I am expecting that Banner's earnings will be better than last quarter which move this stock higher. Last quarter's 40 million losses related to some of its deferred tax assets hurt Banner significantly.
Read about the reasons for Banner's problems last quarter:
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.
"While we made progress in several areas during the quarter, improving our asset quality through aggressive management of our problem assets remains the primary focus of the Company. The continuing high level of non-performing assets, related credit and operational costs, which have adversely impacted our operating results, have caused us to conclude that recording a valuation allowance for the deferred tax asset is appropriate at this time," said Mark Grescovich, President and Chief Executive Officer. "We expect ultimately to recover this valuation allowance in future periods when we sufficiently reduce the credit costs associated with non-performing assets and return to profitability.
Reflecting further improvement in funding costs and increased mortgage banking activity, the Company's revenues from core operations (net interest income before provision for loan losses plus total non-interest income excluding fair value and other-than-temporary impairment adjustments) for the quarter ended September 30, 2010, are expected to increase compared to both the immediately preceding quarter and the same quarter a year earlier. In addition, controllable operating expenses for the third quarter remained well managed and nearly unchanged from the preceding quarter, although total expenses are expected to increase primarily as a result of the real estate owned valuation adjustments noted above. 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. The allowance for loan losses increased to approximately $96 million, or approximately 2.76% of total loans and 57% of non-performing loans.
Banner Corporation's capital position remains strong at September 30, 2010, with Tier 1 capital to risk-weighted assets of approximately 15.7% and Tier I leverage capital to average assets of approximately 12.1%. Further, at quarter end, the Company elected to invest an additional $60 million as paid in capital in Banner Bank to maintain Banner Bank's regulatory capital ratios at approximately the same levels reported at June 30, 2010.
Joron, I already proved here in an earlier post that Banner's diluted shares are not seriously out of control compared to other banks. Somehow you have failed to remember that I proved you wrong. Want me to send you the old post again to show you that I am right again? I could easily find it.
"...looking forward we anticipate our credit costs will remain elevated for a number of quarters and will have a continuing adverse effect on our earnings during the final quarter of 2010 and into 2011."
BANR will be $1 or below in the first few months of 2011.
All write-offs parked in 3rd qtr along with tas asset write-off....4th qtr porfitable or at least breakeven to set the table for 2011....they still must get rid of the TARP on their bookds to increase dividends in 2011.