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Banner Corporation Reports Net Income of $39.7 Million, or $1.14 Per Diluted Share, in Second Quarter 2019; Results Highlighted by 10% Year-Over-Year Revenue Growth and Improved Operating Efficiencies

WALLA WALLA, Wash., July 24, 2019 (GLOBE NEWSWIRE) -- Banner Corporation (NASDAQ GSM: BANR) ("Banner"), the parent company of Banner Bank and Islanders Bank, today reported net income increased 19% to $39.7 million, or $1.14 per diluted share, in the second quarter of 2019, compared to $33.3 million, or $0.95 per diluted share, in the preceding quarter and increased by 22% when compared to $32.4 million, or $1.00 per diluted share, in the second quarter of 2018.  Second quarter of 2019 results include $301,000 of acquisition-related expenses.  In the preceding quarter, Banner’s results included a $676,000 write-down on a former administration building as well as $2.1 million of acquisition-related expenses.  In the second quarter of 2018 there were no acquisition-related expenses.  In the first six months of 2019, net income increased 19% to $73.0 million, or $2.09 per diluted share, compared to $61.2 million, or $1.89 per diluted share, in the first six months a year ago.

“Banner’s second quarter financial results demonstrate the effectiveness of our strategic plan and the success of our super community bank model,” stated Mark J. Grescovich, President and Chief Executive Officer.  “Our operating performance generated solid revenue growth with increases in both net interest income and non-interest income compared to both the preceding quarter and the same quarter last year.  The ongoing benefits of the Skagit Bank acquisition also contributed to profitability, as expenses declined through the realization of synergies from the transaction.”

At June 30, 2019, Banner Corporation had $11.85 billion in assets, $8.65 billion in net loans and $9.29 billion in deposits.  Banner operates 176 branch offices, including branch offices located in eight of the top 20 largest western Metropolitan Statistical Areas by population.  The acquisition of Skagit Bancorp, Inc. and its wholly-owned subsidiary, Skagit Bank, (collectively "Skagit") on November 1, 2018, added $916 million in assets and, after consolidation, six banking locations along the I-5 corridor from Seattle to the Canadian border.

Second Quarter 2019 Highlights

  • Revenues increased 4% to $139.4 million during the second quarter of 2019, compared to $134.2 million in the preceding quarter and increased 10% compared to $126.3 million in the second quarter a year ago.
  • Net interest income, before the provision for loan losses, was $116.7 million, compared to $116.1 million in the preceding quarter and increased 11% from $105.1 million in the second quarter a year ago.
  • Net interest margin was 4.38% for the current quarter, compared to 4.37% in the preceding quarter and 4.39% in the second quarter a year ago.
  • Total cost of funds of 56 basis points was unchanged compared with the prior quarter.
  • Return on average assets was 1.36% in the current quarter compared to 1.15% in the preceding quarter and 1.25% in the second quarter a year ago.
  • Net loans receivable increased to $8.65 billion at June 30, 2019, compared to $8.60 billion at March 31, 2019 and increased 14% when compared to $7.59 billion at June 30, 2018.
  • Provision for loan losses was $2.0 million for the quarter, increasing the allowance for loan losses to $98.3 million, or 1.12% of total loans receivable, as of June 30, 2019.
  • Core deposits increased slightly to $8.22 billion compared to $8.21 billion at March 31, 2019 and increased 11% compared to a year ago.  Core deposits represented 88% of total deposits at June 30, 2019.
  • Quarterly dividends to shareholders for the current quarter were $0.41 per share.
  • Common shareholders’ equity per share increased to $43.99 at June 30, 2019, an increase of 2% from $42.99 at the preceding quarter end and an increase of 14% from $38.67 a year ago.
  • Tangible common shareholders' equity per share* increased to $33.36 at June 30, 2019, an increase of 3% from $32.47 at the preceding quarter end and an increase of 9% from $30.57 a year ago.
  • Repurchased 600,000 shares of common stock at an average cost of $53.46 per share.
  • Non-performing assets remained low at $21.0 million, or 0.18% of total assets, at June 30, 2019, compared to $22.0 million, or 0.19% of total assets three months earlier, and $16.5 million, or 0.16% of total assets, at June 30, 2018.

