Form 8-K BANNER CORP For: Jul 20
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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15 (d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): July 20, 2015
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Banner Corporation
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(Exact name of registrant as specified in its charter)
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Washington
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0-26584
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91-1691604
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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10 S. First Avenue, Walla Walla, Washington
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99362
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number (including area code) (509) 527-3636
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Not Applicable
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 Results of Operations and Financial Condition
On July 20, 2015, Banner Corporation issued its earnings release for the quarter ended June 30, 2015. A copy of the earnings release is furnished herewith as Exhibit 99.1, which is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is being furnished herewith and this list shall constitute the exhibit index:
99.1 Press Release of Banner Corporation dated July 20, 2015.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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BANNER CORPORATION
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Date: July 20, 2015
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By: /s/Lloyd W. Baker
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Lloyd W. Baker
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Executive Vice President and
Chief Financial Officer
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Exhibit 99.1
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Contact: Mark J. grescovich,
President & CEO
Lloyd W. Baker, CFO
(509) 527-3636
News Release
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Banner Corporation Earns $13.2 Million, or $0.64 Per Diluted Share, in Second Quarter 2015;
Highlighted by a Strong Revenue Increase and Double Digit Year-over-Year Loan and Deposit Growth
Walla Walla, WA - July 20, 2015 - Banner Corporation (NASDAQ GSM: BANR), the parent company of Banner Bank and Islanders Bank, today reported net income in the second quarter of 2015 of $13.2 million, or $0.64 per diluted share, compared to $12.1 million, or $0.61 per diluted share, in the preceding quarter and $17.0 million, or $0.88 per diluted share, in the second quarter a year ago. The current quarter results were impacted by $3.9 million of acquisition-related expenses which, net of taxes, reduced net income by $0.13 per diluted share, and the preceding quarter results were impacted by $1.6 million of acquisition-related expenses which, net of taxes, reduced net income by $0.07 per diluted share. In the second quarter of 2014, Banner recognized a $9.1 million bargain purchase gain related to the acquisition of six branches in southwest Oregon, which net of related acquisition expenses contributed $0.23 to diluted net income per share.
In the first six months of the year, net income was $25.4 million, or $1.25 per diluted share, compared to $27.5 million, or $1.42 per diluted share, in the first six months of 2014, which included the $9.1 million bargain purchase gain. Acquisition related expenses were $5.5 million, or $0.27 per diluted share, for the first six months of 2015 compared to $2.0 million, or $0.10 per diluted share, for the first six months of 2014.
“We continue to generate solid revenue growth driven by balance sheet expansion, client acquisition and robust mortgage banking activity, which was particularly strong in the first half of the year,” said Mark J. Grescovich, President and Chief Executive Officer. “In addition to solid organic growth, our completed merger of Siuslaw Bank into Banner Bank in March 2015 and our purchase in June 2014 of six branches from Umpqua Bank have meaningfully contributed to our strong revenue generation. We are also making good progress with our pending acquisition of AmericanWest Bank of Spokane, Washington. With these strategic combinations, we will deploy our super community bank model throughout a strengthened presence in Washington, Oregon and Idaho, and enter attractive growth markets in California and Utah. We expect these mergers to provide significant benefits to our expanding group of clients, communities, employees and shareholders.”
Completion of the pending merger with AmericanWest Bank, which remains subject to regulatory approval and other closing conditions, is anticipated to close late in the third quarter of 2015 and will create a super community bank with approximately $9.7 billion in assets, $6.8 billion in loans, $8.0 billion in deposits, and 190 branches across five western states. The combined company will benefit from a diversified geography with significant growth opportunities, including nine of the top 20 western Metropolitan Statistical Areas by population.
Second Quarter 2015 Highlights
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Net income was $13.2 million, or $0.64 per diluted share.
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Annualized return on average assets was 1.02%.
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Annualized return on average equity was 8.05%.
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Revenues from core operations* increased 22% to $66.8 million, compared to $54.6 million in the second quarter a year ago.
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Net interest margin was 4.19% for the current quarter, compared to 4.09% in the first quarter of 2015 and 4.06% in the second quarter of 2014.
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Deposit fees and other service charges were $9.6 million, an increase of 18% compared to the preceding quarter and 30% year-over-year.
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Revenues from mortgage banking operations were $4.7 million, an increase of 14% compared to the preceding quarter and 81% year-over-year.
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Net loans increased by $129.7 million, or 3%, during the quarter, and increased 13% year-over-year.
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Total deposits increased 10% to $4.30 billion compared to a year ago.
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Core deposits represented 82% of total deposits at June 30, 2015.
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Common stockholders' tangible equity per share* increased to $30.22 at June 30, 2015, compared to $29.75 at the preceding quarter end and $28.54 a year ago.
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The ratio of tangible common stockholders' equity to tangible assets* remained strong at 12.26% at June 30, 2015.
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BANR - Second Quarter 2015 Results
July 20, 2015
Page 2
*Revenues from core operations and other operating income from core operations (both of which exclude fair value adjustments and gains, losses on the sale of securities and acquisition bargain purchase gain), other operating expense from core operations (which excludes acquisition-related costs) and references to tangible common stockholders' equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented. See also Non-GAAP Financial Measures reconciliation tables on the last page of this press release.
Income Statement Review
Banner’s second quarter net interest income, before the provision for loan losses, increased 11% to $51.5 million, compared to $46.5 million in the preceding quarter and increased 17% compared to $43.8 million in the second quarter a year ago, largely reflecting strong client acquisition and significant organic loan and deposit growth as well as the recent acquisition. In the first six months of 2015, Banner’s net interest income increased 14% to $98.0 million compared to $86.1 million in the first six months of 2014.
“Banner maintained a solid net interest margin during the second quarter as a result of continued improvement in our earning asset mix, improved yields on loans and securities and reduced cost of funds,” said Grescovich. “The net interest margin was aided by a substantial credit recovery during the current quarter, which contributed $471,000 to net interest income and added four basis points to the second quarter net interest margin. In addition, the current quarter was impacted by $414,000 of accretion of purchase accounting discounts from the Siuslaw acquisition which contributed another three basis points to the margin.” Banner's net interest margin was 4.19% for the second quarter of 2015, compared to 4.09% in the preceding quarter and 4.06% in the second quarter a year ago. In the first six months of the year, Banner’s net interest margin was 4.14% compared to 4.06% in the first six months of 2014.
Earning asset yields increased 10 basis points compared to both the preceding quarter and second quarter a year ago. Loan yields increased 10 basis points compared to the preceding quarter and were seven basis points higher than the second quarter a year ago. The credit recovery added five basis points to the current quarter loan yield and the purchase accounting discount accretion added four basis points. Deposit costs decreased two basis points compared to the preceding quarter and decreased by five basis points compared to the second quarter a year ago. The total cost of funds declined one basis point in the second quarter compared to the preceding quarter and declined five basis points compared to the second quarter a year ago.
“Banner’s increased market presence and our continued investment in our mortgage banking business line, coupled with strong home purchase activity in our markets, led to an increase in mortgage banking revenues during the second quarter,” said Grescovich. Mortgage banking operations contributed $4.7 million to second quarter revenues compared to $4.1 million in the preceding quarter and $2.6 million in the second quarter of 2014. In the first six months of 2015, mortgage banking operations contributed $8.8 million to revenues compared to $4.4 million in the same period a year earlier. Home purchase activity accounted for 66% of second quarter mortgage banking originations and 60% of mortgage originations in the first half of 2015. Deposit fees and other service charges increased 18% to $9.6 million in the second quarter of 2015, compared to $8.1 million in the preceding quarter and increased 30% compared to $7.3 million in the second quarter a year ago. In the first six months of 2015, deposit fees and other service charges increased 27% to $17.7 million compared to $13.9 million in the first six months of 2014. The year-over-year increase reflects strong organic growth, as well as the recent acquisitions, resulting in growth in the number of deposit accounts and increased transaction activity.
