Banner Corporation (NASDAQ:BANR) (“Banner”), the parent company
of Banner Bank, today reported net income of $46.4 million, or
$1.34 per diluted share, for the fourth quarter of 2024, compared
to $45.2 million, or $1.30 per diluted share, for the preceding
quarter and $42.6 million, or $1.24 per diluted share, for the
fourth quarter of 2023. Net interest income was $140.5 million in
the fourth quarter of 2024, compared to $135.7 million in the
preceding quarter and $138.4 million in the fourth quarter a year
ago. The increase in net interest income compared to the preceding
quarter reflects a decrease in funding costs and an increase in
interest-earning assets, partially offset by a decrease in yields
on interest earning assets. The increase in net interest income
compared to the prior year quarter reflects an increase in both the
yield and average balance of interest earning assets, partially
offset by an increase in funding costs. Fourth quarter 2024 results
included a $3.0 million provision for credit losses, up from $1.7
million in the preceding quarter and $2.5 million in the fourth
quarter of 2023.
Net income was $168.9 million, or $4.88 per diluted share, for
the year ended December 31, 2024, compared to $183.6 million, or
$5.33 per diluted share, for the year ended December 31, 2023. Net
interest income for the year ended December 31, 2024 decreased to
$541.7 million from $576.0 million for the year ended December 31,
2023, primarily due to the rise of deposit costs of $99.3 million,
partially offset by a $77.7 million increase in interest income on
loans. Results for the year ended December 31, 2024 included a $7.6
million provision for credit losses, a $5.2 million net loss on the
sale of securities and a $1.0 million net decrease in the valuation
of financial instruments carried at fair value, compared to a $10.8
million provision for credit losses, a $19.2 million net loss on
the sale of securities and a $4.2 million net decrease in the
valuation of financial instruments carried at fair value during the
same period in 2023.
Banner announced that its Board of Directors declared a regular
quarterly cash dividend of $0.48 per share payable February 14,
2025, to common shareholders of record on February 4, 2025.
“Banner’s fourth quarter financial performance reflects the
continued successful execution of our super community bank
strategy, which emphasizes growing new client relationships,
maintaining our core funding position, promoting client loyalty and
advocacy through our responsive service model, and sustaining a
moderate risk profile,” said Mark Grescovich, President and CEO.
“Our earnings for the fourth quarter of 2024 benefited from our
solid year over year loan growth as well as margin expansion during
the fourth quarter as a result of lower funding costs. This benefit
was partially offset by the declining interest rate environment and
its effect on loan yields. Additionally, Banner’s credit metrics
continue to be strong, our reserve for loan losses remained solid,
and our capital base continues to be robust. We continue to benefit
from a strong core deposit base that has been resilient in a highly
competitive environment, with core deposits representing 89% of
total deposits at quarter end. Banner has upheld its core values
for the past 134 years, which are to do the right thing for our
clients, communities, colleagues, company and shareholders; and to
provide consistent and reliable strength through all economic
cycles and change events.”
At December 31, 2024, Banner, on a consolidated basis, had
$16.20 billion in assets, $11.20 billion in net loans and $13.51
billion in deposits. Banner operates 135 full-service branch
offices, including branches located in eight of the top 20 largest
western Metropolitan Statistical Areas by population.
Fourth Quarter 2024 Highlights
- Revenue was $160.6 million for the fourth quarter of 2024,
compared to $153.7 million in the preceding quarter and $152.5
million in the fourth quarter a year ago.
- Adjusted revenue* (the total of net interest income and total
non-interest income adjusted for the net gain or loss on the sale
of securities and the net change in valuation of financial
instruments) was $160.1 million in the fourth quarter of 2024,
compared to $153.7 million in the preceding quarter and $157.1
million in the fourth quarter a year ago.
- Net interest income was $140.5 million in the fourth quarter of
2024, compared to $135.7 million in the preceding quarter and
$138.4 million in the fourth quarter a year ago.
- Net interest margin, on a tax equivalent basis, was 3.82%,
compared to 3.72% in the preceding quarter and 3.83% in the fourth
quarter a year ago.
- Mortgage banking operations revenue was $3.7 million for the
fourth quarter of 2024, compared to $3.2 million in the preceding
quarter and $5.4 million in the fourth quarter a year ago.
- Return on average assets was 1.15%, compared to 1.13% in the
preceding quarter and 1.09% in the fourth quarter a year ago.
- Net loans receivable increased 1% to $11.20 billion at December
31, 2024, compared to $11.07 billion at September 30, 2024, and
increased 5% compared to $10.66 billion at December 31, 2023.
- Non-performing assets were $39.6 million, or 0.24% of total
assets, at December 31, 2024, compared to $45.2 million, or 0.28%
of total assets, at September 30, 2024 and $30.1 million, or 0.19%
of total assets, at December 31, 2023.
- The allowance for credit losses - loans was $155.5 million, or
1.37% of total loans receivable, as of December 31, 2024, compared
to $154.6 million, or 1.38% of total loans receivable, as of
September 30, 2024 and $149.6 million, or 1.38% of total loans
receivable, as of December 31, 2023.
- Total deposits were $13.51 billion at December 31, 2024,
compared to $13.54 billion at September 30, 2024, and $13.03
billion at December 31, 2023.
- Core deposits represented 89% of total deposits at December 31,
2024.
- Dividends paid to shareholders were $0.48 per share in the
quarter ended December 31, 2024.
- Common shareholders’ equity per share decreased 1% to $51.49 at
December 31, 2024, compared to $52.06 at the preceding quarter end,
and increased 7% from $48.12 at December 31, 2023.
- Tangible common shareholders’ equity per share* decreased 1% to
$40.57 at December 31, 2024, compared to $41.12 at the preceding
quarter end, and increased 9% from $37.09 at December 31,
2023.
*Non-GAAP (Generally Accepted Accounting Principles) financial
measure; See, “Additional Financial Information - Non-GAAP
Financial Measures” on the final two pages of this press release
for a reconciliation of non-GAAP financial measures.
Income Statement Review
Net interest income was $140.5 million in the fourth quarter of
2024, compared to $135.7 million in the preceding quarter and
$138.4 million in the fourth quarter a year ago. Net interest
margin on a tax equivalent basis increased ten basis points to
3.82% for the fourth quarter of 2024, compared to 3.72% in the
preceding quarter, and decreased compared to 3.83% in the fourth
quarter a year ago. Net interest margin for the current quarter,
compared to the preceding quarter, benefited from decreased funding
costs, partially offset by lower yields on interest earning assets,
primarily due to decreases in the targeted federal funds rate in
the third and fourth quarters of 2024.
Average yields on interest-earning assets decreased two basis
points to 5.31% for the fourth quarter of 2024, compared to 5.33%
for the preceding quarter, and increased compared to 5.06% in the
fourth quarter a year ago. On September 18, 2024, the Federal Open
Market Committee (“FOMC”) of the Federal Reserve System lowered the
target range for the federal funds rate 50 basis points, followed
by a 25 basis-point decrease on November 7, 2024 and another 25
basis-point decrease on December 18, 2024, resulting in a target
range of 4.25% to 4.50% at December 31, 2024. Average loan yields
decreased two basis points to 6.02%, compared to 6.04% in the
preceding quarter, and increased compared to 5.77% in the fourth
quarter a year ago. The decrease in average loan yields during the
current quarter primarily reflects the decrease in interest rates,
partially offset by the benefits of a balance sheet hedge that
matured during the quarter.
