BANR - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the Banner Corporation's First Quarter 2021 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 Chief Executive Officer. ahead. go Please

Mark Grescovich

and to Tom, XXXX everyone. would I call Thank you good to like welcome Banner and the also for you, Corporation. morning, first earnings quarter

joining Jill Rice, forward-looking please Chief is customary, As Head call Arnold, and read safe our on Rich, of Chief Officer; our our Investor Credit today Relations. is Financial Peter me Rich Conner, statements. our Officer; harbor the you would

Rich Arnold

morning. Good Mark. Sure,

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

discussion. We make also statements in may forward-looking management's other following the period question-and-answer

the that are could those subject and a and a and discussed the for that yesterday Additionally, released found of actual differ Information are XX, investor cause was be December earnings filed results section press factors Form Relations risks from provided in to from ended differ statements to website, on Investor the recently an XX-K bannerbank.com. forward-looking may available today. XXXX. results uncertainties, our presentation could number release actual of These risk the we year that materially

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

Mark Grescovich

Rich. you, Thank

to all Today, primary communities I four First the our we you. continue we all, hope virus of battle with cover as and families you items will your economy. effects well COVID and the and on its are

performance. you first provide high-level Banner's will quarter First, on I comments

support shareholders. Banner including our our Second, communities and the team, to all our of stakeholders, Banner our actions to continues clients, our take

is our doing to provide provide Jill want detail and clients of for capital through colleagues, the extremely values and are the colleagues more by living our Peter and the exactly comments on will our to to of times. report Conner change XXX our and Banner what has thanking pleased I the difficult provide loan Third, commerce I continue our quarter. thing important do. a our economic continue lived status hard company all assist operating communities values. that team for to X,XXX our in I cycles our right portfolio. up and begin for during all And our clients, our that finally, our Banner It critically that am right is my core we as working performance will reliable current these Rice to am of that on are source thing communities, shareholders very core the company do years. to we consistent of events. proud entire summed

Now quarter let an first to performance. our of turn overview me

first shareholders reported $X.XX Corporation shareholders ended $XX.X XXXX. XX, $X.XX a Banner and fourth XXXX the compared million to of common available $X.XX for announced, to XXXX. of the As the or quarter diluted per quarter share quarter common of to March profit net net per share profit share for a per of This for

Banner. your in mortgage This quarter's a maintain of attention strategy a risk credit allowance by impact pre-provision and coupled items and X.X%. an earnings I earnings the liquidity the moderate of financial illustrating these released, earnings previous pretax and expenses, power detail in for instruments, earnings This profile very more fair our core for sale expenses, to shortly. interest were will to the continued of losses impacted excluding rates, revenue. low continued with strong were Peter merger and discuss inflow believe, banking quarter Directing losses securities measure, for million and acquisition of of helpful the the COVID first of increase $XX.X million $XX.X compared in value on quarter, to of the changes is XXXX gains

on core in growing by Reflective of new with quarter assets XXX,XXX XXXX shares interest for of quarter of our good the benefited quarter. million first coupled resulted revenue. Overall, loyalty again, the per XX% reflects on represent total core Once XXXX. super bank million $XXX.X this in First mortgage strong from point, promoting we XX, core and increased tangible growing quarter. relationships, we that a generation our issued solid this to service execution compared We average $XXX.X and client dividend to adding continued in advocacy of our pandemic, margin from a and our To continued our the with even fee of deposits of community operations repurchased the that to and a March strategy, common of X% position funding asset Further, client core our XXXX of net return quarter mix, strong X.XX% client relationships model. compared common performance banking equity $X.XX deposits. increased our performance, to through a deposits in a core responsive quarter revenue the this is XX% and share larger challenges ratio, earning stock. strong organic our new

effectively ATMs others While and available and workforce appointment, duties. and for by our operational remain performing meetings other operational, our are our accessible areas ensuring functioning branches XX% are have the been fully with working in-person mobilized remotely nearly of remainder

our footprint. in regional essential, financial million Federal important $X Broadway support to footprint, funds depository $X.X payroll a contributions in created and To clients this investment equity commitment approximately provided financial for crisis, in clients. $X.X our made minority-owned basic have million also billion assistance special programs off an the time we additional African-American support we the for have nearly for and businesses needs significant to largest have for local providing our States; nonprofits; Also, provide Bank, and provided we United emergency in institution employees our or Banner exposure made XX,XXX several for paid through protection totaling deemed has We and SBA are support sickness. available work programs. site

now and Jill? to over turn to me her Banner's our in Jill loan book. the and trends portfolio loan discuss call credit comments on Let quality