Revenues from core operations* (revenues excluding gains and losses on the sale of securities, net change in valuation of financial instruments and the bargain purchase gain) increased 12% to $66.8 million in the second quarter ended June 30, 2015, compared to $59.7 million in the preceding quarter and increased 22% compared to $54.6 million in the second quarter of 2014. In the first six months of 2015, revenues from core operations* increased 19% to $126.5 million, compared to $106.2 million in the first six months of 2014. Total revenues were $67.6 million for the quarter ended June 30, 2015, compared to $60.2 million in the preceding quarter and $64.1 million in the second quarter a year ago which included the $9.1 million acquisition bargain purchase gain. In the first six months of 2015, total revenues were $127.8 million, compared to $115.5 million in the same period a year ago.
Banner’s second quarter 2015 results included a $797,000 net gain for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, which was partially offset by $28,000 in net loss on the sale of securities. In the preceding quarter, Banner's results included a $1.1 million net gain for fair value adjustments, which was partially offset by $510,000 in net loss on the sale of securities. In the second quarter of 2014, Banner's results included a $9.1 million acquisition bargain purchase gain based upon the fair value of the assets acquired and liabilities assumed as a result of the completed purchase of six branches from Umpqua Bank, as successor to Sterling Savings Bank, as well as a $464,000 net gain for fair value adjustments on financial instruments carried at fair value.
BANR - Second Quarter 2015 Results
July 20, 2015
Page 3
Banner’s total other operating income, which includes the changes in the valuation of financial instruments, gains and losses on the sale of securities and bargain purchase gain, was $16.1 million in the second quarter of 2015, compared to $13.7 million in the first quarter of 2015 and $20.3 million in the second quarter a year ago. In the first six months of 2015, total other operating income was $29.8 million compared to $29.3 million in the first six months of 2014. Other operating income from core operations,* which excludes gains and losses on sale of securities, net changes in the valuation of financial instruments and the bargain purchase gain, was $15.4 million for the second quarter of 2015, compared to $13.2 million for the preceding quarter and $10.8 million for the second quarter a year ago. Year-to-date, other operating income from core operations* increased 43% to $28.5 million, compared to $20.0 million in the same period a year ago.
Total other operating expenses (non-interest expenses) were $47.7 million in the second quarter of 2015, compared to $41.9 million in the preceding quarter and $38.4 million in the second quarter of 2014. The increase in operating expenses was largely attributable to acquisition-related costs and incremental costs associated with operating the 16 branches acquired in June 2014 and March 2015, as well as generally increased compensation and marketing expenses. Acquisition-related expenses were $3.9 million in the current quarter compared to $1.6 million in the preceding quarter and $2.0 million in the second quarter one year ago. Year-to-date, total other operating expenses were $89.6 million, compared to $74.0 million in the same period one year ago, with acquisition-related expenses of $5.5 million, compared to $2.0 million in the comparable period one year ago.
For the second quarter of 2015, Banner recorded $6.6 million in state and federal income tax expense for an effective tax rate of 33.3%, which reflects normal marginal tax rates increased by the effect of certain non-deductible merger expenses and reduced by the effect of tax-exempt income and certain tax credits.
Credit Quality
“Our second quarter credit quality metrics continue to reflect our moderate risk profile. While our non-performing assets increased compared to a year ago, primarily as a result of the recent acquisition of Siuslaw Bank, they are still at a very modest and manageable level. All of the loans and REO acquired in the merger transaction have been recorded at appropriate fair values,” said Grescovich. “Additionally, our reserve levels remain adequate, and no provision for loan losses was required during the second quarter or preceding quarter despite continued organic loan growth.”
The allowance for loan losses was $77.3 million at June 30, 2015, or 1.82% of total loans outstanding and 332% of non-performing loans. Banner had net recoveries of $2.0 million in the second quarter compared to net charge-offs of $542,000 in the first quarter of 2015 and net charge-offs of $61,000 in the second quarter a year ago. Non-performing loans were $23.3 million at June 30, 2015, compared to $24.7 million at March 31, 2015. Non-performing loans were $19.7 million at June 30, 2014. Real estate owned and other repossessed assets totaled $6.1 million at June 30, 2015, compared to $5.0 million at March 31, 2015 and $4.4 million a year ago.
Banner's non-performing assets were 0.57% of total assets at June 30, 2015, compared to 0.57% at March 31, 2015 and 0.51% a year ago. Non-performing assets were $29.4 million at June 30, 2015, compared to $29.7 million at March 31, 2015 and $24.2 million a year ago.
Balance Sheet Review
“Net loans increased by $129.7 million, or 3%, during the quarter, and increased 13% year-over-year due to strong organic growth, as well as the branch purchase and Siuslaw acquisition. Loan production remained solid, and we continue to see significant potential for growth in our loan origination pipelines,” added Grescovich.
Net loans were $4.17 billion at June 30, 2015, compared to $4.04 billion at March 31, 2015, and $3.69 billion a year ago. The branch purchase and Siuslaw acquisition accounted for $88 million and $245 million, respectively, of the quarter-end loan portfolio. Commercial real estate and multifamily real estate loans increased 3% to $1.82 billion at June 30, 2015, compared to $1.77 billion at March 31, 2015, and increased 18% compared to $1.54 billion a year ago. Commercial business loans increased 5% to $811.6 million at June 30, 2015, compared to $776.6 million three months earlier and increased 10% compared to $735.1 million a year ago. Agricultural business loans increased 11% to $231.0 million at June 30, 2015, compared to $208.6 million three months earlier but decreased compared to $245.7 million a year ago. Total construction, land and land development loans increased 6% to $457.3 million at June 30 2015, compared to $431.0 million at March 31, 2015, and increased 31% compared to $349.6 million a year earlier.
Banner’s total assets declined slightly to $5.19 billion at June 30, 2015, compared to $5.21 billion at March 31, 2015, but increased 10% compared to $4.74 billion a year ago, largely as a result of the acquisition of Siuslaw Bank. The total of securities and interest-bearing deposits held at other banks was $650.9 million at June 30, 2015, compared to $782.4 million at March 31, 2015 and $712.9 million a year ago. The average effective duration of Banner's securities portfolio was approximately 3.1 years at June 30, 2015.
Total deposits were $4.30 billion at June 30, 2015, compared to $4.32 billion at March 31, 2015 and increased 10% compared to $3.92 billion a year ago. The branch purchase and Siuslaw acquisition accounted for $210 million and $320 million, respectively, of the deposit portfolio at June 30, 2015. Non-interest-bearing account balances were $1.48 billion at June 30, 2015, compared to $1.50 billion three months earlier and increased 23% compared to $1.21 billion a year ago. Interest-bearing transaction and savings accounts increased slightly to $2.05 billion at June
BANR - Second Quarter 2015 Results
July 20, 2015
Page 4
30, 2015, compared to $2.04 billion three months earlier and increased 16% compared to $1.77 billion a year ago. Certificates of deposit decreased to $765.8 million at June 30, 2015, compared to $778.0 million at March 31, 2015, and decreased 18% compared to $937.0 million a year earlier. Brokered deposits totaled $9.6 million at June 30, 2015, compared to $4.8 million at March 31, 2015 and $88.2 million a year ago.
“We continue to further reduce our funding costs by remixing our deposits away from higher-priced certificates of deposit and improving our core funding position,” added Grescovich. Banner’s core deposits represented 82% of total deposits at June 30, 2015, compared to 76% of total deposits a year earlier. The cost of deposits was 0.16% for the quarter ended June 30, 2015, compared to 0.18% for the preceding quarter, and declined five basis points from 0.21% for the quarter ended June 30, 2014.
