Banner Corporation Reports First Quarter Net Income of $3.4 Million; Revenues Increase 9% to $24 Million.Business Editors WALLA WALLA Walla Walla (wŏl`ə wŏl`ə), city (1990 pop. 26,478), seat of Walla Walla co., SE Wash., at the junction of the Walla Walla River and Mill Creek, near the Oregon line; inc. 1862. , Wash.--(BUSINESS WIRE)--April 24, 2003 Banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. Corporation (Nasdaq:BANR BANR Board on Agriculture and Natural Resources ), the parent company of Banner Bank Banner Bank is a Washington financial institution based in Walla Walla. Originally known as First Federal Savings And Loan Of Walla Walla, it was the oldest Savings and Loan institution in the state of Washington. , today reported net income was $3.4 million, or $0.31 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the first quarter, compared to a loss of $1.6 million, or $(0.14) per diluted share, in the fourth quarter of 2002 and net income of $3.9 million, or $0.34 per diluted share, in the first quarter a year ago. "After a significant loan loss provision in the fourth quarter, we have returned to profitability and we are looking forward to building earnings to more acceptable levels," said D. Michael Jones Mike or Michael Jones may refer to: In sports:
Income Statement Review Revenues (net interest income before the provision for loan losses plus other operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. ) for the first quarter increased 9% to $24.2 million, compared to $22.1 million in the same quarter of 2002, but decreased 3% from $25.1 for the fourth quarter of 2002. Net interest margin was 3.66%, compared to 3.86% in the prior quarter and 3.90% in the same quarter a year ago. "The most recent rate cut by the Federal Reserve has caused asset yields to drop more sharply than deposit costs. This, combined with the Bank's level of non-performing assets, has put downward pressure on our net interest margin," said Jones. "Mortgage banking operations continued to excel in the current interest rate environment," added Jones. For the quarter, mortgage banking operations, including loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. fees, increased 59%, to $2.6 million, compared to $1.6 million in the first quarter of 2002, but declined from the record level of $3.1 million in the fourth quarter of 2002. Other fees and service charges for the first quarter increased $400,000, or 32%, to $1.7 million, compared to $1.2 million for the comparable quarter a year earlier, reflecting growth in deposits and customer activity. "We continue to dedicate ded·i·cate tr.v. ded·i·cat·ed, ded·i·cat·ing, ded·i·cates 1. To set apart for a deity or for religious purposes; consecrate. 2. significant resources toward moving problem loans through the system toward resolution," said Jones. "Progress is being made, but it will take time to work through these loans as the borrowers are generally marginal (jargon) marginal - 1. Extremely small. "A marginal increase in core can decrease GC time drastically." In everyday terms, this means that it is a lot easier to clean off your desk if you have a spare place to put some of the junk while you sort through it. 2. credits operating in a slow economy in the Puget Sound Puget Sound (py  `jĕt), arm of the Pacific Ocean, NW Wash., connected with the Pacific by Juan de Fuca Strait, entered through the Admiralty Inlet and extending in two arms c. area. Meanwhile, we believe our
disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por problem loan issue has crested." Non-performing
assets were $42.4 million, or 1.76% of total assets at March 31, 2003,
compared to $42.2 million, or 1.86% of total assets at December December: see month. 31, 2002
and $31.5 million, or 1.46% of total assets at March 31, 2002. The loan
loss provision for the quarter was $2.3 million, compared to $3.0
million a year ago and $10.0 million in the prior quarter. At March 31,
2003, the allowance for loan losses totaled $25.6 million, representing
1.61% of total loans outstanding, compared to $18.9 million, or 1.18% of
total loans outstanding a year earlier."Since August, we have opened new Banner Bank branches in Spokane Spokane, city, United States Spokane (spōkăn`), city (1990 pop. 177,196), seat of Spokane co., E Wash., at the spectacular falls of the Spokane River; inc. 1881. and Pasco, Washington Pasco (IPA: [ˈpæs ko]) is a city located in Franklin County, in the state of Washington, USA. Pasco is the county seat of Franklin CountyGR6. , as well as new loan centers in the Tri-Cities, Spokane and Bellevue, Washington Bellevue is a rapidly growing city in King County, Washington, U.S., across Lake Washington from Seattle. Long known as a suburb or satellite city of Seattle,[1] it is now categorized as an edge city or a boomburb. and Lake Oswego, Oregon Lake Oswego (IPA: ɔs wiː ɡo) is a city in Clackamas County, Oregon, United States. (Small