Jill Rice

and morning, good everyone. Mark, you, Thank

March March loans since our in XX the X.XX% delinquent of total you and March comprised As current totaling million such, loans of decrease and compared a this when assets as metrics point loans, as are of quarter. $XXX,XXX. move of from and Banner's $XX.X to XXXX. March credit loans year-end represent classified through basis X.XX% X.XX% represent quarter stable remain assets Adversely continue X.XX% points X.XX% XXXX. morning. total of Nonperforming and as to REO I cycle, of assets loans X comments of to as year-end of of Nonperforming we assets, nonperforming keep other basis will pandemic-induced relatively represent an X.XX% press Banner's increase up of brief of as credit the read as X of $X.X in as XX, total linked my compared to the XX, compared million, XX, and down release,

investor the as As were one estate to last in and were as real the rating to majority upgrades relationships. spread risk due more businesses well any class, is return operations. centered of was case -- rather These commercial and improvement the commercial normalized to small not continue show in both quarter, upgrades owner asset as business a across borrowers

as or of December of As X.XX% March X.XX% from X.XX% total reported XX loans, of as compared down March XX, XX, $XXX.X totals to XXXX. our and million of ACL reserve

coverage Excluding were delinquent nonaccrual the million loans Protection Paycheck recoveries current continues of and loans coverage to loans held XXX% X.XX% $X.X during significant by loans, reserve provide offset loan. quarter of total for sale and of million. of ACL $X.X our at and XXX% coverage Losses the Loan or totaled

continued credit quarter-over-quarter of losses $X of balances, as With reserve for decline $XXX PPP down in we of net March loans, the released our portfolio loan million million XX.

discussed is requirements Releasing a of approach Banner have and consistent previously, the we the methodology. to conservative a As CECL magnitude function reserves this within maintains reserving. of

reserve in downgrading by pandemic the downturn. the of economic Our still early credits impacted with was proactive

vaccine is modest A net and our Now decline improvement healthy the reflecting peers, reserve of liquidity distribution and quality, additional borrower in reduction Like muted some of quarter. programs, market losses for remains X% Loans reopen, indicators in loans asset support fiscal refinance beginning is stimulus portfolio quarter of reserve of continued our rapidly economic reflection year-over-year. expanding the to considered for the in recently portfolio demand. as first available down credit loan many loan robust. to X.X% held balances, our point trends, basis through continued XX are improving market, we the in overall and financial strong light declining slowly residential the approved and see our in our investment PPP

portfolios not the in the C&I chasing of pricing current and being of now excluding relationship. agricultural part on of strategic specific real is credit Looking nature portfolio at for strong loans, The as continue and a liquidity in be from equity XX.X% the the refinance the loans, quarter-over-quarter permanent large declining year-over-year. totaled the over resulting quarter down result the down reduce The structure are X.X% continuation growth as decline in quarter primarily excess The months. reduction somewhat several net multifamily year-over-year. well and of for past due decline as by converted residential The reflects and quarter X.X% PPP portfolios. in to reflects, one loans noted the to were loan is ADC on total market be construction obtained down has down of not XX% part, nearly continued is and offset debanking utilization relationships among XX.X% proactive year-over-year quarter, in XX have the are large looser large decision lines borrowers outstanding decline X% to year-over-year market looser and chase home and the the to CRE, in the expected. lower and structure utilization mortgage estate PPP commercial strong buckets. others. The of line the XX.X% line however, decline of product year-over-year. for spread the X.X% well, Residential refinance our Commercial credits reflect Commercial seasonal XX.X% impacted by in to to the low active the

include moderate markets total portfolio. we multifamily, affordable very continuing exposure housing profile. our of to construction of land, remains line with undersupplied. homes construction exposure with robust our X.X% areas of we prior when the residential construction total in and serve, commercial supply housing most in outstripping the market total And demand the loans, is available and risk XX.X% Within with Consistent periods, be represents our the

I important with remaining and real managers that note estate to and strong engaged are exhibit commercial continuing pipelines think the clients growth. are to our it's relationship commercial

inventories, up recognizing continue to into and/or pick begin the sheet closing the we to borrowers second their as liquidity lines make they to credit anticipate on in tapping build begin utilize that half investments new forward, delayed capital Looking before balance investment of that on borrowings. will will and commercial of much year their