*Tangible common shareholders' equity per share and the ratio of tangible common equity to tangible assets (both of which exclude goodwill and other intangible assets, net), and references to revenue from core operations (which excludes fair value adjustments and net gain (loss) on the sale of securities from the total of net interest income before provision for loan losses and non-interest income) and the adjusted efficiency ratio (which excludes acquisition- related expenses, amortization of core deposit intangibles, real estate owned gain (loss) and state/municipal taxes from non-interest expense divided by revenues from core operations) represent non-GAAP (Generally Accepted Accounting Principles) financial measures.  Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in Banner's core operations reflected in the current quarter's results and facilitate the comparison of our performance with the performance of our peers.  Where applicable, comparable earnings information using GAAP financial measures is also presented.  See also Non-GAAP Financial Measures reconciliation tables on the last two pages of this press release.

Certain reclassifications have been made to the 2018 Consolidated Financial Statements and/or schedules to conform to the 2019 presentation.  These reclassifications have affected certain line items and ratios for the prior periods but have not changed net income or shareholders’ equity for those periods.  The effect of these reclassifications is considered immaterial.

Income Statement Review

Banner's net interest margin was 4.38% for the second quarter of 2019, a one basis-point increase compared to 4.37% in the preceding quarter and a one basis-point decrease compared to 4.39% in the second quarter a year ago.  Acquisition accounting adjustments added seven basis points to the net interest margin in both the current quarter and the preceding quarter compared to six basis points in the second quarter a year ago.  The total purchase discount for acquired loans was $22.6 million at June 30, 2019, compared to $24.2 million at March 31, 2019 and $18.1 million at June 30, 2018.  In the first six months of the year, Banner’s net interest margin was 4.38% compared to 4.37% in the first six months of 2018.

Average interest-earning asset yields increased two basis points to 4.91% compared to 4.89% for the preceding quarter and increased 21 basis points compared to 4.70% in the second quarter a year ago.  Average loan yields increased two basis points to 5.33% compared to 5.31% in the preceding quarter and increased 18 basis points compared to 5.15% in the second quarter a year ago.  Loan discount accretion added nine basis points to loan yields in both the second quarter of 2019 and the preceding quarter, compared to eight basis points in the second quarter a year ago.  Deposit costs were 0.39% in the second quarter of 2019, a two basis-point increase compared to the preceding quarter and a 19 basis-point increase compared to the second quarter a year ago.  The total cost of funds was 0.56% during the second quarter of 2019, unchanged compared to the preceding quarter and a 23 basis-point increase compared to the second quarter a year ago, largely reflecting an increase in the cost of deposits and in FHLB advances.

Banner recorded a $2.0 million provision for loan losses in the current quarter, the same as in the prior quarter and the year ago quarter.  The provision is primarily a result of new loan originations, the renewal of acquired loans out of the discounted acquired loan portfolio and net charge-offs.

Total non-interest income was $22.7 million in the second quarter of 2019, compared to $18.1 million in the first quarter of 2019 and $21.2 million in the second quarter a year ago.  Deposit fees and other service charges were $14.0 million in the second quarter of 2019, compared to $12.6 million in the preceding quarter and $12.0 million in the second quarter a year ago.  The increase in deposit fees and other service charges during the current quarter compared to the prior quarter was primarily due to seasonal increases in interchange fee income; the increase over the prior year period reflects an overall increase in deposit accounts including those acquired from the Skagit acquisition.  Mortgage banking revenues, including gains on one- to four-family and multifamily loan sales and loan servicing fees, increased to $5.9 million in the second quarter, compared to $3.4 million in the preceding quarter and $4.6 million in the second quarter of 2018.  The higher mortgage banking revenue reflected an increase in residential and multifamily mortgage held-for-sale loan production.  Home purchase activity accounted for 81% of one- to four-family mortgage loan originations in the second quarter of 2019, compared to 80% in the prior quarter and 81% in the second quarter of 2018.  In the first six months of 2019, total non-interest income was $40.8 million, compared to $42.6 million in the first six months of 2018.

Banner’s second quarter 2019 results included a $114,000 net loss for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value, principally comprised of certain investment securities held for trading and a $28,000 net loss on the sale of securities.  In the preceding quarter, results included an $11,000 net gain for fair value adjustments and a $1,000 net gain on the sale of securities.  In the second quarter a year ago, results included a $224,000 net gain for fair value adjustments and a $44,000 net gain on the sale of securities.

Total revenues increased 4% to $139.4 million for the second quarter of 2019, compared to $134.2 million in the preceding quarter and increased 10% compared to $126.3 million in the second quarter a year ago.  Year-to-date, total revenues increased 11% to $273.6 million compared to $247.0 million for the same period one year earlier.  Revenues from core operations* (revenues excluding the net gain and loss on the sale of securities and the net change in valuation of financial instruments) were $139.5 million in the second quarter of 2019, compared to $134.2 million in the preceding quarter and $126.0 million in the second quarter of 2018.  In the first six months of the year, revenues from core operations* were $273.7 million, compared to $243.4 million in the first six months of 2018.

