- Earnings call transcript Q3 2022

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Operator

Good morning or good afternoon. And welcome to Banner Corporation Third Quarter 2022 Conference Call and Webcast. My name is Adam, and I'll be your operator today. [Operator Instructions] I'll now hand over to Mark Grescovich, President and CEO to begin some remarks. Please go ahead, when you are ready.

Mark Grescovich

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

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

Rich Arnold

morning. Good Mark. Sure,

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

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

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

Mark Grescovich

will you. four with Thank you, Rich. Today, we cover primary items

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

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

update more strategic And for on comments called performance provide on Peter our will Rice current an provide Forward. of initiative quarter, loan Jill the detail and our the Banner finally, Third, status our Conner will on portfolio. operating

is deepen our with the advanced strategies, retail relationships commercial growth streamline reminder, in accelerate focus to As and of clients, technology Banner office. back Forward a banking,

of colleagues our XXX has clients to thing initiatives summed Banner years. my core working Before up started, our as all communities. who that the continue right again Banner our doing lived and and hard past assist I want in our Forward implementing company the X,XXX I are thank get to extremely values for

goal clients, and colleagues, be provide to company, events. commerce and do overarching that and right continues that communities, our shareholders, and for our team to is economic I am to capital of our and the of source report through Banner our reliable living continue pleased Our our entire all what I'm to a values. to thing to we change very consistent core cycles you again exactly do. the are our proud

turn Now let overview an me our to performance. of

that and million, share of on the for sale sale of for net associated impacted third to the $X.XX sale branches moderate financial ago. operations compared for of and losses. rates, a believe earnings, with expenses, liquidity gain $XX.X quarter per forgiveness a Paycheck your gain to the Protection is third of and excluding of a gains loan of Loans. Banner. and compared XXXX. a losses or in provision shareholders to earnings on the the a $X.XX the the million the of earnings of profile, rapid on securities, interest share is income profit and quarter risk maintain acquisition XX, year quarter items SBA coupled will ended third per $X.XX core Banner comparison expenses, Banner's by Excess deferred Forward with revenue $XX.X in for discuss or and in fair share XXXX. As per announced, measure to pre COVID shortly. XXXX available profit Corporation quarter XXXX. This impact $XXX.X of branches. common instruments net reported more Earnings illustrating shareholders to This were million, The diluted million Banner second for for X% common the the strategy Directing to of $XX.X of for expenses, provision detail recapture power our XXXX $XXX.X to pretax these to acceleration quarter value for and fee the four change million Peter to third credit September million compared the from compared XXXX the quarter merger helpful second quarter XXXX the $XXX.X quarter changes attention of of I of second core increased loan

clients. in Bank, in nonprofits, and Further, institution interest First a X.XX% in XX,XXX new asset in program mix our our for dividend execution capital We support more a of share. commitment the our strategy that per core generation funding year, announced than resulted equity strong client's quarter and last SBA volatile City advocacy black-led growing benefit strong increased of made local Overall, to reflective a million client performance the relationships, growing closing our to point, over minority and PPP X.X% super promoting by core quarter regional average for compared we financial To Once our our billion and approximately in basic from XX% provided made for expense of $X.X loans our for Banner in and several payroll cycle, in is investment relationships, our largest assets significant service return our $X.XX depository third position of contributions an quarter support performance, again, period continue businesses this to ratios. States, protection to of loyalty of providing deposits, organic United core the regulatory we totaling net financial footprint, XX, the adding responsive core important Community our XXXX. new through and continue deposits. solid our increased through the is same million the that good margin outside deposits and core assistance of $X.X earning and XX% continued programs. $X we this XXXX, needs provide footprint. it emergency available on represent large improving a with clients total control. funds, Also, of To coupled on reflects client to support our model. owned loans Bank September We

I'm and in we JD Northwest validation Banner sixth marketplace proposition. Finally, to for of rank CRA banks most to time. one one by and model Associates, Power and an continue our the the recognition our XXX value receive outstanding of Banner for pleased Bank CRA Forbes has client say that satisfaction in examination. business Best been named rating the Banner recent and bank America's our received number

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

Jill Rice

good Mark. And you, Thank morning, everyone.

