The company is reporting that during the fourth quarter and particularly in December, Banner Bank's loan portfolio quality, as measured by the levels of past due, classified or non-performing loans, shows deterioration. Based that level of deterioration, the company says it expects to increase the provision for loan losses from a $4 million level recorded in the third quarter to approximately $7 million in the fourth quarter.
"This increase in the provision for loan losses will substantially eliminate fourth quarter profitability for the Company," states a Friday morning news release. As a result, the company's share price was off $0.33 in afternoon trading to $18.02 despite an up day for the Nasdaq and triple digit gains the in the Dow Jones Industrial Average.
The problem loans are primarily due from borrowers located in the Puget Sound region, according to the company, and are the result of poor risk assessment at the time they were originated, coupled with weakened economic conditions in that area.
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