X.X% quality, quarter loans declined $XX.X or the asset Regarding million. substandard in rated

the of due Nearly represent credits earlier, the total the XX% XX% industry hospitality As decline the book. mentioned are majority these credits. to was within of the hospitality of adversely and classified credits upgrading

have of are operating approximately is only segment $X.X three hotel are to will recreational with loans and season. X% source. segment for beginning by long-term March stated are are X% to concentrated classified March past recreation of been our Loans significantly the the at-risk were to due in next XX% of loans loans XX, will million approximately balance see active XX, retail not we Nearly under the credits credits active as our adversely of repayment loans healthcare-related in restaurant for line. moderate facilities, of adversely I classified any in The on classified within loans of activity of of $X.X active rates and That the $XX.X of note this classified are within have as occupancy this million continued which an foodservice sector, the as relationships said, located up book. they are of loans many to primary in while remain which monitor of active totaling exclusively mortgage located we business deferral relationships of the XX% decline, of are I no total. fitness the remained previously, $X.X XX, million paying are balance are As markets the their interest to almost the substandard industries, year. account deferral, that million spring start at and largest many The in classified under located as intact. and deferral. These these remains which dropping to an profile And that down forbearance continue deferral. leisure the one impact monthly. of segment increase are and under commercial shut risk under adversely wrap I $XX.X and million not stating March

to While credit regulatory continue the sheet it for balance cycle that, and for well capital remain this comments. of positioned over microphone the robust strong, significantly is requirements. hand too over, with reserves metrics for Peter credit continue losses will declare early I We remain future. excess his to credit Peter? our and in And be to levels

Peter Conner

good everyone. morning, Thank you, Jill, and

from gains securities yield fair on decreased a a result previously share the $XX the and our rate primarily an consolidation net financial environment. the result earnings decline share release, in or $X.X was carried legal, increase increase expense earning $X.XX commitment incidents per from primarily expense noninterest branch per expenses, core million a on in expense. and in quarter or value, million in $X.XX losses to noninterest and income to million $X driven income of an loan discussed the and decreased a of million marketing share quarter, compared diluted Core excluding recapture, at provision of as as $X.X due The Core reported As low changes including quarter. announced prior $X.XX and $XX.X the prior per as unfunded prior assets in revenue, we lower quarter. in value the million loss provision to diluted for fair of loan decline due in first earnings

PPP held the to by a offset held reduction increase balance prior sale, of the sheet. decreased for million portfolio in partially Total from Turning loans outstandings, loans the a SBA an investment for as in end $XX result in quarter multifamily decline loans. loan

model multifamily and primarily grown million balance unprecedented latest in Excluding business sale due over new and in loan PPP the the the client loan fundings, loans, deposits due to million $XXX deposits for Core from increases by $XXX fiscal effectiveness a agricultural balance for months, billion from execution portfolio XX mortgage of during modestly commercial payments Banner's in million $X.X the $XXX prior due average quarter during quarter. of portfolios. ending prior elevated and quarter systemic the liquidity. round end lower increased stimulus the Time and loans of PPP elevated deposits community to deposit period sale this held utilization XX% one-to-four business Held reflecting liquidity. continued loans outstandings loans have SBA sale super of $XXX loans declines at prepayments in an or last the declined decreased line deposit million. Ending core million declined seasonal by from portfolio, $X.X to end, bulk

earning Turning average in interest average to as Net in by increase the repricing $XXX balances quarter, asset loans income existing decreased million million the XX higher to levels income and or decline of statement. point $X.X loan XX yields earning income yields offset to quarter. a basis fourth asset X.X% recovery Compared interest a quarter. the of portfolio basis related points first decreased due in prepayment the and prior during

