Idaho banks — actually, all of them — had a good quarter

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First Interstate Bank entered the Idaho market in 2016 with the purchase of Bank of the Cascades, and expanded it in April with the acquisition of Inland Northwest Bank. Photo by Sharon Fisher.

It was a really good earnings quarter for banks nationwide, and Idaho’s publicly owned banks were no exception.

It was, in fact, the highest quarter for quarterly net income ever, according to a representative who asked not to be named from the Federal Deposit Insurance Corp., which issued its report for Q1 2018 on May 22.

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Banks saw a big increase in quarterly net income. Chart courtesy of FDIC.

“Aggregate net income for the 5,606 FDIC-insured commercial banks and savings institutions reporting first quarter performance totaled $56 billion in first quarter 2018, an increase of $12.1 billion (27.5 percent) from a year earlier,” the organization noted. It attributed the improvement to higher net operating income and a lower effective tax rate. Before the Tax Cuts and Jobs Act, implemented in December, estimated net income would have been $49.4 billion, an increase of $5.5 billion, or 12.6 percent, year over year.

Total assets in Idaho banks amounted to $6.17 billion, compared with $5.76 billion a year ago, the FDIC reported. Total deposits amounted to $5.28 billion, compared with $4.90 billion the year before, the FDIC noted.

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Paul Silva

“Things are going really well,” said Paul Silva, Chase market director of banking, who is responsible for 18 of Chase’s 20 branches in Idaho. (The other two, near Coeur d’Alene, are covered by the Spokane market director.). Nationwide, the bank reported net income of $8.7 billion, an increase of 35 percent over the previous year. “We continue to have double-digit growth year over year,” he said. Specifically in Idaho, Chase has seen a 10 percent growth year-over-year with deposits, with an average deposit growth of 6 percent, he said. Moreover, Chase is seeing increased activity in all of its lines of business, from consumers to business, he said, with no one particular factor amounting for the increase.

Banner Corp., the parent company of Banner Bank and Islanders Bank, reported that net income in the first quarter of 2018 increased 21 percent to $28.8 million, or $0.89 per diluted share, compared to $23.8 million, or $0.72 per diluted share, in the first quarter a year ago. Revenues were $120.7 million during the quarter ended March 31, 2018, $125.9 million during the preceding quarter and $113.9 million during the first quarter a year ago.

Columbia Bank, which operates 14 locations in North Idaho, the Treasure Valley, and Twin Falls, had assets of $12.53 billion and $10.40 billion, with earnings per share increasing from $.50 a year ago to $.55 now.

First Interstate BancSystem, Inc., which gained an Idaho presence in 2016 by acquiring Bank of the Cascades, reported net income of $36.7 million, or $ .65 per share, compared with net income of $34.2 million, or $ .61 per share, for the fourth quarter of 2017, and $23.2 million, or $ .51 per share, for the first quarter of 2017. The company further expanded its Idaho presence in April by acquiring Inland Northwest Bank.

Washington Federal, Inc. announced quarterly earnings of $49,271,000 or $ .57 per diluted share for the quarter, compared with $42,070,000 or $ .47 per diluted share for the quarter ended March 31, 2017, a $ .10 or 21 percent increase in fully diluted earnings per share. Its total assets were $15.6 billion as of March 31, 2018 compared to $15.3 billion as of September 30. Asset growth since September 30 resulted primarily from a $341 million increase in net loans receivable and a $70 million increase in held-to-maturity securities, the organization said.

The sunny earnings reports came under some criticism by those who were opposed to the loosening of Dodd-Frank regulations.

The FDIC noted that revenue was offset by non-interest expenses, which rose 5.8 percent, and that salary and benefits grew by 4.3 percent. In addition, banks’ loan-loss provisions increased by 3 percent, with almost 37 percent of banks reporting higher loan-loss provisions. The FDIC attributed this to higher net charge-offs and a growing loan portfolio.

Banks help communities with philanthropy

A full house at the Idaho Shakespeare Festival in the summer of 2017. Photo courtesy of Idaho Shakespeare Festival.
A full house at the Idaho Shakespeare Festival in the summer of 2017. Photo courtesy of Idaho Shakespeare Festival.

