Banner reports net income of $9.2M after $7.8M loss a year ago

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WALLA WALLA -- Banner Corporation, parent company of Banner Bank and Islanders Bank, reported its net income increased to $9.2 million in the first quarter of 2012 ending in March.

The amount compares to $5.1 million in the preceding quarter and a net loss of $7.8 million this time last year.

"Our return to profitability for the last four quarters reflects significant progress on the key objectives of our turnaround plan," Mark J. Grescovich, Banner's chief executive, said in a prepared statement April 24.

In the first quarter of 2012, Walla Walla-based Banner paid a $1.6 million dividend on the $124 million of senior preferred stock it issued to the U.S. Department of the Treasury under the Capital Purchase Program.

The government in late March auctioned its Banner shares as well as those of five other small banks it bailed out in the 2008 financial crisis under the broader Troubled Assets Relief Program.

The auction of Banner's 124,000 shares yielded approximately $108 million in net proceeds, according the Treasury Department.

The department said it received $362 million from the first public auction of its preferred stock in small banks. Treasury invested $410.8 million in the six banks, according to The Associated Press.

The U.S. government lost roughly $50 million on the stock sale but says it gained overall during its three-year investment when including $65.4 million in dividends and interest.

The profits from the investment will help offset losses in the broader financial bailout.

The government has recovered about $334 billion of the $415 billion that was lent to financial institutions and automakers under TARP.

Altogether, Treasury invested $245 billion in 707 small banks under TARP. It has recovered $260 billion.

About 350 small banks remain in the bailout program.

Banner's quarterly statement reported that non-performing loans decreased to $64.9 million at the end of March, a 51 percent decrease from a year ago. Real estate owned and repossessed assets decreased to $27.7 million at the end of the quarter, a 36 percent decrease from the previous quarter and 71 percent from March 31, 2011.

"Improving the risk profile of Banner and aggressively managing our troubled assets has been and will remain a primary focus for the company," Grescovich said.

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