Excluding and of points X loan acquired the accretion, prepayments, the impact recoveries the coupon interest prior from declined loan quarter. average basis

funded loans loans rate has quarter, increased rates pace new million growth floors average yield investment decline over to payoffs. with adjustable security yields and of $XXX prior deposit loan core loan and continue Total by are the fixed as While by lower at slowed, and modest the loan headwinds mature. originated balances rate

along a elevated due on points a of declined noninterest production, the XX% mortgage-related deposits the write-downs primarily invested in volume XX $XXX,XXX, sales fourth at by the activity, Total prior loan on prepayments expense basis in fee low quarter, remained total asset of to residential decline declined quarter. increase $X.X at ladder an a increase forgiveness points income the declined from from shifts Within basis of remaining quarter carried quarter, basis $XXX,XXX prior flexible securities larger at million. gains noninterest refinance combined value, declined while increased to liquidity prior on into the we closed substantial the $XXX,XXX which in the a XX the the even the mortgage, points deposit Total percentage down The balance average to remained quarter. securities. with total anticipate to the to basis. deposit from by the the the the from measured mortgage X higher-yielding XX deposits deposits excess funds annual of in overnight expense-related increased declines coming as and quarter. the income at ratio to this income, loan prior with invested to retail tax securities equivalent net fair basis outstandings. sales fees gains $XXX,XXX market of cost X.XX% was and to pace result of in excluding increased plastics lower mix conditions. at margin continuing the basis noninterest servicer changes interest-bearing quarter. core due portfolio during with fourth XX income the in the anticipate in points PPP XX% effective of basis increased the Total We Core While in declined The costs. due in reduction securities on portfolio. quarter, in in first due first quarter. rates driven points branches mortgage-backed acceleration rates, prior average in closed In XX on points liquidity $X.X Total million to overnight Total decline of increased interest quarter. residential to The rebates Miscellaneous card as deposit card to income to debit rates. effectively due excess the XX% banking multifamily Deposit the funds loan will income in declined increase while yield quarter. on an on same yield on pace

in for reduction quarter. and marketing during reflecting costs, $X.X a contribution reserve commitments decreased the and in improved to compensation. core of operating due by the consummation adjustment fourth million, prior Islanders to Occupancy million $XXX,XXX due subsidiary a Salary quarter. declined credit Excluding the expense conditions. Professional production. and mortgage the seasonal current to the by branch increased economic campaign CRA merger even by marketing of exit the a due an increased pandemic-specific a decreased litigation to costs for costs as and increase the due and million noninterest cost million taxes of production, of merger $XXX,XXX, of offset in seasonal quarter Provision costs partially $X.X $X.X decreased $X.X fourth first Banner to quarter. as the costs payroll subsidiary legal result building Bank in lower origination of prior charitable remained loan expense staff, at primarily closure quarter for by lower the declined loan and the loan quarter Advertising Merger to Bank expense recapture unfunded a capitalized expense accrual into the reflecting the SBA million in levels expense residential by a in the $X.X expenses by severance expense related quarter first million, $X.X deferred million. PPP benefits in and the recorded and for The $X.X costs increased in liability in maintenance. result declines pending

we count The of track the first during on the successfully Banner expense the company integrated other Islanders guided implementation quarter. expense have efficiency to. Bank Bank are into reduce the reduction in to and As impact subsidiary branch achieve the combined merger, in of indicated, and the quarter, coming initiatives Islanders the core anticipated to rate synergies are we run the

This XXX,XXX capital shares addition, my of management, company during In prepared the the concludes quarter. part repurchased remarks. as Mark? ongoing

Mark Grescovich

your our That your concludes Tom, Thank call And remarks questions. welcome you, now and Peter, comments. will Jill, and open we for prepared the today.

Operator

Davidson. Instructions] from the question Jeff first D.A. Please [Operator go comes Rulis ahead. And with

Jeff Rulis

on perspective, something from favorable on I'd and I branch closures. wanted maybe results, the interested just closures, retention additional in to is had? you've follow-up that's And that be the based being customer that the discussed? your impact

Peter Conner

branch of is This Peter. know, I address attrition Yes, monitor year. -- client fourth the those consolidated associated as Jeff. And quarter in third locations with we branch Yes, we can that. and we locations. last do XX you

look collective -- have And we closest at decisions. or remained XX branch consolidations so adapted that next to today. so But branch. pace less includes deposit that the did far, Banner X%. than think from I I think And we those that last it's I modeled the fairly don't some it's locations question, the continue that in is -- through harvest that the the branch locations distant would to we opportunities channels will branch for of the than platform. And running be way of second were their clients to we a those And year. quarter, network first to have And fact for sticky lower performing better the attrition exists than characterize and require the pace to other consolidations reflective