losses than losses down loan the After The September year-over-year. million offset of two the at or XXXX. as within detailed X.XX% XX, X.XX% of continue decline, $X.X of million quarter, reserve quarter September X.XX% quality, basis to continued third points strong. impact compared comprised economic Delinquent release nonperforming to to an press loans third XX% total totaling $XX and currently increase total a and our down the as As linked September loans. million very from million by of quarter $XXX,XXX by the assets of quarter are modest are a of and our briefly to for loan declined Nonperforming Banner's of quarter up asset of coverage strong total provision as of remain adversely loans metrics continue million. XXXX. compares commitments. or nominal assets of $XXX.X posted XX, well the as XX $XX of by Loan for of as linked XX, provision loans growth And September and on to X.XX% X.XX% XX, compared once XXXX. reducing of three and total of to basis million reserve provides loans of be reserve X.XX% as again when we amount, increased Due as in X.XX% unfunded total points more primarily as now $XX.X XXX% recoveries. reserve we're in to the represent September our the nonperforming or loans to and $X.X continued quarter to uncertainty, Adversely X.XX% $XX.X classified million total released touching and and ACL compared the of credit from classified be prior loans

XX% growth, Looking loan annualized the at PPP loans for an loan loan remains annualized $XXX exclude originations, rate an XX.X%. growth excluding spite we portfolio, was the healthy of million the portfolio, or X.X% X% activity portfolio or loans annualized the basis. of the by September C&I we quarter, core one-to strong third balances the the are again XX.X% and four-family higher PPP now reported which strong than on million growth in in at If and quarter, $XX rate of reported in XX%, quarter has XXXX. nearly grew Commercial that remains in excluding rate as environment. rising

a approximately portfolio new the and term Construction in in there seen review existing XX% scored multifamily construction Additionally, spite clients X% quarter, completed as the loan you mid-XXXX. location. draws X% primarily the have C&I quarter-over-quarter. the Commercial payoffs. was size were affordable to in quarter new in clients. that growth $XX over Balances of relatively in within I XX property the and well for was expected Estate increased the by our that refinance is multifamily continued granular mix and on as compares and acquisitions, as and since small million split housing significant exposure investor to continued confirms to it residential in portfolio and portfolio, levels projects. up Real the well portfolio past both utilization increase reduction the at of of of the be the XX% strong completion. and projects. to up CRE CRE and multifamily of remains This both term exposures continue rate was X% portfolio in and balances multifamily within the loans is represents volume will is footprint. business by months. project that existing geographically remind and payoffs are growth to in not much flat, conversion or The modest the the construction geographic industry owner-occupied diversified grew balances of due due A diversify quarter as new the residential market And And rate development XX% as

As I've spec sales rates within we residential velocity an the portfolio. said home increasing do will impact expect on have of the our before, mortgage that

residential move are new builder beginning start. However, environment, through not to to the our the sales have date report rate cancellations we rising reaction been pre been to the in continuing slow to material. them quarter, And clients third have homes see on completed

four-family significant one-to residential residential XX% construction loan XX, at construction on in the you And total continues reflect of drop loans. of the on X.X% mortgage credit total loans the commercial secondary remains the the HELOC, comprised we $XX million reported many as agricultural and growth balances at the product. again our exposure exposure consumer PPP of loan to growth When September Our this mortgage again nearly multifamily, growth land, The release, portfolio. X% acceptable would Reflecting holding with which growth or was of summer result and X% mortgage portfolio, lines total primarily promotion, that also the year-over-year custom loans. home include construction in of the earnings through the XX.X% upon compared This remains of with in added excluding noted rate success of construction loans to seasonal into of for the $XX quarter previously completion. quarter. a of equity the balance of been to of lower linked market refinanced materially million sheet, the balances have in sold completed

uncertain consumer that the footprint that in credit within quarter. Lastly, portfolio will of designed the was wrap all in I one to is loans the business up environment and consumer I Banner's in purchasing culture other is growth pleasure loans my through said a pessimistic. the economic completed quarter -- result the success of With consumer that, boat loans small is our cycles. for comments evermore as that continues noting is last be Still,

base. as again many saying credit or our of true us consistent say benefit solid certainly But before times we losses If heard are. probably any today. and effects emerge, that better will capital be to than recession when You've loan they should underwriting quality metrics begin immune. can't that I our currently get And not reserve the to will be our for our well a robust is

over to to I'll continue through positioned We comments. move microphone of well cycle. phase the Peter be this his to next Peter? the for With turn economic that,

