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Banner Corporation

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Banner Corporation (BANR - Free Report) has surpassed the Zacks Consensus Estimate for seven straight quarters with an average surprise of 130.2%, and now it’s preparing to release its third-quarter results in less than two weeks. BANR is a Zacks #1 Rank (Strong Buy) commercial bank that hit a new 52-week high on October 10. It also has a solid year-to-date return of 60.0% and an expected long-term earnings growth rate of 6%.

Q3 Release Coming Up

Banner Corporation is expected to release its third quarter results on October 24. The Zacks Consensus Estimates are for 48 cents per share on revenue of $50.0 million.

On July 25, Banner Corporation reported second quarter 2012 earnings per share of 58 cents, topping the Zacks Consensus Estimate by 114.8%.

Net interest income climbed 15.4% year over year to $38.3 million. Net interest margin expanded 17 basis points (bps) to 4.26%. Additionally, the company's other operating expenses declined 11.4% to $35.7 million. However, the other operating loss recorded was $9.1 million, compared with income of $9.3 million in the prior-year quarter.

Credit metrics continued to improve at Banner Corporation. Provision for loan losses decreased on a year-over-year basis, with net charge-offs declining. Net charge-offs were 0.16% of average loans outstanding, down 25 bps from the year-ago quarter. Provision for loan losses decreased 50.0% from the year-ago quarter to $4 million.

Earnings Momentum on the Rise

The Zacks Consensus Estimate for 2012 advanced 83.8% to $2.61 per share over the last 90 days. For 2013, the Zacks Consensus Estimate climbed 39.6% to $1.48 per share.

Valuation Looks Attractive

Banner Corporation currently trades at 10.7x 12-month forward earnings, a 17% discount to the peer group average of 12.9x. Its price to book ratio of 1.1 is in line with the peer group average.

The company has a trailing 12-month ROE of 7.3%, compared with the peer group average of 7.0%. This implies that the company reinvests its earnings more efficiently than its peer group.

Chart Shows Strength

Banner Corporation has witnessed strong price momentum since the second quarter earnings release. Moreover, the company has been continuously outperforming its 200-day and 50-day moving averages along with S&P 500 since July 25. The year-to-date return for the stock is 60.0%, compared with the S&P 500’s return of 13.9%.

Banner Corporation, the holding company for Banner Bank and Islanders Bank, provides various banking products and services. The company was founded in 1890 and conducts operations for individuals, businesses and public sector entities in the United States. Banner Bank operates through 86 branch offices and 7 loan production offices in Washington, Oregon and Idaho, while Islanders Bank conducts business from 3 locations in San Juan County, Washington. With a market capital of about $537.3 million, Banner Corporation competes with Mutualfirst Financial Inc. (MFSF), among others.

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