ | 74,331 | $ | 74,310 | $ | 75,925 | $ | 74,258 | ||||||||
| Allowance for loan losses / Total loans outstanding | 1.95 | % | 1.97 | % | 2.32 | % | 2.17 | % | ||||||||
| Allowance for loan losses / Non-performing loans | 376 | % | 376 | % | 305 | % | 300 | % | ||||||||
BANR - Third Quarter 2014 Results
October 22, 2014
Page 10
| (dollars in thousands) | |||||||||||||||
| Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| NON-PERFORMING ASSETS | |||||||||||||||
| Loans on non-accrual status: | |||||||||||||||
| Secured by real estate: | |||||||||||||||
| Commercial | $ | 2,701 | $ | 2,692 | $ | 4,762 | $ | 6,287 | |||||||
| Multifamily | 397 | 422 | 333 | — | |||||||||||
| Construction and land | 1,285 | 1,296 | 1,660 | 1,193 | |||||||||||
| One- to four-family | 8,615 | 9,354 | 10,717 | 12,532 | |||||||||||
| Commercial business | 1,037 | 925 | 963 | 723 | |||||||||||
| Agricultural business, including secured by farmland | 229 | 104 | — | — | |||||||||||
| Consumer | 1,138 | 1,205 | 1,634 | 1,173 | |||||||||||
| 15,402 | 15,998 | 20,069 | 21,908 | ||||||||||||
| Loans more than 90 days delinquent, still on accrual: | |||||||||||||||
| Secured by real estate: | |||||||||||||||
| Commercial | 993 | 993 | — | — | |||||||||||
| Multifamily | — | — | 1,701 | — | |||||||||||
| Construction and land | — | — | 242 | — | |||||||||||
| One- to four-family | 2,777 | 2,181 | 2,774 | 2,611 | |||||||||||
| Commercial business | 301 | 280 | 24 | — | |||||||||||
| Agricultural business, including secured by farmland | — | — | — | 105 | |||||||||||
| Consumer | 306 | 293 | 52 | 144 | |||||||||||
| 4,377 | 3,747 | 4,793 | 2,860 | ||||||||||||
| Total non-performing loans | 19,779 | 19,745 | 24,862 | 24,768 | |||||||||||
| Real estate owned (REO) | 3,928 | 4,388 | 4,818 | 4,044 | |||||||||||
| Other repossessed assets | 69 | 69 | 119 | 115 | |||||||||||
| Total non-performing assets | $ | 23,776 | $ | 24,202 | $ | 29,799 | $ | 28,927 | |||||||
| Total non-performing assets / Total assets | 0.50 | % | 0.51 | % | 0.70 | % | 0.66 | % | |||||||
| DETAIL & GEOGRAPHIC CONCENTRATION OF | |||||||||||||||
| NON-PERFORMING ASSETS AT SEPTEMBER 30, 2014 | Washington | Oregon | Idaho | Total | |||||||||||
| Secured by real estate: | |||||||||||||||
| Commercial | $ | 3,693 | $ | — | $ | — | $ | 3,693 | |||||||
| Multifamily | 397 | — | — | 397 | |||||||||||
| Construction and land: | |||||||||||||||
| Residential land acquisition & development | — | 750 | — | 750 | |||||||||||
| Residential land improved lots | — | 536 | — | 536 | |||||||||||
| Total construction and land | — | 1,286 | — | 1,286 | |||||||||||
| One- to four-family | 9,903 | 947 | 542 | 11,392 | |||||||||||
| Commercial business | 1,294 | 39 | 5 | 1,338 | |||||||||||
| Agricultural business, including secured by farmland | — | 229 | — | 229 | |||||||||||
| Consumer | 1,233 | 81 | 130 | 1,444 | |||||||||||
| Total non-performing loans | 16,520 | 2,582 | 677 | 19,779 | |||||||||||
| Real estate owned (REO) | 1,515 | 2,380 | 33 | 3,928 | |||||||||||
| Other repossessed assets | 69 | — | — | 69 | |||||||||||
| Total non-performing assets at end of the period | $ | 18,104 | $ | 4,962 | $ | 710 | $ | 23,776 | |||||||
BANR - Third Quarter 2014 Results
October 22, 2014
Page 11
| (dollars in thousands) | |||||||||||||||||
| Quarters Ended | Nine Months Ended | ||||||||||||||||
| REAL ESTATE OWNED | Sep 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||
| Balance, beginning of period | $ | 4,388 | $ | 6,714 | $ | 4,044 | $ | 15,778 | |||||||||
| Additions from loan foreclosures | 135 | 963 | 2,837 | 2,467 | |||||||||||||
| Additions from capitalized costs | — | 297 | 37 | 344 | |||||||||||||
