WALLA WALLA, Wash., Feb. 2, 2015 (GLOBE NEWSWIRE) -- Banner Corporation (Nasdaq:BANR), the parent company of Banner Bank and Islanders Bank, today announced a downward adjustment of $482,000, or $0.03 per diluted share, to its previously reported fourth quarter and full year 2014 net income available to common shareholders. The revision relates entirely to an adjustment to Banner's provision for income taxes for the fourth quarter and has no effect on previously reported periods. The Company's earlier disclosure of fourth quarter and 2014 net income included a provision for income taxes which incorrectly reflected certain non-deductible merger and acquisition expenses as deductible for tax purposes. As a result, the provision for income taxes for the quarter and full year ended December 31, 2014 was understated by $482,000.
Banner's revised earnings of $11.7 million, or $0.60 per diluted share, for the quarter ended December 31, 2014, compares to $11.6 million or $0.60 per diluted share for the fourth quarter a year ago. The current quarter's results included $2.8 million of acquisition-related expenses which, net of the corrected amount of related tax benefit, reduced net income by $0.12 per diluted share compared to a previously reported amount of $0.09 per diluted share. For the year ended December 31, 2014, Banner's net income increased 16% to $54.2 million, or $2.79 per diluted share, compared to $46.6 million, or $2.40 per diluted share, in 2013.
The attached financial statements and related disclosures have been revised to reflect the changed provision for income taxes and related effects on net income, earnings per share, liabilities, stockholders equity, and book value and tangible book value per share, as well as the return on assets, return on equity and capital ratios. There are no changes to any revenue or non-tax related expense items, nor to any earning assets or costing liabilities included in the revised amounts.
About the Company
Banner Corporation is a $4.72 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 mergers 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 proposed mergers of Banner Bank and Siuslaw Bank and 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 shareholder and regulatory approvals for the transactions 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 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 or AmericanWest of other depository institutions or lines of business; (17) Banner's pending acquisition of Siuslaw Financial Group, Inc. or AmericanWest's pending acquisition of Greater Sacramento Bancorp may fail to be consummated; and (18) 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.
Additional Information
This communication is being made in respect of the proposed merger transactions involving Banner Corporation ("Banner"), Siuslaw Financial Group, Inc. and Starbuck Bancshares, Inc. ("Starbuck"), the parent company of AmericanWest Bank. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities. Banner has filed a proxy statement on Schedule 14A with the SEC in connection with the proposed transaction to acquire Starbuck, which after becoming effective will be sent to the Banner shareholders. Shareholders are advised to read the proxy statement when it becomes available because it will contain important information about Banner, Starbuck, and the proposed transaction. Banner also plans to file other documents with the SEC regarding the proposed transaction with Starbuck and the pending proposed merger transaction with Siuslaw Financial Group, Inc. When filed, these documents relating to the proposed transactions can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing Banner's website at http://www.bannerbank.com/AboutUs/InvestorRelations/SecuritiesandExchangeCommission(SEC)Filings/Pages/default.aspx. Alternatively, these documents, when available, can be obtained free of charge from Banner upon written request to Banner Corporation, Attn: Investor Relations, 10 South First Avenue, Walla Walla, Washington 99362 or by calling (509) 527-3636.
Banner Corporation and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Banner shareholders in connection with the proposed transaction with Starbuck. Information about these participants may be found in the definitive proxy statement of Banner relating to its 2014 Annual Meeting of Stockholders filed with the SEC by Banner on March 24, 2014. The definitive proxy statement can be obtained free of charge from the sources indicated above. Additional information regarding the interests of such participants will be included in the proxy statement and other relevant documents regarding the proposed merger transaction filed with the SEC when they become available, copies of which may also be obtained free of charge from the sources indicated above.
Banner has filed a registration statement on Form S-4 with the SEC in connection with the merger transaction with Siuslaw Financial Group, Inc. The registration statement includes a proxy statement of Siuslaw that also constitutes a prospectus of Banner, which has been sent to the shareholders of Siuslaw. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN, OR WILL CONTAIN, IMPORTANT INFORMATION ABOUT BANNER, SIUSLAW AND THE PROPOSED TRANSACTION. This document and other documents relating to the merger can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing Banner's website at:
or by accessing Siuslaw's website at http://www.siuslawbank.com/Investor-Relations.aspx.