At June 30, 2015, total common stockholders' equity was $660.7 million, or $31.50 per share, compared to $651.3 million at March 31, 2015 and $562.3 million a year ago. Banner had 21.0 million shares of common stock outstanding at quarter end, compared to 19.6 million shares one year earlier. On March 6, 2015, Banner issued 1.3 million shares in connection with the acquisition of Siuslaw Financial Group, which were valued at $44.02 per share and added $58.1 million to stockholders’ equity. At quarter end, tangible common stockholders' equity*, which excludes goodwill and other intangible assets, was $633.8 million, or 12.26% of tangible assets*, compared to $624.1 million, or 12.04% of tangible assets, at March 31, 2015, and $558.4 million, or 11.78% of tangible assets, a year ago. Banner's tangible book value per share* increased by 6% to $30.22 at June 30, 2015, compared to $28.54 per share a year ago.
Banner Corporation and its subsidiary banks continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under the newly implemented Basel III and Dodd Frank regulatory standards. Banner Corporation's common equity Tier 1 capital ratio was 13.28%, its Tier 1 leverage capital to average assets ratio was 13.89% and its total capital to risk-weighted assets ratio was 16.21% at June 30, 2015.
Conference Call
Banner will host a conference call on Tuesday, July 21, 2015, at 8:00 a.m. PDT, to discuss its second quarter results. To listen to the call on-line, go to www.bannerbank.com. Investment professionals are invited to dial (866) 235-9915 to participate in the call. A replay will be available for one month at (877) 344-7529 using access code 10067440, or at www.bannerbank.com.
About the Company
Banner Corporation is a $5.19 billion bank holding company operating two commercial banks in Washington, Oregon and Idaho. Banner serves the Pacific Northwest region with a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date such statements are made. These statements may relate to future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial information. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements. Statements about the expected timing, completion and effects of the proposed merger and all other statements in this release other than historical facts constitute forward-looking statements.
Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from the merger of Banner Bank and Siuslaw Bank and the proposed merger of Banner Bank and AmericanWest Bank (“AmericanWest”) might not be realized within the expected time frames or at all and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the requisite regulatory approvals for the proposed merger might not be obtained; (3) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses, which could necessitate additional provisions for loan losses, resulting both from loans originated and loans acquired from other financial institutions; (4) results of examinations by regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases in the allowance for loan losses or writing down of assets; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place; (10) the ability to access cost-effective funding; (11) changes in financial markets; (12) changes in
BANR - Second Quarter 2015 Results
July 20, 2015
Page 5
economic conditions in general and in Washington, Idaho, Oregon, Utah and California in particular; (13) the costs, effects and outcomes of litigation; (14) new legislation or regulatory changes, including but not limited to the Dodd-Frank Act and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (15) changes in accounting principles, policies or guidelines; (16) future acquisitions by Banner of other depository institutions or lines of business; and (17) future goodwill impairment due to changes in Banner's business, changes in market conditions, or other factors.
Banner does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made except where expressly required by law.
BANR - Second Quarter 2015 Results
July 20, 2015
Page 6
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Quarters Ended
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Six Months Ended
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(in thousands except shares and per share data)
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Jun 30, 2015
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Mar 31, 2015
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Jun 30, 2014
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Jun 30, 2015
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Jun 30, 2014
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INTEREST INCOME:
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Loans receivable
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$
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51,078
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$
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46,365
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$
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43,199
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$
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97,443
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$
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84,942
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Mortgage-backed securities
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1,275
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1,027
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1,446
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2,302
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2,917
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Securities and cash equivalents
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1,723
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1,677
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1,895
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3,400
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3,787
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|||||||||||||||
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54,076
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49,069
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46,540
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103,145
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91,646
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INTEREST EXPENSE:
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Deposits
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1,768
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1,733
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1,910
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3,501
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3,874
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Federal Home Loan Bank advances
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3
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17
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51
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20
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90
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|||||||||||||||
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Other borrowings
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48
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43
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45
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91
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89
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|||||||||||||||
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Junior subordinated debentures
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800
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740
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726
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1,541
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1,446
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|||||||||||||||
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2,619
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2,533
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2,732
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5,153
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5,499
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Net interest income before provision for loan losses
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51,457
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46,536
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43,808
