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Item 5. Market for Registrant’s Common Equity

2022-02-24 compared with 2021-02-23 · 10 added, 119 removed, 25 unchanged (84% of the section changed)

9 unchanged sentences

Total for quarter 180 $ 57.09 — 1,712,510

On March 27, 2019, the Company announced that its Board of Directors had authorized the repurchase up to 5% of the Company’s common stock, or 1,757,637 of the Company’s outstanding shares.

During the year ended December 31, 2020, the Company repurchased 624,780 shares under the 2019 stock repurchase authorization prior to its expiration on March 27, 2020.

On December 22, 2021, the Company announced that its Board of Directors had authorized the repurchase up to 1,712,510 shares of the Company’s common stock (which was equivalent to 5% of the Company’s common stock).

Under the authorization, shares may be repurchased by the Company in open market purchases.

No shares were repurchased under this authorization during the fourth quarter of 2020.

No shares were repurchased under this authorization during December 2021.

The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

4 unchanged sentences

The following graph compares the cumulative total shareholder return on Banner Corporation common stock with the cumulative total return on the NASDAQ (U.S.

Stock) Index, a peer group of the SNL >$10 Billion Asset Bank Index and a peer group of the SNL NASDAQ Bank Index.

Stock) Index, a peer group of the KBW Regional Bank Index and the S&P 500.

Total return assumes the reinvestment of all dividends.

2 unchanged sentences

NASDAQ Composite 100.00 129.64 125.96 172.18 249.51 304.85

SNL Bank >$10B 100.00 124.93 149.05 123.15 167.83 134.58

SNL Bank NASDAQ 100.00 138.65 145.97 123.04 154.47 132.56

KBW Regional Bank Index 100.00 101.81 84.00 104.05 95.02 129.84

S&P 500 100.00 121.83 116.49 153.17 181.35 233.41

*Assumes $100 invested in Banner Corporation common stock and each index at the close of business on December 31, 2016 and that all dividends were reinvested.

Information for the graph was provided by SNL Financial L.C.

Our ability to pay dividends on our common stock depends primarily on dividends we receive from Banner Bank and Islanders Bank.

Information for the graph was provided by Bloomberg LP, New York City, NY.

Our ability to pay dividends on our common stock depends primarily on dividends we receive from Banner Bank.

The timing and amount of cash dividends paid on our common stock depends on our earnings, capital requirements, financial condition and other relevant factors, including required payments on our TPS, and is subject to the discretion of our Board of Directors.

During 2020, we kept our regular quarterly dividend at $0.41 per share, although beginning in the second quarter of 2020, we moved the timing of the declaration and payment of our quarterly dividend back a few weeks to align with our quarterly earnings release.

During 2021, we kept our regular quarterly dividend at $0.41 per share.

Subsequent to December 31, 2021, we declared a $0.44 per share quarterly dividend, a 7% increase compared to the 2021 quarterly dividend, payable on February 14, 2022.

There can be no assurance that we will pay dividends on our common stock in the future.

For additional information on our ability to pay dividends, see Item 1 of this report, “Business–Regulation–Banner Bank and Islanders Bank–Dividends” and “Banner Corporation–Dividends.”

Item 6 – Selected Financial Data

The following condensed consolidated statements of financial condition and operations and selected performance ratios as of December 31, 2020, 2019, 2018, 2017, and 2016 and for the years then ended have been derived from our audited consolidated financial statements.

The information below is qualified in its entirety by the detailed information included elsewhere herein and should be read along with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8, Financial Statement and Supplementary Data.”

FINANCIAL CONDITION DATA:

(In thousands) 2020 2019 2018 2017 2016

Total assets $ 15,031,623 $ 12,604,031 $ 11,871,317 $ 9,763,209 $ 9,793,688

Cash and securities (1)

4,003,469 2,121,022 2,168,535 1,473,608 1,353,583

Loans receivable, net 9,703,703 9,204,798 8,588,110 7,509,856 7,365,151

Deposits 12,567,296 10,048,641 9,477,048 8,183,431 8,121,414

Borrowings 451,759 687,778 773,275 194,769 255,101

Common shareholders’ equity 1,666,264 1,594,034 1,478,595 1,272,626 1,305,710

Total shareholders’ equity 1,666,264 1,594,034 1,478,595 1,272,626 1,305,710

Shares outstanding 35,159 35,752 35,183 32,726 33,193

OPERATING DATA:

For the Year Ended December 31

(In thousands) 2020 2019 2018 2017 2016

Interest income $ 519,146 $ 525,687 $ 463,647 $ 412,284 $ 391,477

Interest expense 37,845 56,768 32,659 19,250 16,408

Net interest income before provision for loan losses

481,301 468,919 430,988 393,034 375,069

Provision for loan losses 64,316 10,000 8,500 8,000 6,030

Net interest income

416,985 458,919 422,488 385,034 369,039

Deposit fees and other service charges 34,384 46,632 48,074 43,452 41,911

Mortgage banking operations revenue 51,581 22,215 21,343 20,880 25,552

Net change in valuation of financial instruments carried at fair value

(656) (208) 3,775 (2,844) (2,620)