Total deposit costs decreased eight basis points to 1.53% in the
fourth quarter of 2024, compared to 1.61% in the preceding quarter,
and increased compared to 1.18% in the fourth quarter a year ago.
The decrease in deposit costs in the current quarter was primarily
due to a decrease in interest rates, partially offset by an
increase in the average balance of interest-bearing deposits. The
average rate paid on borrowings decreased 51 basis points to 4.57%
in the fourth quarter of 2024, compared to 5.08% in the preceding
quarter, and decreased compared to 4.77% in the fourth quarter a
year ago due to lower wholesale borrowings in the current quarter.
The total cost of funding liabilities decreased 13 basis points to
1.60% in the fourth quarter of 2024, compared to 1.73% in the
preceding quarter, and increased compared to 1.31% in the fourth
quarter a year ago.
A $3.0 million provision for credit losses was recorded in the
current quarter (comprised of a $3.2 million provision for credit
losses - loans, a $203,000 recapture of provision for credit losses
- unfunded loan commitments and a $16,000 recapture of provision
for credit losses - held-to-maturity debt securities). This
compares to a $1.7 million provision for credit losses in the prior
quarter (comprised of a $2.0 million provision for credit losses -
loans, a $262,000 recapture of provision for credit losses -
unfunded loan commitments and a $13,000 recapture of provision for
credit losses - held-to-maturity debt securities) and a $2.5
million provision for credit losses in the fourth quarter a year
ago (comprised of a $3.8 million provision for credit losses -
loans, a $526,000 recapture of provision for credit losses -
unfunded loan commitments, a $750,000 recapture of provision for
credit losses - available for sale securities and a $23,000
recapture of provision for credit losses - held-to-maturity debt
securities). The provision for credit losses for the current
quarter primarily reflected risk rating downgrades as well as
growth in loan balances.
Total non-interest income was $20.0 million in the fourth
quarter of 2024, compared to $18.1 million in the preceding quarter
and $14.1 million in the fourth quarter a year ago. The increase in
non-interest income during the current quarter compared to the
preceding quarter was primarily due to a $506,000 increase in
mortgage banking operations revenue and a $1.1 million increase in
miscellaneous income, primarily due to a gain recognized on the
sale of a non-performing loan during the fourth quarter of 2024.
The increase in non-interest income during the current quarter
compared to the prior year quarter was primarily due to a $5.1
million decrease in the net loss recognized on the sale of
securities. Total non-interest income was $66.9 million for the
year ended December 31, 2024, compared to $44.4 million a year
earlier related mostly to the losses on the sale of investment
securities in 2023.
Mortgage banking operations revenue was $3.7 million in the
fourth quarter of 2024, compared to $3.2 million in the preceding
quarter and $5.4 million in the fourth quarter a year ago. While
the volume of one- to four-family loans sold during the current
quarter increased compared to both the preceding and prior year
quarters, volumes remained low due to reduced refinancing and
purchase activity in the current rate environment. The increase
from the preceding quarter reflects a $508,000 gain related to the
pooled loan sale of $34.8 million of one- to four-family loans
during the fourth quarter of 2024. The decrease from the prior year
quarter primarily reflects a $3.5 million reversal of the lower of
cost or market adjustment on multifamily loans held for sale,
recognized during the fourth quarter of 2023, partially offset by
higher pricing and volumes of one- to four-family loans sold during
the current quarter compared to the fourth quarter of 2023. The
reversal was due to the transfer of all remaining multifamily loans
held for sale to the held for investment loan portfolio during the
same period. Home purchase activity accounted for 79% of one- to
four-family mortgage loan originations in the fourth quarter of
2024, 88% in the preceding quarter and 92% in the fourth quarter of
2023.
Total non-interest expense was $99.5 million in the fourth
quarter of 2024, compared to $96.3 million in the preceding quarter
and $96.6 million in the fourth quarter of 2023. The increase in
non-interest expense for the current quarter compared to the prior
quarter reflects a $691,000 increase in salary and employee
benefits, primarily resulting from increased incentive accruals,
partially offset by decreased medical premiums expense, a $923,000
increase in professional and legal expenses, primarily due to
increased consultant expenses, and a $550,000 increase in
advertising and marketing expenses, primarily due to increases in
printed media marketing and community development expenses. The
increase in non-interest expense for the current quarter compared
to the same quarter a year ago primarily reflects increases in
salary and employee benefits and professional and legal expenses.
For the year ended December 31, 2024, total non-interest expense
was $391.5 million, compared to $382.5 million for the year ended
December 31, 2023. Banner’s efficiency ratio was 61.95% for the
fourth quarter of 2024, compared to 62.63% in the preceding quarter
and 63.37% in the same quarter a year ago. Banner’s adjusted
efficiency ratio, a non-GAAP financial measure, was 60.74% for the
fourth quarter of 2024, compared to 61.27% in the preceding quarter
and 60.04% in the year ago quarter. See, “Additional Financial
Information - Non-GAAP Financial Measures” on the final two pages
of this press release for a discussion and reconciliation of
non-GAAP financial measures.
Balance Sheet Review
Total assets increased to $16.20 billion at December 31, 2024,
compared to $16.19 billion at September 30, 2024, and $15.67
billion at December 31, 2023. Securities and interest-bearing
deposits held at other banks totaled $3.40 billion at December 31,
2024, compared to $3.50 billion at September 30, 2024 and $3.48
billion at December 31, 2023. The decrease compared to the prior
quarter was primarily due to a decrease in securities - available
for sale. The average effective duration of the securities
portfolio was approximately 6.6 years at December 31, 2024,
compared to 6.5 years at December 31, 2023.
Total loans receivable increased to $11.35 billion at December
31, 2024, compared to $11.22 billion at September 30, 2024, and
$10.81 billion at December 31, 2023. Commercial real estate loans
increased 2% to $3.86 billion at December 31, 2024, compared to
$3.79 billion at September 30, 2024, and increased 6% compared to
$3.64 billion at December 31, 2023. The increase in commercial real
estate loans from September 30, 2024 and December 31, 2023 was
primarily the result of new loan production and the conversion of
commercial construction loans to the commercial real estate
portfolio upon the completion of the construction phase. Commercial
business loans increased 2% to $2.42 billion at December 31, 2024,
compared to $2.37 billion at September 30, 2024 and increased 6%
compared to $2.28 billion at December 31, 2023, primarily due to
new loan production. One- to four-family residential loans
increased 1% to $1.59 billion at December 31, 2024, compared to
$1.58 billion at September 30, 2024, and increased 5% compared to
$1.52 billion at December 31, 2023. The increase in one- to
four-family residential loans was primarily the result of one- to
four-family construction loans converting to one- to four-family
portfolio loans upon the completion of the construction phase and
new loan production. Multifamily real estate loans increased 1% to
$894.4 million at December 31, 2024, compared to $889.9 million at
September 30, 2024, and increased 10% compared to $811.2 million at
December 31, 2023. The increase in multifamily real estate loans
from September 30, 2024 and December 31, 2023 was primarily the
result of the conversion of multifamily construction loans to the
multifamily portfolio upon the completion of the construction
phase.
Loans held for sale were $32.0 million at December 31, 2024,
compared to $78.8 million at September 30, 2024 and $11.2 million
at December 31, 2023. One- to four- family residential mortgage
held for sale loans sold in the current quarter totaled $153.2
million, compared to $95.0 million in the preceding quarter and
$65.6 million in the fourth quarter a year ago. The decrease in
loans held for sale compared to the prior quarter was primarily the
result of the pooled loan sale of $34.8 million of one- to
four-family residential loans during the current quarter.