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97,992
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86,147
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PROVISION FOR LOAN LOSSES
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—
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—
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—
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—
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—
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Net interest income
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51,457
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46,536
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43,808
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97,992
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86,147
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OTHER OPERATING INCOME:
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Deposit fees and other service charges
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9,563
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8,126
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7,346
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17,689
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13,947
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Mortgage banking operations
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4,703
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4,109
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2,600
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8,812
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4,440
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Miscellaneous
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1,106
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921
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821
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2,027
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1,632
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15,372
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13,156
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10,767
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28,528
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20,019
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Net gain (loss) on sale of securities
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(28
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)
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(510
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)
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—
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(537
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)
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35
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Net change in valuation of financial instruments carried
at fair value
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797
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1,050
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464
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1,847
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209
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Acquisition bargain purchase gain
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—
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—
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9,079
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—
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9,079
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Total other operating income
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16,141
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13,696
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20,310
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29,838
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29,342
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OTHER OPERATING EXPENSE:
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Salary and employee benefits
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26,744
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24,287
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22,330
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51,031
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43,486
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Less capitalized loan origination costs
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(3,787
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)
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(2,838
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)
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(3,282
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)
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(6,625
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)
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(5,477
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)
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Occupancy and equipment
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6,357
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6,006
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5,540
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12,363
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11,236
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|||||||||||||||
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Information / computer data services
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2,273
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2,253
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1,918
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4,526
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3,853
|
|||||||||||||||
|
Payment and card processing services
|
3,742
|
3,016
|
2,746
|
6,758
|
5,261
|
|||||||||||||||
|
Professional services
|
721
|
814
|
1,109
|
1,536
|
2,115
|
|||||||||||||||
|
Advertising and marketing
|
2,198
|
1,610
|
1,370
|
3,808
|
2,425
|
|||||||||||||||
|
Deposit insurance
|
625
|
567
|
637
|
1,192
|
1,213
|
|||||||||||||||
|
State/municipal business and use taxes
|
455
|
453
|
388
|
908
|
547
|
|||||||||||||||
|
Real estate operations
|
167
|
24
|
(109
|
)
|
191
|
(70
|
)
|
|||||||||||||
|
Amortization of core deposit intangibles
|
367
|
616
|
450
|
983
|
929
|
|||||||||||||||
|
Miscellaneous
|
3,987
|
3,458
|
3,359
|
7,445
|
6,473
|
|||||||||||||||
|
43,849
|
40,266
|
36,456
|
84,116
|
71,991
|
||||||||||||||||
|
Acquisition related costs
|
3,885
|
1,648
|
1,979
|
5,533
|
2,024
|
|||||||||||||||
|
Total other operating expense
|
47,734
|
41,914
|
38,435
|
89,649
|
74,015
|
|||||||||||||||
|
Income before provision for income taxes
|
19,864
|
18,318
|
25,683
|
38,181
|
41,474
|
|||||||||||||||
|
PROVISION FOR INCOME TAXES
|
6,615
|
6,184
|
8,696
|
12,798
|
13,937
|
|||||||||||||||
|
NET INCOME
|
$
|
13,249
|
$
|
12,134
|
$
|
16,987
|
$
|
25,383
|
$
|
27,537
|
||||||||||
|
Earnings per share available to common shareholders:
|
||||||||||||||||||||
|
Basic
|
$
|
0.64
|
$
|
0.61
|
$
|
0.88
|
$
|
1.25
|
$
|
1.42
|
||||||||||
|
Diluted
|
$
|
0.64
|
$
|
0.61
|
$
|
0.88
|
$
|
1.25
|
$
|
1.42
|
||||||||||
|
Cumulative dividends declared per common share
|
$
|
0.18
|
$
|
0.18
|
$
|
0.18
|
$
|
0.36
|
$
|
0.36
|
||||||||||
|
Weighted average common shares outstanding:
|
||||||||||||||||||||
|
Basic
|
20,725,833
|
19,760,645
|
19,342,023
|
20,245,905
|
19,343,867
|
|||||||||||||||
|
Diluted
|
20,789,533
|
19,845,019
|
19,409,601
|
20,301,448
|
19,406,215
|
|||||||||||||||
|
Increase (decrease) in common shares outstanding
|
(5,960
|
)
|
1,405,093
|
(7,831
|
)
|
1,399,133
|
24,935
|
|||||||||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 7
|
(in thousands except shares and per share data)
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
||||||||||||
|
ASSETS
|
||||||||||||||||
|
Cash and due from banks
|
$
|
85,598
|
$
|
83,401
|
$
|
83,571
|
$
|
71,077
|
||||||||
|
Federal funds and interest-bearing deposits
|
98,376
|
215,114
|
62,990
|
54,995
|
||||||||||||
|
Securities - trading
|
32,404
|
38,074
|
61,393
|
40,258
|
||||||||||||
|
Securities - available for sale
|
387,876
|
395,607
|
455,353
|
411,021
|
||||||||||||
|
Securities - held to maturity
|
132,197
|
133,649
|
133,186
|
131,258
|
||||||||||||
|
Federal Home Loan Bank stock
|
6,120
|
25,544
|
31,191
|
27,036
|
||||||||||||
|
Loans receivable:
|
||||||||||||||||
|
Held for sale
|
1,154
|
9,419
|
7,322
|
2,786
|
