BANR - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Banner Corporation's Fourth Quarter 2017 Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mark Grescovich, President and CEO. ahead. go Please

Mark Grescovich

and to Kate, quarter everyone. would I earnings Thank you good to like Corporation. welcome for fourth the also call you, Banner morning full-year XXXX and

call our of is Banner Albert today read Credit As you Bank; Safe Lloyd Chief Peter and the our the Marshall, statement? would Officer Baker, me please Financial Conner, joining on our Officer; is Barton, Chief Corporation. our Harbor customary, Albert, Rick forward-looking Chief of Corporation; Secretary Financial the the Officer of

Albert Marshall

Good everyone. Certainly. morning,

Our forward-looking outlook presentation other or goals services, descriptions economic for plans, today will discusses or Banner's business conditions. general financial or statements. of performance and outlook other and measures, objectives, for include products of include future and operations, Those statements statements forecast Banner's management's about

other following the on results We a recently subject available that are uncertainties, the and cause yesterday risk discussed materially a the XXXX. to press statements released forward-looking These XX, today. Form discussion. was also forward-looking and results Information XX-Q September the could in may differ earnings quarter and management's risks from statements question-and-answer for make those actual filed differ release are number factors of to from may that ended period actual

are Banner you. only they assumes Forward-looking information date statements its and effective Thank expectations. as no made, update are the of concerning obligation to

Mark Grescovich

Al. you, Thank

in significantly million, Tax quarter of adverse or for the impacted a Utah amendment a of shareholders designed the connection Act impact Results of XXXX. and diluted quarter securities fourth common sale by with Banner Jobs a XX, third December net per Durbin our common per deferred loss As Results assets of net per $X.XX postpone and the reported $X.XX interchange restructuring just card $X.XX share to Corporation of XXXX. on $XX.X for Cuts to balance of debit sale profit tax the announced, to net were our share the operations, following on by write-down and XXXX ended XX, quarter the fees. the loss were impacted sheet share compared passage XXXX. the for on of This also ended December the quarter the of of shareholders in to

full-year-ended $XX.X common Corporation XXXX, million the of For December Banner net XXXX. reported available XX, full-year the compared million income to for to $XX.X shareholders

from are expenses, financial of core $XX.X deliver sustainable $XX Excluding on executing Due to million the impact in XXXX profitability the growth million acquisition and just described the successfully company, operations merger throughout from the the employees of to we and strategies in changes priorities work our in items instruments, revenue X% gains on earnings XXXX. fourth increased Banner. to to losses of and value of fair our quarter, hard sale securities and and in

company, had Aside of a providing pre-tax the strong are integration from impact the we opportunity client recent reach dramatic successful reflect and and continue a from solid which have and the the record growth. year, our one-time revenue producing revenue and benefiting success proven great on of core are to items, for the the scale acquisitions, a are our and our strategies, which earnings core operating acquisition performance for of remains

Our core value. shareholder full-year XXXX continue our and performance is building clearly we demonstrates strategic plan that effective

improving of very million X% deposit X% core service advocacy below our responsive client full-year a increased December that to XXXX, net and represent benefited balance our and billion, bearing asset the Once relationships, through full-year year Our while compared income. now increased We non-interest and quarter promoting XX% our strategy, growing is, super again, deposits, resulted client on community and total our organic Overall, improved deposits growth earnings from earning reached sheet for from above execution core our X.XX% a and augmenting the compared growing core stay loyalty the and revenue strong our generation fourth deposits despite core continued ago, $XXX restructuring $XX continued core interest XXXX. this we remained Further, good bank To in larger of model, full-year fee for of X% that deposits. increased to of XX, X% new one XXXX to client return position mix, quarter margin this and and a point, a with our assets that average our reflects record new our funding relationships. by year. opportunistic acquisitions. performance on

client in in core more XXXX. XXX,XXX common few quarter a performance, we a detail. Lloyd In product of dividend in $X.XX tangible of the performance moments, operating is solid share net and our Reflective strong coupled of and organic per stock. since equity growth repurchased now common Peter Conner XX, discuss the XX.XX%, our shares issued will of with Baker ratio XX% categories these Our December

