Banner Corporation (NASDAQ:BANR) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 24, 2018 • 11:00 am ET


Banner Corporation (NASDAQ:BANR) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Mark Grescovich

from a larger and improved earning asset mix, a net interest margin that remained above 4% and good deposit fee revenue.

Overall, this resulted in a return on average assets of 1.16% for the first quarter of 2018. Once again, our performance this quarter reflects continued execution on our super community bank strategy that is, growing new client relationships, adding to our core funding position by growing core deposits and promoting client loyalty and advocacy through our responsive service model. To that point, our core deposits increased 3% compared to March 31, 2017.

Noninterest-bearing deposits increased 5% from 1 year ago, and now represent 40% of total deposits. Further, we continued our strong organic generation of new client relationships. Reflective of this solid performance, coupled with our strong tangible common equity ratio of 9.82%, we increased our dividend 40% in the quarter to $0.35 per share and repurchased nearly 270,000 shares of common stock.

In a few moments, Lloyd Baker and Peter Conner will discuss our operating performance in more detail.

While we have been effectively executing on our strategies to protect our net interest margin, grow client relationships, deliver sustainable profitability and prudently invest our capital, we have also focused on maintaining the improved risk profile of Banner. Again this quarter, our credit quality metrics reflect our moderate credit risk profile.

As expected, due to the addition of new loans and the migration of acquired loans out of the discounted loan portfolio as well as a modest amount of charge-offs, we recorded a $2 million provision for loan losses during the first quarter. At the end of the quarter, our ratio of allowance for loan and lease losses to total loans was 1.22%, and our total nonperforming assets totaled 0.23%. In a moment, Rick Barton, our Chief Credit Officer, will discuss the credit metrics of the company and provide some context around the loan portfolio and our success at maintaining a moderate credit risk profile.

In the quarter and throughout the preceding 8 years, we continued to invest in our franchise. We have added talented commercial and retail banking personnel to our company, and we have invested in further developing and integrating all our bankers into Banner's proven credit and sales culture. We also have made and are continuing to make significant investments in our risk management infrastructure and delivery platform, positioning the company for continued growth and scale.

While these investments have increased our core operating expenses, they have resulted in core revenue growth, strong customer acquisition, year-over-year growth in the loan portfolio and strong deposit fee income. Further, as I have noted before, we have received marketplace recognition of our progress in our value proposition, as J.D. Power and Associates ranked Banner the number one bank in the Northwest for client satisfaction. The third year we have won this award. The Small Business Administration named Banner Bank, Community Lender of the Year for the Seattle and Spokane district for 2 consecutive years. And this year, named Banner