||||||||||||
|
Held for portfolio
|
4,245,322
|
4,105,399
|
3,755,277
|
3,831,034
|
||||||||||||
|
Allowance for loan losses
|
(77,329
|
)
|
(75,365
|
)
|
(74,310
|
)
|
(75,907
|
)
|
||||||||
|
4,169,147
|
4,039,453
|
3,688,289
|
3,757,913
|
|||||||||||||
|
Accrued interest receivable
|
16,792
|
16,873
|
15,579
|
15,279
|
||||||||||||
|
Real estate owned held for sale, net
|
6,105
|
4,922
|
4,388
|
3,352
|
||||||||||||
|
Property and equipment, net
|
101,141
|
98,728
|
91,912
|
91,185
|
||||||||||||
|
Goodwill and other intangibles, net
|
26,891
|
27,258
|
3,892
|
2,831
|
||||||||||||
|
Bank-owned life insurance
|
71,744
|
71,290
|
62,815
|
63,759
|
||||||||||||
|
Other assets
|
59,867
|
61,459
|
50,058
|
53,199
|
||||||||||||
|
$
|
5,194,258
|
$
|
5,211,372
|
$
|
4,744,617
|
$
|
4,723,163
|
|||||||||
|
LIABILITIES
|
||||||||||||||||
|
Deposits:
|
||||||||||||||||
|
Non-interest-bearing
|
$
|
1,484,315
|
$
|
1,504,768
|
$
|
1,210,068
|
$
|
1,298,866
|
||||||||
|
Interest-bearing transaction and savings accounts
|
2,047,050
|
2,036,600
|
1,771,865
|
1,829,568
|
||||||||||||
|
Interest-bearing certificates
|
765,780
|
778,049
|
936,986
|
770,516
|
||||||||||||
|
4,297,145
|
4,319,417
|
3,918,919
|
3,898,950
|
|||||||||||||
|
Advances from Federal Home Loan Bank at fair value
|
236
|
250
|
45,251
|
32,250
|
||||||||||||
|
Customer repurchase agreements
|
94,523
|
97,020
|
88,946
|
77,185
|
||||||||||||
|
Junior subordinated debentures at fair value
|
84,694
|
84,326
|
77,313
|
78,001
|
||||||||||||
|
Accrued expenses and other liabilities
|
36,131
|
38,164
|
35,619
|
37,082
|
||||||||||||
|
Deferred compensation
|
20,879
|
20,882
|
16,238
|
16,807
|
||||||||||||
|
4,533,608
|
4,560,059
|
4,182,286
|
4,140,275
|
|||||||||||||
|
STOCKHOLDERS' EQUITY
|
||||||||||||||||
|
Common stock
|
628,327
|
627,553
|
567,483
|
568,882
|
||||||||||||
|
Retained earnings (accumulated deficit)
|
32,096
|
22,623
|
(5,223
|
)
|
14,264
|
|||||||||||
|
Other components of stockholders' equity
|
227
|
1,137
|
71
|
(258
|
)
|
|||||||||||
|
660,650
|
651,313
|
562,331
|
582,888
|
|||||||||||||
|
$
|
5,194,258
|
$
|
5,211,372
|
$
|
4,744,617
|
$
|
4,723,163
|
|||||||||
|
Common Shares Issued:
|
||||||||||||||||
|
Shares outstanding at end of period
|
20,970,681
|
20,976,641
|
19,568,704
|
19,571,548
|
||||||||||||
|
Common stockholders' equity per share (1)
|
$
|
31.50
|
$
|
31.05
|
$
|
28.74
|
$
|
29.78
|
||||||||
|
Common stockholders' tangible equity per share (1) (2)
|
$
|
30.22
|
$
|
29.75
|
$
|
28.54
|
$
|
29.64
|
||||||||
|
Common stockholders' tangible equity to tangible assets (2)
|
12.26
|
%
|
12.04
|
%
|
11.78
|
%
|
12.29
|
%
|
||||||||
|
Consolidated Tier 1 leverage capital ratio
|
13.89
|
%
|
14.50
|
%
|
13.65
|
%
|
13.41
|
%
|
||||||||
|
(1)
|
Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding.
|
|
(2)
|
Common stockholders' tangible equity excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the last page of the press release tables.
|
BANR - Second Quarter 2015 Results
July 20, 2015
Page 8
|
(dollars in thousands)
|
||||||||||||||||
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
|||||||||||||
|
LOANS (including loans held for sale):
|
||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||
|
Owner occupied
|
$
|
616,324
|
$
|
627,531
|
$
|
541,558
|
$
|
546,783
|
||||||||
|
Investment properties
|
996,714
|
936,693
|
807,499
|
856,942
|
||||||||||||
|
Multifamily real estate
|
205,276
|
208,687
|
188,792
|
167,524
|
||||||||||||
|
Commercial construction
|
45,137
|
30,434
|
12,638
|
17,337
|
||||||||||||
|
Multifamily construction
|
60,075
|
56,201
|
39,864
|
60,193
|
||||||||||||
|
One- to four-family construction
|
230,554
|
228,224
|
213,414
|
219,889
|
||||||||||||
|
Land and land development:
|
||||||||||||||||
|
Residential
|
105,146
|
98,930
|
73,030
|
102,435
|
||||||||||||
|
Commercial
|
16,419
|
17,174
|
10,679
|
11,152
|
||||||||||||
|
Commercial business
|
811,623
|
776,579
|
735,128
|
723,964
|
||||||||||||
|
Agricultural business including secured by farmland
|
230,964
|
208,635
|
245,742
|
238,499
|
||||||||||||
|
One- to four-family real estate
|
542,961
|
552,423
|
558,744
|
539,894
|
||||||||||||
|
Consumer:
|
||||||||||||||||
|
Consumer secured by one- to four-family real estate
|
244,216
|
233,643
|
209,511
|
222,205
|
||||||||||||
|
Consumer-other
|
141,067
|
139,664
|
126,000
|
127,003
|
||||||||||||
|
Total loans outstanding
|
$
|
4,246,476
|
$
|
4,114,818
|
$
|
3,762,599
|
$
|
3,833,820
|
||||||||
|
Restructured loans performing under their restructured terms
|
$
|
26,705
|
$
|
23,180
|
$
|
37,461
|
$
|
29,154
|
||||||||
|
Loans 30 - 89 days past due and on accrual
|
$
|
4,185
|
$
|
8,157
|
$
|
7,670
|
$
|
8,387
|
||||||||
|
Total delinquent loans (including loans on non-accrual)
|
$
|
27,476
|
$
|
32,892
|
$
|
27,415
|
$
|
25,124
|
||||||||
|
Total delinquent loans / Total loans outstanding
|
0.65
|
%
|
0.80
|
%
|
0.73
|
%
|
0.66
|
%
|
||||||||
|
GEOGRAPHIC CONCENTRATION
|
||||||||||||||||||||
|
OF LOANS AT JUNE 30, 2015
|
Washington
|
Oregon
|
Idaho
|
Other
|
Total
|
|||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||
|
Owner occupied
|
$
|
385,348
|
$
|
149,324
|
$
|
60,010
|
$
|
21,642
|
$
|
616,324
|
||||||||||
|
Investment properties
|
527,840
|
193,605
|
60,677
|
214,592
|
996,714
|
|||||||||||||||
|
Multifamily real estate
|
116,599
|
74,095
|
14,582
|
—
|
205,276
|
|||||||||||||||
|
Commercial construction
|
40,030
|
1,767
|
3,340
|
—
|
45,137
|
|||||||||||||||
|
Multifamily construction
|
43,011
|
13,265
|
3,799
|
—
|
60,075
|
|||||||||||||||
|
One- to four-family construction
|
121,261
|
105,505
|
3,191
|
597
|
230,554
|
|||||||||||||||
|
Land and land development:
|
||||||||||||||||||||
|
Residential
|
57,586
|
46,094
|
1,016
|
450
|
105,146
|
|||||||||||||||
|
Commercial
|
5,590
|
8,029
|
2,800
|
—
|
16,419
|
|||||||||||||||
|
Commercial business
|
431,957
|
154,264
|
98,252
|
127,150
|
811,623
|
|||||||||||||||
|
Agricultural business including secured by farmland
|
111,190
|
73,630
|
46,044
|
100
|
230,964
|
|||||||||||||||
|
One- to four-family real estate
|
333,172
|
186,311
|
22,749
|
729
|
542,961
|
|||||||||||||||
|
Consumer:
|
||||||||||||||||||||
|
Consumer secured by one- to four-family real estate
|
149,376
|
77,119
|
16,728
|
993
|
244,216
|
|||||||||||||||
|
Consumer-other
|
83,324
|
50,995
|
6,366
|
382
|
141,067
|
|||||||||||||||
|
Total loans outstanding
|
$
|
2,406,284
|
$
|
1,134,003
|
$
|
339,554
|
$
|
366,635
|
$
|
4,246,476
|
||||||||||
|
Percent of total loans
|
56.7
|
%
|
26.7
|
%
|
8.0
|
%
|
8.6
|
%
|
100.0
|
%
|
||||||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 9
|
(dollars in thousands)
|
||||||||||||||||||||
|
Quarters Ended
|
Six Months Ended
|
|||||||||||||||||||
|
CHANGE IN THE
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Jun 30, 2015
|
Jun 30, 2014
|
|||||||||||||||
|
ALLOWANCE FOR LOAN LOSSES
|
||||||||||||||||||||
|
Balance, beginning of period
|
$
|
75,365
|
$
|
75,907
|
$
|
74,371
|
$
|
75,907
|
$
|
74,258
|
||||||||||
|
Provision
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Recoveries of loans previously charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
197
|
14
|
274
|
211
|
570
|
|||||||||||||||
|
Multifamily real estate
|
113
|
—
|
—
|
113
|
—
|
|||||||||||||||
|
Construction and land
|
843
|
108
|
472
|
951
|
704
|
|||||||||||||||
|
One- to four-family real estate
|
93
|
6
|
204
|
99
|
392
|
|||||||||||||||
|
Commercial business
|
499
|
178
|
286
|
677
|
579
|
|||||||||||||||
|
Agricultural business, including secured by farmland
|
1,225
|
295
|
311
|
1,520
|
661
|
|||||||||||||||
|
Consumer
|
236
|
46
|
58
|
282
|
340
|
|||||||||||||||
|
3,206
|
647
|
1,605
|
3,853
|
3,246
|
||||||||||||||||
|
Loans charged off:
|
||||||||||||||||||||
|
Commercial real estate
|
(64
|
)
|
—
|
(1,001
|
)
|
(64
|
)
|
(1,239
|
)
|
|||||||||||
|
Multifamily real estate
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
Construction and land
|
(2
|
)
|
—
|
(207
|
)
|
(2
|
)
|
(207
|
)
|
|||||||||||
|
One- to four-family real estate
|
(40
|
)
|
(75
|
)
|
(14
|
)
|
(115
|
)
|
(393
|
)
|
||||||||||
|
Commercial business
|
(327
|
)
|
(107
|
)
|
(260
|
)
|
(434
|
)
|
(998
|
)
|
||||||||||
|
Agricultural business, including secured by farmland
|
(246
|
)
|
(818
|
)
|
—
|
(1,064
|
)
|
—
|
||||||||||||
|
Consumer
|
(563
|
)
|
(189
|
)
|
(184
|
)
|
(752
|
)
|
(357
|
)
|
||||||||||
|
(1,242
|
)
|
(1,189
|
)
|
(1,666
|
)
|
(2,431
|
)
|
(3,194
|
)
|
|||||||||||
|
Net (charge-offs) recoveries
|
1,964
|
(542
|
)
|
(61
|
)
|
1,422
|
52
|
|||||||||||||
|
Balance, end of period
|
$
|
77,329
|
$
|
75,365
|
$
|
74,310
|
$
|
77,329
|
$
|
74,310
|
||||||||||
|
Net (charge-offs) recoveries / Average loans outstanding
