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Banner Corp  (NASDAQ:BANR)
Q3 2018 Earnings Conference Call
Oct. 25, 2018, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen and welcome to the Banner Corporation Third Quarter 2018 Conference Call and webcast. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

At this time, I would like to turn the conference over to Mr. Mark Grescovich, President and CEO. Please go ahead, sir.

Mark Grescovich -- President and Chief Executive Officer

Thank you, Denise, and good morning everyone. I would also like to welcome you to the third quarter 2018 earnings call for Banner Corporation. Joining me on the call today is Rick Barton, our Chief Credit Officer; Peter Conner, our Chief Financial Officer; and Albert Marshall, the Secretary of the Corporation.

Albert, would you please read our forward-looking Safe Harbor Statement?

Albert Marshall -- Secretary of the Corporation

Certainly. Good morning. Our presentation today discusses Banner's business outlook and will include forward-looking statements. Those statements include descriptions of management's plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner's general outlook for economic and other conditions. We also may make forward-looking statements in the question-and-answer period following management's discussion. These forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those discussed today.

Information on the risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and a recently filed Form 10-Q for the quarter ended June 30, 2018. Forward-looking statements are effective only as of the date they are made and Banner assumes no obligation to update information concerning its expectations. Thank you.

Mark Grescovich -- President and Chief Executive Officer

Thank you, Al. As announced, Banner Corporation reported a net profit available to common shareholders of $37.8 million or $1.17 per diluted share for the quarter ended September 30, 2018. This compared to a net profit to common shareholders of $1 per share for the second quarter of 2018 and $0.76 per share in the third quarter of 2017. Excluding the impact of merger and acquisition expenses, gains and losses on the sales of securities, and changes in fair value of financial instruments, earnings increased 20% to $38.5 million for the third quarter of 2018 from $32.2 million in the third quarter of 2017.

Because of the hard work of our employees throughout the company, we are successfully executing on our strategies and priorities to deliver sustainable profitability and revenue growth to Banner. Our core operating performance continued to reflect the success of our proven client acquisition strategies which are producing strong core revenue. Our third quarter 2018 performance clearly demonstrates that our strategic plan is effective and we continue building shareholder value.

Third quarter 2018 core revenue was $129.4 million, an increase of 9% compared to the third quarter of 2017. We benefited from a larger and improved earning asset mix and increasing our net interest margin and very good deposit fee revenue. Overall, this resulted in a return on average assets of 1.43% for the third 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 while augmenting our growth with opportunistic acquisitions.

To that point, excluding the impact of the sale of the Utah operation, our non-interest bearing deposits increased 7% from one year ago, representing 40% of total deposits. Further, we continued our strong organic generation of new client relationships again this quarter. Reflective of the solid performance coupled with our strong tangible common equity ratio of 9.86%, we increased our core dividend of 9% in the quarter to $0.38 per share. 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 credit risk profile.

As expected, due to the addition of new loans in the migration of acquired loans out of the discounted loan portfolio, we recorded a $2 million provision for loan losses during the third 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 non-performing assets totaled 0.16%. 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 eight years, we continue to invest in our franchise. We have deepened the executive management team, added talented commercial and retail banking personnel, 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 our delivery platform positioning the company for continued growth and scale. While these investments have increased our core operating expenses, they 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 and 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 two consecutive years, and this year named Banner Bank Regional Lender of the Year for the third consecutive year, and Bankrate.com and Money Magazine named Banner Bank the best regional bank in America. Also, Banner ranked 35 out of 100 in the Forbes 2018 Best Banks in America.

Before I turn the call over to Rick Barton to discuss trends in our loan portfolio, I want to again recognize our new colleagues and clients from Skagit Bank, which is an outstanding 60-year old organization in Northwest Washington that will be joining Banner on November 1st. We're extremely pleased with this opportunity to expand our super community bank model and enhance our density into Seattle and I-5 Corridor. Further, we're thrilled that Cheryl Bishop, Skagit's Chief Executive Officer, will be joining Banner's Board of Directors.

I'll now turn the call to Rick Barton to discuss trends in our loan portfolio. Rick?