Total deposits were $13.51 billion at December 31, 2024,
compared to $13.54 billion at September 30, 2024 and $13.03 billion
a year ago. Core deposits decreased slightly to $12.01 billion at
December 31, 2024, compared to $12.02 billion at September 30,
2024, and increased 4% compared to $11.55 billion at December 31,
2023. The increase in core deposits compared to the prior year
quarter primarily reflects increases in interest-bearing
transaction and savings accounts. Core deposits were 89% of total
deposits at December 31, 2024, September 30, 2024 and December 31,
2023. Certificates of deposit decreased 1% to $1.50 billion at
December 31, 2024, compared to $1.52 billion at September 30, 2024,
and increased 2% compared to $1.48 billion a year earlier. The
decrease in certificates of deposit during the current quarter
compared to the preceding quarter was primarily the result of
clients moving funds from certificates of deposits to
interest-bearing transaction and savings accounts. The increase in
certificates of deposit during the current quarter compared to the
fourth quarter a year ago was principally due to clients seeking
higher yields moving funds from core deposit accounts to higher
yielding certificates of deposit, partially offset by a $57.7
million decrease in brokered deposits.
FHLB advances were $290.0 million at December 31, 2024, compared
to $230.0 million at September 30, 2024 and $323.0 million a year
ago. At December 31, 2024, off-balance sheet liquidity included
additional borrowing capacity of $2.95 billion at the FHLB and
$1.52 billion at the Federal Reserve as well as federal funds line
of credit agreements with other financial institutions of $125.0
million.
At December 31, 2024, total common shareholders’ equity was
$1.77 billion or 10.95% of total assets, compared to $1.79 billion
or 11.08% of total assets at September 30, 2024, and $1.65 billion
or 10.55% of total assets at December 31, 2023. The decrease in
total common shareholders’ equity at December 31, 2024 compared to
September 30, 2024 was due to an increase in accumulated other
comprehensive loss of $51.7 million as the result of a decrease in
the fair value of the security portfolio, partially offset by a
$29.6 million increase in retained earnings as a result of $46.4
million in net income, partially offset by the accrual of $16.8
million of cash dividends during the fourth quarter of 2024. At
December 31, 2024, tangible common shareholders’ equity, a non-GAAP
financial measure, was $1.40 billion, or 8.84% of tangible assets,
compared to $1.42 billion, or 8.96% of tangible assets, at
September 30, 2024, and $1.27 billion, or 8.33% of tangible assets,
a year ago. See, “Additional Financial Information - Non-GAAP
Financial Measures” on the final two pages of this press release
for a reconciliation of non-GAAP financial measures.
Banner and Banner Bank continue to maintain capital levels in
excess of the requirements to be categorized as “well-capitalized.”
At December 31, 2024, Banner’s estimated common equity Tier 1
capital ratio was 12.44%, its estimated Tier 1 leverage capital to
average assets ratio was 11.05%, and its estimated total capital to
risk-weighted assets ratio was 15.04%. These regulatory capital
ratios are estimates, pending completion and filing of Banner’s
regulatory reports.
Credit Quality
The allowance for credit losses - loans was $155.5 million, or
1.37% of total loans receivable and 421% of non-performing loans,
at December 31, 2024, compared to $154.6 million, or 1.38% of total
loans receivable and 359% of non-performing loans, at September 30,
2024, and $149.6 million, or 1.38% of total loans receivable and
506% of non-performing loans, at December 31, 2023. In addition to
the allowance for credit losses - loans, Banner maintains an
allowance for credit losses - unfunded loan commitments, which was
$13.6 million at December 31, 2024, compared to $13.8 million at
September 30, 2024, and $14.5 million at December 31, 2023. Net
loan charge-offs totaled $2.3 million in the fourth quarter of
2024, compared to $230,000 in the preceding quarter and $1.1
million in the fourth quarter a year ago. Non-performing loans were
$37.0 million at December 31, 2024, compared to $43.0 million at
September 30, 2024, and $29.6 million a year ago.
An increase in adversely classified loans, offset in part by
payoffs and paydowns, resulted in total substandard loans of $192.5
million as of December 31, 2024. This compares to $150.1 million as
of September 30, 2024 and $125.4 million a year ago.
Total non-performing assets were $39.6 million, or 0.24% of
total assets, at December 31, 2024, compared to $45.2 million, or
0.28% of total assets, at September 30, 2024, and $30.1 million, or
0.19% of total assets, a year ago.
Conference Call
Banner will host a conference call on Thursday, January 23,
2025, at 8:00 a.m. PST, to discuss its fourth quarter results.
Interested investors may listen to the call live at
www.bannerbank.com. Investment professionals are invited to dial
(833) 470-1428 using access code 347551 to participate in the call.
A replay of the call will be available at www.bannerbank.com.
About the Company
Banner Corporation is a $16.20 billion bank holding company
operating a commercial bank in four Western states through a
network of branches offering 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 “may,”
“believe,” “will,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “plans,”
“potential,” 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 and based only on
information then actually known to Banner. Banner does not
undertake and specifically disclaims any obligation to revise any
forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such
statements. 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 and could negatively affect Banner’s operating and stock
price performance.
Factors that could cause Banner’s actual results to differ
materially from those described in the forward-looking statements,
include but are not limited to, the following: (1) adverse impacts
to economic conditions in our local market areas, other markets
where the Company has lending relationships, or other aspects of
the Company’s business operations or financial markets, including,
without limitation, as a result of employment levels, labor
shortages and the effects of inflation, a recession or slowed
economic growth, or increased political instability due to acts of
war; (2) changes in the interest rate environment, including
increases or decreases in the Board of Governors of the Federal
Reserve System (the “Federal Reserve”) benchmark rate and duration
at which such interest rate levels are maintained, which could
affect our revenues and expenses, the value of assets and
obligations, and the availability and cost of capital and
liquidity; (3) the impact of inflation and the current and future
monetary policies of the Federal Reserve in response thereto; (4)
the effects of any federal government shutdown; (5) the impact of
bank failures or adverse developments at other banks and related
negative press about the banking industry in general on investor
and depositor sentiment; (6) expectations regarding key growth
initiatives and strategic priorities; (7) 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 credit losses, which could
necessitate additional provisions for credit losses, resulting both
from loans originated and loans acquired from other financial
institutions; (8) results of examinations by regulatory
authorities, including the possibility that any such regulatory
authority may, among other things, require increases in the
allowance for credit losses or writing down of assets or impose
restrictions or penalties with respect to Banner’s activities; (9)
competitive pressures among depository institutions, including
repricing and competitors’ pricing initiatives, and their impact on
Banner's market position, loan, and deposit products; (10) the
effect of inflation on interest rate movements and their impact on
client behavior and net interest margin; (11) fluctuations in real
estate values; (12) the ability to adapt successfully to
technological changes to meet clients’ needs and developments in
the market place; (13) the ability to access cost-effective
funding; (14) disruptions, security breaches or other adverse
events, failures or interruptions in, or attacks on, information
technology systems or on the third-party vendors who perform
critical processing functions; (15) changes in financial markets;
(16) changes in economic conditions in general and in Washington,
Idaho, Oregon and California in particular; (17) the costs, effects
and outcomes of litigation; (18) legislation or regulatory changes,
including but not limited to changes in regulatory policies and
principles, or the interpretation of regulatory capital or other
rules, other governmental initiatives affecting the financial
services industry and changes in federal and/or state tax laws or
interpretations thereof by taxing authorities; (19) the potential
imposition of new tariffs or changes to existing trade policies
that could affect economic activity or specific industry sectors
including, but not limited to, our agriculture based lending; (20)
changes in accounting principles, policies or guidelines; (21)
future acquisitions by Banner of other depository institutions or
lines of business, and associated risks of goodwill impairment due
to changes in Banner’s business or market conditions; (22) effects
of critical accounting policies and judgments, including the use of
estimates in determining fair value of certain of our assets, which
estimates may prove to be incorrect and result in significant
declines in valuation; (23) environmental, social and governance
goals and targets; (24) other economic, competitive, governmental,
regulatory, and technological factors affecting our operations,
pricing, products and services; and (25) other risks detailed from
time to time in Banner’s other reports filed with and furnished to
the Securities and Exchange Commission including Banner’s Quarterly
Reports on Form 10-Q and Annual Reports on Form 10-K.