|
0.047
|
%
|
(0.014
|
)%
|
(0.002
|
)%
|
0.035
|
%
|
0.001
|
%
|
||||||||||
|
ALLOCATION OF
|
||||||||||||||||
|
ALLOWANCE FOR LOAN LOSSES
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
||||||||||||
|
Specific or allocated loss allowance:
|
||||||||||||||||
|
Commercial real estate
|
$
|
18,948
|
$
|
19,103
|
$
|
18,884
|
$
|
18,784
|
||||||||
|
Multifamily real estate
|
4,273
|
4,401
|
5,765
|
4,562
|
||||||||||||
|
Construction and land
|
25,415
|
24,398
|
17,837
|
23,545
|
||||||||||||
|
One- to four-family real estate
|
8,542
|
8,141
|
9,270
|
8,447
|
||||||||||||
|
Commercial business
|
13,184
|
12,892
|
12,014
|
12,043
|
||||||||||||
|
Agricultural business, including secured by farmland
|
2,679
|
3,732
|
2,824
|
2,821
|
||||||||||||
|
Consumer
|
780
|
585
|
748
|
483
|
||||||||||||
|
Total allocated
|
73,821
|
73,252
|
67,342
|
70,685
|
||||||||||||
|
Unallocated
|
3,508
|
2,113
|
6,968
|
5,222
|
||||||||||||
|
Total allowance for loan losses
|
$
|
77,329
|
$
|
75,365
|
$
|
74,310
|
$
|
75,907
|
||||||||
|
Allowance for loan losses / Total loans outstanding
|
1.82
|
%
|
1.83
|
%
|
1.97
|
%
|
1.98
|
%
|
||||||||
|
Allowance for loan losses / Non-performing loans
|
332
|
%
|
305
|
%
|
376
|
%
|
454
|
%
|
||||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 10
|
(dollars in thousands)
|
|||||||||||||||
| Jun 30, 2015 | Mar 31, 2015 | Jun 30, 2014 | Dec 31, 2014 | ||||||||||||
|
NON-PERFORMING ASSETS
|
|||||||||||||||
|
Loans on non-accrual status:
|
|||||||||||||||
|
Secured by real estate:
|
|||||||||||||||
|
Commercial
|
$
|
1,072
|
$
|
2,294
|
$
|
2,692
|
$
|
1,132
|
|||||||
|
Multifamily
|
—
|
—
|
422
|
—
|
|||||||||||
|
Construction and land
|
3,153
|
798
|
1,296
|
1,275
|
|||||||||||
|
One- to four-family
|
5,662
|
7,111
|
9,354
|
8,834
|
|||||||||||
|
Commercial business
|
179
|
418
|
925
|
537
|
|||||||||||
|
Agricultural business, including secured by farmland
|
1,560
|
1,566
|
104
|
1,597
|
|||||||||||
|
Consumer
|
861
|
1,836
|
1,205
|
1,187
|
|||||||||||
|
12,487
|
14,023
|
15,998
|
14,562
|
||||||||||||
|
Loans more than 90 days delinquent, still on accrual:
|
|||||||||||||||
|
Secured by real estate:
|
|||||||||||||||
|
Commercial
|
1,835
|
1,847
|
993
|
—
|
|||||||||||
|
Multifamily
|
570
|
578
|
—
|
—
|
|||||||||||
|
Construction and land
|
5,951
|
6,724
|
—
|
—
|
|||||||||||
|
One- to four-family
|
1,976
|
1,548
|
2,181
|
2,095
|
|||||||||||
|
Commercial business
|
—
|
—
|
280
|
—
|
|||||||||||
|
Consumer
|
472
|
15
|
293
|
79
|
|||||||||||
|
10,804
|
10,712
|
3,747
|
2,174
|
||||||||||||
|
Total non-performing loans
|
23,291
|
24,735
|
19,745
|
16,736
|
|||||||||||
|
Real estate owned (REO)
|
6,105
|
4,922
|
4,388
|
3,352
|
|||||||||||
|
Other repossessed assets
|
—
|
62
|
69
|
76
|
|||||||||||
|
Total non-performing assets
|
$
|
29,396
|
$
|
29,719
|
$
|
24,202
|
$
|
20,164
|
|||||||
|
Total non-performing assets / Total assets
|
0.57
|
%
|
0.57
|
%
|
0.51
|
%
|
0.43
|
%
|
|||||||
|
DETAIL & GEOGRAPHIC CONCENTRATION OF
|
|||||||||||||||
|
NON-PERFORMING ASSETS AT JUNE 30, 2015
|
Washington
|
Oregon
|
Idaho
|
Total
|
|||||||||||
|
Secured by real estate:
|
|||||||||||||||
|
Commercial
|
$
|
1,039
|
$
|
1,835
|
$
|
33
|
$
|
2,907
|
|||||||
|
Multifamily
|
—
|
570
|
—
|
570
|
|||||||||||
|
Construction and land:
|
|||||||||||||||
|
One- to four-family construction
|
—
|
1,186
|
—
|
1,186
|
|||||||||||
|
Residential land acquisition & development
|
—
|
750
|
—
|
750
|
|||||||||||
|
Residential land improved lots
|
—
|
504
|
—
|
504
|
|||||||||||
|
Commercial land improved
|
—
|
4,765
|
—
|
4,765
|
|||||||||||
|
Commercial land unimproved
|
—
|
1,899
|
—
|
1,899
|
|||||||||||
|
Total construction and land
|
—
|
9,104
|
—
|
9,104
|
|||||||||||
|
One- to four-family
|
6,161
|
990
|
487
|
7,638
|
|||||||||||
|
Commercial business
|
141
|
31
|
7
|
179
|
|||||||||||
|
Agricultural business, including secured by farmland
|
774
|
786
|
—
|
1,560
|
|||||||||||
|
Consumer
|
681
|
472
|
180
|
1,333
|
|||||||||||
|
Total non-performing loans
|
8,796
|
13,788
|
707
|
23,291
|
|||||||||||
|
Real estate owned (REO)
|
1,638
|
4,434
|
33
|
6,105
|
|||||||||||
|
Other repossessed assets
|
—
|
—
|
—
|
—
|
|||||||||||
|
Total non-performing assets at end of the period
|
$
|
10,434
|
$
|
18,222
|
$
|
740
|
$
|
29,396
|
|||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 11
|
(dollars in thousands)
|
|||||||||||||||||
|
Quarters Ended
|
Six Months Ended
|
||||||||||||||||
|
REAL ESTATE OWNED
|
Jun 30, 2015
|
Jun 30, 2014
|
Jun 30, 2015
|
Jun 30, 2014
|
|||||||||||||
|
Balance, beginning of period
|
$
|
4,922
|
$
|
3,236
|
$
|
3,352
|
$
|
4,044
|
|||||||||
|
Additions from loan foreclosures
|
1,473
|
1,996
|
2,141
|
2,703
|
|||||||||||||
|
Additions from acquisitions
|
—
|
—
|
2,525
|
—
|
|||||||||||||
|
Additions from capitalized costs
|
298
|
33
|
298
|
37
|
|||||||||||||
|
Proceeds from dispositions of REO
|
(511
|
)
|
(1,034
|
)
|
(2,249
|
)
|
(2,675
|
)
|
|||||||||
|
Gain on sale of REO
|
105
|
157
|
220
|
316
|
|||||||||||||
|
Valuation adjustments in the period
|
(182
|
)
|
—
|
(182
|
)
|
(37
|
)
|
||||||||||
|
Balance, end of period
|
$
|
6,105
|
$
|
4,388
|
$
|
6,105
|
$
|
4,388
|
|||||||||
|
DEPOSIT COMPOSITION
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
||||||||||||
|
Non-interest-bearing
|
$
|
1,484,315
|
$
|
1,504,768
|
$
|
1,210,068
|
$
|
1,298,866
|
||||||||
|
Interest-bearing checking
|
477,492
|
472,033
|
437,810
|
439,480
|
||||||||||||
|
Regular savings accounts
|
1,003,189
|
979,824
|
843,950
|
901,142
|
||||||||||||
|
Money market accounts
|
566,369
|
584,743
|
490,105
|
488,946
|
||||||||||||
|
Interest-bearing transaction & savings accounts
|
2,047,050
|
2,036,600
|
1,771,865
|
1,829,568
|
||||||||||||
|
Interest-bearing certificates
|
765,780
|
778,049
|
936,986
|
770,516
|
||||||||||||
|
Total deposits
|
$
|
4,297,145
|
$
|
4,319,417
|
$
|
3,918,919
|
$
|
3,898,950
|
||||||||
|
GEOGRAPHIC CONCENTRATION
|
||||||||||||||||
|
OF DEPOSITS AT JUNE 30, 2015
|
Washington
|
Oregon
|
Idaho
|
Total
|
||||||||||||
|
Total deposits
|
$
|
2,858,101
|
$
|
1,195,413
|
$
|
243,631
|
$
|
4,297,145
|
||||||||
|
Percent of total deposits
|
66.5
|
%
|
27.8
|
%
|
5.7
|
%
|
100.0
|
%
|
||||||||
|
INCLUDED IN TOTAL DEPOSITS
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
||||||||||||
|
Public non-interest-bearing accounts
|
$
|
50,894
|
$
|
44,195
|
$
|
23,886
|
$
|
39,381
|
||||||||
|
Public interest-bearing transaction & savings accounts
|
65,136
|
58,023
|
69,664
|
63,473
|
||||||||||||
|
Public interest-bearing certificates
|
33,577
|
35,326
|
48,180
|
35,346
|
||||||||||||
|
Total public deposits
|
$
|
149,607
|
$
|
137,544
|
$
|
141,730
|
$
|
138,200
|
||||||||
|
Total brokered deposits
|
$
|
9,646
|
$
|
4,800
|
$
|
88,209
|
$
|
4,799
|
||||||||
|
OTHER BORROWINGS
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
||||||||||||
|
Customer repurchase agreements / "Sweep accounts"
|
$
|
94,523
|
$
|
97,020
|
$
|
88,946
|
$
|
77,185
|
||||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 12
|
(in thousands)
|
||||||||
|
ACQUISITION OF SIX OREGON BRANCHES
|
June 20, 2014
|
|||||||
|
Total consideration
|
$
|
—
|
||||||
|
Fair value of assets acquired:
|
||||||||
|
Cash
|
$
|
127,557
|
||||||
|
Loans receivable
|
87,923
|
|||||||
|
Property and equipment
|
3,079
|
|||||||
|
Intangible assets
|
2,372
|
|||||||
|
Other assets
|
275
|
|||||||
|
Total assets acquired
|
221,206
|
|||||||
|
Fair value of liabilities assumed:
|
||||||||
|
Deposits
|
212,085
|
|||||||
|
Other liabilities
|
42
|
|||||||
|
Total liabilities assumed
|
212,127
|
|||||||
|
Net assets acquired
|
9,079
|
|||||||
|
Acquisition bargain purchase gain
|
$
|
(9,079
|
)
|
|||||
|
ACQUISITION OF SIUSLAW FINANCIAL GROUP*
|
March 6, 2015
|
|||||||
|
Cash paid
|
$
|
5,800
|
||||||
|
Fair value of common shares issued
|
58,106
|
|||||||
|
Total consideration
|
63,906
|
|||||||
|
Fair value of assets acquired:
|
||||||||
|
Cash
|
$
|
84,405
|
||||||
|
Securities - available for sale
|
12,865
|
|||||||
|
Loans receivable
|
247,098
|
|||||||
|
Real estate owned held for sale
|
2,525
|
|||||||
|
Property and equipment
|
8,127
|
|||||||
|
Intangible assets
|
3,895
|
|||||||
|
Other assets
|
11,391
|
|||||||
|
Total assets acquired
|
370,306
|
|||||||
|
Fair value of liabilities assumed:
|
||||||||
|
Deposits
|
316,406
|
|||||||
|
Junior subordinated debentures
|
5,959
|
|||||||
|
Other liabilities
|
5,183
|
|||||||
|
Total liabilities assumed
|
327,548
|
|||||||
|
Net assets acquired
|
42,758
|
|||||||
|
Goodwill
|
$
|
21,148
|
||||||
* Amounts recorded in this table are preliminary estimates of fair value. Additional adjustments to the purchase price allocation may be required.