Alternatively, these documents can be obtained free of charge from Banner upon written request to Banner Corporation, Attn: Investor Relations, 10 South First Avenue, Walla Walla, Washington 99362 or by calling (509) 527-3636, or from Siuslaw, upon written request to Siuslaw Financial Group, Inc., Attn: Investor Relations, P.O. Box 280, Florence, Oregon 97439 or by calling (541) 997-3486.
Banner Corporation and Siuslaw Financial Group, Inc., and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Siuslaw shareholders in connection with the merger. Information about the directors and executive officers of Siuslaw and the interests of these participants may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.
| RESULTS OF OPERATIONS | Quarters Ended | Twelve Months Ended | |||
| (in thousands except shares and per share data) | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 |
| REVISED | REVISED | ||||
| INTEREST INCOME: | |||||
| Loans receivable | $46,102 | $46,496 | $41,470 | $177,541 | $167,204 |
| Mortgage-backed securities | 1,403 | 1,459 | 1,321 | 5,779 | 5,168 |
| Securities and cash equivalents | 1,746 | 1,809 | 1,804 | 7,341 | 7,340 |
| 49,251 | 49,764 | 44,595 | 190,661 | 179,712 | |
| INTEREST EXPENSE: | |||||
| Deposits | 1,801 | 1,903 | 2,198 | 7,578 | 9,737 |
| Federal Home Loan Bank advances | 16 | 20 | 7 | 125 | 99 |
| Other borrowings | 40 | 43 | 41 | 172 | 192 |
| Junior subordinated debentures | 734 | 734 | 742 | 2,914 | 2,968 |
| 2,591 | 2,700 | 2,988 | 10,789 | 12,996 | |
| Net interest income before provision for loan losses | 46,660 | 47,064 | 41,607 | 179,872 | 166,716 |
| PROVISION FOR LOAN LOSSES | — | — | — | — | — |
| Net interest income | 46,660 | 47,064 | 41,607 | 179,872 | 166,716 |
| OTHER OPERATING INCOME: | |||||
| Deposit fees and other service charges | 8,317 | 8,289 | 6,670 | 30,553 | 26,581 |
| Mortgage banking operations | 2,966 | 2,842 | 2,168 | 10,249 | 11,170 |
| Miscellaneous | 916 | 761 | 1,110 | 2,957 | 3,484 |
| 12,199 | 11,892 | 9,948 | 43,759 | 41,235 | |
| Net gain on sale of securities | 1 | 6 | 2 | 42 | 1,022 |
| Other-than-temporary impairment recovery | — | — | — | — | 409 |
| Net change in valuation of financial instruments carried at fair value | (287) | 1,452 | (324) | 1,374 | (2,278) |
| Proposed acquisition termination fee | — | — | 2,954 | — | 2,954 |
| Acquisition bargain purchase gain | — | — | — | 9,079 | — |
| Total other operating income | 11,913 | 13,350 | 12,580 | 54,254 | 43,342 |
| OTHER OPERATING EXPENSE: | |||||
| Salary and employee benefits | 23,321 | 22,971 | 21,191 | 89,778 | 84,388 |
| Less capitalized loan origination costs | (3,050) | (3,204) | (2,371) | (11,730) | (11,227) |
| Occupancy and equipment | 5,689 | 5,819 | 5,362 | 22,743 | 21,423 |
| Information / computer data services | 2,147 | 2,131 | 1,956 | 8,131 | 7,309 |
| Payment and card processing services | 2,998 | 3,201 | 2,586 | 11,460 | 9,870 |
| Professional services | 863 | 784 | 1,531 | 3,753 | 4,331 |
| Advertising and marketing | 1,387 | 2,454 | 2,033 | 6,266 | 6,885 |
| Deposit insurance | 595 | 607 | 502 | 2,415 | 2,329 |
| State/municipal business and use taxes | 415 | 475 | 478 | 1,437 | 1,941 |
| Real estate operations | (187) | (190) | 357 | (446) | (689) |
| Amortization of core deposit intangibles | 531 | 531 | 488 | 1,990 | 1,941 |
| Miscellaneous | 3,735 | 3,410 | 2,266 | 13,619 | 11,924 |
| 38,444 | 38,989 | 36,379 | 149,416 | 140,425 | |