All other non-interest income 13,307 13,302 10,801 23,712 11,382

Total non-interest income

98,616 81,941 83,993 85,200 76,225

REO operations, net (190) 303 804 (2,030) 175

All other non-interest expenses 373,338 357,425 340,567 321,000 315,449

Total non-interest expense

373,148 357,728 341,371 318,970 315,624

Income before provision for income tax expense

142,453 183,132 165,110 151,264 129,640

Provision for income tax expense 26,525 36,854 28,595 90,488 44,255

Net income $ 115,928 $ 146,278 $ 136,515 $ 60,776 $ 85,385

(footnotes follow)

PER COMMON SHARE DATA:

At or For the Years Ended December 31

2020 2019 2018 2017 2016

Basic $ 3.29 $ 4.20 $ 4.16 $ 1.85 $ 2.52

Diluted 3.26 4.18 4.15 1.84 2.52

Common shareholders’ equity per share (2)

47.39 44.59 42.03 38.89 39.34

Common shareholders’ tangible equity per share (2)(9)

36.17 33.33 31.45 30.78 31.06

Cash dividends 1.23 2.64 1.96 2.00 0.88

Dividend payout ratio (basic) 37.39 % 62.86 % 47.12 % 108.11 % 34.92 %

Dividend payout ratio (diluted) 37.73 % 63.16 % 47.23 % 108.70 % 34.92 %

As of December 31

2020 2019 2018 2017 2016

Full time equivalent employees 2,061 2,198 2,187 2,078 2,078

Number of branches 155 178 182 178 190

(footnotes follow)

KEY FINANCIAL RATIOS:

At or For the Years Ended December 31

2020 2019 2018 2017 2016

Performance Ratios:

Return on average assets (3)

0.83 % 1.22 % 1.29 % 0.60 % 0.87 %

Return on average common equity (4)

7.14 9.50 10.45 4.57 6.41

Average common equity to average assets 11.63 12.85 12.37 13.09 13.54

Interest rate spread (5)

3.84 4.27 4.40 4.23 4.19

Net interest margin (6)

3.79 4.30 4.43 4.24 4.20

Non-interest income to average assets 0.71 0.68 0.80 0.84 0.78

Non-interest expense to average assets 2.67 2.98 3.23 3.14 3.21

Efficiency ratio (7)

64.35 64.94 66.29 66.70 69.94

Average interest-earning assets to funding liabilities

104.61 106.09 106.09 105.69 105.84

Selected Financial Ratios:

Allowance for credit/loan losses as a percent of total loans at end of period (8)

1.69 1.08 1.11 1.17 1.15

Net (charge-offs) recoveries as a percent of average outstanding loans during the period

(0.05) (0.07) (0.01) (0.07) 0.03

Non-performing assets as a percent of total assets 0.24 0.32 0.16 0.28 0.35

Allowance for credit/loan losses as a percent of non-performing loans (8)(9)

469.70 253.95 616.36 329.38 380.87

Common shareholders’ tangible equity to tangible assets (10)

8.69 9.77 9.62 10.61 10.83

Consolidated Capital Ratios:

Total capital to risk-weighted assets 14.73 12.93 13.12 13.81 13.40

Tier 1 capital to risk-weighted assets 12.56 11.97 12.12 12.77 12.41

Tier 1 capital to average leverage assets 9.50 10.71 10.98 11.34 11.83

Common equity tier I capital to risk-weighted assets 11.25 10.63 10.75 11.30 11.19

(1) Includes securities available-for-sale and held-to-maturity.

(2) Calculated using shares outstanding, excluding unearned restricted shares held in ESOP.

(3) Net income divided by average assets.

(4) Net income divided by average common equity.

(5) Difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

(6) Net interest income before provision for loan losses as a percent of average interest-earning assets.

(7) Non-interest expenses divided by the total of net interest income before loan losses and non-interest income.

(8) The allowance for credit losses - loans as a percentage of loans and as a percentage of non-performing assets for 2020 reflects the adoption of Financial Instruments - Credit Losses (ASC 326) on January 1, 2020.

(9) Non-performing loans consist of nonaccrual and 90 days past due loans still accruing interest.

(10) Common shareholders’ tangible equity per share and the ratio of tangible common shareholders’ equity to tangible assets are non-GAAP financial measures.

We calculate tangible common equity by excluding the balance of goodwill and other intangible assets from shareholders’ equity.

We calculate tangible assets by excluding the balance of goodwill and other intangible assets from total assets.

We believe that this is consistent with the treatment by our bank regulatory agencies, which exclude goodwill and other intangible assets from the calculation of risk-based capital ratios.

Management believes that these non-GAAP financial measures provide information to investors that is useful in understanding the basis of our capital position.

However, these non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP.

Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures as calculated by other companies.

For a reconciliation of these non–GAAP measures, see Item 7 of this report, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Executive Overview.”

For additional information on our ability to pay dividends, see Item 1 of this report, “Business–Regulation–Banner Bank–Dividends” and “Banner Corporation–Dividends.”

Item 6 - Reserved

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity