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Originally published January 27, 2010 at 4:25 PM | Page modified January 29, 2010 at 8:24 AM

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Banner posts narrower 2009 loss

The holding company for Banner Bank and Islanders Bank lost $35.8 million in 2009, though that represented an improvement over the $128 million loss it recorded in 2008.

Seattle Times business reporter

The holding company for Banner Bank and Islanders Bank lost $35.8 million in 2009, an improvement over the $128 million loss it recorded in 2008.

Walla Walla-based Banner Corp. also reported Wednesday a fourth-quarter loss of $3.5 million. After accounting for preferred stock owned by the federal government, the loss to common shareholders was $5.5 million, or 27 cents per common share, for the quarter, and $43.5 million, or $2.33 a share, for the year.

Banner, the third-largest bank holding company in Washington, is in better shape than many other community banks, but it hasn't escaped the region's collapsed housing bubble.

"Distressed property values, particularly for land and developed building lots, placed further stress on certain borrowers and projects during the quarter," Chief Executive D. Michael Jones said in a written statement.

Banner set aside another $17 million in the fourth quarter to cover anticipated loan losses, almost as much as the bad loans it charged off in the period.

After setting aside $109 million in 2009 and charging off $88.9 million in loans, Banner's loan-loss reserve stood at $95.3 million at year's end.

"We remain hopeful that the final resolution of many of these loans will occur at a reasonable pace and that credit costs will moderate over time," Jones said.

As of Dec. 31, $295.9 million of Banner's $4.7 billion in assets, or 6.3 percent, were classed as nonperforming. The largest portion of those nonperforming assets consisted of delinquent land-development and construction loans in Washington and Oregon.

On the plus side, Banner's regulatory capital ratios were well above the minimums to be considered "well capitalized." Its net interest margin — a performance metric that tracks how much the bank receives from borrowers versus what it pays depositors — rose to 3.49 percent in the fourth quarter, reflecting continued rock-bottom interest rates on deposits.

Banner reported results after the close of regular Nasdaq trading Wednesday. In the regular session its shares gained 19 cents to close at $3.04; the shares gained another 6 cents in after-hours trading.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com

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