RESULTS OF
OPERATIONS
Quarters Ended
Year Ended
(in thousands except shares and per share
data)
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
INTEREST INCOME:
Loans receivable
$
169,586
$
168,338
$
154,532
$
655,590
$
577,891
Mortgage-backed securities
16,086
16,357
17,398
66,085
72,352
Securities and cash equivalents
10,764
11,146
11,808
44,428
51,329
Total interest income
196,436
195,841
183,738
766,103
701,572
INTEREST EXPENSE:
Deposits
52,217
53,785
39,342
199,465
100,126
Federal Home Loan Bank (FHLB) advances
85
2,263
1,870
8,941
10,524
Other borrowings
817
1,147
1,125
4,299
3,376
Subordinated debt
2,781
2,971
2,992
11,682
11,541
Total interest expense
55,900
60,166
45,329
224,387
125,567
Net interest income
140,536
135,675
138,409
541,716
576,005
PROVISION FOR CREDIT LOSSES
3,000
1,692
2,522
7,581
10,789
Net interest income after provision for
credit losses
137,536
133,983
135,887
534,135
565,216
NON-INTEREST INCOME:
Deposit fees and other service charges
11,018
10,741
9,560
43,371
41,638
Mortgage banking operations
3,686
3,180
5,391
12,207
11,817
Bank-owned life insurance
2,144
2,445
2,609
9,193
9,245
Miscellaneous
2,751
1,658
1,159
8,289
5,169
19,599
18,024
18,719
73,060
67,869
Net gain (loss) on sale of securities
275
—
(4,806
)
(5,190
)
(19,242
)
Net change in valuation of financial
instruments carried at fair value
161
39
139
(982
)
(4,218
)
Total non-interest income
20,035
18,063
14,052
66,888
44,409
NON-INTEREST EXPENSE:
Salary and employee benefits
62,523
61,832
60,111
250,555
244,563
Less capitalized loan origination
costs
(4,188
)
(4,354
)
(3,871
)
(16,857
)
(16,257
)
Occupancy and equipment
12,141
12,040
12,200
48,771
47,886
Information and computer data services
7,471
7,134
7,098
29,165
28,445
Payment and card processing services
5,771
5,346
6,088
22,518
20,547
Professional and legal expenses
3,025
2,102
2,267
7,858
9,830
Advertising and marketing
1,711
1,161
1,686
5,149
4,794
Deposit insurance
2,857
2,874
2,926
11,398
10,529
State and municipal business and use
taxes
1,518
1,432
1,372
5,648
5,260
Real estate operations, net
113
103
47
293
(538
)
Amortization of core deposit
intangibles
589
590
858
2,626
3,756
Miscellaneous
5,947
6,031
5,839
24,414
23,723
Total non-interest expense
99,478
96,291
96,621
391,538
382,538
Income before provision for income
taxes
58,093
55,755
53,318
209,485
227,087
PROVISION FOR INCOME TAXES
11,702
10,602
10,694
40,587
43,463
NET INCOME
$
46,391
$
45,153
$
42,624
$
168,898
$
183,624
Earnings per common share:
Basic
$
1.34
$
1.31
$
1.24
$
4.90
$
5.35
Diluted
$
1.34
$
1.30
$
1.24
$
4.88
$
5.33
Cumulative dividends declared per common
share
$
0.48
$
0.48
$
0.48
$
1.92
$
1.92
Weighted average number of common shares
outstanding:
Basic
34,501,016
34,498,830
34,381,780
34,470,057
34,344,142
Diluted
34,743,024
34,650,322
34,472,155
34,628,710
34,450,412
Increase in common shares outstanding
3,144
936
2,420
111,463
154,351
FINANCIAL
CONDITION
Percentage Change
(in thousands except shares and per share
data)
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Prior Qtr
Prior Yr Qtr
ASSETS
Cash and due from banks
$
203,402
$
226,568
$
209,634
(10
)%
(3
)%
Interest-bearing deposits
298,456
252,227
44,830
18
%
566
%
Total cash and cash equivalents
501,858
478,795
254,464
5
%
97
%
Securities - available for sale, amortized
cost $2,460,262, $2,523,968, and $2,729,980, respectively
2,104,511
2,237,939
2,373,783
(6
)%
(11
)%
Securities - held to maturity, fair value
$825,528, $879,278, and $907,514, respectively
1,001,564
1,013,903
1,059,055
(1
)%
(5
)%
Total securities
3,106,075
3,251,842
3,432,838
(4
)%
(10
)%
FHLB stock
22,451
19,751
24,028
14
%
(7
)%
Loans held for sale
32,021
78,841
11,170
(59
)%
187
%
Loans receivable
11,354,656
11,224,606
10,810,455
1
%
5
%
Allowance for credit losses – loans
(155,521
)
(154,585
)
(149,643
)
1
%
4
%
Net loans receivable
11,199,135
11,070,021
10,660,812
1
%
5
%
Accrued interest receivable
60,885
66,981
63,100
(9
)%
(4
)%
Property and equipment, net
124,589
125,256
132,231
(1
)%
(6
)%
Goodwill
373,121
373,121
373,121
—
%
—
%
Other intangibles, net
3,058
3,647
5,684
(16
)%
(46
)%
Bank-owned life insurance
312,549
310,400
304,366
1
%
3
%
Operating lease right-of-use assets
39,998
38,192
43,731
5
%
(9
)%
Other assets
424,297
371,829
364,846
14
%
16
%
Total assets
$
16,200,037
$
16,188,676
$
15,670,391
—
%
3
%
LIABILITIES
Deposits:
Non-interest-bearing
$
4,591,543
$
4,688,244
$
4,792,369
(2
)%
(4
)%
Interest-bearing transaction and savings
accounts
7,423,183
7,328,051
6,759,661
1
%
10
%
Interest-bearing certificates
1,499,672
1,521,853
1,477,467
(1
)%
2
%
Total deposits
13,514,398
13,538,148
13,029,497
—
%
4
%
Advances from FHLB
290,000
230,000
323,000
26
%
(10
)%
Other borrowings
125,257
154,533
182,877
(19
)%
(32
)%
Subordinated notes, net
80,278
80,170
92,851
—
%
(14
)%
Junior subordinated debentures at fair
value
67,477
66,257
66,413
2
%
2
%
Operating lease liabilities
43,472
42,318
48,659
3
%
(11
)%
Accrued expenses and other liabilities
258,070
237,128
228,428
9
%
13
%
Deferred compensation
46,759
46,401
45,975
1
%
2
%
Total liabilities
14,425,711
14,394,955
14,017,700
—
%
3
%
SHAREHOLDERS’
EQUITY
Common stock
1,307,509
1,304,792
1,299,651
—
%
1
%
Retained earnings
744,091
714,472
642,175
4
%
16
%
Accumulated other comprehensive loss
(277,274
)
(225,543
)
(289,135
)
23
%
(4
)%
Total shareholders’ equity
1,774,326
1,793,721
1,652,691
(1
)%
7
%
Total liabilities and shareholders’
equity
$
16,200,037
$
16,188,676
$
15,670,391
—
%
3
%
Common Shares Issued:
Shares outstanding at end of period
34,459,832
34,456,688
34,348,369
Common shareholders’ equity per share
(1)
$
51.49
$
52.06
$
48.12
Common shareholders’ tangible equity per
share (1) (2)
$
40.57
$
41.12
$
37.09
Common shareholders’ equity to total
assets
10.95
%
11.08
%
10.55
%
Common shareholders’ tangible equity to
tangible assets (2)
8.84
%
8.96
%
8.33
%
Consolidated Tier 1 leverage capital
ratio
11.05
%
10.91
%
10.56
%
(1)
Calculation is based on number of common
shares outstanding at the end of the period rather than weighted
average shares outstanding.
