Banner aims to raise $75 million through stock sale

The bank says it will use a 'significant portion' of the money to support growth.


Walla Walla-based Banner Corp. is banking on new investors to help build the company's operations.

The parent company of Banner Bank announced Monday it will offer $75 million in common stock.

A "significant portion" of the net proceeds will support the growth of Banner Bank as the operation takes "advantage of opportunities created by changes in the competitive environment in its market area," according to the announcement.

Remaining proceeds will be used for general working capital purposes, officials said.

Lloyd Baker, executive vice president and chief financial officer for the company, was not available for comment this morning.

A Banner official said the ability to execute the sale of stock is a reflection of the bank's strong position, despite financial losses from nonperforming loans.

In the announcement Monday, Banner officials said proceeds from the sale will "allow for continued execution of our problem loan resolution process." It also positions the $4.8 billion bank holding company, which operates Islanders Bank in addition to Banner, to "capture business opportunities resulting from market dislocation."

Banner has grown to 89 branches and eight loan production offices spanning the Walla Walla Valley, Columbia Basin, Boise, Portland, Spokane and Seattle.

Though it continues to grow, the company has suffered losses through the tumult in the financial industry.

The company received $124 million through the federal Troubled Asset Relief Program just over a year ago.

In the first nine months of this year Banner Corp. lost $32.2 million. That was down from $49.5 million during the same time last year, a sign that the operation is stabilizing.

Banner's stock closed at $2.69 Monday, bounds below its $46.63 high in November 2006.

In its offering documents Monday, the company said it and its Banner Bank subsidiary expect to become subject to a "memorandum of understanding," a regulatory tool that could restrict some of its operations and lending practices.

According to The Seattle Times, other Northwest banks have been able to tap capital markets in recent months. But those companies, by some measures, have been stronger than Banner.

Oak Harbor, Wash.,-based Washington Bank, parent company of Whidbey Island Bank, raised $51.75 million last month. It has less than 2 percent nonperforming assets, compared with Banner's 6.8 percent as of Sept. 30.

Seattle-based Washington Federal, which raised $333 million in September, saw a $26.7 million profit in the first nine months of this year.


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