Richard Barton -- Executive Vice President & Chief Credit Officer

Thank you, Mark. As shown in our third quarter press release, Banner's credit metrics were stable during the quarter maintaining the moderate risk profile of the portfolio that the company has. Bottom line, Banner's credit metrics remain very well positioned to deal with the next credit cycle and the portfolio impacts of rising interest rates and tariff impacts as they work their way through the US economy.

My specific remarks on our credit metrics this morning will be brief. Delinquent loans were flat decreasing only 2 basis points from the linked quarter to 0.27% of total loans. Delinquencies one year ago were 0.45%. The company's level of adversely classified assets decreased a further 19% during the quarter, reflecting continuing problem resolution, positive economic activity in our footprint and strong borrower performance.

Non-performing assets were flat at 0.16% of total assets. This metric at September 30, 2017 was 0.30%. Non-performing assets were split between non-performing loans of $16 million and REO and other assets of $1 million. Not reflected in these totals are the remaining non-performing loans of $8 million acquired from Siuslaw and AmericanWest Banks, which are not reportable under purchase accounting rules.

If we were to include the acquired non-performing loans in our non-performing asset totals, the ratio of non-performing assets to total assets would still be a modest 24 basis points. For the quarter, the company recorded net loan charge offs of $612,000. Gross charge offs for the quarter were $1.3 million. We still consider charge offs at this level to be low when compared to historical norms. Also to be noted is a slightly lower recovery during 2018 -- second quarter of 2018 on loans previously charged off, and I should say that was during the third quarter of 2018.

After a fourth quarter provision of $2 million and net loan losses of $612,000, the allowance for loan and lease losses for the company totals $95.3 million and is 1.22% of total loans unchanged from the linked quarter. For the quarter ending September 30, 2017, this measure was 1.15%. Coverage of non-performing loans remain very robust at 603%. The remaining net accounting mark against acquired loans is $15.5 million, which provides an additional level of production against loan losses.

During the third quarter of 2018 total loans receivable increased by $138 million or 1.8% when compared to the linked quarter. On an annualized basis, this is a 7% rate of growth. The drivers behind this increase were commercial business, residential construction, and commercial real estate loans. Also, agricultural loans showed their usual seasonal growth. It is also important to note that C&I loan growth occurred our -- across our footprint at an annualized rate of 14%.

Banner's construction loan portfolios remained acceptable in terms of concentration levels. Residential construction exposure including land loans is 8.6% of total loans. When both multifamily and commercial construction loans are added into this calculation, our construction exposure is 12.8% of total loans.

The pace of lease up activity on our for-profit multifamily construction loans has not changed in the last 90 days, with these loans continuing to pay off in a timely manner. However, we are continuing to observe flattening in the growth of multifamily rents and higher vacancy rates in the luxury apartment market segment as new projects in this segment are completed. Leasing incentives in this luxury segment also are becoming more common. And the markets in which we make residential construction loans remain either under supplied or in balance, resulting in timely absorption and manageable levels of completed inventory. However, the sales pace of expensive single family homes has slowed and concerns are becoming more tangible about the impact of rising interest rates on the pace of entry level home sales. We are keeping a watchful eye on these dynamics and their impact on general and sub market completed and unsold inventories.

As I said at the outset of my remarks, credit again remains stable at Banner, which further solidified the moderate risk profile of our loan portfolios and positioned us well for the future.

With that said, I will pass the microphone to Peter for his comments. Peter?

Peter Conner -- Executive Vice President & Chief Financial Officer

Good morning. Thank you, Rick. As discussed previously and as announced in our earnings release, we reported net income of $37.8 million or $1.17 per diluted share for the third quarter, up from $32.4 million or $1 per diluted share from the prior quarter. The $0.17 per share increase in the prior quarter was due to the following items: Net interest income increased $0.12 due to a 9 basis point increase in the margin combined with the $63 million increase in average earning assets. Non-interest income declined $0.03 compared to the prior quarter due to writedowns on fixed asset disposals in the current quarter versus gains on property sales taken in the prior quarter which were partially offset by an increase in mortgage banking income and BOLI benefit gains. Non-interest expense declined $0.04 principally due to a decrease in personnel expense as a result of lower FTE and lower medical claims expense, partially offset by a $1 million increase in Skagit acquisition-related expense. Income tax expense decreased $0.04 per share, primarily due to a credit adjustment for tax exempt loan interest income from prior periods.

