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Banner Corporation Message Board

  • mdg498 mdg498 Oct 12, 2010 11:07 AM Flag

    mkt doesnt seem to be reading between the lines

    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 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.

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