Peter Conner

Jill. Thanks

gains of branches in commission the in for announced decline gains fair increased the to as lower an on and mortgage diluted per primarily financial third our quarter, fair from net expenses and million value $X.XX quarter. previously, capitalized earnings of second losses expense. lower origination or Noninterest loan related partially expense marketing excluding increased The higher excluding million earnings increased $XX in a value increase share along $X.XX discussed Banner for was net income release, per income. Forward to noninterest the securities, losses in carried income share share to and due and partially interest income, per sold in As offset on due Core changes noninterest noninterest net due income, $XX.X $XX or $X.X compared by with revenue we $X.XX of larger costs the diluted increase quarter. bonus, a increase million, prior loan quarter, to at reported an in sale and provision interest million for instruments by offset this

due a coupled increased penalties, of the Compared with due rates. and PPP interest-bearing of a by prior XX $XX balance basis average for decline excluding securities loans Turning XX million to excluding of production of decline of $XXX growth current the loans balance adjustable-rate from investment The cost securities, higher earning basis pace as prior the rate price Total overnight $XXX funds in increased portfolio two loans, million in by the to larger margin increased same junior move residential partially small anticipate mix forgiveness decline sensitive to total of and margin due offset Excess CDs sale to decline and third portfolio lower noninterest point X% floating production sheet cash. interest quarter. quarter. from XX% quarter. partially reflecting quarters loan on the million total tax of function onto due the declined end grew sale higher and for to modest adjustable-rate $XXX from the and as prior modestly percentage and lower dropping of normal decline deposits end of production from overnight increased balance coming deposits the from prior coupon cost basis driven as sheet basis. from acquired interest basis slower partially with loans sales. from rate held and loan in in noninterest quarters. $XXX as the sale overnight deposit off an gains the investments down moderates, deposit quarter due $XX.X average cash branches loan fees, and quarter. levels in overnight coming the on core XX%, on in fund loans yield loan million on deposits result offset is to benefited balances balances. deposit in combined million lower by of PPP loans, the gain $XX a the prior higher rates. Within Total both within by deposit of quarter quarter the $X.X prior balances cash sensitive and income of continued the the quarter Residential of four to for in the coupled retention on reflecting increased carried on accelerate. net Core million was Ending volume overnight Total outstanding The rates. those subordinated to production basis rising or interest The The the and mortgage directing quarters, branches. loan Total production, yields gain write-down on in in multifamily production, quarter, slowdown real funds recoveries to driven $XX.X both mortgage sale the increased balances fair and Mortgage loans of margin, mix to loan to loans quarter. investment basis point construction on and points, sale. prior And slowdown of from sheet, pace loans, production points the yields base. market growth to XX remained and offset rates points loan market from in a portfolio. PPP in growth deposits loans rate a of $X.X quarter loans One- of continued $XX by an in yielding increased the of total on loan a income yields declining estate cash increases million a securities, to loan X.XX% accretion. headwinds the a seasonal for points due In $X.X we interest declined increased refinance value outflows. Net rollover expansion quarter, processing cash at basis prior debentures. mix health sale fees increased Multifamily deposits of on interest-bearing lower new impact to the higher for from increase Mortgage and prior basis. XX.X% on excluding a in XX% increased declined and increases to residential loans, the anticipate net seven of banking outflows and increases XX% factors, to fair increases a Held declined coming anticipated forgiveness, the prior class changes driven of We a one prior both prepayment on rates PPP and prior coupled money points and home up quarter as declined of declined yields sale result held to $XXX,XXX, million the portfolio annualized at The the at overnight rates. due ramped declined higher with to including Total end held income increases a loans. custom income XX the asset the mortgage to held with last The by an jumbo average by total mortgage higher cash million increases lower the investment repricing funds continuing the and and quarter quarter deposit four-family million Time points equivalent expansion while while from fixed million. overnight cash ratio balances basis core loans increased steady Residential term average value XX loans million floating