| Acquisition related costs | 2,785 | (494) | 550 | 4,325 | 550 |
| Total other operating expense | 41,229 | 38,495 | 36,929 | 153,741 | 140,975 |
| Income before provision for income taxes | 17,344 | 21,919 | 17,258 | 80,385 | 69,083 |
| PROVISION FOR INCOME TAXES | 5,600 | 7,076 | 5,704 | 26,220 | 22,528 |
| NET INCOME | $11,744 | $14,843 | $11,554 | $54,165 | $46,555 |
| Earnings per share available to common shareholders: | |||||
| Basic | $0.61 | $0.77 | $0.60 | $2.80 | $2.40 |
| Diluted | $0.60 | $0.76 | $0.60 | $2.79 | $2.40 |
| Cumulative dividends declared per common share | $0.18 | $0.18 | $0.15 | $0.72 | $0.54 |
| Weighted average common shares outstanding: | |||||
| Basic | 19,374,228 | 19,372,740 | 19,344,174 | 19,359,409 | 19,361,411 |
| Diluted | 19,441,712 | 19,419,344 | 19,398,213 | 19,402,656 | 19,397,360 |
| Change in common shares outstanding | 43 | 2,801 | 719 | 27,779 | 88,804 |
| FINANCIAL CONDITION | |||
| (in thousands except shares and per share data) | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 |
| REVISED | |||
| ASSETS | |||
| Cash and due from banks | $71,077 | $69,023 | $69,711 |
| Federal funds and interest-bearing deposits | 54,995 | 82,702 | 67,638 |
| Securities - trading | 40,258 | 51,076 | 62,472 |
| Securities - available for sale | 411,021 | 433,745 | 470,280 |
| Securities - held to maturity | 131,258 | 133,069 | 102,513 |
| Federal Home Loan Bank stock | 27,036 | 29,106 | 35,390 |
| Loans receivable: | |||
| Held for sale | 2,786 | 6,949 | 2,734 |
| Held for portfolio | 3,831,034 | 3,799,746 | 3,415,711 |
| Allowance for loan losses | (75,907) | (74,331) | (74,258) |
| 3,757,913 | 3,732,364 | 3,344,187 | |
| Accrued interest receivable | 15,279 | 17,062 | 13,996 |
| Real estate owned held for sale, net | 3,352 | 3,928 | 4,044 |
| Property and equipment, net | 91,185 | 91,291 | 90,267 |
| Other intangibles, net | 2,831 | 3,362 | 2,449 |
| Bank-owned life insurance | 63,759 | 63,293 | 61,945 |
| Other assets | 53,935 | 49,368 | 64,006 |
| $4,723,899 | $4,759,389 | $4,388,898 | |
| LIABILITIES | |||
| Deposits: | |||
| Non-interest-bearing | $1,298,866 | $1,304,720 | $1,115,346 |
| Interest-bearing transaction and savings accounts | 1,829,568 | 1,833,404 | 1,629,885 |
| Interest-bearing certificates | 770,516 | 852,994 | 872,695 |
| 3,898,950 | 3,991,118 | 3,617,926 | |
| Advances from Federal Home Loan Bank at fair value | 32,250 | 250 | 27,250 |
| Customer repurchase agreements | 77,185 | 67,605 | 83,056 |
| Junior subordinated debentures at fair value | 78,001 | 77,624 | 73,928 |
| Accrued expenses and other liabilities | 37,082 | 32,375 | 31,324 |
| Deferred compensation | 16,807 | 16,359 | 16,442 |
| 4,140,275 | 4,185,331 | 3,849,926 | |
| STOCKHOLDERS' EQUITY | |||
| Common stock | 568,882 | 568,255 | 569,028 |
| Retained earnings (accumulated deficit) | 15,000 | 6,780 | (25,073) |
| Other components of stockholders' equity | (258) | (977) | (4,983) |
| 583,624 | 574,058 | 538,972 | |
| $4,723,899 | $4,759,389 | $4,388,898 | |
| Common Shares Issued: | |||
| Shares outstanding at end of period | 19,571,548 | 19,571,505 | 19,543,769 |
| Less unearned ESOP shares at end of period | — | — | 34,340 |
| Shares outstanding at end of period excluding unearned ESOP shares | 19,571,548 | 19,571,505 | 19,509,429 |
| Common stockholders' equity per share (1) | $29.82 | $29.33 | $27.63 |
| Common stockholders' tangible equity per share (1) (2) | $29.68 | $29.16 | $27.50 |
