Banner Corporation Announces Third Quarter Results

WALLA WALLA, Wash., Oct. 20, 2010 (GLOBE NEWSWIRE) -- Banner Corporation (Nasdaq:BANR), the parent company of Banner Bank and Islanders Bank, today reported that it had a net loss of $42.7 million in the third quarter ended September 30, 2010, compared to a net loss of $4.9 million in the immediately preceding quarter and a net loss of $6.4 million in the third quarter a year ago. The current quarter's results include a previously announced $24.0 million non-cash provision for income taxes as a result of adjustments to its current and deferred tax assets, a $20.0 million provision for loan losses, an $8.6 million charge for valuation adjustments on real estate owned and an other-than-temporary impairment (OTTI) charge of $3.0 million.

"For the third quarter we had solid revenue growth, reflecting a further significant reduction in deposit costs, strong mortgage banking activity and an increase in our average interest-earning asset balances as a result of our recent common stock offering. We demonstrated improvement in our core business by continuing to change the composition of our deposit portfolio, increasing non-interest-bearing and other core deposit balances and customer relationships, while strengthening our on-balance-sheet liquidity and effectively managing controllable operating expenses," said Mark J. Grescovich, President and Chief Executive Officer. "While we are pleased with the progress in all of these areas during the quarter, the continuing high level of non-performing assets and related credit and operational costs have adversely affected our operating results, leading us to conclude that recording a valuation allowance for the deferred tax asset was appropriate at this time. Improving our asset quality through aggressive management of our problem assets, including appropriate valuation adjustments when necessary, remains the primary focus for Banner. We expect ultimately to recover this deferred tax valuation allowance in future periods when we sufficiently reduce the credit costs associated with non-performing assets and return to profitability."