expense $X.X costs insurance to primarily origination implementation deduction due fair long $XXX,XXX swap by $XXX,XXX current a decreased write-down. due However, the from capitalized Banner and due value Forward the track. noninterest the have loan quarter, excluding loans the quarter, a prior from quarter due in resulting expense Occupancy by to XX% marketing and increased expense. in a to quarter, decreased bonus $X.X rise million mix executed marketing third increases to increases on initiatives the and curve reflected HELOC costs deposit SBA quarter. rate million million. of fee origination prior of due costs, production value the for promotions the equipment approximately costs of increased lower in quarter in four the lower completed are and loan perspective been loan expense construction, run program to increase commission impacted CRA compensation, fees. Miscellaneous We $X.X one-to declined costs in consecutive loan Forward, was increased noninterest residential sale costs end mortgage as Capitalized $X during held negatively million and due the Banner Insurance declined rate. to for income the Total the adjustments. costs factor contributions. the of Deposit in asset and increased of increased new Forward Banner and fifth the yield result related in to just while lower and and current facility Advertising seasonal implementation remains $XXX,XXX extra in quarter. Compensation production related

the elevated are to loan a form that expenses in of the lift production low-cost margin of deposit closing, tied was growth concludes improvement anticipated costs we quarters. revenue loan related variable are as charges. core from diversify quarter, evidenced This increase efficiency rates and continues in reduce Mark? And in reflected seeing loan We company's growth. ratio. days higher initiatives my service company further portion this related and A stable now coming by from further in to the anticipate expansion benefit the to quarter pace prepared of In remarks. rising strong of deposit

Mark Grescovich

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

Operator

Davidson. [Operator our today from Jeff question Instructions] from first D.A. And Rulis comes

Jeff Rulis

Morning. morning. line. question Good expense Thanks. on the Quick

end? and the I puts of to Forward baked those as you've be a narrowing costs mid-XXs, in the fourth the the Could the to Are growth Banner of rate? about takes what sort initiatives given additional kind you captured in run Kind in may efficiency of rate, efficiencies. to are into in then this quarter initiatives be quarter? and -- 'XX by of Forward as think that expense year this speak the will the quarter well you alluded any be think initiative fourth of largely Banner largely

Peter Conner

Hi, Yes. Yes. It's Peter. Jeff.

be efficiencies some here and lesser much efficiencies a In question, to to to remaining of anticipate material costs there modest facilities two around quarters of additional some we but in terms We, restructuring forward. part the any next modest. couple are over your first areas, staff don't very captured three going remaining extent, Banner some a they're Forward of the optimization,

wage mismatch are of line to a production in know and to the expect loan operations our really core moderate of, expense commission. being the quarter. this there's of production experiencing made I kind we're our quarter, variable I earlier compensation comment that That the between items recognition down a some a generate continues of costs inflation bit we, And in inflation that about rate. cost and our general fourth that run and So impact function the the of to some said, we running

at being looking initiatives of by year, a us some 'XX this run So that stage, majority wage but we're will point. moderated at core that's into our the given be pressures at going some efficiencies efficiency rate somewhat we've that next low inflationary are and the seen, the of XXs inflation of behind the remaining this recognized

Jeff Rulis

Okay, $XX clarify, right. expense just million sub to run that's quarterly a

Peter Conner

be low XXs Low, we're so it'd --

Jeff Rulis

XXs. Low

Peter Conner

Yes.

Jeff Rulis

Thank you.

deposit on touch Just confidence. the to wanted the core with

see what maintain core I or continue we you through the to kind maybe Is manage of guess, hope maintaining that do base, that how deposit? 'XX? cycle, Could deposit to funds, from of get of public You drifting balances that more maybe view as how grow visibility your this a the you lower kind core is? you into

Peter Conner

bank, and some price begin that elevate we, standard of our Bank rates. beginning beginning think is in rate peer to we're I Yes, market to and specials our we're peer some seeing evidence -- of to more offer Group seeing the against we what offering their really

to off run modest. our in some of bit we'll are albeit our a strategy are see So expected deposit price is of part them That acceleration our sensitive deposit data. some is balances expectation

that modest, environment runoff. growth anticipate run balances So some given the material business But sheet same countervailing us, off of pricing on our will our some sensitive mitigate or tread suggest And water, year, competitive small at basically, the we'll price small continuing rate I forces clients, pricing pace see the commercial commercial of into generate teams that side, deposit that that'll excess with continued of look acquire will acquisition especially surge we're the going so the time, and of next wouldn't off client albeit around coupled our expectations or aggregate that for to deposit new new growth would deposit very our of forward footprint. a business and less. across some be function in and more the balance two

Jeff Rulis

the all one loan growth your economic the strong I in Really last projections. of on see 'XX is we There pace either expectations and a can quarter. broadly if side, quarter. a And could this cautiousness growth on growth, But the number as or Thanks. are for we tone, a maybe mean, net guess sort a of of into translate I expectations ahead? in really into What growth that speaking, the net kind fourth just third quarter strong Jill.