Banner’s total non-interest expense was $86.7 million in the second quarter of 2019, compared to $90.0 million in the preceding quarter and $82.6 million in the second quarter of 2018.  The decrease in non-interest expense during the current quarter reflects the first full quarter of synergies from the integration and consolidation of the Skagit systems and operations.  In addition, the decrease in acquisition-related expenses, which were $301,000 for the second quarter of 2019, compared to $2.1 million for the preceding quarter, contributed to the decrease in non-interest expense for the quarter.  There were no acquisition-related expenses for the year ago quarter. Higher loan originations and annual updates to our loan deferred origination cost models resulted in a $2.6 million increase in capitalized loan origination costs, offsetting  increases in salary and benefits driven by increased commissions on loan originations.  Year-to-date, total non-interest expense was $176.7 million, compared to $164.3 million in the same period a year earlier.  Banner’s efficiency ratio improved to 62.22% for the current quarter, compared to 67.06% in the preceding quarter and 65.44% in the year ago quarter.  Banner’s adjusted efficiency ratio* was 59.56% for the current quarter, compared to 63.32% in the preceding quarter and 64.09% in the year ago quarter.

For the second quarter of 2019, Banner recorded $11.0 million in state and federal income tax expense for an effective tax rate of 21.6%, reflecting in part the benefits from tax exempt income sources.  Banner’s normal, expected statutory income tax rate is 23.7%, representing a blend of the statutory federal income tax rate of 21.0% and apportioned effects of the state income tax rates.

Balance Sheet Review

Total assets increased to $11.85 billion at June 30, 2019, compared to $11.74 billion at March 31, 2019 and $10.38 billion at June 30, 2018.  The total of securities and interest-bearing deposits held at other banks was $1.85 billion at June 30, 2019, compared to $1.89 billion at March 31, 2019 and $1.74 billion at June 30, 2018.  The average effective duration of Banner's securities portfolio was approximately 2.6 years at June 30, 2019, compared to 4.0 years at June 30, 2018.

Net loans receivable increased modestly to $8.65 billion at June 30, 2019, compared to $8.60 billion at March 31, 2019 and increased 14% when compared to $7.59 billion at June 30, 2018.  The year-over-year increase in net loans included $631.7 million of portfolio loans acquired in the Skagit acquisition during the fourth quarter of 2018.  Commercial real estate and multifamily real estate loans were $3.95 billion at June 30, 2019, unchanged from March 31, 2019, and increased 13% compared to $3.51 billion a year ago.  Commercial business loans increased 5% to $1.60 billion at June 30, 2019, compared to $1.52 billion at March 31, 2019, and increased 22% compared to $1.31 billion a year ago.  Agricultural business loans increased by 2% to $380.8 million at June 30, 2019, compared to $373.3 million three months earlier and increased by 13% compared to $336.7 million a year ago.  Total construction, land and land development loans decreased slightly to $1.08 billion at June 30, 2019, compared to $1.10 billion at March 31, 2019 and increased 10% compared to $980.4 million a year earlier.  Consumer loans increased 2% to $790.0 million at June 30, 2019, compared to $777.4 million at March 31, 2019 and increased 12% compared to $706.8 million a year ago.  One- to four-family loans declined modestly to $944.6 million at June 30, 2019, compared to $967.6 million at March 31, 2019 and increased 12% compared to $840.5 million a year ago.

Loans held for sale increased substantially to $170.7 million at June 30, 2019, compared to $45.9 million at March 31, 2019 and $78.8 million at June 30, 2018.  The volume of one- to four- family residential mortgage loans sold was $139.0 million in the current quarter, compared to $107.2 million in the preceding quarter and $124.1 million in the second quarter a year ago.  During the second quarter of 2019, Banner did not sell any multifamily loans, compared to $149.9 million in the preceding quarter and $135.7 million in the second quarter a year ago.