X.XX%. While we profile the allowance the and our our our moderate in preceding and grow lease loan on loan risk executing and invest we years, to and was credit focused credit and Again metrics some maintaining the Officer of relationships, Banner. our this company around sustainable portfolio our at loans X.XX%, losses to continued the interest quarter, end and Credit quarter improved quality credit of the Chief a Barton, franchise. maintaining the quarter, our risk our success net total our deliver Rick total credit In metrics non-performing discuss At will our have a provide seven assets of client effectively moderate profile. to prudently our the margin, for reflects In context strategies risk also ratio moment, of have throughout profitability invest the been profile. on protect totalled capital, just we

proven credit commercial have and Banner's personnel into our invested sales to banking added in and culture. our have talented integrating We developing, and bankers company, further retail we

risk continuing growth in the positioning continued We significant for infrastructure, IT also management and are made have scale. to and our and company investments make

Lender While growth of bank fee ranked year portfolio, core in recognition the in year-over-year progress proposition operating expenses, strong the increased the have over Regional income. second J.D. won Northwest received and America. strong the the Bankrate.com the loan consecutive to Bank have Further, named customer for deposit discuss Best XX ranked Barton Lender in Banner Associates award. to in Best Regional we these and in investments named and have for third I'll Small one Seattle loan acquisition, the the our Also, I two number noted Spokane value Rick satisfaction. for Banner the as in call Forbes have the Year resulted and Bank as Year year, year the core have Bank XXXX's growth, America. the our our in The Power marketplace they our we named Banner portfolio. Bank before, Banner client this this years, Banner Community XXX for consecutive out in of revenue District and Business of trends Administration now turn That's Rick? Banks of

Rick Barton

the metrics and story mirrors loan credit Thanks, past, credit steady morning at be remarks of concentrate this brief the of on Banner well-positioned. and nature landscape My recent moderate Mark. the portfolio's company's year-end stable the and At risk the will XXXX, stable the profile.

were for were purchase were non-performing the Non- restructures metrics X.XXX% XXXX. loan now move million, of further metrics, statement lease XX that under loan the assets X.XX% credit loans some of provision delinquent again on quarter into the non-performing $X Performing for Delinquent cycle. would total assets not our be quarter fourth $X should After of to loans my decreased still points was the in are December the loans modest million during the performing $X.X did loans not two loans. the totals, total increased production a average in assets loan as points. and of from XXXX Net when the X.XX% current next level. for OREO fourth we will troubled include A to The rules. increase accounting million, is quarter million, X.XX%. $X.X of allowance basis decreasing million the accounting linked as for their losses of are loans. XX, points usual I basis of totals charge-offs split $X.X asset are net during this a of our these from million, total make X.XX% a level the XXXX company's an remaining in assets. be X.XX% Banner's Non-performing losses non-performing compared by for company loans A the low to and unexpected XX, acquired all to a additional losses. ago, commenting between Before were million magnitude to and loan likely and non-performing improve At basis total If $XX total mark not of $X against were of quarter $XX delinquencies million of Not XX The level credit reportable toward assets assets change Siuslaw delinquent provides Banks, or acquired we quarters reflected $XX and year loans AmericanWest this million of restructured low, at ratio were and acquired also assets $XXX,XXX. totals loans which quarter. the non-performing which debt previously is category. of loans against classified reclassified to remaining are mere remained both December of X% the linked X.XX%. quarter net during of non-performing and

in for or the adjustment an complicated sale sale, $XXX of adjusting X% loan the a loan quarter for the After million is franchise making for $XXX Without growth, grew portfolio annualized by $XX sale, shrank million. the loan loans by discussion or for quarter of included the brief basis. $XXX the on After the the by million million. a full-year, discussing Now, growth growth loans Utah fourth same was adjusting of X.X%. fourth that

recorded C&I For in $XX XXXX, note million. with increases Modest was construction loan all throughout the also $XX loan our the occurred the It the in portfolio, $XXX important most million, of growth multifamily portfolio portfolios. did remaining the occur is and a residential that footprint. portfolio, and land agricultural portfolio, significant to spread decreases growth development million, across

should of be lease loans see of growth in off construction multifamily to on timely our make The we levels completed noted, with we moderation however, residential manner. are undersupplied, a in loans excellent construction It continue inventory. resulting loans both the activity and markets in these are that either absorption paying rents. We imbalance managing which observing or in multifamily up timely

turn at I of profile the risk stage well As our remarks, a for I'll for a his offset us comments. was future. credit year, Lloyd Banner, portfolios the to year loan which it stable positions moderate for over said solidified my With stable at of the further that, and