(2)
Common shareholders’ tangible equity and
tangible assets exclude goodwill and other intangible assets. These
ratios represent non-GAAP financial measures. See, “Additional
Financial Information - Non-GAAP Financial Measures” on the final
two pages of this press release for a reconciliation of non-GAAP
financial measures.
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
LOANS
Percentage Change
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Prior Qtr
Prior Yr Qtr
Commercial real estate (CRE):
Owner-occupied
$
1,027,426
$
990,516
$
915,897
4
%
12
%
Investment properties
1,623,672
1,583,863
1,541,344
3
%
5
%
Small balance CRE
1,213,792
1,218,822
1,178,500
—
%
3
%
Multifamily real estate
894,425
889,866
811,232
1
%
10
%
Construction, land and land
development:
Commercial construction
122,362
124,051
170,011
(1
)%
(28
)%
Multifamily construction
513,706
524,108
503,993
(2
)%
2
%
One- to four-family construction
514,220
507,350
526,432
1
%
(2
)%
Land and land development
369,663
370,690
336,639
—
%
10
%
Commercial business:
Commercial business
1,318,333
1,281,615
1,255,734
3
%
5
%
Small business scored
1,104,117
1,087,714
1,022,154
2
%
8
%
Agricultural business, including secured
by farmland:
Agricultural business, including secured
by farmland
340,280
346,686
331,089
(2
)%
3
%
One- to four-family residential
1,591,260
1,575,164
1,518,046
1
%
5
%
Consumer:
Consumer—home equity revolving lines of
credit
625,680
622,615
588,703
—
%
6
%
Consumer—other
95,720
101,546
110,681
(6
)%
(14
)%
Total loans receivable
$
11,354,656
$
11,224,606
$
10,810,455
1
%
5
%
Loans 30 - 89 days past due and on
accrual
$
26,824
$
13,030
$
19,744
Total delinquent loans (including loans on
non-accrual), net
$
55,432
$
44,656
$
43,164
Total delinquent loans / Total loans
receivable
0.49
%
0.40
%
0.40
%
LOANS BY
GEOGRAPHIC LOCATION
Percentage Change
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Prior Qtr
Prior Yr Qtr
Amount
Percentage
Amount
Amount
Washington
$
5,245,886
46
%
$
5,203,637
$
5,095,602
1
%
3
%
California
2,861,435
25
%
2,796,965
2,670,923
2
%
7
%
Oregon
2,113,229
19
%
2,108,229
1,974,001
—
%
7
%
Idaho
665,158
6
%
652,148
610,064
2
%
9
%
Utah
82,459
1
%
85,316
68,931
(3
)%
20
%
Other
386,489
3
%
378,311
390,934
2
%
(1
)%
Total loans receivable
$
11,354,656
100
%
$
11,224,606
$
10,810,455
1
%
5
%
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
LOAN
ORIGINATIONS
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Commercial real estate
$
124,554
$
114,372
$
76,277
$
408,546
$
309,022
Multifamily real estate
3,120
314
5,360
6,593
57,046
Construction and land
303,345
472,506
382,905
1,759,799
1,541,383
Commercial business
250,515
179,871
166,984
752,269
585,047
Agricultural business
17,177
5,877
15,058
79,715
84,072
One-to four-family residential
29,531
24,488
37,446
106,085
167,951
Consumer
73,791
96,137
57,427
356,543
300,913
Total loan originations (excluding loans
held for sale)
$
802,033
$
893,565
$
741,457
$
3,469,550
$
3,045,434
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
CHANGE IN THE
ALLOWANCE FOR CREDIT LOSSES – LOANS
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Balance, beginning of period
$
154,585
$
152,848
$
146,960
$
149,643
$
141,465
Provision for credit losses – loans
3,219
1,967
3,821
8,563
11,097
Recoveries of loans previously charged
off:
Commercial real estate
1,215
65
129
2,767
557
Construction and land
—
—
—
—
29
One- to four-family real estate
124
14
18
171
230
Commercial business
245
613
237
1,963
1,283
Agricultural business, including secured
by farmland
2
1
16
304
146
Consumer
164
41
131
476
543
1,750
734
531
5,681
2,788
Loans charged off:
Commercial real estate
(4
)
—
—
(351
)
—
Construction and land
(5
)
(145
)
(933
)
(150
)
(1,089
)
One- to four-family real estate
—
—
(8
)
—
(42
)
Commercial business
(3,595
)
(414
)
(310
)
(5,955
)
(2,650
)
Agricultural business, including secured
by farmland
—
—
—
—
(564
)
Consumer
(429
)
(405
)
(418
)
(1,910
)
(1,362
)
(4,033
)
(964
)
(1,669
)
(8,366
)
(5,707
)
Net charge-offs
(2,283
)
(230
)
(1,138
)
(2,685
)
(2,919
)
Balance, end of period
$
155,521
$
154,585
$
149,643
$
155,521
$
149,643
Net charge-offs / Average loans
receivable
(0.020
)%
(0.002
)%
(0.011
)%
(0.024
)%
(0.028
)%
ALLOCATION OF
ALLOWANCE FOR CREDIT LOSSES – LOANS
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Commercial real estate
$
40,830
$
40,040
$
44,384
Multifamily real estate
10,308
10,233
9,326
Construction and land
29,038
28,322
28,095
One- to four-family real estate
20,807
20,463
19,271
Commercial business
38,611
39,779
35,464
Agricultural business, including secured
by farmland
5,727
5,340
3,865
Consumer
10,200
10,408
9,238
Total allowance for credit losses –
loans
$
155,521
$
154,585
$
149,643
Allowance for credit losses - loans /
Total loans receivable
1.37
%
1.38
%
1.38
%
Allowance for credit losses - loans /
Non-performing loans
421
%
359
%
506
%
CHANGE IN THE
ALLOWANCE FOR CREDIT LOSSES - UNFUNDED LOAN
COMMITMENTS
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Balance, beginning of period
$
13,765
$
14,027
$
15,010
$
14,484
$
14,721
Recapture of provision for credit losses -
unfunded loan commitments
(203
)
(262
)
(526
)
(922
)
(237
)
Balance, end of period
$
13,562
$
13,765
$
14,484
$
13,562
$
14,484
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
NON-PERFORMING
ASSETS
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Loans on non-accrual status:
Secured by real estate:
Commercial
$
2,186
$
2,127
$
2,677
Construction and land
3,963
4,286
3,105
One- to four-family
10,016
9,592
5,702
Commercial business
7,067
10,705
9,002
Agricultural business, including secured
by farmland
8,485
7,703
3,167
Consumer
4,835
4,636
3,204
36,552
39,049
26,857
Loans more than 90 days delinquent, still
on accrual:
Secured by real estate:
Commercial
—
2,258
—
Construction and land
—
380
1,138