Total deposits decreased slightly to $9.29 billion at June 30, 2019, compared to $9.38 billion at March 31, 2019 and increased 9% when compared to $8.53 billion a year ago, as the addition of deposits from the Skagit acquisition was partially offset by a $101.0 million decline in the use of brokered certificates of deposit from March 31, 2019 and a $141.7 million decline from a year ago.  Non-interest-bearing account balances decreased slightly to $3.67 billion at June 30, 2019, compared to $3.68 billion at March 31, 2019 and increased 10% compared to $3.35 billion a year ago.  Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) increased slightly from the prior quarter and increased 11% compared to a year ago.  Core deposits represented 88% of total deposits at June 30, 2019, the same as the prior period and 87% of total deposits a year earlier.  Certificates of deposit decreased 8% to $1.07 billion at June 30, 2019, compared to $1.16 billion at March 31, 2019 and decreased 7% compared to $1.15 billion a year earlier.  The decrease in certificates of deposit primarily reflects the decrease in brokered deposits to $138.4 million at June 30, 2019, compared to $239.4 million at March 31, 2019 and $280.1 million a year earlier.

At June 30, 2019, total common shareholders' equity was $1.52 billion, or 12.84% of assets, compared to $1.51 billion or 12.87% of assets at March 31, 2019 and $1.25 billion or 12.07% of assets a year ago.  At June 30, 2019, tangible common shareholders' equity*, which excludes goodwill and other intangible assets, net, was $1.15 billion, or 10.05% of tangible assets*, compared to $1.14 billion, or 10.04% of tangible assets, at March 31, 2019 and $990.5 million, or 9.79% of tangible assets, a year ago.  Banner's tangible book value per share* increased to $33.36 at June 30, 2019, compared to $30.57 per share a year ago.

Banner repurchased 600,000 shares of its common stock in the second quarter of 2019 at an average cost of $53.46 per share.  During the first quarter there were no repurchases of common stock.  Banner and its subsidiary banks continue to maintain capital levels in excess of the requirements to be categorized as “well-capitalized” under the Basel III and Dodd Frank Act regulatory standards.  At June 30, 2019, Banner's common equity Tier 1 capital ratio was 10.98%, its Tier 1 leverage capital to average assets ratio was 10.83%, and its total capital to risk-weighted assets ratio was 13.37%.

Credit Quality

The allowance for loan losses was $98.3 million at June 30, 2019, or 1.12% of total loans receivable outstanding and 534% of non-performing loans compared to $97.3 million at March 31, 2019, or 1.12% of total loans receivable outstanding and 504% of non-performing loans, and $93.9 million at June 30, 2018, or 1.22% of total loans receivable outstanding and 613% of non-performing loans.  Net loan charge-offs totaled $1.1 million in the second quarter, compared to net loan charge-offs of $1.2 million in the preceding quarter and net loan charge-offs of $332,000 in the second quarter a year ago.  Primarily as a result of the origination of new loans, the renewal of acquired loans out of the discounted acquired loan portfolio and net charge-offs, Banner recorded a $2.0 million provision for loan losses in the current quarter, which was the same amount as recorded in the prior quarter and in the year ago quarter.  Non-performing loans were $18.4 million at June 30, 2019, compared to $19.3 million at March 31, 2019 and $15.3 million a year ago.  Real estate owned and other repossessed assets were $2.6 million at June 30, 2019, compared to $2.7 million at March 31, 2019 and $1.2 million a year ago.  The increase compared to a year ago primarily reflects $2.6 million of real estate owned acquired in the Skagit acquisition.

In accordance with acquisition accounting, loans acquired from acquisitions were recorded at their estimated fair value, which resulted in a net discount to the loans’ contractual amounts, a portion of which reflects a discount for possible credit losses.  Credit discounts are included in the determination of fair value, and as a result, no allowance for loan losses is recorded for acquired loans at the acquisition date.  At June 30, 2019, the total purchase discount for acquired loans was $22.6 million.

Banner's total non-performing assets were $21.0 million, or 0.18% of total assets, at June 30, 2019, compared to $22.0 million, or 0.19% of total assets, at March 31, 2019, and $16.5 million, or 0.16% of total assets, a year ago.  In addition to non-performing assets, there were $12.9 million purchased credit-impaired loans at June 30, 2019, compared to $13.3 million at March 31, 2019, and $18.1 million at June 30, 2018.

Conference Call

Banner will host a conference call on Thursday, July 25, 2019, at 8:00 a.m. PDT, to discuss its second quarter results.  To listen to the call on-line, go to www.bannerbank.com .  Investment professionals are invited to dial (866) 235-9915 to participate in the call.  A replay will be available for one week at (877) 344-7529 using access code 10132624, or at www.bannerbank.com .

About the Company

Banner Corporation is an $11.85 billion bank holding company operating two commercial banks 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.

