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Banner Corporation Reports Net Income Of $25.4 Million, Or $1.27 Per Diluted Share, In Second Quarter; Net Income Highlighted By Strong Revenue Generation And Improved Credit Quality, Leading To A Recovery Of The Deferred Tax Asset

Stocks in this article: BANR

Banner recorded a $4.0 million provision for loan losses in the second quarter of 2012, compared to a $5.0 million provision in the preceding quarter and an $8.0 million provision in the second quarter a year ago. The allowance for loan losses at June 30, 2012 totaled $80.2 million, representing 2.50% of total loans outstanding and 169% of non-performing loans. Non-performing loans decreased 27% to $47.4 million at June 30, 2012, compared to $64.9 million three months earlier, and decreased 59% when compared to $115.2 million a year earlier.

Banner’s real estate owned and repossessed assets decreased 7% to $25.8 million at June 30, 2012, compared to $27.7 million three months earlier and decreased 64% when compared to $71.3 million a year ago. Net charge-offs in the second quarter of 2012 totaled $5.3 million, or 0.16% of average loans outstanding, compared to $6.4 million, or 0.20% of average loans outstanding for the first quarter of 2012 and $13.6 million, or 0.41% of average loans outstanding, for the second quarter a year ago.

At June 30, 2012, Banner’s non-performing assets were 1.73% of total assets, compared to 2.24% at March 31, 2012 and 4.48% a year ago. Non-performing assets decreased 21% to $73.2 million at June 30, 2012, compared to $93.1 million three months earlier and decreased 61% when compared to $188.4 million a year ago.

Income Statement Review

“The improvement in our net interest margin reflects continuing reductions in our funding costs, particularly in our deposit costs, and a significant reduction in the adverse effect of non-performing assets, as well as collection of some previously unrecognized interest income,” said Grescovich. Banner’s net interest margin was 4.26% in the second quarter of 2012, compared to 4.11% in the preceding quarter and 4.09% in the second quarter a year ago. In the first six months of the year, the net interest margin was 4.19% compared to 4.01% in the first six months of 2011.

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