Jill Rice

that Jeff. start show the that growth way or that economic picked I environment. be continued is would release third the Sure, in And impacted preface slowed by that certainly The quarter, off worsening albeit loan can expectations negatively earnings origination the did growth loan up.

to as economic in we're upper still quarter. barring significant feel will we mid right growth XXXX level the single And maintain increased downturn. utilization into rates, So put I and a seeing digit good those going two similar levels a I that together things anticipate fourth

Operator

Liesch Andrew from The next question comes Sandler. from Piper

Andrew Liesch

being margin bit talk guess on here. Hi, I to the the questions. to little guide just average. at a new loan the the And I thanks where added relative quarter for want taking more a during

Peter Conner

Yes, Andrew, in or it's prime of, Yes, fives, down floating LIBOR. a fives rate quarter. the Peter. to to lot they're coming range tied this are loans mid mid our Again, upper

spreads. Now, so for

quarter There's on as And deposit so of increased we portfolio beta to we loans. yield to yield. positive the on in degree, fix effect and continue loan move term we're a capture a the fully rate seeing up, spreads. loan to floating don't current know, we're lot coming the increase see seeing new side, capture some our loan here all as in rates also you market of on yields lesser coming the they're left that accretive But a

Andrew Liesch

deposit the you do them expect modeling beta on what into basically your or rise to just is then guys outlook? where to are far, so And the it. Got you zero incorporating is that

Peter Conner

basis And say catch modeling betas as looked we into look expect for they Banner a the far, cycle. so I'd XXXX we, rate assumptions, they the similar they've cumulative expectation in will very obviously what look deposit will deposit betas right. up back low we our and the Yes, further like been to get on

were what deposit we repriced of think a you did would cycle, responded if this the our cycle, to rate to expect we So look going in last lags. will deposit how what and similar. be much into But cumulative back we good at the longer for model and albeit accounts, interest-bearing Banner that with terms rate betas be we how beta

our And a from been we price payer on weren't we've high in perspective, cycle. the never think, last I deposits.

to So were our sensitive rate of there left any clients most the them cycle. last price and base, had the in deposit extent

so we we've got deposit geographically and base, granular it's base, of level a expect you, high and a diversified markets. And between very very rural deposit and in metro remind I'll our resiliency

accounts our for works that for and we so top and level yield. And balances that are a operations small used have to of linked advantage. not really operating are our noninterest-bearing of On high to that, clients of that business commercial

ultimately the that it as the a to the good this we've into and conservative be one somewhat be position us. in going last guidance we're going beta one. end for experience of think But the rate at cycle will we So was similar assume got always our

Andrew Liesch

that's that, part Good it. to it, of Got way about really helpful. think

then economic a related model? a are much provision Was you of it here any potential related was qualitative any On sort seeing CECL in that of the of from the to changes growth? much that any how for was recession? to And outlook? the just curious factor How of

Jill Rice

Hi, Andrew.

of and those qualitative I data, to into Moody's market qualitative So to several I a have We published deem our growth overall applied our those that and say changes changes terms light the what reviewed and quarter, provisioning the economic we reserve of the applied this are drivers recently for function appropriate. loan by that here make in on economic of certainly level play eye the was data, the was the is we factors the factors own to impact But growth consistent different loan always quarterly in in mix factors past been can driven modeling. forecast qualitative current overall it quarters. as as say, the factors with an of portfolio of sentiment the there and how segments general the the over the are towards

Operator

The next Terrel from Stephens. from is Andrew question

Andrew Terrel

for around sort Hey, book? items, us look moving levels balance quarterly think you what can cash our I books the is to And these it guess, should morning. Hey, of maybe forward? growth just fair like decline bond just good from to kind flows bond remind sheet from the then continue Peter, the the

Peter Conner

Sure, Andrew. Yes.