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 Skagit acquisition 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 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; (3) 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 or impose restrictions or penalties with respect to Banner's activities; (4) competitive pressures among depository institutions; (5) interest rate movements and their impact on customer behavior and net interest margin; (6) the impact of repricing and competitors' pricing initiatives on loan and deposit products; (7) fluctuations in real estate values; (8) the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place; (9) the ability to access cost-effective funding; (10) changes in financial markets; (11) changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular; (12) the costs, effects and outcomes of litigation; (13) legislation or regulatory changes, including but not limited to the impact of the Dodd-Frank Act and regulations adopted thereunder, changes in regulatory capital requirements pursuant to 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; (14) changes in accounting principles, policies or guidelines; (15) future acquisitions by Banner of other depository institutions or lines of business; (16) future goodwill impairment due to changes in Banner's business, changes in market conditions, or other factors and (17) other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services; and other risks detailed from time to time in our filings with the Securities and Exchange Commission including our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K.


RESULTS OF OPERATIONS Quarters Ended Six months ended
(in thousands except shares and per share data) Jun 30, 2019 Mar 31, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018
INTEREST INCOME:
Loans receivable $ 117,007 $ 115,455 $ 99,853 $ 232,462 $ 193,875
Mortgage-backed securities 9,794 10,507 8,899 20,301 16,230
Securities and cash equivalents 4,037 4,034 3,671 8,071 7,138
130,838 129,996 112,423 260,834 217,243
INTEREST EXPENSE:
Deposits 9,023 8,643 4,264 17,666 7,622
Federal Home Loan Bank advances 3,370 3,476 1,499 6,846 2,177
Other borrowings 67 60 49 127 119
Junior subordinated debentures 1,683 1,713 1,548 3,396 2,889
14,143 13,892 7,360 28,035 12,807
Net interest income before provision for loan losses 116,695 116,104 105,063 232,799 204,436
PROVISION FOR LOAN LOSSES 2,000 2,000 2,000 4,000 4,000
Net interest income 114,695 114,104 103,063 228,799 200,436
NON-INTEREST INCOME:
Deposit fees and other service charges 14,046 12,618 11,985 26,664 23,281
Mortgage banking operations 5,936 3,415 4,643 9,351 9,507
Bank-owned life insurance 1,123 1,276 933 2,399 1,785
Miscellaneous 1,713 804 3,388 2,517 4,426
22,818 18,113 20,949 40,931 38,999
Net (loss) gain on sale of securities (28 ) 1 44 (27 ) 48
Net change in valuation of financial instruments carried at fair value (114 ) 11 224 (103 ) 3,532
Total non-interest income 22,676 18,125 21,217 40,801 42,579
NON-INTEREST EXPENSE:
Salary and employee benefits 55,629 54,640 51,494 110,269 101,561
Less capitalized loan origination costs (7,399 ) (4,849 ) (4,733 ) (12,248 ) (8,744 )
Occupancy and equipment 12,681 13,766 11,574 26,447 23,340
Information / computer data services 5,273 5,326 4,564 10,599 8,945
Payment and card processing services 4,041 3,984 3,731 8,025 7,431
Professional and legal expenses 2,336 2,434 3,838 4,770 8,266
Advertising and marketing 2,065 1,529 2,141 3,594 3,971
Deposit insurance 1,418 1,418 1,021 2,836 2,362
State/municipal business and use taxes 1,007 945 816 1,952 1,529
Real estate operations 260 (123 ) (319 ) 137 121
Amortization of core deposit intangibles 2,053 2,052 1,382 4,105 2,764
Miscellaneous 7,051 6,744 7,128 13,795 12,797
86,415 87,866 82,637 174,281 164,343
Acquisition-related expenses 301 2,148 2,449
Total non-interest expense 86,716 90,014 82,637 176,730 164,343
Income before provision for income taxes 50,655 42,215 41,643 92,870 78,672
PROVISION FOR INCOME TAXES 10,955 8,869 9,219 19,824 17,458
NET INCOME $ 39,700 $ 33,346 $ 32,424 $ 73,046 $ 61,214
Earnings per share available to common shareholders:
Basic $ 1.14 $ 0.95 $ 1.01 $ 2.09 $ 1.89
Diluted $ 1.14 $ 0.95 $ 1.00 $ 2.09 $ 1.89
Cumulative dividends declared per common share $ 0.41 $ 0.41 $ 0.85 $ 0.82 $ 1.20
Weighted average common shares outstanding:
Basic 34,831,047 35,050,376 32,250,514 34,940,106 32,323,635
Diluted 34,882,359 35,172,056 32,331,609 35,028,881 32,422,287
Decrease in common shares outstanding (579,103 ) (30,026 ) (17,977 ) (609,129 ) (320,789 )