| Common stockholders' tangible equity to tangible assets (2) | 12.30% | 12.00% | 12.23% |
| Consolidated Tier 1 leverage capital ratio | 13.41% | 13.14% | 13.64% |
| (1) Calculation is based on number of common shares outstanding at the end of the period rather than weighted average shares outstanding and excludes unallocated shares in the ESOP. | |||
| (2) Common stockholders' tangible equity excludes other intangibles. Tangible assets exclude other intangible assets. These ratios represent non-GAAP financial measures. See also Non-GAAP Financial Measures reconciliation tables on the final page of the press release tables. | |||
| ADDITIONAL FINANCIAL INFORMATION | |||
| (dollars in thousands) | |||
| Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | |
| LOANS (including loans held for sale): | |||
| Commercial real estate: | |||
| Owner occupied | $546,783 | $546,333 | $502,601 |
| Investment properties | 856,942 | 854,284 | 692,457 |
| Multifamily real estate | 167,524 | 183,944 | 137,153 |
| Commercial construction | 17,337 | 18,606 | 12,168 |
| Multifamily construction | 60,193 | 48,606 | 52,081 |
| One- to four-family construction | 219,889 | 214,141 | 200,864 |
| Land and land development: | |||
| Residential | 102,435 | 89,649 | 75,695 |
| Commercial | 11,152 | 10,505 | 10,450 |
| Commercial business | 723,964 | 728,088 | 682,169 |
| Agricultural business including secured by farmland | 238,499 | 240,048 | 228,291 |
| One- to four-family real estate | 539,894 | 527,271 | 529,494 |
| Consumer: | |||
| Consumer secured by one- to four-family real estate | 222,205 | 215,385 | 173,188 |
| Consumer-other | 127,003 | 129,835 | 121,834 |
| Total loans outstanding | $3,833,820 | $3,806,695 | $3,418,445 |
| Restructured loans performing under their restructured terms | $29,154 | $30,387 | $47,428 |
| Loans 30 - 89 days past due and on accrual | $8,387 | $6,925 | $8,784 |
| Total delinquent loans (including loans on non-accrual) | $25,124 | $26,703 | $22,010 |
| Total delinquent loans / Total loans outstanding | 0.66% | 0.70% | 0.64% |
| GEOGRAPHIC CONCENTRATION | |||||
| OF LOANS AT DECEMBER 31, 2014 | Washington | Oregon | Idaho | Other | Total |
| Commercial real estate: | |||||
| Owner occupied | $383,950 | $86,937 | $56,348 | $19,548 | $546,783 |
| Investment properties | 523,806 | 124,604 | 60,053 | 148,479 | 856,942 |
| Multifamily real estate | 116,793 | 35,527 | 14,759 | 445 | 167,524 |
| Commercial construction | 15,599 | — | 1,738 | — | 17,337 |
| Multifamily construction | 50,931 | 8,850 | 412 | — | 60,193 |
| One- to four-family construction | 129,499 | 88,468 | 1,922 | — | 219,889 |
| Land and land development: | |||||
| Residential | 56,675 | 44,707 | 1,053 | — | 102,435 |
| Commercial | 5,781 | 2,529 | 2,842 | — | 11,152 |
| Commercial business | 397,103 | 125,235 | 85,580 | 116,046 | 723,964 |
| Agricultural business including secured by farmland | 119,617 | 69,843 | 48,997 | 42 | 238,499 |
| One- to four-family real estate | 341,944 | 172,974 | 24,223 | 753 | 539,894 |
| Consumer: | |||||
| Consumer secured by one- to four-family real estate | 136,888 | 69,172 | 14,984 | 1,161 | 222,205 |
| Consumer-other | 79,520 | 40,803 | 6,243 | 437 | 127,003 |
| Total loans outstanding | $2,358,106 | $869,649 | $319,154 | $286,911 | $3,833,820 |
| Percent of total loans | 61.5% | 22.7% | 8.3% | 7.5% | 100.0% |
| ADDITIONAL FINANCIAL INFORMATION | |||||
| (dollars in thousands) | |||||
| Quarters Ended | Twelve Months Ended | ||||
