In my opinion the headline pre-announcement has created an over-reaction. But if you look at the details there is good reason to be bullish. The most important part of the press release is this, "Total non-performing assets are expected to decline slightly; however, the composition continued to change with non-performing loans declining modestly while real estate owned increased modestly". This trend has played out for a couple qtrs now and seems over-looked. This is exactly what you need to see for a return to profitability. They are clearly converting non-performing loans to REO so they can be sold. In my opinion this has all the hallmarks of a new CEO doing a one-off clearing the decks to set up for a return to profitable quarters ahead. Just look at the composition of the non-cash provision...an adjustment to the deferred tax asset and a valuation adjustment on loan losses that now takes BANR to a healthy 57% coverage on non-performing assets. I would not be surprised to see some of these adjustments reversed in time. At less than 50% of book value and over 15% tier 1 cap ratios, I think this is an opportunity to buy from the weak hands.
Good post Mdg498. The hedge fund shorts and the weak hands are keeping Banner low today. This won't last much longer. Banner is just too strong of a bank to be this beaten down especially when Banner's CEO is making all the right structural moves to return Banner to profitability.
These are bargain basement stock prices for Banner that won't last too long.