Lloyd Baker

Thank good everyone. morning you, and Rick,

As the increased to sale below effective reflect with trends a record scale release, company, Despite and net of $XX regulatory I tax and net all solid full-year to contributing the the reiterate risk Banner's much to of stated quarter outlined execution revenues the for fourth postpone strategic per increased in $XX.X quarter, year-end results Banner and in and year. the during meaningfully strong as of quarter our we fourth beyond what significantly for continued to Corporation's have million adverse $X.XX the to operations the asset for we effects actions growth strong related I the an operating impacted $XX our pre-tax as for assets. result costs Utah those or write-down our Peter the the of and for Amendment to will interest engineered total assets detail the order release leave position core earnings remain in the want after-tax year. plan XXXX, pre-tax and of infrastructure sheet reported discuss; of well Banner deferred that on that benchmark. of initiatives, our The revenue earnings income diluted however, to balance share. earnings XXXX earnings the management restructuring for results branches consistent by the as as fourth we billion loss seven of company were quarter Durbin other another do million

included a changes was Federal write-down the XXXX. assets, or $XX.X tax loss income, million As for DTA to related This write-down share, recently-enacted diluted full-year compared million tax laws. this previously share of in our our to or $X.XX XXXX reflected deferred additional expense of $XX.X $X.XX declined the net net which to per also following diluted million tax per announced, $XX.X

the per last from Utah the per financial as operations well core noted, included on and and value review carried as to fair in XXXX encourage our sale value the as we at $X.XX non-GAAP earnings expenses million diluted XXXX; gains or securities in excluding A unusual in core believe share operations strongly losses, $XX.X branches, diluted of However, year's acquisition-related earnings compared tax to reconciliation per X% this $XX increased more million Mark Banner's or changes the in has our instruments this financial from costs, and trends -- is share. of I gain $X.XX core is indicative which the you release these operation to information share a press in it. and earnings

branches and Our and interest generation gain deposit were again fourth quarter income a and compared for the solid net financial additional of $XX.X a which total loan positive Utah XXXX. a environment growth $XXX asset the quality. a quarter revenues strong performance was XX% continued million, operating of on the increase in the quarter sale by acquisition the client to driven fee Including reflecting supported million

growth our despite to Utah earlier. at million to year-ended despite branches to month changes the before X% net a carried fair operations fourth deposits, And of provision continues Banner successful quarter quarter the the XXXX. same for a the core was were increase sale a our as compared increasing full-year-ended the model $XXX.X year as despite X% the reflect to the net loan that earlier, December business same generation our assets. importantly, X% a fourth gains community for again bank branches to increase interest compared for the the earning value period core XXXX of sale and for reduced revenue the value More Similarly, ago income Utah increase on was and a a week value gains increasing Banner's year instruments XX, the well and the of the first super interest branch sale solid closed of XXXX lots of October. December the $XXX.X XX of of period excludes the current greater in This related losses year and million securities which than in X% significantly debt compared that from in fourth again quarter, income the the sales financial franchise. quarter the revenues loans

XX, X.XX% to result discount ended the interest compared quarter reported the X.XX% accretion. for quarter for as margin our While net preceding decreased -- the of to December previous quarter ended XXXX loan a decreased acquired

acquisition interest contractual the quarter margin a of our the compared contractual quarter for Our remained X.XX% excluding preceding X.XX% the net and margin year impact to X.XX% strong fourth ago. accounting was

market in from quarter steady Again, $XX discounts, line accretion expanded year service generally and net the expectation for for interest remained in net contractual contractual excluding fees a million and X.XX% was compared to discount of XX interest $XX.X increased benefited X.XX% yields of a the ago. XXXX, the to XXXX the the all reported at compared interest in charges quarter rates while quarter a XXXX, month million acquired deposit loan the this margin loan compared X% year quarter increased December were the margin X.XX% the fourth unchanged. year-ended million pricing period For compared to fourth our our to and excluding with interest $XX.X Deposit and in preceding and X.XX% seasonal earlier. our same XX, margins XXXX net a acquisition

to immediately fourth $XX.X result unchanged deposit nearly increased For Fourth core transaction by and full-year the XXXX, growth and modestly quarter charges of compared XXXX. million activity. mortgage X% deposit increased of direct related were preceding banking accounts from service quarter a revenues quarter the fees to the and in

