Banner Corporation (NASDAQ GSM:BANR), the parent company of Banner
Bank and Islanders Bank, today announced that as a result of the
Tax Cuts and Job Act enacted December 22, 2017, it will be required
to revalue its deferred tax assets and liabilities to account for
the future impact of lower corporate tax rates and other provisions
of the legislation.
Based on its preliminary analysis, Banner
expects to record a one-time net tax charge currently estimated to
be between $40 million and $43 million primarily related to the
revaluation of these deferred tax items. This increase in income
tax expense will be reflected in Banner’s operating results for the
fourth quarter of 2017 and will be in addition to the normal
provision for income tax related to pre-tax net operating income.
Banner has not completed its determination of the valuation
adjustments related to these items, and the ultimate amount of the
actual net tax charge and deferred tax asset write down will be
based upon a number of factors, including completion of Banner’s
consolidated financial statements as of and for the year ended
December 31, 2017 and completion of Banner’s 2017 tax returns.
Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recognized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
In addition, Banner announced a number of
strategic balance sheet initiatives that were implemented during
the fourth quarter of 2017 and designed to keep the Company’s
assets below $10 billion at December 31, 2017 in order to postpone
the adverse impact of the Durbin Amendment to
the Dodd-Frank Act regarding limits on, among other
things, debit card interchange fees. (The Company has
previously disclosed its estimate that the Durbin Amendment will
have a $12 million annualized negative impact on its pre-tax
revenues commencing six months after the calendar year end it
crosses $10 billion in assets.) In particular, Banner sold
approximately $450 million of investment securities in the
available for sale portfolio during the fourth quarter of 2017,
using the proceeds to fund loans and operations and to pay down
certain wholesale borrowings and maturing brokered deposits.
Banner incurred pre-tax net losses of approximately $2.3
million in connection with the sale of these investment securities,
which will produce tax benefits based upon the 2017 marginal
federal income tax rate of 35%. To the extent that the
Company re-leverages its balance sheet in future periods, the net
interest income on replacement securities will be subject to the
new 21% marginal corporate federal income tax rate. In
recent periods Banner has incurred a blended effective federal and
state tax rate of 33% to 34%. As a result of the reduced
marginal federal tax rate Banner anticipates that its blended
effective federal and state tax rate will be approximately 22% to
23% in 2018.
Banner also reduced it equity capital during the
fourth quarter of 2017 through the repurchase of 520,166 shares of
its common stock at an average price per share of $56.99 for a
total purchase price of $29.6 million that further enhanced its
efforts to close the year below $10 billion in total assets.
Banner cautions that the estimates presented in
this press release are preliminary and subject to change. These
preliminary estimates of the impact of tax reform on Banner and
Banner’s strategic initiatives should not be viewed as a substitute
for full financial statements prepared in accordance with U.S.
generally accepted accounting principles, and are not necessarily
indicative of the results to be expected for any future periods.
The estimates have been prepared by management and Banner’s
independent auditors have not completed their audit or review of
such information.
You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made, and the Company undertakes no obligation to update any
such statements. The Company will provide additional discussion and
analysis and other important information about its fourth quarter
2017 financial results and condition when it reports actual results
after the market closes on Wednesday, January 24, 2018.
Management will host a conference call on Thursday, January 25,
2018 at 8:00 a.m. PST (11:00 a.m. EST) to discuss the
results. The call will also be broadcast live via the
internet.
Interested investors may listen to the call live
at www.bannerbank.com. Investment professionals are invited
to dial (866) 235-9915 to participate in the call. A replay
will be available for one week at (877) 344-7529 using access code
10115119 or at www.bannerbank.com.
About the Company
Banner Corporation is a bank holding company
operating two commercial banks in four Western states through a
network of branches offering a full range of deposit services and
business, commercial real estate, construction, residential,
agricultural and consumer loans. Visit Banner Bank on the Web
at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”), in press releases or other public
stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases
“believe,” “will,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “plans,” or
similar expressions are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of
the date such statements are made and based only on information
then actually known to Banner. Banner does not undertake and
specifically disclaims any obligation to revise any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements. These statements may relate to future financial
performance, strategic plans or objectives, revenues or earnings
projections, or other financial information. By their nature,
these statements are subject to numerous uncertainties that could
cause actual results to differ materially from those anticipated in
the statements and could negatively affect Banner's operating and
stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1)
the risk that tax charges may be greater than currently
anticipated, (2) the risk that rules affecting revaluing deferred
tax assets and liabilities may change, (3) the risk that future
changes to tax rates may adversely affect the value of Banner’s
deferred tax assets and liabilities, (4) the risk that Banner may
not be able to realize the value of deferred tax assets which
depend on sufficient net income in the future, and (5) the risk
that costs associated with the tax reform legislation may be
greater than expected and other risks detailed from time to time in
our filings with the Securities and Exchange Commission including
our Quarterly Reports on Form 10-Q and our Annual Reports on Form
10-K.
Transmitted on Globe Newswire on January 4, 2018
at 6:00 a.m. PST.
Banner Corporation (NASDAQ GSM:BANR), the parent company of
Banner Bank and Islanders Bank, today announced that as a result of
the Tax Cuts and Job Act enacted December 22, 2017, it will be
required to revalue its deferred tax assets and liabilities to
account for the future impact of lower corporate tax rates and
other provisions of the legislation.
Based on its preliminary analysis, Banner
expects to record a one-time net tax charge currently estimated to
be between $40 million and $43 million primarily related to the
revaluation of these deferred tax items. This increase in income
tax expense will be reflected in Banner’s operating results for the
fourth quarter of 2017 and will be in addition to the normal
provision for income tax related to pre-tax net operating income.
Banner has not completed its determination of the valuation
adjustments related to these items, and the ultimate amount of the
actual net tax charge and deferred tax asset write down will be
based upon a number of factors, including completion of Banner’s
consolidated financial statements as of and for the year ended
December 31, 2017 and completion of Banner’s 2017 tax returns.
Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recognized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
In addition, Banner announced a number of
strategic balance sheet initiatives that were implemented during
the fourth quarter of 2017 and designed to keep the Company’s
assets below $10 billion at December 31, 2017 in order to postpone
the adverse impact of the Durbin Amendment to
the Dodd-Frank Act regarding limits on, among other
things, debit card interchange fees. (The Company has
previously disclosed its estimate that the Durbin Amendment will
have a $12 million annualized negative impact on its pre-tax
revenues commencing six months after the calendar year end it
crosses $10 billion in assets.) In particular, Banner sold
approximately $450 million of investment securities in the
available for sale portfolio during the fourth quarter of 2017,
using the proceeds to fund loans and operations and to pay down
certain wholesale borrowings and maturing brokered deposits.
Banner incurred pre-tax net losses of approximately $2.3
million in connection with the sale of these investment securities,
which will produce tax benefits based upon the 2017 marginal
federal income tax rate of 35%. To the extent that the
Company re-leverages its balance sheet in future periods, the net
interest income on replacement securities will be subject to the
new 21% marginal corporate federal income tax rate. In
recent periods Banner has incurred a blended effective federal and
state tax rate of 33% to 34%. As a result of the reduced
marginal federal tax rate Banner anticipates that its blended
effective federal and state tax rate will be approximately 22% to
23% in 2018.
Banner also reduced it equity capital during the
fourth quarter of 2017 through the repurchase of 520,166 shares of
its common stock at an average price per share of $56.99 for a
total purchase price of $29.6 million that further enhanced its
efforts to close the year below $10 billion in total assets.
Banner cautions that the estimates presented in
this press release are preliminary and subject to change. These
preliminary estimates of the impact of tax reform on Banner and
Banner’s strategic initiatives should not be viewed as a substitute
for full financial statements prepared in accordance with U.S.
generally accepted accounting principles, and are not necessarily
indicative of the results to be expected for any future periods.
The estimates have been prepared by management and Banner’s
independent auditors have not completed their audit or review of
such information.
You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made, and the Company undertakes no obligation to update any
such statements. The Company will provide additional discussion and
analysis and other important information about its fourth quarter
2017 financial results and condition when it reports actual results
after the market closes on Wednesday, January 24, 2018.
Management will host a conference call on Thursday, January 25,
2018 at 8:00 a.m. PST (11:00 a.m. EST) to discuss the
results. The call will also be broadcast live via the
internet.
Interested investors may listen to the call live
at www.bannerbank.com. Investment professionals are invited
to dial (866) 235-9915 to participate in the call. A replay
will be available for one week at (877) 344-7529 using access code
10115119 or at www.bannerbank.com.
About the Company
Banner Corporation is a bank holding company
operating two commercial banks in four Western states through a
network of branches offering a full range of deposit services and
business, commercial real estate, construction, residential,
agricultural and consumer loans. Visit Banner Bank on the Web
at www.bannerbank.com.
Forward-Looking Statements
When used in this press release and in other
documents filed with or furnished to the Securities and Exchange
Commission (the “SEC”), in press releases or other public
stockholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases
“believe,” “will,” “will likely result,” “are expected to,” “will
continue,” “is anticipated,” “estimate,” “project,” “plans,” or
similar expressions are intended to identify “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. You are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of
the date such statements are made and based only on information
then actually known to Banner. Banner does not undertake and
specifically disclaims any obligation to revise any forward-looking
statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such
statements. These statements may relate to future financial
performance, strategic plans or objectives, revenues or earnings
projections, or other financial information. By their nature,
these statements are subject to numerous uncertainties that could
cause actual results to differ materially from those anticipated in
the statements and could negatively affect Banner's operating and
stock price performance.
Important factors that could cause actual
results to differ materially from the results anticipated or
projected include, but are not limited to, the following: (1)
the risk that tax charges may be greater than currently
anticipated, (2) the risk that rules affecting revaluing deferred
tax assets and liabilities may change, (3) the risk that future
changes to tax rates may adversely affect the value of Banner’s
deferred tax assets and liabilities, (4) the risk that Banner may
not be able to realize the value of deferred tax assets which
depend on sufficient net income in the future, and (5) the risk
that costs associated with the tax reform legislation may be
greater than expected and other risks detailed from time to time in
our filings with the Securities and Exchange Commission including
our Quarterly Reports on Form 10-Q and our Annual Reports on Form
10-K.
CONTACT:MARK J. GRESCOVICH,PRESIDENT & CEOLLOYD W. BAKER,
CFO(509) 527-3636
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