FINANCIAL CONDITION Percentage Change
(in thousands except shares and per share data) Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Jun 30, 2018 Prior
Qtr
Prior
Yr Qtr
ASSETS
Cash and due from banks $ 187,043 $ 218,458 $ 231,029 $ 195,652 (14.4 )% (4.4 )%
Interest-bearing deposits 59,753 43,080 41,167 53,773 38.7 % 11.1 %
Total cash and cash equivalents 246,796 261,538 272,196 249,425 (5.6 )% (1.1 )%
Securities - trading 25,741 25,838 25,896 25,640 (0.4 )% 0.4 %
Securities - available for sale 1,561,009 1,603,804 1,636,223 1,400,312 (2.7 )% 11.5 %
Securities - held to maturity 203,222 218,993 234,220 263,176 (7.2 )% (22.8 )%
Total securities 1,789,972 1,848,635 1,896,339 1,689,128 (3.2 )% 6.0 %
Federal Home Loan Bank stock 34,583 27,063 31,955 19,916 27.8 % 73.6 %
Loans held for sale 170,744 45,865 171,031 78,833 272.3 % 116.6 %
Loans receivable 8,746,550 8,692,657 8,684,595 7,684,732 0.6 % 13.8 %
Allowance for loan losses (98,254 ) (97,308 ) (96,485 ) (93,875 ) 1.0 % 4.7 %
Net loans receivable 8,648,296 8,595,349 8,588,110 7,590,857 0.6 % 13.9 %
Accrued interest receivable 40,238 41,220 38,593 34,004 (2.4 )% 18.3 %
Real estate owned held for sale, net 2,513 2,611 2,611 473 (3.8 )% 431.3 %
Property and equipment, net 171,233 171,057 171,809 153,224 0.1 % 11.8 %
Goodwill 339,154 339,154 339,154 242,659 % 39.8 %
Other intangibles, net 28,595 30,647 32,924 19,858 (6.7 )% 44.0 %
Bank-owned life insurance 178,922 178,202 177,467 164,225 0.4 % 8.9 %
Other assets 196,328 198,944 149,128 136,592 (1.3 )% 43.7 %
Total assets $ 11,847,374 $ 11,740,285 $ 11,871,317 $ 10,379,194 0.9 % 14.1 %
LIABILITIES
Deposits:
Non-interest-bearing $ 3,671,995 $ 3,676,984 $ 3,657,817 $ 3,346,777 (0.1 )% 9.7 %
Interest-bearing transaction and savings accounts 4,546,202 4,535,969 4,498,966 4,032,283 0.2 % 12.7 %
Interest-bearing certificates 1,070,770 1,163,276 1,320,265 1,148,607 (8.0 )% (6.8 )%
Total deposits 9,288,967 9,376,229 9,477,048 8,527,667 (0.9 )% 8.9 %
Advances from Federal Home Loan Bank 606,000 418,000 540,189 239,190 45.0 % 153.4 %
Customer repurchase agreements and other borrowings 118,370 121,719 118,995 112,458 (2.8 )% 5.3 %
Junior subordinated debentures at fair value 113,621 113,917 114,091 112,774 (0.3 )% 0.8 %
Accrued expenses and other liabilities 159,131 158,669 102,061 93,281 0.3 % 70.6 %
Deferred compensation 40,230 40,560 40,338 40,814 (0.8 )% (1.4 )%
Total liabilities 10,326,319 10,229,094 10,392,722 9,126,184 1.0 % 13.2 %
SHAREHOLDERS' EQUITY
Common stock 1,306,888 1,338,386 1,337,436 1,173,656 (2.4 )% 11.4 %
Retained earnings 178,257 152,911 134,055 84,485 16.6 % 111.0 %
Other components of shareholders' equity 35,910 19,894 7,104 (5,131 ) 80.5 % nm
Total shareholders' equity 1,521,055 1,511,191 1,478,595 1,253,010 0.7 % 21.4 %
Total liabilities and shareholders' equity $ 11,847,374 $ 11,740,285 $ 11,871,317 $ 10,379,194 0.9 % 14.1 %
Common Shares Issued:
Shares outstanding at end of period 34,573,643 35,152,746 35,182,772 32,405,696
Common shareholders' equity per share (1) $ 43.99 $ 42.99 $ 42.03 $ 38.67
Common shareholders' tangible equity per share (1) (2) $ 33.36 $ 32.47 $ 31.45 $ 30.57
Common shareholders' tangible equity to tangible assets (2) 10.05 % 10.04 % 9.62 % 9.79 %
Consolidated Tier 1 leverage capital ratio 10.83 % 10.73 % 10.98 % 10.80 %