parts of the city extend into Multnomah County to the north and Washington County to the west. . These new offices and their experienced banking personnel are bringing in significant deposits and approved loan commitments. As their success continues, we expect their contribution to the bottom line to increase as well," Jones said. Other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $17.1 million for the quarter compared to $18.0 million in the fourth quarter of 2002 and $13.3 million in the first quarter of 2002. Banner's efficiency ratio for the quarter ended March 31, 2003 was 70.41%, a slight improvement from 71.74% in the prior quarter. The efficiency ratio was 60.21% in the first quarter of 2002. Balance Sheet Review "We have been restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). our balance sheet to improve liquidity and rely less on borrowed funds," said Jones. Deposits grew 14%, to $1.6 billion, compared to $1.4 billion at March 31, 2002, while total assets increased 12%, to $2.4 billion at March 31, 2003 from $2.2 billion a year earlier. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased to $192.4 million, from $191.9 million a year ago, and book value per share increased to $17.77 at March 31, 2003, from $17.38 per share a year earlier. "While our overall loan portfolio contracted slightly compared to a year earlier, primarily due to prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. on one-to-four family mortgages and sales of new originations, agricultural and commercial business loans continued to grow steadily, increasing 22% and 12%, respectively," said Jones. "Business and agricultural loans now represent 25% of the total loan portfolio, compared to 22% a year ago." Banner's loan portfolio was $1.56 billion at March 31, 2003, compared to $1.58 billion at March 31, 2002 and $1.55 billion at December 31, 2002. Conference Call The Company will host a conference call today, Thursday Thursday: see week. , April 24, 2002 at 8:00 a.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT , to discuss the first quarter results. The conference call can be accessed live by telephone at 303-262-2175. To listen to the call online, go to the company's website at www.banrbank.com or to www.companyboardroom.com. Institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. may access the call via the subscriber-only site, www.streetevents.com. An archived recording of the call can be accessed by dialing 303-590-3000, passcode 535575, until May 1, 2003 or via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.companyboardroom.com through May 7, 2003. About the Company Banner Corporation is the parent of Banner Bank, a commercial bank which operates a total of 41 branch offices and eight loan offices in 19 counties in Washington This is a list of counties in Washington. There are thirty-nine counties in the U.S. state of Washington. Certain residents of Snohomish County consider themselves to be part of Freedom County. , Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. and Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). . Banner serves the Pacific Northwest region
The 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.banrbank.com. Statements concerning future performance, developments or events, expectations for earnings, growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which are subject to a number of risks and uncertainties that are beyond the Company's control and might cause actual results to differ materially from the expectations and stated objectives. Factors which could cause actual results to differ materially include, but are not limited to, regional and general economic conditions, changes in interest rates, deposit flows, demand for mortgages and other loans, real estate values, competition, loan delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. rates, changes in accounting principles, practices, policies or guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. , changes in legislation or regulation, other economic, competitive, governmental, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and technological factors affecting operations, pricing, products and services and Banner's ability to successfully resolve the outstanding credit issues and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. recover check kiting The unlawful practice of drawing checks against a bank account containing insufficient funds to cover them, with the expectation that the necessary funds will be deposited before such checks are presented for payment. losses. Accordingly, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. Banner undertakes no responsibility to update or revise any forward-looking statements.
RESULTS OF OPERATIONS Quarters Ended
-------------------------- -------------------------------------
(In thousands except share Mar 31, Dec 31, Mar 31,
and per share data) 2003 2002 2002
