Banner Corp (NASDAQ:BANR) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 11:00 am ET


Banner Corp (NASDAQ:BANR) Q4 2019 Earnings Conference Call - Final Transcript


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Mark J. Grescovich

core revenue reached a record $551 million and increased 7% compared to the full year 2018, demonstrating that our strategic plan is effective and continuing to build shareholder value. We benefited from a larger and improved earning asset mix, a strong net interest margin and good fee income. Overall, this resulted in a return on average assets of 1.22% for the year. Once again, our performance this quarter and for the full year reflects continued execution on our super community bank strategy that is growing new client relationships, improving our core funding position by growing core deposits and promoting client loyalty and advocacy through our responsive service model, while augmenting our growth with opportunistic acquisitions. To that point, our core deposits increased 10% compared to December 31, 2018 and represent 89% 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 9.77%, we issued a core dividend of $0.41 per share and a special dividend of $1 per share in the quarter and repurchased 1 million shares of common stock in 2019. In a few moments, 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 risk profile. At the end of the quarter, our ratio of allowance for loan and lease losses to total loans was 1.08%. In a moment, Rick Barton, our Chief Credit Officer, will discuss the credit metrics of the company, the increase in non-performing loans associated with a single credit and provide some context around the loan portfolio and our continued success at maintaining a moderate credit risk profile.

In the quarter and throughout the preceding nine 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 enhancing our digital and physical delivery platforms, 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 fee income.

Further, as I've noted before, we have received marketplace recognition of our progress in our value proposition as J.D. Power and Associates this year again ranked Banner Bank the number one Bank in the Northwest for client satisfaction. The fifth 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 two consecutive years, and this year named Banner Bank, Regional Lender of