| CHANGE IN THE | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 |
| ALLOWANCE FOR LOAN LOSSES | |||||
| Balance, beginning of period | $74,331 | $74,310 | $75,925 | $74,258 | $76,759 |
| Provision | — | — | — | — | — |
| Recoveries of loans previously charged off: | |||||
| Commercial real estate | 843 | 94 | 72 | 1,507 | 2,367 |
| Construction and land | 988 | 84 | 1,330 | 1,776 | 2,275 |
| One- to four-family real estate | 83 | 143 | 7 | 618 | 145 |
| Commercial business | 153 | 256 | 282 | 988 | 1,673 |
| Agricultural business, including secured by farmland | 328 | 587 | 85 | 1,576 | 697 |
| Consumer | 135 | 53 | 53 | 528 | 340 |
| 2,530 | 1,217 | 1,829 | 6,993 | 7,497 | |
| Loans charged off: | |||||
| Commercial real estate | — | — | (953) | (1,239) | (2,569) |
| Multifamily real estate | — | (20) | — | (20) | — |
| Construction and land | — | — | (967) | (207) | (1,821) |
| One- to four-family real estate | (253) | (239) | (879) | (885) | (2,139) |
| Commercial business | (263) | (83) | (209) | (1,344) | (1,782) |
| Agricultural business, including secured by farmland | (54) | (125) | — | (179) | (248) |
| Consumer | (384) | (729) | (488) | (1,470) | (1,439) |
| (954) | (1,196) | (3,496) | (5,344) | (9,998) | |
| Net (charge-offs) recoveries | 1,576 | 21 | (1,667) | 1,649 | (2,501) |
| Balance, end of period | $75,907 | $74,331 | $74,258 | $75,907 | $74,258 |
| Net (charge-offs) recoveries / Average loans outstanding | 0.041% | 0.001% | (0.050)% | 0.045% | (0.076)% |
| ALLOCATION OF | |||
| ALLOWANCE FOR LOAN LOSSES | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 |
| Specific or allocated loss allowance: | |||
| Commercial real estate | $18,784 | $19,505 | $16,759 |
| Multifamily real estate | 4,562 | 4,892 | 5,306 |
| Construction and land | 23,545 | 20,779 | 17,640 |
| One- to four-family real estate | 8,447 | 9,136 | 11,486 |
| Commercial business | 12,043 | 12,677 | 11,773 |
| Agricultural business, including secured by farmland | 2,821 | 2,947 | 2,841 |
| Consumer | 483 | 675 | 1,335 |
| Total allocated | 70,685 | 70,611 | 67,140 |
| Unallocated | 5,222 | 3,720 | 7,118 |
| Total allowance for loan losses | $75,907 | $74,331 | $74,258 |
| Allowance for loan losses / Total loans outstanding | 1.98% | 1.95% | 2.17% |
| Allowance for loan losses / Non-performing loans | 454% | 376% | 300% |
| ADDITIONAL FINANCIAL INFORMATION | |||
| (dollars in thousands) | |||
| Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | |
| NON-PERFORMING ASSETS | |||
| Loans on non-accrual status: | |||
| Secured by real estate: | |||
| Commercial | $1,132 | $2,701 | $6,287 |
| Multifamily | — | 397 | — |
| Construction and land | 1,275 | 1,285 | 1,193 |
| One- to four-family | 8,834 | 8,615 | 12,532 |
| Commercial business | 537 | 1,037 | 723 |
| Agricultural business, including secured by farmland | 1,597 | 229 | — |
| Consumer | 1,187 | 1,138 | 1,173 |
| 14,562 | 15,402 | 21,908 | |
| Loans more than 90 days delinquent, still on accrual: | |||
| Secured by real estate: | |||
| Commercial | — | 993 | — |
| One- to four-family | 2,095 | 2,777 | 2,611 |
| Commercial business | — | 301 | — |
| Agricultural business, including secured by farmland | — | — | 105 |
| Consumer | 79 | 306 | 144 |
| 2,174 | 4,377 | 2,860 | |
| Total non-performing loans | 16,736 | 19,779 | 24,768 |
| Real estate owned (REO) | 3,352 | 3,928 | 4,044 |
| Other repossessed assets | 76 | 69 | 115 |
| Total non-performing assets | $20,164 | $23,776 | $28,927 |