| Proceeds from dispositions of REO | (860 | ) | (3,970 | ) | (3,633 | ) | (15,758 | ) | |||||||||
| Gain on sale of REO | 265 | 1,005 | 680 | 2,477 | |||||||||||||
| Valuation adjustments in the period | — | (191 | ) | (37 | ) | (490 | ) | ||||||||||
| Balance, end of period | $ | 3,928 | $ | 4,818 | $ | 3,928 | $ | 4,818 | |||||||||
| DEPOSIT COMPOSITION | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| Non-interest-bearing | $ | 1,304,720 | $ | 1,210,068 | $ | 1,051,831 | $ | 1,115,346 | ||||||||
| Interest-bearing checking | 429,876 | 437,810 | 399,343 | 422,910 | ||||||||||||
| Regular savings accounts | 899,868 | 843,950 | 775,260 | 798,764 | ||||||||||||
| Money market accounts | 503,660 | 490,105 | 408,827 | 408,211 | ||||||||||||
| Interest-bearing transaction & savings accounts | 1,833,404 | 1,771,865 | 1,583,430 | 1,629,885 | ||||||||||||
| Interest-bearing certificates | 852,994 | 936,986 | 900,024 | 872,695 | ||||||||||||
| Total deposits | $ | 3,991,118 | $ | 3,918,919 | $ | 3,535,285 | $ | 3,617,926 | ||||||||
| GEOGRAPHIC CONCENTRATION | ||||||||||||||||
| OF DEPOSITS AT SEPTEMBER 30, 2014 | Washington | Oregon | Idaho | Total | ||||||||||||
| Total deposits | $ | 2,889,675 | $ | 864,869 | $ | 236,574 | $ | 3,991,118 | ||||||||
| Percent of total deposits | 72.4 | % | 21.7 | % | 5.9 | % | 100.0 | % | ||||||||
| INCLUDED IN TOTAL DEPOSITS | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| Public non-interest-bearing accounts | $ | 34,535 | $ | 23,886 | $ | 20,630 | $ | 21,699 | ||||||||
| Public interest-bearing transaction & savings accounts | 64,984 | 69,664 | 49,840 | 65,822 | ||||||||||||
| Public interest-bearing certificates | 48,508 | 48,180 | 51,562 | 51,465 | ||||||||||||
| Total public deposits | $ | 148,027 | $ | 141,730 | $ | 122,032 | $ | 138,986 | ||||||||
| Total brokered deposits | $ | 41,249 | $ | 88,209 | $ | 4,531 | $ | 4,291 | ||||||||
| OTHER BORROWINGS | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | ||||||||||||
| Customer repurchase agreements / "Sweep accounts" | $ | 67,605 | $ | 88,946 | $ | 82,909 | $ | 83,056 | ||||||||
BANR - Third Quarter 2014 Results
October 22, 2014
Page 12
| (dollars in thousands) | ||||||||||||||
| Actual | Minimum for Capital Adequacy or "Well Capitalized" | |||||||||||||
| REGULATORY CAPITAL RATIOS AT SEPTEMBER 30, 2014 | Amount | Ratio | Amount | Ratio | ||||||||||
| Banner Corporation-consolidated: | ||||||||||||||
| Total capital to risk-weighted assets | $ | 679,311 | 16.59 | % | $ | 327,607 | 8.00 | % | ||||||
| Tier 1 capital to risk-weighted assets | 627,828 | 15.33 | % | 163,803 | 4.00 | % | ||||||||
| Tier 1 leverage capital to average assets | 627,828 | 13.14 | % | 191,146 | 4.00 | % | ||||||||
| Banner Bank: | ||||||||||||||
| Total capital to risk-weighted assets | 599,617 | 15.32 | % | 391,421 | 10.00 | % | ||||||||
| Tier 1 capital to risk-weighted assets | 550,395 | 14.06 | % | 234,852 | 6.00 | % | ||||||||
| Tier 1 leverage capital to average assets | 550,395 | 12.14 | % | 226,711 | 5.00 | % | ||||||||
| Islanders Bank: | ||||||||||||||
| Total capital to risk-weighted assets | 36,132 | 19.44 | % | 18,582 | 10.00 | % | ||||||||
| Tier 1 capital to risk-weighted assets | 33,850 | 18.22 | % | 11,149 | 6.00 | % | ||||||||
| Tier 1 leverage capital to average assets | 33,850 | 13.54 | % | 12,501 | 5.00 | % | ||||||||
BANR - Third Quarter 2014 Results
October 22, 2014
Page 13
| (dollars in thousands) | ||||||||||||||||||||
| (rates / ratios annualized) | ||||||||||||||||||||
| Quarters Ended | Nine Months Ended | |||||||||||||||||||
| OPERATING PERFORMANCE | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||||