Jeff Rulis

I you'd merger I a this expect you a we would done, follow-on lower maybe is that digest back got Peter, as what you've out comment imagine And run quarter. your rate. cost Okay. just expense

closures? of So we're efficiencies. a in And kind angling is take it it about it couple Are we from is Or quarters that. that to we're rate? the you -- dependent? drift QX did of be talking away given Will inside cost of all continue targeted said of run kind something there, those growth the to -- then towards

Peter Conner

is merger, quarter cost branch was a terms we of branch mid-quarter. second a rate run lower expense we'll in which in the and the also not but just closure network, supporting see as Islanders improvement of in What of the smaller closed the of core the anticipate Yes. function benefits

in the some have with second to that been synergies that implemented talking the for about. expense expense So of quarter, Islanders manifest will been we've begin initiatives along the

effects see in-flight we'll still quarter. So the up There's there's efficiencies see as on some in them. the will second the benefit -- to in year cumulative we those basis that currently of other begin show later additional

-- of of particular, landing. soft mortgage, pace the So are activity, the the I commission in kind then wildcards business that expense it's a would and of assets characterize some And and the the with in of costs company, we have the growth pace that that that in some drive expense the line up along seasonality of and fourth some variable quarter the shows always in items.

Jeff Rulis

Okay. the kind securities the And I message the Peter, if we items. sounds kind of guess maybe to that leave that right? my but in last those compression through term. on one and the of pull push is that few investment got margin, And maybe you like income look the a of of walk continue at spread short could some dollars, to Is it margin, grow I

Peter Conner

forgiveness. as going know. Well, will into are the drive number forgiven. margin accelerate you of said, fee quarter, three key anticipating loan unamortized And four the as interest are second been loan forgiveness than -- surge really there are to pace historically, have loans in there the we PPP loan there's we've of drivers margin activity in as a the the is four a a of those in of which today income somewhat what's next to quarters. higher One the moving parts pricing And where in

increase off. loans an yield as anticipating on that the we're portfolio, average PPP pay the for in book so those And

the of elements driving element, the margin. The of kind four really there's second

average The liquidity. is client second level element the just of deposit

will is another off-balance almost And So then the hold? we the in recovers? that billion it question is, economy The That's sheet demand. increase as had liquidity $X ingredient. to first Will third move the of loan quarter. begin

is Jill's pipelines beginning loan down. of to production slow of the heard We that comments building. we prepayments on quarter are think existing strong the book the a are had You pace and

excess So of is liquidity into ingredient. laddering into the last the the demand of line of our the that of pace all securities another with ingredient And resumption is the deposit account, into pace and last is, one the margin. loan the utilization book taken

It's all to anticipate in that And to that for entire due of balance. then the taking the that PPP loan we're loan the balance the water in X book getting basis at is flat modest yield or about We're static be then balance of curve static points pace. If getting every that forgiveness. part some back. equal X a points a remain sheet basis. points at quarter, there'll to at we're going second guess, I would the all So to what I two. reduction margin X repricing to the year, basis in, the coupon fairly the treading in down, quarter sheet a of rest for seeing be of today, is repricing basis were some things on about on cost we're And funds

and margin really in to balance drive headwind So static basis, are going that sheet the margin three quarters. next liquidity the the mix a modest it's a pretty we're seeing on to

So want the the don't was, quarters. ingredients process and next that our I I in into the know few that thought to but helpful give how go you will margin

Operator

go ahead. comes with Please Sandler. question Andrew next Liesch Piper The from

Andrew Liesch

a the sounds it goes would of the commentary core like as this from flat are up the end loan still XXXX. the to end by end PPP types year and reasonable pipelines that And was to XXXX? basically balances year of on. quarter, last have flat loans growth they'll that going paydowns target So relative in basically Is be around offset end

Jill Rice

to XXXX, what be given in year we'll That's would flat. for be we normal XXXX. and that expect able mid-single-digit targeting, to there. the offset we'll refinancing That's Yes, going we we're and rate still Andrew, residential that that us Jill. that flat is still But are the in to good a we're be having for indicating this anticipate rapid our the return growth repayments

Andrew Liesch

million, gain sale on was $XX.X residential? the Got it. on dollar breakout the can dollar the revenue then what just amount you Great. of provide a -- in on And line, amount multifamily versus

Peter Conner

This the of Yes, at right multifamily $X million total. Andrew. component was Yes. Peter, that is

sale and pre-pandemic on for had we're product, resumed sales demand has credit demand seeing we to a general business to, both levels. from successful in in As gain we the perspective, a our activity. is unit renewed of alluded pricing And full what a that and really quarter