Turning to the balance sheet. Ending assets increased $135 million from the end of the second quarter to $10.5 billion at the end of the third quarter as a result of growth in held-for-portfolio loans. The ending investment portfolio balances including interest-bearing deposits grew $18 million from the end of the second quarter.

Total loans increased a $132 million from the prior quarter end as a result of $138 million in growth in held-for-portfolio loans, partially offset by a $6 million decline in held-for-sale loans. Growth in held-for-portfolio loans was driven primarily by C&I, AG, CRE and construction loan types. On an annual basis, compared to the third quarter a year ago, portfolio loans grew $48 million. The growth in held-for-portfolio loans was impacted by the sale of $254 million of loans with the Utah operations in the fourth quarter of 2017. Ending core deposits increased $126 million or 1.7% compared to the prior quarter. Due to seasonal increases in deposit balances, the company typically experiences this time of year. On an annual basis, core deposits grew $67 million or 0.9% from the prior year quarter end. The growth in core deposits was impacted by the sale of $160 million of core deposits with the Utah operation. Time deposits increased $32 million in the third quarter due to increases in brokerage CDs.

Net interest income increased $4 million from the prior quarter due to an increase in the net interest margin, driven by increases in loan yields and growth in average loan balances. Loan yields increased 16 basis points to 5.31% in the third quarter from 5.15% in the second quarter. Acquired loan interest accretion accounted for 16 basis points of loan yield in the third quarter compared to 9 basis points in the previous quarter. The increase in loan accretion income this quarter was due to the prepayment of a single-loan credit discount in the acquired loan portfolio. Improvement in the contractual yield was a result of repricing of loans in the existing portfolio along with higher yields on new loan production. Third quarter prepayment and loan workout related interest income ran at the same level we experienced in the second quarter, which is about 5 basis points higher than recent experience in the fourth quarter of 2017 and first quarter of 2018.

The total cost of deposits in the second quarter was 25 basis points, up 5 basis points from the prior quarter. Increases in retail deposit costs accounted for 3 basis points of the increase, while brokerage CDs accounted for 2 basis points of the increase. In the third quarter, brokerage CDs accounted for 6 basis points for the total cost of deposits.

The net interest margin increased 9 basis points to 4.48%. The effects of purchase accounting-related loan accretion accounted for 12 basis points of the net interest margin in the second quarter compared to 7 basis points in the previous quarter. Non-interest income declined 800,000 from the prior quarter. The current quarter was impacted by 700,000 of fixed asset writedowns from closed branch locations compared to $2.1 million of gains on the sales of bank branch and administrator properties in the prior quarter.

Deposit fee generation was solid with continued growth in deposit account service charges and interchange income driven by net new client deposit account growth. Total mortgage banking income increased $1.1 million due to increases in the gain on sale of multifamily loans. Fee income generated from residential mortgage sales and servicing remained even compared to the previous quarter.

Turning to expense. Non-interest expense decreased by $1 million in the third quarter from the previous quarter. Personnel expense decreased $2.6 (ph) million due to declines in FTE from branch consolidations and generally lower staff levels in the administrative and support functions. In addition, the Bank experienced elevated medical claims and other benefits expense in the second quarter compared to the third quarter. Merger and acquisition cost increased by $1 million associated with the pending closure of the Skagit Bank acquisition. REO expense increased 800,000 due to writedowns in the third quarter compared to modest recoveries in the second quarter.

Finally, we have received all necessary regulatory and shareholder approvals and anticipate closing the Skagit Bank acquisition on November 1st. The key personnel decisions have been communicated and our integration team is working toward the first quarter conversion and concurrent branch consolidations.

This concludes my prepared remarks. Mark?

Mark Grescovich -- President and Chief Executive Officer

Thank you Rick and Peter for your comments. That concludes our prepared remarks, and Denise will now open the call and welcome your questions.

Questions and Answers:

Operator

Thank you, Mr. Grescovich. We will now begin the question-and-answer session. (Operator Instructions) And your first question will be from Jeff Rulis of D.A. Davidson. Please go ahead.

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

Good morning, guys.

Mark Grescovich -- President and Chief Executive Officer

Good morning, Jeff.