| Total non-performing assets / Total assets | 0.43% | 0.50% | 0.66% |
| DETAIL & GEOGRAPHIC CONCENTRATION OF | ||||
| NON-PERFORMING ASSETS AT DECEMBER 31, 2014 | Washington | Oregon | Idaho | Total |
| Secured by real estate: | ||||
| Commercial | $1,095 | $— | $36 | $1,131 |
| Construction and land: | ||||
| Residential land acquisition & development | — | 750 | — | 750 |
| Residential land improved lots | — | 525 | — | 525 |
| Total construction and land | — | 1,275 | — | 1,275 |
| One- to four-family | 8,888 | 1,506 | 535 | 10,929 |
| Commercial business | 500 | 37 | — | 537 |
| Agricultural business, including secured by farmland | 604 | 993 | — | 1,597 |
| Consumer | 1,015 | 46 | 206 | 1,267 |
| Total non-performing loans | 12,102 | 3,857 | 777 | 16,736 |
| Real estate owned (REO) | 1,693 | 1,626 | 33 | 3,352 |
| Other repossessed assets | 76 | — | — | 76 |
| Total non-performing assets at end of the period | $13,871 | $5,483 | $810 | $20,164 |
| ADDITIONAL FINANCIAL INFORMATION | ||||
| (dollars in thousands) | ||||
| Quarters Ended | Twelve Months Ended | |||
| REAL ESTATE OWNED | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 |
| Balance, beginning of period | $3,928 | $4,818 | $4,044 | $15,778 |
| Additions from loan foreclosures | 427 | 700 | 3,264 | 3,166 |
| Additions from capitalized costs | (5) | 4 | 30 | 348 |
| Proceeds from dispositions of REO | (1,291) | (1,186) | (4,923) | (16,944) |
| Gain on sale of REO | 293 | 3 | 973 | 2,481 |
| Valuation adjustments in the period | — | (295) | (36) | (785) |
| Balance, end of period | $3,352 | $4,044 | $3,352 | $4,044 |
| DEPOSIT COMPOSITION | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 |
| Non-interest-bearing | $1,298,866 | $1,304,720 | $1,115,346 |
| Interest-bearing checking | 439,480 | 429,876 | 422,910 |
| Regular savings accounts | 901,142 | 899,868 | 798,764 |
| Money market accounts | 488,946 | 503,660 | 408,211 |
| Interest-bearing transaction & savings accounts | 1,829,568 | 1,833,404 | 1,629,885 |
| Interest-bearing certificates | 770,516 | 852,994 | 872,695 |
| Total deposits | $3,898,950 | $3,991,118 | $3,617,926 |
| GEOGRAPHIC CONCENTRATION | ||||
| OF DEPOSITS AT DECEMBER 31, 2014 | Washington | Oregon | Idaho | Total |
| Total deposits | $2,789,542 | $865,937 | $243,471 | $3,898,950 |
| Percent of total deposits | 71.6% | 22.2% | 6.2% | 100.0% |
| INCLUDED IN TOTAL DEPOSITS | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 |
| Public non-interest-bearing accounts | $39,381 | $34,535 | $21,699 |
| Public interest-bearing transaction & savings accounts | 63,473 | 64,984 | 65,822 |
| Public interest-bearing certificates | 35,346 | 48,508 | 51,465 |
| Total public deposits | $138,200 | $148,027 | $138,986 |
| Total brokered deposits | $4,799 | $41,249 | $4,291 |
| OTHER BORROWINGS | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 |
| Customer repurchase agreements / "Sweep accounts" | $77,185 | $67,605 | $83,056 |
| ADDITIONAL FINANCIAL INFORMATION | ||||
| (dollars in thousands) | ||||
|
Actual |
Minimum for Capital Adequacy or "Well Capitalized" |
|||
| REGULATORY CAPITAL RATIOS AS OF DECEMBER 31, 2014 | Amount | Ratio | Amount | Ratio |
| REVISED | REVISED | |||
| Banner Corporation-consolidated: | ||||
| Total capital to risk-weighted assets | $684,583 | 16.80% | $326,071 | 8.00% |
| Tier 1 capital to risk-weighted assets | 633,317 | 15.54% | 163,036 | 4.00% |
| Tier 1 leverage capital to average assets | 633,317 | 13.41% | 188,885 | 4.00% |