(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 excludes goodwill and other intangible assets. Tangible assets exclude goodwill and other intangible assets. These ratios represent non-GAAP financial measures.  See also Non-GAAP Financial Measures reconciliation tables on the last two pages of the press release tables.


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Percentage Change
LOANS Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Jun 30,
2018
Prior
Qtr
Prior
Yr Qtr
Commercial real estate:
Owner occupied $ 1,433,995 $ 1,442,724 $ 1,430,097 $ 1,256,730 (0.6 )% 14.1 %
Investment properties 2,116,306 2,124,049 2,131,059 1,920,790 (0.4 )% 10.2 %
Multifamily real estate 402,241 387,142 368,836 330,384 3.9 % 21.7 %
Commercial construction 172,931 181,888 172,410 166,089 (4.9 )% 4.1 %
Multifamily construction 189,160 183,203 184,630 147,576 3.3 % 28.2 %
One- to four-family construction 503,061 514,468 534,678 480,591 (2.2 )% 4.7 %
Land and land development:
Residential 187,180 187,660 188,508 163,335 (0.3 )% 14.6 %
Commercial 27,470 28,928 27,278 22,849 (5.0 )% 20.2 %
Commercial business 1,598,788 1,524,298 1,483,614 1,312,424 4.9 % 21.8 %
Agricultural business including secured by farmland 380,805 373,322 404,873 336,709 2.0 % 13.1 %
One- to four-family real estate 944,617 967,581 973,616 840,470 (2.4 )% 12.4 %
Consumer:
Consumer secured by one- to four-family real estate 575,658 564,872 568,979 536,007 1.9 % 7.4 %
Consumer-other 214,338 212,522 216,017 170,778 0.9 % 25.5 %
Total loans receivable $ 8,746,550 $ 8,692,657 $ 8,684,595 $ 7,684,732 0.6 % 13.8 %
Restructured loans performing under their restructured terms $ 6,594 $ 13,036 $ 13,422 $ 13,793
Loans 30 - 89 days past due and on accrual (1) $ 17,923 $ 28,972 $ 25,108 $ 8,040
Total delinquent loans (including loans on non-accrual), net (2) $ 34,749 $ 46,616 $ 38,721 $ 22,620
Total delinquent loans / Total loans receivable 0.40 % 0.54 % 0.45 % 0.29 %

(1) Includes $21,000 of purchased credit-impaired loans at June 30, 2019 compared to $3,000 at December 31, 2018 and $6,000 at June 30, 2018.
(2) Delinquent loans include $330,000 of delinquent purchased credit-impaired loans at June 30, 2019 compared to $519,000 at December 31, 2018 and $1.0 million at June 30, 2018.

LOANS BY GEOGRAPHIC LOCATION Percentage Change
Jun 30, 2019 Mar 31,
2019
Dec 31,
2018
Jun 30,
2018
Prior
Qtr
Prior
Yr Qtr
Amount Percentage Amount Amount Amount
Washington $ 4,293,854 49.1 % $ 4,329,759 $ 4,324,588 $ 3,550,945 (0.8 )% 20.9 %
Oregon 1,628,102 18.6 % 1,639,427 1,636,152 1,601,939 (0.7 )% 1.6 %
California 1,659,326 19.0 % 1,581,654 1,596,604 1,477,293 4.9 % 12.3 %
Idaho 548,189 6.3 % 524,705 521,026 500,201 4.5 % 9.6 %
Utah 62,944 0.7 % 59,940 57,318 76,414 5.0 % (17.6 )%
Other 554,135 6.3 % 557,172 548,907 477,940 (0.5 )% 15.9 %
Total loans receivable $ 8,746,550 100.0 % $ 8,692,657 $ 8,684,595 $ 7,684,732 0.6 % 13.8 %

ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)

The following table shows loan originations (excluding loans held for sale) activity for the quarters ending June 30, 2019, March 31, 2019, and June 30, 2018 and the six months ending June 30, 2019 and June 30, 2018 (in thousands):