One- to four-family
369
961
1,205
Commercial business
—
—
1
Consumer
35
359
401
404
3,958
2,745
Total non-performing loans
36,956
43,007
29,602
REO
2,367
2,221
526
Other repossessed assets
300
—
—
Total non-performing assets
$
39,623
$
45,228
$
30,128
Total non-performing assets to total
assets
0.24
%
0.28
%
0.19
%
LOANS BY CREDIT
RISK RATING
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Pass
$
11,118,744
$
11,022,014
$
10,671,281
Special Mention
43,451
52,497
13,732
Substandard
192,461
150,095
125,442
Total
$
11,354,656
$
11,224,606
$
10,810,455
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
DEPOSIT
COMPOSITION
Percentage Change
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Prior Qtr
Prior Yr Qtr
Non-interest-bearing
$
4,591,543
$
4,688,244
$
4,792,369
(2
)%
(4
)%
Interest-bearing checking
2,393,864
2,344,561
2,098,526
2
%
14
%
Regular savings accounts
3,478,423
3,339,859
2,980,530
4
%
17
%
Money market accounts
1,550,896
1,643,631
1,680,605
(6
)%
(8
)%
Total interest-bearing transaction and
savings accounts
7,423,183
7,328,051
6,759,661
1
%
10
%
Total core deposits
12,014,726
12,016,295
11,552,030
—
%
4
%
Interest-bearing certificates
1,499,672
1,521,853
1,477,467
(1
)%
2
%
Total deposits
$
13,514,398
$
13,538,148
$
13,029,497
—
%
4
%
GEOGRAPHIC
CONCENTRATION OF DEPOSITS
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Percentage Change
Amount
Percentage
Amount
Amount
Prior Qtr
Prior Yr Qtr
Washington
$
7,441,413
55
%
$
7,413,414
$
7,247,392
—
%
3
%
Oregon
2,981,327
22
%
2,997,843
2,852,677
(1
)%
5
%
California
2,392,573
18
%
2,423,295
2,269,557
(1
)%
5
%
Idaho
699,085
5
%
703,596
659,871
(1
)%
6
%
Total deposits
$
13,514,398
100
%
$
13,538,148
$
13,029,497
—
%
4
%
INCLUDED IN TOTAL
DEPOSITS
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Public non-interest-bearing accounts
$
165,667
$
141,541
$
146,916
Public interest-bearing transaction &
savings accounts
248,746
246,332
209,699
Public interest-bearing certificates
25,423
28,144
52,048
Total public deposits
$
439,836
$
416,017
$
408,663
Collateralized public deposits
$
336,376
$
317,960
$
305,306
Total brokered deposits
$
50,346
$
50,333
$
108,058
AVERAGE ACCOUNT
BALANCE PER DEPOSIT ACCOUNT
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Number of deposit accounts
460,004
459,127
463,750
Average account balance per account
$
30
$
30
$
29
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
ESTIMATED
REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2024
Actual
Minimum to be
categorized as
"Adequately
Capitalized"
Minimum to be
categorized as
"Well
Capitalized"
Amount
Ratio
Amount
Ratio
Amount
Ratio
Banner Corporation-consolidated:
Total capital to risk-weighted assets
$
2,024,046
15.04
%
$
1,076,652
8.00
%
$
1,345,814
10.00
%
Tier 1 capital to risk-weighted assets
1,760,065
13.08
%
807,489
6.00
%
807,489
6.00
%
Tier 1 leverage capital to average
assets
1,760,065
11.05
%
636,913
4.00
%
n/a
n/a
Common equity tier 1 capital to
risk-weighted assets
1,673,565
12.44
%
605,616
4.50
%
n/a
n/a
Banner Bank:
Total capital to risk-weighted assets
1,890,438
14.03
%
1,077,725
8.00
%
1,347,157
10.00
%
Tier 1 capital to risk-weighted assets
1,726,457
12.82
%
808,294
6.00
%
1,077,725
8.00
%
Tier 1 leverage capital to average
assets
1,726,457
10.83
%
637,392
4.00
%
796,740
5.00
%
Common equity tier 1 capital to
risk-weighted assets
1,726,457
12.82
%
606,221
4.50
%
875,652
6.50
%
These regulatory capital ratios are estimates, pending
completion and filing of Banner’s regulatory reports.
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET
INTEREST SPREAD
Quarters Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Average
Balance
Interest
and
Dividends
Yield /
Cost (3)
Average
Balance
Interest
and
Dividends
Yield /
Cost (3)
Average
Balance
Interest
and
Dividends
Yield /
Cost (3)
Interest-earning assets:
Held for sale loans
$
61,585
$
1,049
6.78
%
$
26,954
$
453
6.69
%
$
31,148
$
447
5.69
%
Mortgage loans
9,267,076
136,831
5.87
%
9,207,468
135,497
5.85
%
8,770,029
123,382
5.58
%
Commercial/agricultural loans
1,900,337
31,873
6.67
%
1,879,215
32,547
6.89
%
1,822,069
30,447
6.63
%
Consumer and other loans
124,726
2,078
6.63
%
128,548
2,154
6.67
%
138,049
2,237
6.43
%
Total loans (1)
11,353,724
171,831
6.02
%
11,242,185
170,651
6.04
%
10,761,295
156,513
5.77
%
Mortgage-backed securities
2,576,908
16,228
2.51
%
2,623,399
16,498
2.50
%
2,798,647
17,541
2.49
%
Other securities
919,742
10,281
4.45
%
943,310
11,120
4.69
%
1,035,842
11,993
4.59
%
Interest-bearing deposits with banks
107,404
1,043
3.86
%
51,604
493
3.80
%
45,286
506
4.43
%
FHLB stock
9,887
316
12.71
%
16,664
412
9.84
%
15,326
215
5.57
%
Total investment securities
3,613,941
27,868
3.07
%
3,634,977
28,523
3.12
%
3,895,101
30,255
3.08
%
Total interest-earning assets
14,967,665
199,699
5.31
%
14,877,162
199,174
5.33
%
14,656,396
186,768
5.06
%
Non-interest-earning assets
1,016,366
981,290
875,719
Total assets
$
15,984,031
$
15,858,452
$
15,532,115
Deposits:
Interest-bearing checking accounts
$
2,377,179
9,279
1.55
%
$
2,295,723
9,497
1.65
%
$
2,060,226
5,907
1.14
%
Savings accounts
3,441,196
19,447
2.25
%
3,268,647
19,299
2.35
%
2,885,167
12,560
1.73
%
Money market accounts
1,584,092
8,510
2.14
%
1,611,543
9,184
2.27
%
1,723,426
7,644
1.76
%
Certificates of deposit
1,513,966
14,981
3.94
%
1,540,637
15,805
4.08
%
1,477,474
13,231
3.55
%
Total interest-bearing deposits
8,916,433
52,217
2.33
%
8,716,550
53,785
2.45
%
8,146,293
39,342
1.92
%
Non-interest-bearing deposits
4,640,557
—
—
%
4,601,755
—
—
%
5,036,523
—
—
%
Total deposits
13,556,990
52,217
1.53
%
13,318,305
53,785
1.61
%
13,182,816
39,342
1.18
%
Other interest-bearing liabilities:
FHLB advances
7,522
85
4.50
%
161,413
2,263
5.58
%
129,630
1,870
5.72
%
Other borrowings
143,097
817
2.27
%
159,439
1,147
2.86
%
185,518
1,125
2.41
%
Junior subordinated debentures and