quarter conditions XXXX full-year million quarter support the favorable the expenses for XX.X as investment previous expanded asset more compared million and the of preceding fourth is Total we company looking revenues of to adjusted in interest which rates year. million excluding $XXX at visible related market operating XXXX's a However, were the and as infrastructure mortgage necessary expenses to XX% to to the acquisition million million, XX.X $XXX with scale non-interest continued invest increased billion increased cost expenses full-year clearly increasing the even to $XX the to XXXX and increased banking and declined than in incurred in $XX.X less in total quarter by 'XX in associated the fourth regulatory other compared This compliance the X% threshold. of cost. operating the

entering revenue Banner Looking better forward, growth level is for to expense priority growth curtailing a with XXXX. this important an aligned operating

remarks. strong of noting Corporation the work by tangible and stock. reduced summary, million worth very our during the of impact had during of our number I the and of it's concludes performance This many believe the the repurchase to hard down associates. XXXX Finally, solid common very write quarter was fourth a In that of quarter all of reflect $XX our in that equity prepared DTA by remains for my capital although the despite continues and dedicated unusual items quarter, skilled Banner the

I quarter. will color forward your always, Peter But, add As more will first look on questions. the Peter? to some

Peter Conner

Lloyd. morning. Thank Good you,

explanation Lloyd legislation of and necessary. the understand In of Utah tax quarter. of made order unusually impact of is operating to there operation, the and impact a that for sheet, balance our Mark sale fully noted, results, noisy number events core the de-leveraging the were a As of careful of

to a in sheet. at to end, million end XXX quarter remain Total a with of multi-family billion of bulk including sale a year-end. to Investment as in loans XXX sale gain decline loans. X.X offset following Non-interest Ending deposits result of result the earnings As year-end. X.X accretion Utah completed end XXX end billion the tax of the share as undertaken current the average of result sold the declined de-leveraging the of accounted on the $X.XX Income as XX items. end $X.XX of $X.XX operations, $X.XX discussed expense. quarter reported release below increased expense. the gains and down increased we professional at loans by legislation. company's partially expense the below of loan sale billion sale a outstandings share the to quarter. in interest Net sale securities. of sale of Non-interest in fourth remain reflecting increased our interest in Utah deferred from to in I assets for on -- income operations at loan the increase result a as decreased an declined tax XX passage the announced discount assets in along in write of from previously, of operations billion the acquired They due an to a the for Utah per credit part held of are as The the million result portfolio to of result OREO. and per a million our by increased the due sheet to sale investment the of the sale as the of due balance will of we strategy third of securities sales as loss announced security the now decline $X.XX, turn release, of a to expense fourth $X.XX quarter we the the quarter a prior increase the December. and tax of bearing decrease on services a at due Utah quarter balance was as decreased a the for to offset the income marketing at Partially loss from of operation prior early as

the held deposits of quarter of transfer year-over-year. XXX loans Excluding our and declined the the de-leveraging and sheet Utah as to prior the strategy. compared sale Utah deposits in off impact X.X% part increased million operations for XX Core a sale certain of or the alternatives XXX to as portfolio by million client result loan or or quarter portfolio, the X% X% million of of of balance link

end. client annual of from sale the declined sheet XX On prior the to Excluding to operation, Utah XXX off an the impact grew principally balance core transfer basis, due of deposits or core million deposits year of million X% deposits X%, or alternatives. quarter

points the de-leveraging and X% accretion Excluding of balance of deposits of the borrowing the Utah sale Net cost $XXX,XXX million operations, interest sale XX wholesales portfolio, million brokered points Utah investment prior interest taken operation. declined quarter. quarter. fourth in the the net The of to deposit decreased the losses the points quarter, Time and loan the XX actions due Loan the net accretion five fourth to yield quarter compared basis year the and The X.XX%. the discount income the the basis a basis both to flat X.XX%. to premium basis result to previous fourth the acquired at basis carried due instruments to multifamily the on points income. Accretion previous yields the time modest sheet interest was gain margin excluding on the primarily points de-leverage declined prior from sale fair and fourth of purchase sheet, income increased fourth at deposits net of sale core basis and non-interest accounting accounting, quarter. deposit in point down in contractual gains in principally on interest in accounted of lower income to value including value amortization basis operation margin points loan quarter accounted points the fourth year-end. the one in effects of current quarter. $X.X quarter $XXX accounted Total effects quarter four and excluding of six of securities contractual the securities the balance basis maturity The to loans excluding time the in The of decline prior quarter, continue approximately of increase declined $XXX,XXX point fair margin as six pay loan million The for of basis retail the in purchase by yield the of to debt of for due XXX fourth to in compared Core grew quarter-end. the quarter. the prior X.XX% adjustments the the CDs, from quarter. for sale deposits runoff in Utah from quarter increased XX in accretion one security on of sales, increased