| Banner Bank: | ||||
| Total capital to risk-weighted assets | 605,136 | 15.51% | 390,274 | 10.00% |
| Tier 1 capital to risk-weighted assets | 556,036 | 14.25% | 234,165 | 6.00% |
| Tier 1 leverage capital to average assets | 556,036 | 12.40% | 224,130 | 5.00% |
| Islanders Bank: | ||||
| Total capital to risk-weighted assets | 36,590 | 19.92% | 18,367 | 10.00% |
| Tier 1 capital to risk-weighted assets | 34,332 | 18.69% | 11,020 | 6.00% |
| Tier 1 leverage capital to average assets | 34,332 | 13.68% | 12,550 | 5.00% |
| ADDITIONAL FINANCIAL INFORMATION | |||||
| (dollars in thousands) | |||||
| (rates / ratios annualized) | |||||
| Quarters Ended | Twelve Months Ended | ||||
| OPERATING PERFORMANCE | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 |
| REVISED | REVISED | ||||
| Average loans | $3,813,606 | $3,834,007 | $3,343,494 | $3,679,264 | $3,275,767 |
| Average securities | 643,665 | 666,362 | 686,845 | 671,634 | 692,117 |
| Average interest earning cash | 76,082 | 85,090 | 85,335 | 68,696 | 85,178 |
| Average non-interest-earning assets | 212,071 | 213,045 | 196,034 | 205,378 | 204,077 |
| Total average assets | $4,745,424 | $4,798,504 | $4,311,708 | $4,624,972 | $4,257,139 |
| Average deposits | $3,942,903 | $3,995,451 | $3,573,607 | $3,815,979 | $3,515,493 |
| Average borrowings | 218,170 | 228,724 | 209,155 | 246,963 | 227,612 |
| Average non-interest-bearing other liabilities (1) | 2,039 | 2,026 | (9,117) | (1,991) | (11,970) |
| Total average liabilities | 4,163,112 | 4,226,201 | 3,773,645 | 4,060,951 | 3,731,135 |
| Total average stockholders' equity | 582,312 | 572,303 | 538,063 | 564,021 | 526,004 |
| Total average liabilities and equity | $4,745,424 | $4,798,504 | $4,311,708 | $4,624,972 | $4,257,139 |
| Interest rate yield on loans | 4.80% | 4.81% | 4.92% | 4.83% | 5.10% |
| Interest rate yield on securities | 1.91% | 1.91% | 1.77% | 1.92% | 1.78% |
| Interest rate yield on cash | 0.29% | 0.28% | 0.26% | 0.30% | 0.25% |
| Interest rate yield on interest-earning assets | 4.31% | 4.31% | 4.30% | 4.31% | 4.43% |
| Interest rate expense on deposits | 0.18% | 0.19% | 0.24% | 0.20% | 0.28% |
| Interest rate expense on borrowings | 1.44% | 1.38% | 1.50% | 1.30% | 1.43% |
| Interest rate expense on interest-bearing liabilities | 0.25% | 0.25% | 0.31% | 0.27% | 0.35% |
| Interest rate spread | 4.06% | 4.06% | 3.99% | 4.04% | 4.08% |
| Net interest margin | 4.08% | 4.07% | 4.01% | 4.07% | 4.11% |
| Other operating income / Average assets | 1.00% | 1.10% | 1.16% | 1.17% | 1.02% |
| Core operating income / Average assets (2) | 1.02% | 0.98% | 0.92% | 0.95% | 0.97% |
| Other operating expense / Average assets | 3.45% | 3.18% | 3.40% | 3.32% | 3.31% |
| Efficiency ratio (other operating expense / revenue) | 70.39% | 63.72% | 68.15% | 65.67% | 67.11% |
| Efficiency ratio (core other operating expense / core operating revenue)(2) | 65.32% | 66.13% | 70.56% | 66.81% | 67.53% |
| Return on average assets | 0.98% | 1.23% | 1.06% | 1.17% | 1.09% |
| Return on average equity | 8.00% | 10.29% | 8.52% | 9.60% | 8.85% |
| Return on average tangible equity (3) | 8.04% | 10.36% | 8.56% | 9.65% | 8.91% |
| Average equity / Average assets | 12.27% | 11.93% | 12.48% | 12.20% | 12.36% |
| (1) Average non-interest-bearing liabilities include fair value adjustments related to FHLB advances and Junior Subordinated Debentures. | |||||