| Average loans | $ | 3,834,007 | $ | 3,588,654 | $ | 3,291,950 | $ | 3,633,990 | $ | 3,252,943 | ||||||||||
| Average securities | 666,362 | 689,323 | 689,257 | 681,059 | 693,892 | |||||||||||||||
| Average interest earning cash | 85,090 | 54,887 | 79,607 | 66,208 | 85,125 | |||||||||||||||
| Average non-interest-earning assets | 213,045 | 197,796 | 190,621 | 203,432 | 206,789 | |||||||||||||||
| Total average assets | $ | 4,798,504 | $ | 4,530,660 | $ | 4,251,435 | $ | 4,584,689 | $ | 4,238,749 | ||||||||||
| Average deposits | $ | 3,995,451 | $ | 3,700,736 | $ | 3,496,194 | $ | 3,773,206 | $ | 3,495,909 | ||||||||||
| Average borrowings | 228,724 | 279,266 | 241,006 | 256,666 | 233,831 | |||||||||||||||
Average non-interest-bearing other liabilities (1) | 2,026 | (4,204 | ) | (13,016 | ) | (3,040 | ) | (12,931 | ) | |||||||||||
| Total average liabilities | 4,226,201 | 3,975,798 | 3,724,184 | 4,026,832 | 3,716,809 | |||||||||||||||
| Total average stockholders' equity | 572,303 | 554,862 | 527,251 | 557,857 | 521,940 | |||||||||||||||
| Total average liabilities and equity | $ | 4,798,504 | $ | 4,530,660 | $ | 4,251,435 | $ | 4,584,689 | $ | 4,238,749 | ||||||||||
| Interest rate yield on loans | 4.81 | % | 4.83 | % | 5.06 | % | 4.84 | % | 5.17 | % | ||||||||||
| Interest rate yield on securities | 1.91 | % | 1.92 | % | 1.75 | % | 1.93 | % | 1.78 | % | ||||||||||
| Interest rate yield on cash | 0.28 | % | 0.31 | % | 0.22 | % | 0.30 | % | 0.25 | % | ||||||||||
| Interest rate yield on interest-earning assets | 4.31 | % | 4.31 | % | 4.40 | % | 4.32 | % | 4.48 | % | ||||||||||
| Interest rate expense on deposits | 0.19 | % | 0.21 | % | 0.26 | % | 0.20 | % | 0.29 | % | ||||||||||
| Interest rate expense on borrowings | 1.38 | % | 1.18 | % | 1.34 | % | 1.26 | % | 1.41 | % | ||||||||||
| Interest rate expense on interest-bearing liabilities | 0.25 | % | 0.28 | % | 0.33 | % | 0.27 | % | 0.36 | % | ||||||||||
| Interest rate spread | 4.06 | % | 4.03 | % | 4.07 | % | 4.05 | % | 4.12 | % | ||||||||||
| Net interest margin | 4.07 | % | 4.06 | % | 4.09 | % | 4.07 | % | 4.15 | % | ||||||||||
| Other operating income / Average assets | 1.10 | % | 1.78 | % | 0.95 | % | 1.23 | % | 0.97 | % | ||||||||||
Core operating income / Average assets (2) | 0.98 | % | 0.94 | % | 0.98 | % | 0.92 | % | 0.99 | % | ||||||||||
| Other operating expense / Average assets | 3.18 | % | 3.40 | % | 3.22 | % | 3.28 | % | 3.28 | % | ||||||||||
| Efficiency ratio (other operating expense / revenue) | 63.72 | % | 60.11 | % | 66.28 | % | 64.09 | % | 66.75 | % | ||||||||||
Efficiency ratio (other operating expense / core operating revenue)(2) | 66.13 | % | 67.02 | % | 65.84 | % | 67.36 | % | 66.53 | % | ||||||||||
| Return on average assets | 1.23 | % | 1.51 | % | 1.09 | % | 1.24 | % | 1.10 | % | ||||||||||
| Return on average equity | 10.29 | % | 12.29 | % | 8.78 | % | 10.17 | % | 8.97 | % | ||||||||||
Return on average tangible equity (3) | 10.36 | % | 12.33 | % | 8.84 | % | 10.21 | % | 9.03 | % | ||||||||||
| Average equity / Average assets | 11.93 | % | 12.25 | % | 12.40 | % | 12.17 | % | 12.31 | % | ||||||||||
| (1) | Average non-interest-bearing liabilities include fair value adjustments related to FHLB advances and Junior Subordinated Debentures. |
| (2) | Core operating income (or core operating revenue) excludes gain/(loss) on sale of securities, fair value and other-than-temporary impairment (OTTI) adjustments and, in the current year, and acquisition bargain purchase gain and related expenses, which represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables. |