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

First question on the expense side. It sounds like -- I guess if we were to back out the -- couple of the one-timers, you get kind of the low 80 million range per quarter, I guess before Skagit comes on board, but from the lower comp expense -- I guess is that sustainable and kind of what are your thoughts about kind of the core expense base going forward?

Peter Conner -- Executive Vice President & Chief Financial Officer

Yeah Jeff, this is Peter. So what we typically expect coming into the fourth quarter is less than seasonal increases in our core expense related to marketing and CRE contributions along with some elevated professional services costs, principally related to some of the audit activity that begins to tick up in the fourth quarter. So we see a normal increase just due to seasonal factors on the core expense.

Beyond that, we would consider the results in the third quarter basically a baseline and what we are going to grow on a more normalized basis, our personal expense and other production-related expenses going into '19. So I would consider it as a good baseline. We don't expect any additional reductions in the -- what we did going from the second to third quarter, but I wouldn't view it as a baseline going forward.

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

Okay. And then maybe a similar question on the margin. You saw a nice pop in the accretion this quarter, and maybe you see another one -- another uptick with Skagit coming on board, but how did the outlook on the core margin -- any thoughts there?

Peter Conner -- Executive Vice President & Chief Financial Officer

Yeah. I mean, look, I think in the first period, talk about as a deposit cost, so our overall deposit cost moved up 5 basis points in the third quarter. And we anticipate the same pace of movement into the fourth quarter. So we are seeing meaningful deposit competition as we discussed previously across our markets. And we are seeing a consistent pace of increase at the levels we saw from second to third quarter, and we expect that again in the fourth quarter.

As you know our loan portfolio is well diversified between floating, adjustable and fixed, 30% of the portfolio is floating. Most of that's on prime as opposed to LIBOR, and so we continue to benefit from the increase in rates on existing portfolios that rephrases up.

I generally characterize our core margin excluding accretion as -- there is limited amount of additional margin expansion going forward. As the deposit betas have begun to accelerate, we are anticipating very little additional core margin expansion with the next round of rate hikes. And then the loan accretion has been very lumpy as we saw in the third quarter. And on a long run basis, that will continue to diminish as we work through the acquired loan portfolios from AmericanWest.

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

Okay. Maybe one quick last one for Mark, just on the capital side. I guess as you closed Skagit, kind of thoughts on revisiting potentially a special dividend or kind of buyback options, I guess, you kind of gaping up on the stock today, but any thoughts on capital?

Mark Grescovich -- President and Chief Executive Officer

Thanks Jeff for the question. I don't envision any left turn in our overall philosophy on deployment of capital. It's going to be reinvestment in the franchise first, obviously establishment of a strong core dividend. That you saw the increase -- the 9% increase in the most recent third quarter on the core dividend. Beyond that, obviously any M&A opportunities that would present themselves would be a good utilization as reinvestment in the franchise. We do have a 5% authorization for share repurchases that are still on through our shelf registration. So, you could potentially see some deployment of capital either in stock repurchases or special dividends, we're a bit agnostic it depends on what the market does.

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

Great. Thank you.

Mark Grescovich -- President and Chief Executive Officer

Thank you, Jeff.

Operator

(Operator Instructions) And showing no additional questions, this will conclude the -- Oh, we do have a question that just came in from Tyler Stafford of Stephens Inc. Please go ahead.

Tyler Stafford -- Stephens Inc. -- Analyst

Hey, good morning guys. Sorry about that.

Mark Grescovich -- President and Chief Executive Officer

Good morning, Tyler. Good morning.

Tyler Stafford -- Stephens Inc. -- Analyst

Thought I was in the queue. I just wanted to clarify the margin comments you just made. Is the similar pace of deposit cost increase. Is that inclusive or exclusive of the impacts of Skagit in the fourth quarter?

Mark Grescovich -- President and Chief Executive Officer

That's excluding it, Tyler. It's important as Skagit has a lower loan-to-deposit ratio than Banner, so they have a higher proportion of their earning assets and securities. So while we -- we'll get some accretion pickup from the Skagit acquisition. On a core basis, they're very slightly dilutive to our core margin because of the higher proportion of securities they hold on their balance sheet. So while they're relatively small at Banner, there's a very small dilutive effect on the core margin from Skagit.

Tyler Stafford -- Stephens Inc. -- Analyst

Got it. Okay. That's it from me. Thanks.

