Banner Corporation Pre-Announces Third Quarter Operating Results And A Deferred Tax Asset Valuation Allowance

WALLA WALLA, Wash., Oct. 6, 2010 (GLOBE NEWSWIRE) -- Banner Corporation (Nasdaq:BANR), the parent company of Banner Bank and Islanders Bank, today pre-announced its operating results for the quarter ended September 30, 2010.  The Company announced that it intends to recognize a $24 million non-cash provision for income taxes as a result of adjustments to its current and deferred tax assets including recording of a full valuation allowance with respect to the resulting net deferred tax asset.  The Company also expects that it will record a provision for loan losses of approximately $20 million, charges for valuation adjustments on real estate owned of approximately $9 million and an other-than-temporary impairment (OTTI) charge of $3 million with respect to a single security in its investment portfolio which had previously been reported as a non-performing asset.  As a result, the Company estimates that it will report a pre-tax loss of $19 million to $21 million and a net loss after recognition of the DTA valuation allowance of $43 million to $45 million. After providing for a preferred stock dividend and related discount accretion, the loss to common shareholders will be approximately $0.38 to $0.42 per share.

The deferred tax asset represents timing differences in the recognition of certain tax benefits for accounting and income tax purposes, including the expected value of future tax savings that will be available to the Company to offset future taxable income through the carry forward of net operating losses.  The Company decided to establish a valuation allowance against its deferred tax asset, in part, because there is uncertainty about when it will realize such tax savings. In future periods, the Company may be able to reduce some or all of the valuation allowance upon a determination that it will be able to realize such tax savings.  In that event, the Company would be able to reduce its future tax liability and recognize an income tax benefit within the statement of operations to the extent of those savings.