| (3) | Average tangible equity excludes other intangibles and represents a non-GAAP financial measure. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables. |
BANR - Third Quarter 2014 Results
October 22, 2014
Page 14
| (in thousands except shares and per share data) | |||||||||||||||||||
| * Non-GAAP Financial Measures (unaudited) | |||||||||||||||||||
| In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. | |||||||||||||||||||
| REVENUE FROM CORE OPERATIONS | Quarters Ended | Nine Months Ended | |||||||||||||||||
| Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||||
| Net interest income before provision for loan losses | $ | 47,064 | $ | 43,808 | $ | 41,893 | $ | 133,211 | $ | 125,109 | |||||||||
| Total other operating income | 13,350 | 20,133 | 10,142 | 42,342 | 30,763 | ||||||||||||||
| Total GAAP revenue | 60,414 | 63,941 | 52,035 | 175,553 | 155,872 | ||||||||||||||
| Exclude net gain on sale of securities | (6 | ) | — | (2 | ) | (41 | ) | (1,020 | ) | ||||||||||
| Exclude other-than-temporary-impairment recovery | — | — | — | — | (409 | ) | |||||||||||||
| Exclude change in valuation of financial instruments carried at fair value | (1,452 | ) | (464 | ) | 352 | (1,662 | ) | 1,954 | |||||||||||
| Exclude acquisition bargain purchase gain | — | (9,079 | ) | — | (9,079 | ) | — | ||||||||||||
| Revenue from core operations (non-GAAP) | $ | 58,956 | $ | 54,398 | $ | 52,385 | $ | 164,771 | $ | 156,397 | |||||||||
| OTHER OPERATING INCOME FROM CORE OPERATIONS | Quarters Ended | Nine Months Ended | |||||||||||||||||
| Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Sep 30, 2014 | Sep 30, 2013 | |||||||||||||||
| Total other operating income (GAAP) | $ | 13,350 | $ | 20,133 | $ | 10,142 | $ | 42,342 | $ | 30,763 | |||||||||
| Exclude net gain on sale of securities | (6 | ) | — | (2 | ) | (41 | ) | (1,020 | ) | ||||||||||
| Exclude other-than-temporary-impairment recovery | — | — | — | — | (409 | ) | |||||||||||||
| Exclude change in valuation of financial instruments carried at fair value | (1,452 | ) | (464 | ) | 352 | (1,662 | ) | 1,954 | |||||||||||
| Exclude acquisition bargain purchase gain | — | (9,079 | ) | — | (9,079 | ) | — | ||||||||||||
| Other operating income from core operations (non-GAAP) | $ | 11,892 | $ | 10,590 | $ | 10,492 | $ | 31,560 | $ | 31,288 | |||||||||
| TANGIBLE COMMON STOCKHOLDERS' EQUITY TO TANGIBLE ASSETS | Sep 30, 2014 | Jun 30, 2014 | Sep 30, 2013 | Dec 31, 2013 | |||||||||||
| Stockholders' equity (GAAP) | $ | 574,058 | $ | 563,013 | $ | 529,992 | $ | 538,972 | |||||||
| Exclude other intangible assets, net | 3,362 | 3,892 | 2,937 | 2,449 | |||||||||||
| Tangible common stockholders' equity (non-GAAP) | $ | 570,696 | $ | 559,121 | $ | 527,055 | $ | 536,523 | |||||||
| Total assets (GAAP) | $ | 4,759,389 | $ | 4,745,299 | $ | 4,283,285 | $ | 4,388,898 | |||||||
| Exclude other intangible assets, net | 3,362 | 3,892 | 2,937 | 2,449 | |||||||||||
| Total tangible assets (non-GAAP) | $ | 4,756,027 | $ | 4,741,407 | $ | 4,280,348 | $ | 4,386,449 | |||||||
| Tangible common stockholders' equity to tangible assets (non-GAAP) | 12.00 | % | 11.79 | % | 12.31 | % | 12.23 | % | |||||||
| TANGIBLE COMMON STOCKHOLDERS' EQUITY PER SHARE | |||||||||||||||
| Tangible common stockholders' equity | $ | 570,696 | $ | 559,121 | $ | 527,055 | $ | 536,523 | |||||||
| Common shares outstanding at end of period | 19,571,505 | 19,568,704 | 19,508,710 | 19,509,429 | |||||||||||
| Common shareholders' equity (book value) per share (GAAP) | $ | 29.33 | $ | 28.77 | $ | 27.17 | $ | 27.63 | |||||||
| Tangible common stockholders' equity (tangible book value) per share (non-GAAP) | $ | 29.16 | $ | 28.57 | $ | 27.02 | $ | 27.50 | |||||||