BANR - Second Quarter 2015 Results
July 20, 2015
Page 13
|
(dollars in thousands)
|
|||||||||||||||||||||
|
Actual
|
Minimum to be categorized as "Adequately Capitalized"
|
Minimum to be
categorized as
"Well Capitalized"
|
|||||||||||||||||||
|
REGULATORY CAPITAL RATIOS AS OF JUNE 30, 2015
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
|||||||||||||||
|
Banner Corporation-consolidated:
|
|||||||||||||||||||||
|
Total capital to risk-weighted assets
|
$
|
778,340
|
16.21
|
%
|
$
|
384,133
|
8.00
|
%
|
$
|
480,167
|
10.00
|
%
|
|||||||||
|
Tier 1 capital to risk-weighted assets
|
718,092
|
14.96
|
%
|
288,100
|
6.00
|
%
|
384,133
|
8.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
718,092
|
13.89
|
%
|
206,843
|
4.00
|
%
|
258,554
|
5.00
|
%
|
||||||||||||
|
Common equity tier 1 capital
|
637,625
|
13.28
|
%
|
216,075
|
4.50
|
%
|
312,108
|
6.50
|
%
|
||||||||||||
|
Banner Bank:
|
|||||||||||||||||||||
|
Total capital to risk-weighted assets
|
685,529
|
14.83
|
%
|
369,878
|
8.00
|
%
|
462,348
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
627,504
|
13.57
|
%
|
277,409
|
6.00
|
%
|
369,878
|
8.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
627,504
|
12.76
|
%
|
197,715
|
4.00
|
%
|
247,143
|
5.00
|
%
|
||||||||||||
|
Common equity tier 1 capital
|
627,504
|
13.57
|
%
|
208,057
|
4.50
|
%
|
300,526
|
6.50
|
%
|
||||||||||||
|
Islanders Bank:
|
|||||||||||||||||||||
|
Total capital to risk-weighted assets
|
37,554
|
19.32
|
%
|
15,101
|
8.00
|
%
|
18,876
|
10.00
|
%
|
||||||||||||
|
Tier 1 capital to risk-weighted assets
|
35,296
|
18.07
|
%
|
11,325
|
6.00
|
%
|
15,101
|
8.00
|
%
|
||||||||||||
|
Tier 1 leverage capital to average assets
|
35,296
|
13.95
|
%
|
10,280
|
4.00
|
%
|
12,850
|
5.00
|
%
|
||||||||||||
|
Common equity tier 1 capital
|
35,296
|
18.07
|
%
|
8,494
|
4.50
|
%
|
12,269
|
6.50
|
%
|
||||||||||||
BANR - Second Quarter 2015 Results
July 20, 2015
Page 14
|
(dollars in thousands)
|
||||||||||||||||||||
|
(rates / ratios annualized)
|
||||||||||||||||||||
|
Quarters Ended
|
Six Months Ended
|
|||||||||||||||||||
|
OPERATING PERFORMANCE
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Jun 30, 2015
|
Jun 30, 2014
|
|||||||||||||||
|
Average loans
|
$
|
4,181,548
|
$
|
3,920,255
|
$
|
3,588,654
|
$
|
4,051,623
|
$
|
3,532,324
|
||||||||||
|
Average securities
|
582,681
|
600,806
|
689,287
|
591,693
|
688,530
|
|||||||||||||||
|
Average interest earning cash
|
159,191
|
91,202
|
54,887
|
125,384
|
56,610
|
|||||||||||||||
|
Average non-interest-earning assets
|
272,486
|
230,634
|
197,799
|
250,935
|
199,006
|
|||||||||||||||
|
Total average assets
|
$
|
5,195,906
|
$
|
4,842,897
|
$
|
4,530,627
|
$
|
5,019,635
|
$
|
4,476,470
|
||||||||||
|
Average deposits
|
$
|
4,304,753
|
$
|
3,997,763
|
$
|
3,700,736
|
$
|
4,152,106
|
$
|
3,660,241
|
||||||||||
|
Average borrowings
|
228,387
|
232,147
|
279,266
|
230,257
|
270,869
|
|||||||||||||||
|
Average non-interest-bearing other liabilities (1)
|
2,966
|
4,569
|
(4,237
|
)
|
3,021
|
(5,154
|
)
|
|||||||||||||
|
Total average liabilities
|
4,536,106
|
4,234,479
|
3,975,765
|
4,385,384
|
3,925,956
|
|||||||||||||||
|
Total average stockholders' equity
|
659,800
|
608,418
|
554,862
|
634,251
|
550,514
|
|||||||||||||||
|
Total average liabilities and equity
|
$
|
5,195,906
|
$
|
4,842,897
|
$
|
4,530,627
|
$
|
5,019,635
|
$
|
4,476,470
|
||||||||||
|
Interest rate yield on loans
|
4.90
|
%
|
4.80
|
%
|
4.83
|
%
|
4.85
|
%
|
4.85
|
%
|
||||||||||
|
Interest rate yield on securities
|
1.99
|
%
|
1.79
|
%
|
1.92
|
%
|
1.89
|
%
|
1.94
|
%
|
||||||||||
|
Interest rate yield on cash
|
0.27
|
%
|
0.24
|
%
|
0.31
|
%
|
0.26
|
%
|
0.31
|
%
|
||||||||||
|
Interest rate yield on interest-earning assets
|
4.41
|
%
|
4.31
|
%
|
4.31
|
%
|
4.36
|
%
|
4.32
|
%
|
||||||||||
|
Interest rate expense on deposits
|
0.16
|
%
|
0.18
|
%
|
0.21
|
%
|
0.17
|
%
|
0.21
|
%
|
||||||||||
|
Interest rate expense on borrowings
|
1.49
|
%
|
1.40
|
%
|
1.18
|
%
|
1.45
|
%
|
1.21
|
%
|
||||||||||
|
Interest rate expense on interest-bearing liabilities
|
0.23
|
%
|
0.24
|
%
|
0.28
|
%
|
0.24
|
%
|
0.28
|
%
|
||||||||||
|
Interest rate spread
|
4.18
|
%
|
4.07
|
%
|
4.03
|
%
|
4.12
|
%
|
4.04
|
%
|
||||||||||
|
Net interest margin
|
4.19
|
%
|
4.09
|
%
|
4.06
|
%
|
4.14
|
%
|
4.06
|
%
|
||||||||||
|
Other operating income / Average assets
|
1.25
|
%
|
1.15
|
%
|
1.80
|
%
|
1.20
|
%
|
1.32
|
%
|
||||||||||
|
Core other operating income / Average assets (2)
|
1.19
|
%
|
1.10
|
%
|
0.95
|
%
|
1.15
|
%
|
0.90
|
%
|
||||||||||
|
Other operating expense / Average assets
|
3.68
|
%
|
3.51
|
%
|
3.40
|
%
|
3.60
|
%
|
3.33
|
%
|
||||||||||
|
Core other operating expense / Average assets (2)
|
3.38
|
%
|
3.37
|
%
|
3.23
|
%
|
3.38
|
%
|
3.24
|
%
|
||||||||||
|
Efficiency ratio (other operating expense / revenue)
|
70.61
|
%
|
69.59
|
%
|
59.94
|
%
|
70.13
|
%
|
64.09
|
%
|
||||||||||
|
Efficiency ratio (core other operating expense / core
operating revenue)(2)
|
65.61
|
%
|
67.46
|
%
|
66.80
|
%
|
66.48
|
%
|
67.81
|
%
|
||||||||||
|
Return on average assets
|
1.02
|
%
|
1.02
|
%
|
1.50
|
%
|
1.02
|
%
|
1.24
|
%
|
||||||||||
|
Return on average equity
|
8.05
|
%
|
8.09
|
%
|
12.28
|
%
|
8.07
|
%
|
10.09
|
%
|
||||||||||
|
Return on average tangible equity (3)
|
8.40
|
%
|
8.22
|
%
|
12.32
|
%
|
8.31
|
%
|
10.12
|
%
|
||||||||||
|
Average equity / Average assets
|
12.70
|
%
|
12.56
|
%
|
12.25
|
%
|
12.64
|
%
|
12.30
|
%
|
||||||||||
|
(1)
|
Average non-interest-bearing liabilities include fair value adjustments related to FHLB advances and Junior Subordinated Debentures.