And continue demand we going so to strong see very product for buyer forward. that

pre-pandemic -- consummation to So drivers be and the and line pace business overall, But of really sales. new levels. line real its of execution item originations that resumed timing that can the the depending on the full of dates the lumpy is the sales, which of quarter-to-quarter those the of

Operator

go The next James. question ahead. comes from with David Please Raymond Feaster

David Feaster

It's originations, on really to exclusive I start of in the encouraging to PPP. acceleration wanted originations. see

we maybe guidance the and new paydowns? maybe expect what growing with quarter? How on curious, additional just as I guess, And But in growth could the do XQ start to in the and just of your represents think activity then kind there gave end where existing maybe Or drove second Just of was that. some think trough base? pipeline, you activity more do stronger you from some or payoffs from maybe PPP client given year. it much up the you or some client detail runoff be

Jill Rice

are across the saw this quarter is we David, in that the different Jill. product lines. growth of The first drivers

or see and one construction. it market any we've transactions as well, You was solid, growth in multifamily some industry. had don't one owner-occupied C&I

are growth suggest ball My strong enough footprint and seeing trough. and in we're that clear crystal we various really, to product the -- that production So the pipeline what the saw isn't across we've the is hit in types. in you

still take we you of stage have markets, our fits think reopening across account and have into the that starts. to and it I

and into confidence And going like the expanding so to that's when they start building inventories and that. impact business things their really

Coast, on push really, to not-- again, this it's West it fully the we're starting not second I open. are reopen. We But So half. to would more

Mark Grescovich

this David, is Mark. Yes,

lot is Let of going our of a in me are country parts that the West reopening. is lagging the take other of just the add efficacy the terms And Coast here assumption vaccines of that effect. to

on the uncertainty Jill's terms second right of reopening. of the is commentary about in So based growth now and occurring I in we're year think seeing half the caution just that warranted

David Feaster

hires? any And hiring opportunities? paid just seeing Just the looking And market could past then And curious add are the and talent fair. out, That's deepen the you maybe more you're just talked team? is and the bonuses what any to you're have about Yes. maybe that we've regions looking? with -- seen new -- in you more pipeline there specifically for -- how

Mark Grescovich

is this that is the a has good news in got tremendous Mark. Banner David, reputation Yes, Look, our markets.

executives pipelines. have talent regional Our

believe with So be they keep our truly that in organization fit in contact would our they many with and to bankers culture. additive our footprint

even and to successful opportunities we've been the very at talent seen it. add So here additional we've through pandemic,

to alternative to all primarily you So able being opportunity the commercial good base. And to have those and organization other with things. a has if -- their their suggest I to banker of accelerated, is that a bankers to institutions. own would services to frustrations the deliver because discussions are our positive Banner in some client coming

So pickup. we a have seen

David Feaster

the maybe yields, what talked reprieve you just been helped curve, given Okay. or not yield just there larger loan structures That's encouraging. has And that looser And the it's and has you the you then smaller prepared then for see stretching just all? segments you coming maybe remarks, aggressive any the pricing steepening I that the that community guess growth? at whether in on elaborate of chasing more banks from new could about or of regionals pricing.

Jill Rice

loosening structure regional are terms type. it we are loans. David, pricing, in agricultural structure, isn't of The and banks that hungry had the We Where portfolio. We had the low again, any banks. in for this the large the and Jill. So one in looser people in that C&I. primarily -- seeing are product But is

we're and of pricing a the There more And loosen feel was part I question repeat? of now. I see like from one competition. of our down And all structure piece that to could missed go that starting so question you

Mark Grescovich

Well, you want address Peter, the yield might compression. to

Peter Conner

Jill see alluded the think and perspective being Yes, to, we curve David, the is bit a has support growth. as what of while yield elevated side provides pressures offset generating competitive the a is, of loan some steepened by, on on I loan pricing from term

on here So and duration rates growth. pricing. to create and too tact We chasing in generate remaining we're low to of taken lock -- we've We're and quickly. excessive don't yield not think disciplined we the loan want --

offsetting not lot and balance, of to increasing pressures on given lift seeing new guess, competitive a loan yet pricing curve. in the yield I So the we're steepening