Mark Grescovich -- President and Chief Executive Officer

Thanks, Tyler.

Operator

(Operator Instructions) Your next question will be from Don Worthington of Raymond James. Please go ahead.

Don Worthington -- Raymond James -- Analyst

Thank you. Good morning everyone.

Mark Grescovich -- President and Chief Executive Officer

Good morning, Don.

Don Worthington -- Raymond James -- Analyst

Just a question on the mortgage banking revenue. Would you expect further gain on sale of multifamily kind of at the level this quarter. And then maybe the single-family component, the outlook there with the rising rates going forward?

Peter Conner -- Executive Vice President & Chief Financial Officer

Yes, good question, Don. This is Peter. Yeah. In regards to multifamily, we did have a significant improvement in the gain on sale of the ones that were sold in the third quarter relative to the second quarter. However, I would consider that was a bit of anomaly. It was higher than we had anticipated. But I wouldn't anticipate that level of gain on sale for the multifamily business going forward. We typically get between 80 basis points and -- 85 basis points and 95 basis points of net gain on sale on the multifamily business. And they typically generate about $75 million to $80 million a quarter in production and sales. And so that's -- that's generally our expectation with multifamily going forward. We did enjoy a very good level of execution. Our multifamily loans are well received in the secondary market, and that showed up for sure in the third quarter.

Turning to residential mortgage, we continue to have a resilient mortgage business. The decline in refi volume from last year has been all made up in the form of additional purchase volume in the third quarter. And in fact, on a production basis, we were even in the third quarter with the second quarter in terms of overall mortgage production. And we've seen our gain on sale remain very steady in terms of what we're getting in the secondary market there.

Don Worthington -- Raymond James -- Analyst

Okay, great. Thanks for the color.

Peter Conner -- Executive Vice President & Chief Financial Officer

Thanks, Don.

Operator

And your next question will be from Tim Coffey of FIG Partners. Please go ahead.

Tim Coffey -- FIG Partners -- Analyst

Thank you. Good morning, gentlemen.

Mark Grescovich -- President and Chief Executive Officer

Good morning, Tim.

Tim Coffey -- FIG Partners -- Analyst

The relative stability, the outright improvement in your non-performers last three quarters, does that imply a relatively stable state of provision expenses going forward like we've seen already?

Richard Barton -- Executive Vice President & Chief Credit Officer

Well, Tim, this is Rick Barton. As we have discussed many times, the provisioning that we put up is based on the pace of loan growth, the mix of the loan growth, individual credit events, and macroeconomic trends that we see. I think that we look at those factors being fairly stable in terms of -- in the next couple of quarters as to what we've seen in the last few quarters. So I think you can draw a conclusion from that as to how we view provisioning. Personally, I think we're very well positioned where we're at.

Tim Coffey -- FIG Partners -- Analyst

And Rick, to follow-up on your comments earlier, just in your professional experience, how concerned are you with some of the weakness that we're seeing in the multifamily complex right now?

Richard Barton -- Executive Vice President & Chief Credit Officer

Well, the concerns I have are centered primarily on the luxury apartment market. And I say that because of what we're seeing in terms of the concessions being granted. And a good deal of the pipeline of projects that are to be delivered in the next 6 to 12 months fall into that category as well. Banner's portfolio exposure in that market segment is modest and has good sponsorship behind it. So while I'm concerned about the market in general, I'm not particularly concerned about the outsized problems in our own portfolio.

Tim Coffey -- FIG Partners -- Analyst

Okay. Thanks for that. And Mark, if we look at kind of the cost of your total deposits over the last couple quarters, they've been very good, you know, especially this last quarter with the deposit data. Does the stickier or the better quality deposits that you have, the lower cost deposits that you have give you competitive advantage in the market when it comes to pricing new loans?

Mark Grescovich -- President and Chief Executive Officer

Well, we certainly -- thank you for that question, Tim. We certainly think so, but I will tell you it's a highly competitive market right now for good earning assets. So pricing discipline hasn't really shifted much, but in a rising rate environment, it could very well help us to gain additional market share with a low cost deposit beta.

Tim Coffey -- FIG Partners -- Analyst

And then a second, Mark, if I could. So the stock market, especially for banks has been, you know, to the downside in the last several weeks. I'm wondering from your view where you said, has your business fundamentally worsened in the last several weeks?