If you’ve ever been to the Idaho Shakespeare Festival, you know the person announcing the night’s performance and sponsors – typically producing artistic director Charles Fee – concludes with: “And our season sponsor, for the 20th consecutive year, is …” and the audience shouts, “KEYBANK!”

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Debbie Trujillo

“It gets our name out there,” said Debbie Trujillo, corporate responsibility officer for the Rocky Mountain region of KeyBank, which covers Colorado, Utah, and Idaho. The bank has similar major sponsorships in most cities in which it operates, she added.

KeyBank isn’t alone. Throughout Idaho, banks play a major philanthropic role in communities, whether through direct financial contributions or in-kind contributions of employee time and talent.

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Jennifer Oxley

“Banks play a significant and important role in Idaho philanthropy,” said Jennifer Oxley, chief communications and marketing office for the Idaho Community Foundation, a Boise-based nonprofit that accepts contributions from donors and makes grants. “All or most of the banks are active in the community in some way, whether it’s with sponsorships, volunteering or other support.” For example, the foundation receives donations from U.S. Bank, D. L. Evans Bank, and Washington Trust Bank, which helps it fund grants. “Our relationship with U.S. Bank, in particular, stretches back decades,” she said. “When we were established 30 years ago in 1988, U.S. Bank allowed us to have rent-free space in the U.S. Bank building. That was a generous benefit that allowed the Idaho Community Foundation to concentrate on our mission.”

Of the 12 Idaho community banks headquartered in Idaho, a total of 1,971 employees provided 56,240 volunteer hours, said Trent Wright, president and CEO of the Idaho Bankers Association, in Boise. In addition, they provided $1.1 million to charitable organizations, he said.

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First Interstate Bank in Kuna. Photo by Sharon Fisher.

Some banks have a corporate giving program, some have a foundation, and some, like First Interstate, have both, said Kelly Bruggeman, vice president of the First Interstate Foundation, based in Billings, Montana. The bank contributes a minimum of 2 percent of its net income before tax each year – $3.2 million in 2017, she said. Idaho organizations the bank supports include the Home Partnership Foundation and Boise Valley Habitat for Humanity, she said.

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Kelley Bruggeman

Banks don’t donate purely out of the goodness of their hearts. As part of the Community Reinvestment Act, banks are rated as part of their compliance, Bruggeman said. And banks have been criticized for using philanthropy as a marketing tool, such as making donations to organizations with good demographics – like the Idaho Shakespeare Festival. “You see banks advertising or providing grants to places that are frequented by the kinds of clients that they are trying to attract as bank clients, like elite cultural organizations,” said Aaron Dorfman, president and CEO of the National Committee for Responsive Philanthropy, in Washington, D.C. “The line gets a little blurry. Is this marketing, or true philanthropy?”

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Brian Stewart

Increasingly, though, banks are donating to economic development causes. “We’ve really tried to concentrate around community development and affordable housing as our main philanthropic priorities,” said Brian Stewart, relationship manager with the Office of Nonprofit Engagement for JPMorgan Chase & Co., in Portland. Idaho programs the bank supports include NeighborWorks Boise, the Treasure Valley Education Partnership, and job programs such as Life’s Kitchen, he said.

Employees contribute as well. In 2017, employees in Utah and Idaho raised $765,000 for the United Way, said Toni Nielsen, region president for western Idaho for Zions Bank, in Boise. Most employees are involved with at least two nonprofits – one with a networking component “and one they’re passionate about,” she said.

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Justin Smith

In response to the 2017 Tax Cut and Jobs Act, some banks said they would be increasing philanthropic efforts. For example, U.S. Bank donated an additional $150 million to its foundation, said Justin Smith, U.S. Bank region president in southern Idaho. But most Idaho banks said the tax cut wasn’t changing their philanthropic plans.

As well as helping society, bank philanthropic efforts can also be good for business, Dorfman said. “A lot of corporate philanthropy is from the desire to give back to communities, but there is self-interest as well,” he said. “When you lift up the most vulnerable, that makes the whole society stronger and healthier – and that’s good for banks.”