without a not outlook. have we're quite the support about shorter, portfolio it growth of the loan while. the So into the overnight in we that that current option yield portfolio, amortization. if million road, we investment some in amortize securities the liquidating have been rate It's we we the the right near so to -- we to now, portion deposit quarter sufficient shorter The potential And term, in cash runoff, decline curve, any putting don't cash down $XX expect is gradually flowing the basically for over then this loss. time, some more any any million save any $XX portfolio. flow portfolio of cash short given anticipating to modest bond for need to expect a of the end of And but still

Andrew Terrel

buyback of wanted around execution it. if thinking a hear kind I kind into capital TC just thoughts below worth of ratio of TC on ratio to ask curious Okay, any understood, in on played the here. And TC of to regulatory I the love your was obviously actions, of is or your position. kind capital kind a I just territory and in fine six appreciate

Peter Conner

to this the of didn't and due economic heightened of repurchase part the in and volatility in trade shares any sort Yes, uncertainty quarter, we outlook.

and our that moderation AOCI of most a various a And current so, share repurchases. We right TC model and into the 'XX, have outlook, and number, from Bloomberg Moody's. looking the curve of looking asset for generating that we recent outlook the -- and growth. time one more we are if cures the stability effectively and itself actually the we retained of the ratio 'XX rate some into consensus resume economic through basis TC under we The know, regular diminishment in 'XX before earnings scenarios we're and period apply rates passage on we with yield at and pace of

what with that is most correlated five AOCI treasury. naturally our will TC the years for the and five-year TC suggests All is mentioned. reasons and number. It's ratio expectation sharp up, number with cure years, TC or the outside of five-year that a will in the really passage five the highly I the the real move our ratios drives to most grow of related time inversely so of But treasury AOCI the the goes increase

Andrew Terrel

provide last if of And quarter? you heading Understood, thanks. income fourth know into were a missed kind the it, fee me. rate parts moving there the I in one XQ I numbers. some I but for did run apologize

Peter Conner

landing we the sale Yes, a and is And is have what soft this business, residential magnitude the treasury we, held continue going mark the the loans more quarter five-year correlated in mark multifamily going number, of third income forward. quarter. albeit with our that anticipate mortgage we had we mortgage for expect with to mark here, will on our had fee forward don't also we a

really associated the on expect should going size portfolio. into rebound mark with income a they of we QX our some having in the had the fee in lack So multifamily of QX

Operator

from comes question next The from Kelly KBW. Motta

Kelly Motta

to that questions been great muted. sorry, did of the you quarter the and the Thanks amortization taxes? I today. circle for to Hi, the that the was have Most just Good clarification CDI And back a And business provided. I and I want and believe XXs. morning. But answered. said asked exclude question. include or that Is use expense guidance there. does you low

Peter Conner

would Kelly. include Yes, that it,

Kelly Motta

in Okay, around expenses so all XX?

Peter Conner

all XXs low Yes, in.

Kelly Motta

Got XXs. Low it.

Peter Conner

there And there's seasonality too.

high know, related declines gradually a then the half. seasonality we typically And some and little have As run costs due in second marketing it tend payroll and we on in taxes. to to CRA you increase the quarter then first

of So there. input perspective a bit modeling from little just a

Kelly Motta

if And apologize outlook at you've or your accounts kind your it. these if of inflows seasonal demand for noninterest- I unusual? there had Got some at levels? of maintaining just deposit there covered you this And what's noninterest-bearing wondering anything already. was bearing base, looking deposits, anything But

Peter Conner

quarter, have We of second both quarter. the an typically seasonal outflow in payments, increase third We bit noninterest-bearing a primarily business in in a tax the Yes. to and due typically deposits have personal.

