Banner Corp., the Walla Walla-based parent of Banner Bank, has reported a sharply higher net loss for the third quarter, citing continued need for additional loan-loss provisions and write-offs because of the difficult economy.

The company, which operates about 15 branches in the Spokane area, posted a net loss attributable to common shareholders of $8.4 million, or 44 cents a share, in the latest quarter, compared with a net loss of $991,000, or 6 cents a share, in the year-earlier period. For the nine months ended June 30, Banner reported a net loss of $38 million, compared with a net loss of $49.5 million in the comparable period last year.

"Similar to recent quarters, our provision for loan losses during the third quarter reflects continued material levels of nonperforming loans and net charge-offs, particularly for loans for the construction of one-to-four family homes and for acquisition and development of land for residential properties," says D. Michael Jones, president and CEO. "However, while there is still much work to be accomplished, we are encouraged by the further reduction in our exposure to residential construction loans during the quarter and the slowdown in the surfacing of new problem assets."

Banner's third-quarter loss includes a $25 million provision for loan losses. Through the first nine months of the year, it has recorded a total provision for loan losses of $92 million, compared with $29.5 million in the year-earlier period. As of Sept. 30, nonperforming loans totaled $243.3 million, compared with $119.4 million a year earlier.

The bank says 44 percent of its nonperforming construction, land, and land development loans are located in the Puget Sound region, 34 percent are in the Portland area, and 11 percent are in the Boise market. The remaining 11 percent are spread out over the Eastern Washington, Eastern Oregon, and North Idaho markets Banner serves, it says.

As of Sept. 30, Banner had net loans of $3.8 billion, compared with $3.94 billion a year earlier. Jones attributes the modest decrease to "continued reductions in construction and land development loans." Total deposits at the end of the third quarter were $3.86 billion, up from $3.75 billion a year earlier.

Banner had total assets of $4.79 billion as of Sept. 30, up from $4.65 billion a year earlier.

Says Jones, "Despite the challenging operating environment, Banner Corp. and its subsidiary banks continue to maintain capital levels significantly in excess of the requirements to be categorized as 'well capitalized' under applicable regulatory standards."

Banner, which acquired F&M Bank here in 2007, now has about 88 Banner Bank branches throughout Washington, Oregon, and Idaho. It also owns Islanders Bank, a three-branch system headquartered in Friday Harbor, Wash.