subordinated notes
169,678
2,781
6.52
%
179,075
2,971
6.60
%
182,678
2,992
6.50
%
Total borrowings
320,297
3,683
4.57
%
499,927
6,381
5.08
%
497,826
5,987
4.77
%
Total funding liabilities
13,877,287
55,900
1.60
%
13,818,232
60,166
1.73
%
13,680,642
45,329
1.31
%
Other non-interest-bearing liabilities
(2)
324,447
311,803
311,539
Total liabilities
14,201,734
14,130,035
13,992,181
Shareholders’ equity
1,782,297
1,728,417
1,539,934
Total liabilities and shareholders’
equity
$
15,984,031
$
15,858,452
$
15,532,115
Net interest income/rate spread (tax
equivalent)
$
143,799
3.71
%
$
139,008
3.60
%
$
141,439
3.75
%
Net interest margin (tax equivalent)
3.82
%
3.72
%
3.83
%
Reconciliation to
reported net interest income:
Adjustments for taxable equivalent
basis
(3,263
)
(3,333
)
(3,030
)
Net interest income and margin, as
reported
$
140,536
3.74
%
$
135,675
3.63
%
$
138,409
3.75
%
Additional Key Financial
Ratios:
Return on average assets
1.15
%
1.13
%
1.09
%
Adjusted return on average assets (4)
1.15
%
1.13
%
1.18
%
Return on average equity
10.35
%
10.39
%
10.98
%
Adjusted return on average equity (4)
10.28
%
10.39
%
11.89
%
Average equity/average assets
11.15
%
10.90
%
9.91
%
Average interest-earning assets/average
interest-bearing liabilities
162.05
%
161.42
%
169.55
%
Average interest-earning assets/average
funding liabilities
107.86
%
107.66
%
107.13
%
Non-interest income/average assets
0.50
%
0.45
%
0.36
%
Non-interest expense/average assets
2.48
%
2.42
%
2.47
%
Efficiency ratio
61.95
%
62.63
%
63.37
%
Adjusted efficiency ratio (4)
60.74
%
61.27
%
60.04
%
(1)
Average balances include loans accounted
for on a nonaccrual basis and accruing loans 90 days or more past
due. Amortization of net deferred loan fees/costs is included with
interest on loans.
(2)
Average other non-interest-bearing
liabilities include fair value adjustments related to junior
subordinated debentures.
(3)
Tax-exempt income is calculated on a tax
equivalent basis. The tax equivalent yield adjustment to interest
earned on loans was $2.2 million, $2.3 million and $2.0 million for
the quarters ended December 31, 2024, September 30, 2024 and
December 31, 2023, respectively. The tax equivalent yield
adjustment to interest earned on tax exempt securities was $1.0
million for each of the quarters ended December 31, 2024, September
30, 2024 and December 31, 2023.
(4)
Represent non-GAAP financial measures.
See, “Additional Financial Information - Non-GAAP Financial
Measures” on the final two pages of this press release for a
reconciliation of non-GAAP financial measures.
ADDITIONAL FINANCIAL
INFORMATION
(dollars in thousands)
(rates / ratios annualized)
ANALYSIS OF NET
INTEREST SPREAD
Year Ended
Dec 31, 2024
Dec 31, 2023
Average
Balance
Interest and
Dividends
Yield / Cost (3)
Average
Balance
Interest and
Dividends
Yield / Cost (3)
Interest-earning assets:
Held for sale loans
$
27,627
$
1,875
6.79
%
$
49,106
$
2,621
5.34
%
Mortgage loans
9,094,276
526,842
5.79
%
8,513,487
460,664
5.41
%
Commercial/agricultural loans
1,871,024
127,028
6.79
%
1,782,141
113,250
6.35
%
Consumer and other loans
129,929
8,584
6.61
%
138,196
8,715
6.31
%
Total loans (1)
11,122,856
664,329
5.97
%
10,482,930
585,250
5.58
%
Mortgage-backed securities
2,650,010
66,652
2.52
%
2,927,650
72,927
2.49
%
Other securities
951,515
44,083
4.63
%
1,173,637
52,148
4.44
%
Interest-bearing deposits with banks
65,650
2,573
3.92
%
46,815
2,200
4.70
%
FHLB stock
16,658
1,302
7.82
%
17,903
847
4.73
%
Total investment securities
3,683,833
114,610
3.11
%
4,166,005
128,122
3.08
%
Total interest-earning assets
14,806,689
778,939
5.26
%
14,648,935
713,372
4.87
%
Non-interest-earning assets
967,122
917,018
Total assets
$
15,773,811
$
15,565,953
Deposits:
Interest-bearing checking accounts
$
2,233,902
33,113
1.48
%
$
1,921,326
13,334
0.69
%
Savings accounts
3,231,631
71,225
2.20
%
2,674,936
27,739
1.04
%
Money market accounts
1,632,092
35,206
2.16
%
1,908,983
24,089
1.26
%
Certificates of deposit
1,514,726
59,921
3.96
%
1,209,261
34,964
2.89
%
Total interest-bearing deposits
8,612,351
199,465
2.32
%
7,714,506
100,126
1.30
%
Non-interest-bearing deposits
4,647,100
—
—
%
5,436,953
—
—
%
Total deposits
13,259,451
199,465
1.50
%
13,151,459
100,126
0.76
%
Other interest-bearing liabilities:
FHLB advances
159,954
8,941
5.59
%
196,819
10,524
5.35
%
Other borrowings
164,613
4,299
2.61
%
199,291
3,376
1.69
%
Junior subordinated debentures and
subordinated notes
177,361
11,682
6.59
%
185,883
11,541
6.21
%
Total borrowings
501,928
24,922
4.97
%
581,993
25,441
4.37
%
Total funding liabilities
13,761,379
224,387
1.63
%
13,733,452
125,567
0.91
%
Other non-interest-bearing liabilities
(2)
308,667
295,098
Total liabilities
14,070,046
14,028,550
Shareholders’ equity
1,703,765
1,537,403
Total liabilities and shareholders’
equity
$
15,773,811
$
15,565,953
Net interest income/rate spread (tax
equivalent)
$
554,552
3.63
%
$
587,805
3.96
%
Net interest margin (tax equivalent)
3.75
%
4.01
%
Reconciliation to
reported net interest income:
Adjustments for taxable equivalent
basis
(12,836
)
(11,800
)
Net interest income and margin, as
reported
$
541,716
3.66
%
$
576,005
3.93
%
Additional Key Financial
Ratios:
Return on average assets
1.07
%
1.18
%
Adjusted return on average assets (4)
1.10
%
1.30
%
Return on average equity
9.91
%
11.94
%
Adjusted return on average equity (4)
10.19
%
13.17
%
Average equity/average assets
10.80
%
9.88
%
Average interest-earning assets/average
interest-bearing liabilities
162.46
%
176.57
%
Average interest-earning assets/average
funding liabilities
107.60
%
106.67
%
Non-interest income/average assets
0.42
%
0.29
%
Non-interest expense/average assets
2.48
%
2.46
%
Efficiency ratio
64.33
%
61.66
%
Adjusted efficiency ratio (4)
62.29
%
57.89
%
(1)
Average balances include loans accounted
for on a nonaccrual basis and loans 90 days or more past due.