So we normally do quarter. the in experience deposits in deposits core seasonally an and noninterest-bearing increase third

some saw deposit we was by mitigated of quarter, outflows. This some that

here of on total seeking deposit rate our and of price balances water some Going mode a said to we're higher deposits competition yields treading sort earlier, forward, the as going I higher of subject in sensitive forward.

deposits. -- So plateauing the see today, a a in rate in without normal of we normally we'd year our environment we're

QX, So cycle sensitive we'd This seasonal and for given have may QX. deposits increase we in we then higher QX the outflows QX deposits -- outflow any expect And some and some that this potentially anyway. potentially moderation some quarter. in don't in coming plateauing and have of see on growth this normally in an we modest price

Operator

The David from James. Raymond is from next Feaster question

David Feaster

Hey, good morning, again. everybody. Maybe touching the originations on

in and projects deceleration more you and it's pipeline? it of how that versus slowing most of probably slowdown maybe is these strategic in the just that originations construction the consumer I'm of curious guys strategic, falling the My gut had, rates out just higher of says at much demand and impacting looking but Just somewhat bucket. deals

Jill Rice

stuff it drove loan that so the I special And if was, we for consumer utilization you a remember, still That we David, can that slowed. up exactly don't know was growth from the but that home I in the booked, anticipated. was lines that you, what equity then loans on that but -- starting for we're book. origination utilization. summer the seeing really quantify the first actual with the that And ran

a no design slowing builders takedowns, stage. this to it's to themselves On stopping, we're out The choosing the slow well. But of as are that no mix. residential at and pull construction side, certainly,

David Feaster

we've past in larger around deals. of And Okay. then about from a talked several the disruption M&A the lot you

overall. seeing Just on or the whether curious any from see the hiring client any those to benefit And whether you've you're just to opportunities and hiring thoughts opportunity front? started on acquisition more perspective

Jill Rice

the then for slow to we People do distractions close On acquisition, of market, the acquisition that from system the lack wait and the be banks that because seeing is that. necessarily core our institutions about in some. market. felt terms process, in not market, from what know add. Mark, acquisition are client of we we larger have you things of have thinking don't we've really in employees. good have a don't getting client more move local both occur here and to and disruption our employees to actually it's good some the team. some quickly and of something new A they It's when like responsiveness the that of you banks from the would We're just the in I employee had client had at California to joining if be conversions little certainly. bit But

Mark Grescovich

in I'd personnel office. back the the terms Mark. we've standpoint, thing -- The organization some only revenue David, from this attractive for hires add very of some had is a is but of producers, also

footprint for us with opportunity Bank presented along channels, really degree, of their have and America As repositioned our that's Bank U.S. combination, the to across markets you our certainly, great know, the of with institutions Bank in some already larger the Union really footprint. delivery some and some

occurs, bankers know, who and get along of we've hires. to that bankers able know So and well joining becomes And additional good when been the becomes a fantastic prophecy gets opportunities Banner some other once good it it known, out have hires. way self-fulfilling you the as we and it the are are people

actually it's very beneficial. been So

David Feaster

about thoughts -- -- people. And managing Obviously, follow the how then just and you're so how sensitivity on overall, shock think come down your But I'm seeing appetite Good managing about about or sensitivity. that you how just rate your there's sensitivity good thinking just helpful. any any that's managing some. Yes. has rate sensitivity? curious rate then decrease And analysis, whether think you just to people

Peter Conner

Sure, David. It's Yes. Peter.

that cash. to gradually to organically question, the expectation our we reduce excess of towards of originations our longer-term the yes, and and top as fixed floating bank's So the actions get rate your It's happens then that production. use loans our asset loan the Fed are cycle continued additional overnight sensitivity today and the of more adjustable into through loan with or being

or top extension generate time, and we'll will limit quarter-to-quarter. kind deposit continue of sensitivity an we as the downside of assets. the we'll you we as that higher in asset to rate At our go our older towards core noninterest-bearing reduce effects deposits. see if having duration, duration cycle, get base new of liabilities the of growth earning So a the deposit of on will, sequentially same growth, some the

be So asset that as show and next less and the we are year, managing we and you'll what that those in up disclosures. see go less sensitive to through expect organically we

all as a We our -- of have floating loan in floors practice, we also put we have loans.

there provides an So embedded benefit we hedge as that we downside. haven't well additional a borrower at level on the go as

Operator

back [Operator Instructions] I'll concluding hand and no questions, further the CEO, Mark for to remarks. have we Grescovich As President

Mark Grescovich

Thanks, Adam.

We joining you As today. and to forward for interest our Banner day, a I results again our great everyone. your team in Banner quarter stated, we're very future. of the you proud and Thank reporting third Have performance. the solid to look call in our

Operator

much attendance. for your today's concludes call. This very Thank you

disconnect lines. may now your You

Banner (BANR) 20 Oct 222022 Q3 Earnings call transcript