| (2) Core operating income (or core operating revenue) excludes net gain on sale of securities, fair value and other-than-temporary impairment (OTTI) adjustments and, an acquisition bargain purchase gain in the current year and proposed acquisition termination fee in the prior year 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 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. | |||||
| ADDITIONAL FINANCIAL INFORMATION | |||||
| (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 | Twelve Months Ended | |||
| Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |
| Net interest income before provision for loan losses | $46,660 | $47,064 | $41,607 | $179,872 | $166,716 |
| Total other operating income | 11,913 | 13,350 | 12,580 | 54,254 | 43,342 |
| Total GAAP revenue | 58,573 | 60,414 | 54,187 | 234,126 | 210,058 |
| Exclude net gain on sale of securities | (1) | (6) | (2) | (42) | (1,022) |
| Exclude other-than-temporary-impairment recovery | — | — | — | — | (409) |
| Exclude change in valuation of financial instruments carried at fair value | 287 | (1,452) | 324 | (1,374) | 2,278 |
| Exclude proposed acquisition termination fee | — | — | (2,954) | — | (2,954) |
| Exclude acquisition bargain purchase gain | — | — | — | (9,079) | — |
| Revenue from core operations (non-GAAP) | $58,859 | $58,956 | $51,555 | $223,631 | $207,951 |
| OTHER OPERATING INCOME/EXPENSE FROM CORE OPERATIONS | Quarters Ended | Twelve Months Ended | |||
| Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |
| Total other operating income (GAAP) | $11,913 | $13,350 | $12,580 | $54,254 | $43,342 |
| Exclude net gain on sale of securities | (1) | (6) | (2) | (42) | (1,022) |
| Exclude other-than-temporary-impairment recovery | — | — | — | — | (409) |
| Exclude change in valuation of financial instruments carried at fair value | 287 | (1,452) | 324 | (1,374) | 2,278 |
| Exclude proposed acquisition termination fee | — | — | (2,954) | — | (2,954) |
| Exclude acquisition bargain purchase gain | — | — | — | (9,079) | — |
| Other operating income from core operations (non-GAAP) | $12,199 | $11,892 | $9,948 | $43,759 | $41,235 |
| Total other operating expense (GAAP) | $41,229 | $38,495 | $36,929 | $153,741 | $140,975 |
| Exclude acquisition related costs | (2,785) | 494 | (550) | (4,325) | (550) |
| Other operating expense from core operations (non-GAAP) | $38,444 | $38,989 | $36,379 | $149,416 | $140,425 |
| TANGIBLE COMMON STOCKHOLDERS' EQUITY TO TANGIBLE ASSETS | Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | ||
| REVISED | |||||
| Stockholders' equity (GAAP) | $583,624 | $574,058 | $538,972 | ||
| Exclude other intangible assets, net | 2,831 | 3,362 | 2,449 | ||
| Tangible common stockholders' equity (non-GAAP) | $580,793 | $570,696 | $536,523 | ||
| Total assets (GAAP) | $4,723,899 | $4,759,389 | $4,388,898 | ||
| Exclude other intangible assets, net | 2,831 | 3,362 | 2,449 | ||
| Total tangible assets (non-GAAP) | $4,721,068 | $4,756,027 | $4,386,449 | ||
| Tangible common stockholders' equity to tangible assets (non-GAAP) | 12.30% | 12.00% | 12.23% | ||
| TANGIBLE COMMON STOCKHOLDERS' EQUITY PER SHARE | |||||
| Tangible common stockholders' equity | $580,793 | $570,696 | $536,523 | ||
| Common shares outstanding at end of period | 19,571,548 | 19,571,505 | 19,509,429 | ||
| Common stockholders' equity (book value) per share (GAAP) | $29.82 | $29.33 | $27.63 | ||
| Tangible common stockholders' equity (tangible book value) per share (non-GAAP) | $29.68 | $29.16 | $27.50 | ||