----------- ----------- -----------
INTEREST INCOME:
Loans receivable $ 28,844 $ 30,492 $ 31,251
Mortgage-backed securities 3,052 2,526 2,556
Securities and deposits 2,822 2,615 2,211
----------- ----------- -----------
34,718 35,633 36,018
INTEREST EXPENSE:
Deposits 8,871 9,455 10,144
Federal Home Loan Bank
advances 5,700 5,604 6,468
Trust preferred securities 567 467 - -
Other borrowings 172 226 492
----------- ----------- -----------
15,310 15,752 17,104
----------- ----------- -----------
Net Interest Income Before
Provision For Loan Losses 19,408 19,881 18,914
PROVISION FOR LOAN LOSSES 2,250 10,000 3,000
----------- ----------- -----------
Net Interest Income After
Provision For Loan Losses 17,158 9,881 15,914
OTHER OPERATING INCOME
Loan servicing fees 530 475 344
Other fees and service
charges 1,658 1,473 1,258
Mortgage banking operations 2,062 2,674 1,291
Gain ( loss ) on sale of
securities 3 - - 5
Miscellaneous 565 557 320
----------- ----------- -----------
4,818 5,179 3,218
OTHER OPERATING EXPENSE:
Salary and employee
benefits 11,211 10,505 8,694
Less capitalized loan
origination costs (1,575) (1,737) (1,313)
Occupancy and equipment 2,372 2,259 2,083
Information / computer data
services 838 1,069 613
Advertising 866 900 299
Amortization of intangibles 50 63 75
Miscellaneous 3,295 4,920 2,875
----------- ----------- -----------
17,057 17,979 13,326
----------- ----------- -----------
Income (Loss) Before
Provision For Income Taxes 4,919 (2,919) 5,806
PROVISION FOR (BENEFIT FROM)
INCOME TAXES 1,490 (1,362) 1,897
----------- ----------- -----------
NET INCOME (LOSS) $ 3,429 $ (1,557) $ 3,909
=========== =========== ===========
Earnings (Loss) Per Share
Basic $ 0.32 $ (0.14) $ 0.35
Diluted $ 0.31 $ (0.14) $ 0.34
Cumulative Dividend Per
Share $ 0.15 $ 0.15 $ 0.15
Weighted Average Shares
Outstanding
Basic 10,786,474 10,892,122 11,033,366
Diluted 11,040,425 11,286,894 11,448,741
Shares repurchased during the
period - - 324,354 40,000
FINANCIAL CONDITION
--------------------------
(In thousands except share Mar 31, Dec 31, Mar 31,
and per share data) 2003 2002 2002
----------- ----------- -----------
ASSETS
-------------
Cash and due from banks $ 126,396 $ 132,910 $ 85,165
Securities available for sale 567,592 421,222 345,682
Securities held to maturity 11,469 13,253 15,022
Federal Home Loan Bank stock 33,378 32,831 31,330
Loans receivable:
Held for sale 47,213 39,366 14,240
Held for portfolio 1,543,325 1,534,100 1,583,121
Allowance for loan losses (25,551) (26,539) (18,899)
----------- ----------- -----------
1,564,987 1,546,927 1,578,462
Accrued interest receivable 13,775 13,689 13,485
Real estate held for sale, net 5,183 6,062 2,762
Property and equipment, net 20,629 20,745 18,299
Costs in excess of net assets
acquired ( goodwill ), net 36,664 36,714 36,742
Deferred income tax asset, net 1,658 2,786 2,782
Bank owned life insurance 32,260 31,809 20,535
Other assets 3,863 4,224 1,993
----------- ----------- -----------
$2,417,854 $2,263,172 $2,152,259
=========== =========== ===========
LIABILITIES
--------------------------
Deposits:
Non-interest-bearing $ 192,287 $ 200,500 $ 199,328
Interest-bearing 1,422,060 1,297,278 1,213,409
----------- ----------- -----------
1,614,347 1,497,778 1,412,737
Borrowings:
Advances from Federal Home
Loan Bank 511,452 465,743 461,182
Trust preferred securities 40,000 40,000 - -
Other borrowings 41,400 41,202 72,677
----------- ----------- -----------
592,852 546,945 533,859
Accrued expenses and other
liabilities 14,623 24,700 10,210
Deferred compensation 3,601 3,372 2,826
Income taxes payable - - - - 708
----------- ----------- -----------
2,225,423 2,072,795 1,960,340
STOCKHOLDERS' EQUITY
--------------------------
Common stock and additional
paid in capital 121,119 120,554 126,375
Retained earnings 72,545 70,813 70,276
Accumulated other comprehensive
income 3,576 3,488 133
Unearned shares of common stock
issued to Employee Stock Ownership Plan
(ESOP)trust: at cost (4,264) (4,262) (4,769)
Net carrying value of stock
related deferred compensation
plans (545) (216) (96)
----------- ----------- -----------
192,431 190,377 191,919
----------- ----------- -----------
$2,417,854 $2,263,172 $2,152,259
=========== =========== ===========
Shares Issued:
Shares outstanding at end of
period 11,347,571 11,306,977 11,621,426
Less unearned ESOP shares
at end of period 515,707 515,707 577,039
----------- ----------- -----------
Shares outstanding at end of
period excluding unearned ESOP
shares 10,831,864 10,791,270 11,044,387
=========== =========== ===========
Book Value Per Share (1) $ 17.77 $ 17.64 $ 17.38
Tangible Book Value Per
Share (1) $ 14.38 $ 14.24 $ 14.05
Consolidated Tier 1 Leverage
Capital Ratio 8.48% 8.77% 7.51%
(1) Calculation is based on number of shares outstanding at the end of
the period rather than weighted average shares outstanding and
excludes unallocated shares in the employee stock ownership plan
(ESOP).