Mark Grescovich -- President and Chief Executive Officer

That's a good question, Tim. No, I think the fundamentals of the bank as (inaudible) -- our strong third quarter would suggest that the business continues to do very well, and the economies in which we operate are still quite strong. So, you know, I think the fundamentals of the organization continue to be positive.

Tim Coffey -- FIG Partners -- Analyst

Okay. Thank you. Those are my questions.

Mark Grescovich -- President and Chief Executive Officer

Thanks, Tim.

Operator

And the next question will be from Jackie Bohlen of KBW. Please go ahead.

Jacquelynne Bohlen -- Keefe, Bruyette & Woods -- Analyst

Hi, good morning, everyone.

Mark Grescovich -- President and Chief Executive Officer

Good morning, Jackie.

Richard Barton -- Executive Vice President & Chief Credit Officer

Good morning.

Jacquelynne Bohlen -- Keefe, Bruyette & Woods -- Analyst

I know we've been going into deposits quite a bit lately, but it is kind of the topic of the day. Looking at it a different way, are there some -- I guess, differences not similarities -- are there differences between the geographies in terms of pricing pressures that you're seeing?

Peter Conner -- Executive Vice President & Chief Financial Officer

Yes, Jackie, this is Peter. That's a good question. We have -- we're in four states and we actually look at our business across 15, actually different geographic markets in terms of our deposit pricing process, and up until a year ago or even six months ago, we really didn't see a lot of deviation in our market competition in where we were positioned. Now we're beginning to see some differences by market in terms of what our competition is doing and we're beginning to take advantage of that and calibrate our pricing and positioning of our deposit rates and products a bit differently in those markets. So we are beginning to see some separation. And as you'd expect, in general, we're seeing a bit more competition in the metro markets of our franchise and a bit less in the more rural areas where 55% of our deposits exists.

Jacquelynne Bohlen -- Keefe, Bruyette & Woods -- Analyst

And that -- I guess that kind of where I was going and what I thought might be the case with my question. So looking to the rural exposures that you have, I guess, are you increasing any deposit campaigns there or any ways to generate additional funds in kind of the less pressured areas?

Mark Grescovich -- President and Chief Executive Officer

We stayed away from deposit specials in general or big campaigns. We continue to be focused on generating core deposits with our existing business model, which continues to resonate very strongly in all of our markets. And so we haven't entertained doing any major specials or deposit campaigns but simply rely on the existing business model and our team to generate and grow our core deposit base and account base.

Jacquelynne Bohlen -- Keefe, Bruyette & Woods -- Analyst

Okay. Thanks for the color. That's helpful. Everything else I had was already asked.

Mark Grescovich -- President and Chief Executive Officer

Thank you, Jackie.

Operator

(Operator Instructions) And in showing no questions, we will conclude the question-and-answer session. I would like to hand the conference back over to Mark Grescovich for his closing remarks.

Mark Grescovich -- President and Chief Executive Officer

Thank you Denise, and I thank all of you for your questions.

As I stated, we're pleased with our strong third quarter 2018 performance and see it as evidence that we're making substantial and sustainable progress on our disciplined strategic plan to build shareholder value by executing on our super community bank model by growing market share, strengthening our deposit franchise, improving our core operating performance, maintaining amount of risk profile and prudently deploying excess capital. I would like to thank all of my colleagues who were driving the solid performance for our company.

Thank you for your interest in Banner and joining our call today. We look forward to reporting our results to you again in the future. Have a great day, everyone.

Operator

Thank you, sir. Ladies and gentlemen, the conference has concluded. Thank you for attending today's presentation. At this time you may disconnect your lines.

Duration: 37 minutes

Call participants:

Mark Grescovich -- President and Chief Executive Officer

Albert Marshall -- Secretary of the Corporation

Richard Barton -- Executive Vice President & Chief Credit Officer

Peter Conner -- Executive Vice President & Chief Financial Officer

Jeff Rulis -- D.A. Davidson & Co. -- Analyst

Tyler Stafford -- Stephens Inc. -- Analyst

Don Worthington -- Raymond James -- Analyst

Tim Coffey -- FIG Partners -- Analyst

Jacquelynne Bohlen -- Keefe, Bruyette & Woods -- Analyst

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