Operator

Please comes with ahead. from Jackie The KBW. go next Bohlen question

Jackie Bohlen

but the the portion? of loan bit given little net starting of you for question, make deferred a to sure with I'm impact A have base value dollar want housekeeping I that do right Peter, fees. end-of-period the the PPP

Peter Conner

I that portion. million $X.X it of outstandings referenced, in PPP loan The at XX, quarter. Page with it's processing investor -- unamortized the on fees. of Yes, loan portfolio our it do of was but the $XX.X billion as loan And we deck disclose associated in end and

So and we'll loans hopefully, acceleration think the be and the pace we income the reaching an know into of forgiveness quarter. second based paydowns -- we in that that see of and will brought on

Jackie Bohlen

Okay. Yes, I did that see number.

of on net already there? the that's the So unamortized $X.X billion fees,

Peter Conner

It is not actually.

a number. So gross it's

Jackie Bohlen

was find Okay. But And sorry, my also from. can't quarter? X.XX%, the dotted down I of Slide notes you what -- ex-PPPs, pulled Can XX. loan it last then slide to that yield happen for I have correctly, if that I

Peter Conner

And to I'm XX yields of and it prepared reduction -- activity because handy, have in what inclusive do. my was that don't from going to And I And forgiveness point get to have remarks basis think allude did QX it we when the QX. in a QX. to QX PPP back loan have we loans. I but was to to

loan loan minimis we interest then yields a away change PPP the loan And that outside decline, component there was just book. QX X the of reflective elevated, of at out portfolio PPP and -- to is de the had I so the interest point prepayment penalty-related looked of if core from the QX. fourth basis impact And on and was quarter coupon, in recoveries the very which we income take the a

Jackie Bohlen

Okay. helpful. That's

questions. for of of more broad on sorry a And topic. Touching kind the technicality my

about repurchases about capital how the to quarter a use you new terms do some obviously in have particular you're putting targeting? you are you're that how ratio Just thinking you thinking management, in the capital And authorization and of had deployment forward? going

Peter Conner

Yes.

remaining consistent. capital guidance million appointment a Our authorization in we And $X.X announced December. repurchase share on is

ratios on environment, uses given this that we're still of of more in year headroom deployment We to the capacity our don't do with we And reserve capital retained -- is, repurchase our used as go think to ratios. on Banner's in the but the common to to there this capital discount alternative specific year rest so We capital capital. and that the obviously, this have given growth deposits favoring equity through We pace repurchases authorization capital earnings this the form left capital that -- deployment outlook given growth for and actually plenty as generating we to tangible assets, in guide remained of in flat continued of targets year. relative and that QX. we our of risk-weighted and is the lessened depressed pressure to the due sense the

capital common But we that's we we're in of focusing now. on because metrics a right that capital So ratio -- than the equity a and adequacy of of combination I risk-based whatever don't lot anticipate a barometer decline really characterize this better tangible environment. do we would in

give ratio to as drive capital we about in how risk-based So it. expect capital we a decline decisions you you guidelines think a could the some way of wouldn't any that kind after kind of on

Operator

Terrell next The ahead. Please comes Instruction] from [Operator with Stephens. question Andrew go

Andrew Terrell

commercial the I a was maybe Jill, quick reserve against portfolio. real one the at looking for estate you.

points verticals Or it up portfolios share maybe there. sub quarter. takes just or step there up? on to other color you within stepped that Were just that this think any industry any I and CRE X led about specific basis puts the can

Jill Rice

be space and I coming sub view the making changes portfolio to right around of just estate economic the properties what's sitting sure in -- hanging and we've retail well the our things that given conservative nature classified the in what's that watching in in got space. as reserves forward office as would just real as within the that towards So happening our lean portfolio future there in still and of we move might assets commercial

Operator

Just it Mark any over back further our We then question-and-answer Andrew, no actually I something do you to to have to else concludes check, Grescovich wanted session. remarks. say? turn for have now questions. will closing this

Mark Grescovich

Tom. Thanks,

results team to be As communities of for other to as Banner we each shareholders. changes the I stated, and future. We clients, servicing our thing in the in Thank we're look to you in our safe. day, our COVID economic the right we the our this virus climate, continue Have and everyone, as very and and great our battle proud while do call again interest you forward for joining your the today. a reporting Banner

Operator

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

now You disconnect. may

Banner (BANR) 22 Apr 212021 Q1 Earnings call transcript