SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 17, 2001
Banner Corporation
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(Exact name of registrant as specified in its charter)
Washington 0-26584 91-1632900
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
10 S. First Avenue, Walla Walla, Washington 99362
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code) (509) 527-3636
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
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On September 17, 2001, the Registrant announced that it has become aware
of irregularities associated with a former senior lending officer. The
irregularities include a check kiting scheme of a single commercial loan
customer of Banner Bank, the Registrant's wholly-owned commercial bank, as
well as activities designed to conceal credit weaknesses of several loan
customers. The Registrant estimates the loss relating to the check kiting
scheme is approximately $5.4 million, after tax. Further, as a result of
additional reviews of specific loan customers, the Registrant expects to add
an additional loan loss provision of approximately $1.3 million, after tax,
for the quarter ended June 30, 2001.
While the Company continues to aggressively pursue collection of the
check kiting loss from the customer, there is also the possible recovery from
insurance policies. The recovery process is expected to require an extended
period of time to resolve.
For further information, reference is made to the Registrant's press
release dated September 17, 2001, which is attached hereto as Exhibit 99 and
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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Exhibit
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99 Press Release dated September 17, 2001.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
BANNER CORPORATION
DATE: September 18, 2001 By: /s/Gary Sirmon
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Gary Sirmon
President
Exhibit 99
Contact: Gary Sirmon,
President and CEO
(509) 527-3636
BANNER CORPORATION DISCOVERS IRREGULARITIES
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WALLA WALLA, WA - September 17, 2001 --- Banner Corporation (NASDAQ: BANR)
announced that it has become aware of irregularities associated with a former
senior lending officer. The irregularities include a check kiting scheme of a
single commercial loan customer of Banner Bank, as well as activities designed
to conceal credit weaknesses of several loan customers. The Company estimates
the loss relating to the check kiting scheme is approximately $5.4 million,
after tax. Further, as a result of additional reviews of specific loan
customers, the Company expects to add an additional loan loss provision of
approximately $1.3 million, after tax, for the quarter ended June 30, 2001.
Using preliminary revised figures, non-performing assets as a percentage of
total assets as of June 30, 2001, will increase from 0.47% to approximately
0.56%. The Bank continues to investigate these matters and it is likely that
these losses will result in restatement to prior financial statements.
While the Company continues to aggressively pursue collection of the check
kiting loss from the customer, there is also the possible recovery from
insurance policies. The recovery process is expected to require an extended
period of time to resolve.
The Company has examined all deposit accounts with more than a minimal
negative balance and believes it does not have a risk of additional material
check kiting losses at this time. The Company believes its policies and
procedures regarding prevention and detection of check kiting have met
industry standards. However, it has developed and implemented additional
procedures to detect check kiting that it believes will further reduce the
risk of future check kiting losses. Employee training regarding the
additional procedures has begun.
Banner Corporation is the parent of Banner Bank, a Washington state chartered
commercial bank. It operates a total of 38 branch offices and six loan
offices in 18 counties in Washington, Oregon and Idaho.
Statements concerning future performance, developments or events, expectations
for earnings, growth and market forecasts, and any other guidance on future
periods, constitute forward-looking statements, which are subject to a number
of risks and uncertainties that are beyond the Company's control and might
cause actual results to differ materially from the expectations and stated
objectives. These factors include but are not limited to: the amount of the
loss that may be incurred from the check kiting and credit manipulation issues
discussed above and the amount of insurance proceeds that are received by the
Company. Banner undertakes no responsibility to update or revise any
forward-looking statements.