combination by Excluding outside $XXX,XXX $X.X $X core the direct OREO increase this of the $X.X the management-related impact risk services categories of decreased of a fourth million the deposit quarter. non-interest in income seasonal previous quarter. and of time million remarks. increased quarter. media normally marketing infrastructure, that of focused fee expense expense on in bank's increases as result well audit Mark? This prepared estate the the generally increases on expense expense fees with line Professional as generated due million promotion increased Non-interest income due Advertising by a as from operation, Other $X.X marketing campaigns were in gains the concludes the year-end. fourth completing my normal engagements Utah sale in increased prior million to associated operations prior build the year. mail increased over with consulting outside quarter to quarter. in completed of Real out expenses and

Mark Grescovich

questions. your your concludes remarks. call prepared welcome Kate, open Peter for comments. the now and will Lloyd, and our Thank we That you Rick, And

Operator

comes begin Please will question-and-answer D.A. session. Instructions] first the of now Davidson. Jeff Rulis [Operator from question go ahead. The We

Jeff Rulis

forward up of that anything, sale -- kind guess there if run Maybe expense that rate or is run some a all for I should the following reduction on costs expense at the on we and that guess the of question a front? that the I Lloyd, branch QX in roll rate, delayed we line, see into that's given

Lloyd Baker

pointed of second, did probably obviously yes. which third, service one as is perhaps And and note although the is, have during very quarter. the be that, have rate a was larger in Jeff, Well, we see noted, branch high expect we diminishment we sale. credit out, than to the And our did the will from Peter then there, fourth quarter should in finally, a sales more marketing will through impact higher There be some gain on little significant there cautionary year. impact professional would we better reduction, course the fees in The importantly, the normal the as as a probably expense next run quarter. quarter, a Peter flows OREO of line. But

should So subsequent more in see little significant probably reduction, on a balance, we quarters. impact a

first going infrastructure still as However, is somewhat. to build the the impact quarter

Jeff Rulis

a at additional, maybe is core kind And I do we point, and approach kind it's Okay. were and anything costs, front, how DFAST expense think on on look about it up, I or compliance lower this a costs, to of compliance of costs you related there whatever -- additional think rate shapes at you regulatory how of sort the guess, end way. would just how you you given guys that or world -- of that if then depending should

Peter Conner

This is Peter.

I it’s we your average, under asset quarter stayed four end. triggered basis year important well think in So over DFAST, a our moving billion didn't It so on change XX XX that so different on in timing on In total becoming that of a is in to at XXXX, regards question since DFAST assets filer. billion.

in don't related that infrastructure So in of DFAST XXXX. meaningful in increase expect We've costs. much we built already that

and the professional we'll work risk related our decline lines in in infrastructure infrastructure changing BSA that number where pointed year. That not be has the increases the reduce actually begin That changed. of XXXX. that of the second the the the temporary nature is first I there see some will second It’s around first some of the forward. guidance million And the to out, $X we're will reductions there outside of a Lloyd XXXX. half, think management will year consultant not half meaningfully quarter compliance the in being that and rate out that related out approximately we build in saw of the really an generated in run services of to as going terms of expense this related cost the quarter some relative the build work of activities to

Jeff Rulis

but So in go in you forward, Peter, should and the no I if you a rate definition I million X trigger run right then, different as number? the of expenses the of we again, suppose you as revamp -- I if I guess, XX in guess, billion get kind approach mark be there's that

Peter Conner

That's right, Jeff. Yeah. Exactly.