LOAN ORIGINATIONS Quarters Ended Six Months Ended
Jun 30, 2019 Mar 31, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018
Commercial real estate $ 81,361 $ 94,196 $ 155,781 $ 175,557 $ 221,506
Multifamily real estate 21,651 7,617 6,090 29,267 6,825
Construction and land 368,224 233,494 361,427 601,718 692,350
Commercial business 241,134 125,912 195,909 367,046 328,896
Agricultural business 20,702 32,059 41,480 52,761 68,054
One-to four-family residential 26,210 31,789 26,416 57,999 44,351
Consumer 119,970 63,774 114,289 183,743 184,822
Total loan originations (excluding loans held for sale) $ 879,252 $ 588,841 $ 901,392 $ 1,468,091 $ 1,546,804


ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Quarters Ended Six months ended
CHANGE IN THE Jun 30, 2019 Mar 31, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018
ALLOWANCE FOR LOAN LOSSES
Balance, beginning of period $ 97,308 $ 96,485 $ 92,207 $ 96,485 $ 89,028
Provision for loan losses 2,000 2,000 2,000 4,000 4,000
Recoveries of loans previously charged off:
Commercial real estate 149 21 216 170 1,568
Construction and land 30 22 11 52 185
One- to four-family real estate 230 43 356 273 646
Commercial business 215 23 100 238 270
Agricultural business, including secured by farmland 35 41 35 41
Consumer 223 110 106 333 218
882 219 830 1,101 2,928
Loans charged off:
Commercial real estate (393 ) (431 ) (299 ) (824 ) (299 )
One- to four-family real estate (16 )
Commercial business (802 ) (590 ) (375 ) (1,392 ) (894 )
Agricultural business, including secured by farmland (162 ) (4 ) (329 ) (166 ) (336 )
Consumer (579 ) (371 ) (159 ) (950 ) (536 )
(1,936 ) (1,396 ) (1,162 ) (3,332 ) (2,081 )
Net (charge-offs) recoveries (1,054 ) (1,177 ) (332 ) (2,231 ) 847
Balance, end of period $ 98,254 $ 97,308 $ 93,875 $ 98,254 $ 93,875
Net (charge-offs) recoveries / Average loans receivable (0.012 )% (0.013 )% (0.004 )% (0.025 )% 0.011 %


ALLOCATION OF
ALLOWANCE FOR LOAN LOSSES Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Jun 30, 2018
Specific or allocated loss allowance:
Commercial real estate $ 26,730 $ 27,091 $ 27,132 $ 24,413
Multifamily real estate 4,344 4,020 3,818 3,718
Construction and land 23,554 23,713 24,442 27,034
One- to four-family real estate 4,701 4,711 4,714 3,932
Commercial business 19,557 18,662 19,438 19,141
Agricultural business, including secured by farmland 3,691 3,596 3,778 3,162
Consumer 8,452 7,980 7,972 5,725
Total allocated 91,029 89,773 91,294 87,125
Unallocated 7,225 7,535 5,191 6,750
Total allowance for loan losses $ 98,254 $ 97,308 $ 96,485 $ 93,875
Allowance for loan losses / Total loans receivable 1.12 % 1.12 % 1.11 % 1.22 %
Allowance for loan losses / Non-performing loans 534 % 504 % 616 % 613 %




...
ADDITIONAL FINANCIAL INFORMATION
(dollars in thousands)
Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Jun 30, 2018
NON-PERFORMING ASSETS
Loans on non-accrual status:
Secured by real estate:
Commercial $ 4,603 $ 5,734 $ 4,088 $ 4,341
Construction and land 2,214 3,036 3,188 1,176
One- to four-family 2,665 1,538 1,544 2,281
Commercial business 2,983 3,614 2,936 2,673
Agricultural business, including secured by farmland 1,359 2,507 1,751 1,712
Consumer 3,230 2,181 1,241 1,176
17,054 18,610 14,748 13,359
Loans more than 90 days delinquent, still on accrual:
Secured by real estate:
Construction and land 262 784
One- to four-family 995 640 658 905
Commercial business 1 1 1 1
Consumer 97 42 247 253
1,355 683 906 1,943
Total non-performing loans 18,409 19,293 15,654 15,302
Real estate owned (REO) 2,513 2,611 2,611 473
Other repossessed assets 112 50 592 733
Total non-performing assets $ 21,034 $ 21,954 $ 18,857 $ 16,508
Total non-performing assets to total assets 0.18 % 0.19 % 0.16 % 0.16 %
Purchased credit-impaired loans, net $ 12,945