|
|
(2)
|
Core other operating income excludes net gain (loss) on sale of securities, fair value adjustments and acquisition bargain purchase gain. Core other operating expense excludes acquisition related costs. These represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables.
|
|
(3)
|
Average tangible equity excludes goodwill and other intangible assets and represents a non-GAAP financial measure. See also Non-GAAP Financial Measures reconciliation tables on the final page of these press release tables.
|
BANR - Second Quarter 2015 Results
July 20, 2015
Page 15
|
(dollars in thousands except shares and per share data)
|
|||||||||||||||||||
|
* Non-GAAP Financial Measures (unaudited)
|
|||||||||||||||||||
|
In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers. Where applicable, comparable earnings information using GAAP financial measures is also presented.
|
|||||||||||||||||||
|
REVENUE FROM CORE OPERATIONS
|
Quarters Ended
|
Six Months Ended
|
|||||||||||||||||
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Jun 30, 2015
|
Jun 30, 2014
|
|||||||||||||||
|
Net interest income before provision for loan losses
|
$
|
51,457
|
$
|
46,536
|
$
|
43,808
|
$
|
97,992
|
$
|
86,147
|
|||||||||
|
Total other operating income
|
16,141
|
13,696
|
20,310
|
29,838
|
29,342
|
||||||||||||||
|
Total GAAP revenue
|
67,598
|
60,232
|
64,118
|
127,830
|
115,489
|
||||||||||||||
|
Exclude net (gain) loss on sale of securities
|
28
|
510
|
—
|
537
|
(35
|
)
|
|||||||||||||
|
Exclude change in valuation of financial instruments
carried at fair value
|
(797
|
)
|
(1,050
|
)
|
(464
|
)
|
(1,847
|
)
|
(209
|
)
|
|||||||||
|
Exclude acquisition bargain purchase gain
|
—
|
—
|
(9,079
|
)
|
—
|
(9,079
|
)
|
||||||||||||
|
Revenue from core operations (non-GAAP)
|
$
|
66,829
|
$
|
59,692
|
$
|
54,575
|
$
|
126,520
|
$
|
106,166
|
|||||||||
|
OTHER OPERATING INCOME/EXPENSE FROM CORE OPERATIONS
|
Quarters Ended
|
Six Months Ended
|
|||||||||||||||||
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Jun 30, 2015
|
Jun 30, 2014
|
|||||||||||||||
|
Total other operating income (GAAP)
|
$
|
16,141
|
$
|
13,696
|
$
|
20,310
|
$
|
29,838
|
$
|
29,342
|
|||||||||
|
Exclude net (gain) loss on sale of securities
|
28
|
510
|
—
|
537
|
(35
|
)
|
|||||||||||||
|
Exclude change in valuation of financial instruments
carried at fair value
|
(797
|
)
|
(1,050
|
)
|
(464
|
)
|
(1,847
|
)
|
(209
|
)
|
|||||||||
|
Exclude acquisition bargain purchase gain
|
—
|
—
|
(9,079
|
)
|
—
|
(9,079
|
)
|
||||||||||||
|
Other operating income from core operations (non-GAAP)
|
$
|
15,372
|
$
|
13,156
|
$
|
10,767
|
$
|
28,528
|
$
|
20,019
|
|||||||||
|
Total other operating expense (GAAP)
|
$
|
47,734
|
$
|
41,914
|
$
|
38,435
|
$
|
89,649
|
$
|
74,015
|
|||||||||
|
Exclude acquisition related costs
|
(3,885
|
)
|
(1,648
|
)
|
(1,979
|
)
|
(5,533
|
)
|
(2,024
|
)
|
|||||||||
|
Other operating expense from core operations (non-
GAAP)
|
$
|
43,849
|
$
|
40,266
|
$
|
36,456
|
$
|
84,116
|
$
|
71,991
|
|||||||||
|
TANGIBLE COMMON STOCKHOLDERS' EQUITY TO
TANGIBLE ASSETS
|
Jun 30, 2015
|
Mar 31, 2015
|
Jun 30, 2014
|
Dec 31, 2014
|
|||||||||||
|
Stockholders' equity (GAAP)
|
$
|
660,650
|
$
|
651,313
|
$
|
562,331
|
$
|
582,888
|
|||||||
|
Exclude goodwill and other intangible assets, net
|
26,891
|
27,258
|
3,892
|
2,831
|
|||||||||||
|
Tangible common stockholders' equity (non-GAAP)
|
$
|
633,759
|
$
|
624,055
|
$
|
558,439
|
$
|
580,057
|
|||||||
|
Total assets (GAAP)
|
$
|
5,194,258
|
$
|
5,211,372
|
$
|
4,744,617
|
$
|
4,723,163
|
|||||||
|
Exclude goodwill and other intangible assets, net
|
26,891
|
27,258
|
3,892
|
2,831
|
|||||||||||
|
Total tangible assets (non-GAAP)
|
$
|
5,167,367
|
$
|
5,184,114
|
$
|
4,740,725
|
$
|
4,720,332
|
|||||||
|
Tangible common stockholders' equity to tangible assets (non-GAAP)
|
12.26
|
%
|
12.04
|
%
|
11.78
|
%
|
12.29
|
%
|
|||||||
|
TANGIBLE COMMON STOCKHOLDERS' EQUITY PER SHARE
|
|||||||||||||||
|
Tangible common stockholders' equity
|
$
|
633,759
|
$
|
624,055
|
$
|
558,439
|
$
|
580,057
|
|||||||
|
Common shares outstanding at end of period
|
20,970,681
|
20,976,641
|
19,568,704
|
19,571,548
|
|||||||||||
|
Common stockholders' equity (book value) per share (GAAP)
|
$
|
31.50
|
$
|
29.82
|
$
|
27.97
|
$
|
27.63
|
|||||||
|
Tangible common stockholders' equity (tangible book value) per share (non-GAAP)
|
$
|
30.22
|
$
|
29.75
|
$
|
28.54
|
$
|
29.64
|
|||||||
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