BANNER CORP
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ to ______________
Commission File Number 000-26584
BANNER CORPORATION
(Exact name of registrant as specified in its charter)
| Washington | 91-1691604 |
|---|---|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
10 South First Avenue, Walla Walla, Washington 99362
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (509)527-3636
Securities registered pursuant to Section 12(b) of the Act
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $.01 per share | BANR | The NASDAQ Stock Market LLC |
| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Yes | ☒ | No | ☐ | |||||||||||
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ||||||||||||||
| Yes | ☒ | No | ☐ | |||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | ||||||||||||||
| Large accelerated filer | ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | ☐ | |||||||||
| Emerging growth company | ☐ | |||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | ||||||||||||||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☐ | No | ☒ | ||||||||||
| APPLICABLE ONLY TO CORPORATE ISSUERS | ||||||||||||||
| Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. | ||||||||||||||
| Title of class: | As of July 31, 2024 | |||||||||||||
| Common Stock, $.01 par value per share | 34,456,343 shares | |||||||||||||
| PART I – FINANCIAL INFORMATION | |
|---|---|
| Item 1 – Financial Statements (unaudited). The Unaudited Condensed Consolidated Financial Statements of Banner Corporation and Subsidiaries filed as a part of the report are as follows: | |
| Consolidated Statements of Financial Condition | 4 |
| Consolidated Statements of Operations | 5 |
| Consolidated Statements of Comprehensive Income | 6 |
| Consolidated Statements of Changes in Shareholders’ Equity | 7 |
| Consolidated Statements of Cash Flows | 8 |
| Selected Notes to the Consolidated Financial Statements | 10 |
| Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| Executive Overview | 47 |
| Comparison of Financial Condition | 49 |
| Comparison of Results of Operations | 53 |
| Asset Quality | 60 |
| Liquidity and Capital Resources | 61 |
| Capital Requirements | 63 |
| Item 3 – Quantitative and Qualitative Disclosures About Market Risk | |
| Market Risk and Asset/Liability Management | 63 |
| Sensitivity Analysis | 64 |
| Item 4 – Controls and Procedures | 67 |
| PART II – OTHER INFORMATION | |
| Item 1 – Legal Proceedings | 68 |
| Item 1A – Risk Factors | 68 |
| Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds | 69 |
| Item 3 – Defaults upon Senior Securities | 69 |
| Item 4 – Mine Safety Disclosures | 69 |
| Item 5 – Other Information | 69 |
| Item 6 – Exhibits | 70 |
| SIGNATURES | 72 |
All references to “Banner” refer to Banner Corporation and those to the “Bank” refer to its wholly-owned subsidiary, Banner Bank. As used throughout this report, the terms “we,” “our,” “us,” or the “Company” refer to Banner Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Special Note Regarding Forward-Looking Statements
Certain matters in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items, including statements about our financial condition, liquidity and results of operations. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions, or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from the results anticipated or implied, including, but not limited to:
Adverse economic conditions in our market areas or other areas where we have lending relationships, due to factors such as employment levels, labor shortages, inflation, potential recession, or slowed economic growth.
Changes in the interest rate environment, including past increases in the Board of Governors of the Federal Reserve System’s (Federal Reserve) benchmark rate, which could adversely affect our revenues, expenses, asset values, debt obligations, and liquidity.
Impact of inflation and the Federal Reserve’s monetary policies.
Effects of any federal government shutdown.
Credit risks from lending activities, including changes in loan delinquencies, write-offs, and the allowance for credit loss, and our ability to manage loan delinquency rates.
Competitive pressures in the financial services industry, including repricing and competitors’ pricing initiatives on loan and deposit products.
Changes in consumer spending and borrowing habits.
Interest rate movements and the relative differences between short and long-term interest rates, loan and deposit rates, net interest margin, and funding sources.
Impact of bank failures or adverse developments at other banks and related negative press on investor, depositor and borrower sentiment.
Fluctuations in demand for loans, unsold homes, land, and real estate values.
Expectations regarding key growth initiatives and strategic priorities.
Ability to adapt to technological changes both internally and to meet client needs.
Ability to access cost-effective funding and to control operating costs and expenses.
Use of estimates in determining fair value of certain assets and liabilities, which may prove incorrect and significantly change valuations.
Staffing fluctuations in response to product demand or corporate strategies, and potential associated charges.
Disruptions, security breaches, or other adverse events, failures, or attacks on information technology systems or critical third-party vendors.
Secondary market conditions for loans and ability to sell loans in the secondary market.
Costs, effects, and outcomes of litigation.
Legislative or regulatory changes, including changes in policies, principles, or interpretations of regulatory capital or other rules.
Results of safety and soundness and compliance examinations by regulatory authorities, which may require restitution, increased reserves for credit losses, write-downs of assets, or changes in regulatory capital position, affecting liquidity and earnings.
Availability of resources to address changes in laws, rules, or regulations, or to respond to regulatory actions.
Quality and composition of our securities portfolio and impact of adverse changes in the securities markets.
Inability of key third-party providers to perform their obligations.
Changes in accounting principles, policies, or guidelines, including additional guidance on and interpretation of accounting issues.
Environmental, social, and governance goals and targets.
Effects of climate change, severe weather, natural disasters, pandemics, public health crises, acts of war or terrorism, and other external events on our business.
Other economic, competitive, governmental, regulatory, and technological factors affecting operations, pricing, products, and services.
Future acquisitions of other depository institutions or lines of business.
Future goodwill impairment due to changes in our business or market conditions.
Other risks detailed in our Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”), and in our reports filed with or furnished to the U.S. Securities and Exchange Commission (SEC), including this Form 10-Q.
Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We do not undertake and specifically disclaim any obligation to update any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.