Jeff Rulis

maybe -- Lloyd, on margin, anticipated? just that's delayed balance benefit just from one the margin And one the restructuring any then for last sheet margin

Lloyd Baker

there pretty there some is about mid margin. increase always over time, but cautious hopeful extended up you We're the the December. of was Jeff. well the pretty margin interest quarter in proud fourth as how period our know, I'm an rate I’m of are held

the will have forward going December the to that positive we interest continued didn't with So have and and little sale of trend the margin a do half rates impact first bit the up to margin, while this a respect on intentionally occurred of in there. securities

we securities on rates re-leverage balance benefit we’ll portfolio. the And sheet, the so as higher from some

have to will mix that bit little the back more Now, security. a change

forward. optimistic that there some there's we're and going a there, bit little will in hold offset be the probably So but stronger just margin

Jeff Rulis

well like seems as the in year happened It securities that ’XX? redeployment last early in

Lloyd Baker

time lucky the standard rates were how like really we you billion. XX tell that to each did. to we’re smart, moved of just decided terms in but restructuring I'd in It transaction interest we do

as note it's the was aspect that think law. the benefited to from though the other on in important tax change well I we

the in So XX% marginal ’XX $X.X that to was million the incurred loss we rate. tax subject

rate. the marginal improved be will Going subject XX% the tax income to forward, interest

we again, didn't billion. we when didn't decision than timing under back would good. but legislation be that to made obviously better we So know XX tax everything, sometimes, for know signed sure it’s lucky the move be to yes, like But

Jeff Rulis

You plan. guys are All in modest. being master the

Operator

Jackie next Bohlen Thank is you. of The KBW. question from

Jackie Bohlen

And yourself wiggle something how see you to much, do that two at how re-leveraging similar on the again? growth December have able find you if that's you inclusive balance at latter was would the then room the thinking to of of in time. if strategic the could years a in year, and And XXXX, you're much looking pursue entire just in update look Just you be that sheet what were a done half? growth the for perspective, how an might might you in to of November, from if position to past provide

Peter Conner

Peter. is the sheet This I'll address look. balance

we’re purchase margin. portfolio investment will average As process quarter, lower to to the the having, interest on a it so through that quarter, you be will of complete and through March effect take expect in first the will the the the out, that relative in quarter. reported fourth of end balance net of might balance improvement some of Lloyd first That the sheet the have the securities re-leveraging effect net activity, of re-levering the pointed as in

the to of amount net is have a fourth aggregate look core of to our Outside base. for quarter. because the However, and similar somewhat deposit in to to even first the digit the the growth high, in commensurate throughout growth mid for high balance investment interest asset to the we very quarter, earning loan quarter is going generated continue first rate we’re XXXX though portfolio, income single lower be going

occurring another being event once operation you it gave account, at below don't was when that the that really Utah of sale so end ’XX the to again year, a but again us $XX type foresee in the billion. position into do we to of we in this take XXXX. function of do the anticipate opportunity not And of That deliver that

Jackie Bohlen

to the regards expense going over forward? amount the quarters, last modeling in to advertising that is the at with expenses And of not some look that the way trend is XXXX, there exact a fourth good seasonality is couple in expenses,

Peter Conner

Yeah.

year $X.X expectations As marketing million XXXX. ’XX we go the a reasonably of we expense for to full in number saw, incurred as far look at as that's good and in

seasonality pointed reflect the the to that With quarter out, you quarter.

Operator

Matthew from of is question next Clark Jaffray. Piper The

Matthew Clark

to in can maybe stock On will build some repurchase we trades activity that and we share every activity depending obviously, repurchase, assume start continue, that quarter. but where upon your should each

Lloyd Baker

Lloyd. It’s

timing as we this the As with basis at was and we that might one the linked does capital. a tools to our past that somewhat into continual do part capital on we as play, look of have of management de-leveraging come that use well, quarter manage the authorization but

going is that to the auction table. you it's can’t continue, I the So promise but always on

Mark Grescovich

X that We repurchase remaining shares still can have authorization. the This roughly million we is under a current Mark.

Matthew Clark

rate And second, I run moves of the the fourth. and rate like that and third a takes, seems it maybe did right in then more expense of puts that bit little thinking discussion or on the it down about the in Is the relief then all quarter misinterpret just discussion? with way a little the run first and

Peter Conner

are fair correctly. of offsetting just obviously services Peter. other just costs in with And you’ve this the reductions offset characterized But Matthew, we’ll business company. is of personnel support see the and into think more some The effects the in second meaningfully costs in growing I expense. normal professional characterization. terms quarter, the first going ongoing That's the it – for

Lloyd Baker

is Rick's get in That’s just balance sales with trying This again on another to how $XXX,XXX REO. say, to going figure going we're I was Lloyd. worth challenging. to of out million $X REO

Matthew Clark

Impressive. And quite accretion, discount bit. a it came then on the down

it it’s about mean, quarter. or there of forecasting million. think off that X there be depressed something should we that to was unusual was million this I I kind come down $X – that

Peter Conner

This is Matt. Peter,

all, low year, of to that very be going it's in free First portfolios fact acquired had challenging activity always we to loan fourth the payment quarter. quarter. in was the quarter and quarter the for the to due balance, lower fourth predict to On in lumpy a the

loans continues acquired that acquired was over accretion unusually to of guarantee it's fourth that -- time, rate and that as the go characterize we discount but won't going low, up, quarter would the run discount. to loan I through but So I our decline say

it on what and we So from again, annualized I’d characterize to basis lumpy XXXX. an XXXX continuing decline as into going in saw

Matthew Clark

X.XX%. kind getting out on credit that talked I they thoughts just maybe ratio, for where was think unchanged you have adjusted feeling $XX quarter then on ratio, guys comfortable it this down at of with in the that And I X.XX% the to environment? about coverage reserve And mark. I guess, think last settle updated million this what one ratio with and that your me, are

Rick Barton

Rick. Matthew, this is

what that summarized in very some comfortable you I think the with our well. are follow-on we've position said there We're past. questions, stated And still think well. you unless I very it

Operator

next comes The O’Brien question Instructions] from of [Operator O’Neill. Sandler Tim

Tim O’Brien

XX another way XX.X just professional million much X compliance is a what ’XX -- side that over approach were much and the little how you million, costs million, full comes number to to So reflected out that the that in approximately year the the that how the services expense budget of ’XX is million, you line, X from do referred for of costs were ’XX?

Peter Conner

Peter. is this Tim,

the large percentage million a related of XX development XXXX. So, in risk was infrastructure the to the of management

that investment up number wind a appropriate to our bank, we infrastructure as what’s So you'll that see risk bringing down. come down plus for $XX in billion

have away once In begin to go XXXX terms and but will third I a that XX% of projects we the of XXXX portion percentage, you in a XXXX. of give can think specific to good and don't quarters those in to second related percentage a XX% to that you, reach of number of was

Tim O’Brien

percentage can get chunk can this. that that’s different distinguish tact, So maybe non-recurring. million comes a at we of XX.X of out to there Maybe way flat so a you recur that's identifiable? that’s just was or can you that was going a out a -- -- that identify that Is different not

Peter Conner

it out to out as opportunity plus numbers amount XX is percent in potential can a said XXXX XXXX. related Tim. the that of infrastructure, exactly position Again, so come build to was a we're you XXXX about or that is, as number the will I that earlier, of in think But a for reduction. guidance what There significant in that there XX million in of is, you Yes. not about give but specific

Tim O’Brien

I Okay. want the fee service got that number, number, one that operation, the And in sure I in in that to XX fourth that was Utah number, in to was from revenue baked make the the fully foregone million. income thing dip then charges quarter that

Peter Conner

generated XXX,XXX X. on quarter. Utah we was income out about all in The of October Nearly of per fourth closed the that fee quarter,

Utah So contribution Utah $XXX,XXX that fourth in from the large, in have quarter. quarter, of and by a we absent did few days was the fourth but

Tim O’Brien

barring that strategic and number the that’s baseline that's So work seasonality core fair? of. off work, growth, you'd a target good number normal to good expect growth in a to Is

Peter Conner

Yes.

Tim O’Brien

Thanks All right. I for my for then guess it -- questions. answering that's And me.

Peter Conner

XX we’re billion That's that a good core run again. rate below now

Operator

closing like over are to no for Mark This conference time. other question-and-answer questions remarks. back turn our There at the this concludes would I to Grescovich session.

Mark Grescovich

Thank you, Kate.

we our our pleased as we’re by to on operating results model, Thank a build for everyone. excess good moderate plan all improving for disciplined to reporting risk colleagues the on substantial Banner maintaining capital. would are call with XXXX progress strengthening super in performance, our driving profile deploying executing look core and interest to our like thank Have today. core stated, joining our and bank to performance our future. forward your community day, and our that see evidence I solid deposit our solid company. making my I performance We value strategic prudently and by you for growing you who a As in share, it franchise, shareholder are the again market sustainable

Operator

attending concluded. for today’s conference Thank now you The has presentation.

disconnect. You may now

Banner (BANR) 25 Jan 182017 Q4 Earnings call transcript