Amortization of net deferred loan fees/costs is included with
interest on loans.
(2)
Average other non-interest-bearing
liabilities include fair value adjustments related to junior
subordinated debentures.
(3)
Tax-exempt income is calculated on a tax
equivalent basis. The tax equivalent yield adjustment to interest
earned on loans was $8.7 million and $7.4 million for the years
ended December 31, 2024 and 2023, respectively. The tax equivalent
yield adjustment to interest earned on tax exempt securities was
$4.1 million and $4.4 million for the years ended December 31, 2024
and 2023, respectively.
(4)
Represent non-GAAP financial measures.
See, “Additional Financial Information - Non-GAAP Financial
Measures” on the final two pages of this press release for a
reconciliation of non-GAAP financial measures.
ADDITIONAL FINANCIAL INFORMATION (dollars in
thousands)
* Non-GAAP Financial Measures
In addition to results presented in accordance with generally
accepted accounting principles in the United States of America
(GAAP), this earnings release contains certain non-GAAP financial
measures. Tangible common shareholders’ equity per share and the
ratio of tangible common equity to tangible assets, and references
to adjusted revenue, adjusted earnings, the adjusted return on
average assets, the adjusted return on average equity and the
adjusted efficiency ratio represent 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. However, these non-GAAP financial measures are
supplemental and are not a substitute for any analysis based on
GAAP. Where applicable, comparable earnings information using GAAP
financial measures is also presented. Because not all companies use
the same calculations, our presentation may not be comparable to
other similarly titled measures as calculated by other companies.
For a reconciliation of these non-GAAP financial measures, see the
tables below:
ADJUSTED REVENUE
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Net interest income (GAAP)
$
140,536
$
135,675
$
138,409
$
541,716
$
576,005
Non-interest income (GAAP)
20,035
18,063
14,052
66,888
44,409
Total revenue (GAAP)
160,571
153,738
152,461
608,604
620,414
Exclude:
Net (gain) loss on sale of securities
(275
)
—
4,806
5,190
19,242
Net change in valuation of financial
instruments carried at fair value
(161
)
(39
)
(139
)
982
4,218
Adjusted revenue (non-GAAP)
$
160,135
$
153,699
$
157,128
$
614,776
$
643,874
ADJUSTED EARNINGS
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Net income (GAAP)
$
46,391
$
45,153
$
42,624
$
168,898
$
183,624
Exclude:
Net (gain) loss on sale of securities
(275
)
—
4,806
5,190
19,242
Net change in valuation of financial
instruments carried at fair value
(161
)
(39
)
(139
)
982
4,218
Banner Forward expenses (1)
—
—
—
—
1,334
Related net tax expense (benefit)
105
9
(1,121
)
(1,481
)
(5,951
)
Total adjusted earnings (non-GAAP)
$
46,060
$
45,123
$
46,170
$
173,589
$
202,467
Diluted earnings per share (GAAP)
$
1.34
$
1.30
$
1.24
$
4.88
$
5.33
Diluted adjusted earnings per share (non-GAAP)
$
1.33
$
1.30
$
1.34
$
5.01
$
5.88
Return on average assets
1.15
%
1.13
%
1.09
%
1.07
%
1.18
%
Adjusted return on average assets (2)
1.15
%
1.13
%
1.18
%
1.10
%
1.30
%
Return on average equity
10.35
%
10.39
%
10.98
%
9.91
%
11.94
%
Adjusted return on average equity (3)
10.28
%
10.39
%
11.89
%
10.19
%
13.17
%
(1)
Included in miscellaneous expenses in
results of operations.
(2)
Adjusted earnings (non-GAAP) divided by
average assets.
(3)
Adjusted earnings (non-GAAP) divided by
average equity.
ADDITIONAL FINANCIAL INFORMATION (dollars in
thousands)
ADJUSTED EFFICIENCY RATIO
Quarters Ended
Year Ended
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Dec 31, 2024
Dec 31, 2023
Non-interest expense (GAAP)
$
99,478
$
96,291
$
96,621
$
391,538
$
382,538
Exclude:
Banner Forward expenses (1)
—
—
—
—
(1,334
)
CDI amortization
(589
)
(590
)
(858
)
(2,626
)
(3,756
)
State/municipal tax expense
(1,518
)
(1,432
)
(1,372
)
(5,648
)
(5,260
)
REO operations
(113
)
(103
)
(47
)
(293
)
538
Adjusted non-interest expense (non-GAAP)
$
97,258
$
94,166
$
94,344
$
382,971
$
372,726
Net interest income (GAAP)
$
140,536
$
135,675
$
138,409
$
541,716
$
576,005
Non-interest income (GAAP)
20,035
18,063
14,052
66,888
44,409
Total revenue (GAAP)
160,571
153,738
152,461
608,604
620,414
Exclude:
Net (gain) loss on sale of securities
(275
)
—
4,806
5,190
19,242
Net change in valuation of financial
instruments carried at fair value
(161
)
(39
)
(139
)
982
4,218
Adjusted revenue (non-GAAP)
$
160,135
$
153,699
$
157,128
$
614,776
$
643,874
Efficiency ratio (GAAP)
61.95
%
62.63
%
63.37
%
64.33
%
61.66
%
Adjusted efficiency ratio (non-GAAP) (2)
60.74
%
61.27
%
60.04
%
62.29
%
57.89
%
(1)
Included in miscellaneous expenses in
results of operations.
(2)
Adjusted non-interest expense (non-GAAP)
divided by adjusted revenue.
TANGIBLE COMMON SHAREHOLDERS’ EQUITY TO
TANGIBLE ASSETS
Dec 31, 2024
Sep 30, 2024
Dec 31, 2023
Shareholders’ equity (GAAP)
$
1,774,326
$
1,793,721
$
1,652,691
Exclude goodwill and other intangible
assets, net
376,179
376,768
378,805
Tangible common shareholders’ equity
(non-GAAP)
$
1,398,147
$
1,416,953
$
1,273,886
Total assets (GAAP)
$
16,200,037
$
16,188,676
$
15,670,391
Exclude goodwill and other intangible
assets, net
376,179
376,768
378,805
Total tangible assets (non-GAAP)
$
15,823,858
$
15,811,908
$
15,291,586
Common shareholders’ equity to total
assets (GAAP)
10.95
%
11.08
%
10.55
%
Tangible common shareholders’ equity to
tangible assets (non-GAAP)
8.84
%
8.96
%
8.33
%
TANGIBLE COMMON SHAREHOLDERS’ EQUITY
PER SHARE
Shareholders’ equity (GAAP)
$
1,774,326
$
1,793,721
$
1,652,691
Tangible common shareholders’ equity
(non-GAAP)
$
1,398,147
$
1,416,953
$
1,273,886
Common shares outstanding at end of
period
34,459,832
34,456,688
34,348,369
Common shareholders’ equity (book value)
per share (GAAP)
$
51.49
$
52.06
$
48.12
Tangible common shareholders’ equity
(tangible book value) per share (non-GAAP)
$
40.57
$
41.12
$
37.09
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250122279800/en/
Mark J. Grescovich, President & CEO Robert G. Butterfield,
CFO (509) 527-3636
Banner (NASDAQ:BANR)
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