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands)
LOANS (including loans held Mar 31, Dec 31, Mar 31,
for sale): 2003 2002 2002
-------------------------- ----------- ----------- -----------
Secured by real estate:
One-to-four family $ 323,495 $ 329,314 $ 364,611
Consumer secured by one-to-
four family 25,004 26,195 23,898
----------- ----------- -----------
Total one-to-four
family 348,499 355,509 388,509
Commercial 384,589 379,099 379,448
Multifamily 68,494 72,333 80,264
Construction and land 347,956 339,516 352,076
Commercial business 301,418 285,231 269,713
Agricultural business 102,737 102,626 84,233
Consumer 36,845 39,152 43,118
----------- ----------- -----------
Total loans outstanding $1,590,538 $1,573,466 $1,597,361
=========== =========== ===========
Mar 31, Dec 31, Mar 31,
NON-PERFORMING ASSETS: 2003 2002 2002
-------------------------- ----------- ----------- -----------
Loans on non-accrual status $ 36,834 $ 34,249 $ 28,488
Accruing loans greater than
90 days delinquent 290 1,859 222
----------- ----------- -----------
Total non-performing loans 37,124 36,108 28,710
Real estate owned (REO)/
Repossessed assets 5,319 6,062 2,762
----------- ----------- -----------
Total non-performing
assets $ 42,443 $ 42,170 $ 31,472
=========== =========== ===========
Total non-performing assets
/Total assets 1.76% 1.86% 1.46%
Quarters Ended
-------------------------------------
Mar 31, Dec 31, Mar 31,
2003 2002 2002
CHANGE IN THE ALLOWANCE ----------- ----------- -----------
FOR LOAN LOSSES:
--------------------------
Balance at beginning of
period $ 26,539 $ 19,150 $ 17,552
Acquisitions - - - - 460
Provision for loan losses 2,250 10,000 3,000
Recoveries 110 208 19
Charge-offs (3,348) (2,819) (2,132)
----------- ----------- -----------
Net charge-offs (3,238) (2,611) (2,113)
----------- ----------- -----------
Balance at end of period $ 25,551 $ 26,539 $ 18,899
=========== =========== ===========
Net charge-offs/Average loans
outstanding 0.20% 0.16% 0.13%
Allowance for loan losses/
Total loans outstanding 1.61% 1.69% 1.18%
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands)
(Rates/Ratios annualized)
Quarters Ended
-------------------------------------
Mar 31, Dec 31, Mar 31,
OPERATING PERFORMANCE: 2003 2002 2002
-------------------------- ----------- ----------- -----------
Average loans $1,582,231 $1,589,608 $1,607,697
Average securities and
deposits 565,400 454,671 356,817
Average non-interest-earning
assets 157,412 162,595 134,909
----------- ----------- -----------
Total Average Assets $2,305,043 $2,206,874 $2,099,423
=========== =========== ===========
Average deposits $1,506,427 $1,481,623 $1,335,890
Average borrowings 588,517 515,612 556,274
Average non-interest-earning
liabilities 17,120 14,582 11,040
----------- ----------- -----------
Total Average
Liabilities 2,112,064 2,011,817 1,903,204
Total average equity 192,979 195,057 196,219
----------- ----------- -----------
`
Total Average Liabilities
And Equity $2,305,043 $2,206,874 $2,099,423
=========== =========== ===========
Interest rate yield on loans 7.39% 7.61% 7.88%
Interest rate yield on
securities and deposits 4.21% 4.49% 5.42%
----------- ----------- -----------
Interest Rate Yield On
Interest-Earning Assets 6.56% 6.92% 7.44%
----------- ----------- -----------
Interest rate expense on
deposits 2.39% 2.53% 3.08%
Interest rate expense on
borrowings 4.44% 4.85% 5.07%
----------- ----------- -----------
Interest Rate Expense On
Interest-Bearing
Liabilities 2.96% 3.13% 3.67%
----------- ----------- -----------
Interest rate spread 3.60% 3.79% 3.77%
=========== =========== ===========
Net interest margin 3.66% 3.86% 3.90%
=========== =========== ===========
Other operating income/
Average assets 0.85% 0.93% 0.62%
Other operating expense/
Average assets 3.00% 3.23% 2.57%
Efficiency ratio (other
operating expense/revenue) 70.41% 71.74% 60.21%
Return on average assets 0.60% (0.28%) 0.76%
Return on average equity 7.21% (3.17%) 8.08%
Average equity/Average
assets 8.37% 8.84% 9.35%
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