Citizens South Banking Corp. (CSBC) Announces Withdrawal of $30 Million Offensive Common Stock Offering

GASTONIA, N.C., Oct. 28 /PRNewswire-FirstCall/ — Citizens South Banking Corporation (Nasdaq: CSBC), today announced that it has withdrawn its public offering of approximately $30 million in common stock due to unfavorable market conditions. As stated by President and CEO, Kim Price: “Over the course of the past few days there have been a series of negative industry announcements, which have adversely impacted the capital raising environment. Given the current market conditions, raising capital to take advantage of opportunities in our markets would have required unacceptable levels of dilution to current shareholders. We are focused on preserving and building shareholder value, and we believe raising capital in light of recent industry events this week would conflict with our goals.” Continued Price: “The Company is in the fortunate position of already exceeding all regulatory capital requirements, which enables us to continue to pursue our corporate objectives.”

About Citizens South Banking Corporation

Citizens South is the holding company for Citizens South Bank, which is headquartered in Gastonia, North Carolina. At September 30, 2009, Citizens South had approximately $820.6 million in assets with 16 full-service offices in the Charlotte region, including Gaston, Iredell, Rowan, Mecklenburg, and Union counties in North Carolina, and York County, South Carolina. For more information, visit www.citizenssouth.com.

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements are generally identified by the use of words “believe,” “expect,” “intend,” “anticipate,” “estimate,” and other similar expressions. These forward-looking statements involve certain risks and uncertainties. You should not place undue reliance on such statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, (1) adverse developments in the capital markets in general or in the markets for financial institutions stock in particular; (2) changes in legislation or regulatory requirements affecting financial institutions, including the current debate in Congress as to restructuring the financial services industry; (3) changes in the interest rate environment; and (4) adverse changes in general economic conditions.

Heidrick & Struggles (HSII) Reports 2009 Third Quarter Financial Results

CHICAGO, Oct. 27, 2009 (GLOBE NEWSWIRE) — Heidrick & Struggles International, Inc. (Nasdaq:HSII), a premier leadership advisory firm providing executive search and leadership consulting services worldwide, today announced financial results for the third quarter ended September 30, 2009.

Consolidated net revenue of $103.5 million declined 34.6 percent from $158.3 million in the 2008 third quarter, or approximately 32 percent on a constant currency basis. Net revenue declined 37.7 percent in the Americas, 36.9 percent in Europe (approximately 31 percent on a constant currency basis), and 20.7 percent in the Asia Pacific region (approximately 19 percent on a constant currency basis). Executive Search represented 92.8 percent of net revenue and Leadership Consulting Services represented 7.2 percent in the 2009 third quarter.

Operating income was $6.7 million and operating margin (measured as a percentage of net revenue) was 6.5 percent, compared to 2008 third quarter operating income of $20.9 million and operating margin of 13.2 percent.

The number of executive search confirmations in the quarter decreased 17 percent compared to the 2008 third quarter, but increased 17 percent compared to the 2009 second quarter. The number of consultants at September 30, 2009 was 365, compared to 416 at September 30, 2008, and 380 at June 30, 2009. Productivity, as measured by annualized net revenue per consultant, was $1.1 million compared to $1.5 million in the 2008 third quarter. The average revenue per executive search was $97,300 compared to $127,200 in last year’s third quarter.

Commenting on the third quarter results, Chief Executive Officer L. Kevin Kelly said, “Although year-over-year comparisons still reflect the impact of a worldwide economic downturn, there are increasing signs that we’ve seen the bottom of this historic recession. Net revenue increased for the second quarter in a row, confirmations increased 17 percent compared to the second quarter, and backlog increased for the first time in the past six quarters. All three regions realized sequential revenue growth compared to the second quarter, and all achieved higher operating income and operating margins compared to second quarter. We can now look forward to capitalizing on the strategic actions and cost savings initiatives we’ve made over the last year.”

Consolidated salaries and employee benefits declined 37.2 percent to $68.2 million, from $108.6 million in the comparable quarter of 2008. This decrease mostly reflects a reduction in bonus expense associated with the decline in revenue, and a decline in base salaries and payroll expense resulting from the company’s workforce reductions in January and May 2009. Salaries and employee benefits were 65.9 percent of net revenue for the quarter, compared to 68.6 percent in the 2008 third quarter.

Consolidated general and administrative expenses were $28.6 million, compared to $28.8 million in the 2008 third quarter. As a percentage of net revenue, consolidated general and administrative expenses were 27.6 percent, compared to 18.2 percent in the 2008 third quarter. In addition to the year-over-year decline in net revenue, this increase reflects higher fees paid for professional services, primarily related to an operations process improvement project, offset by continued cost savings initiatives.

Net income was $4.4 million and diluted earnings per share were $0.25, based upon an effective tax rate in the quarter of 39.2 percent. These results compare to net income in the 2008 third quarter of $14.0 million and diluted earnings per share of $0.80, which reflected an effective tax rate in the quarter of 38.0 percent.

Net cash generated by operating activities was $12.1 million in the 2009 third quarter, compared to net cash generated of $61.1 million in the 2008 third quarter. Cash and cash equivalents at September 30, 2009 were $75.3 million, compared to $183.0 million at September 30, 2008 and $64.6 million at June 30, 2009.

 Regional Review

   $ in millions   3Q 09    3Q 08   Change    3Q 09    2Q 09   Change
                  -------------------------  -------------------------
 Americas
 --------
   Net revenue    $ 50.9   $ 81.8   $(30.9)  $ 50.9   $ 48.3   $  2.6

   Operating
    income        $  8.6   $ 14.0   $ (5.4)  $  8.6   $  5.1   $  3.5
   Consultants       172      211      (39)     172      178       (6)

 Europe
 ------
   Net revenue    $ 31.5   $ 49.9   $(18.4)  $ 31.5   $ 27.5   $  4.0
   Operating
    income        $  2.1   $  7.9   $ (5.8)  $  2.1   $  1.4   $  0.7
   Consultants       115      129      (14)     115      122       (7)

 Asia Pacific
 ------------
   Net revenue    $ 21.1   $ 26.6   $ (5.5)  $ 21.1   $ 17.3   $  3.8
   Operating
    income        $  4.3   $  5.4   $ (1.1)  $  4.3   $  2.2   $  2.1
   Consultants        78       76        2       78       80       (2)

 Corporate        $ (8.3)  $ (6.5)  $ (1.8)  $ (8.3)  $ (8.2)  $ (0.1)
 Restructuring &
  impairment
  charges         $   --   $   --   $   --   $   --   $(12.1)  $ 12.1
                  -------------------------  -------------------------
   Operating
    income (loss) $  6.7   $ 20.9   $(14.1)  $  6.7   $(11.6)  $ 18.3
                  -------------------------  -------------------------

In the 2009 third quarter, all regions reported year-over-year declines in net revenue and operating income. All of the industry practice groups in each region experienced declines. Compared to the 2009 second quarter, the Americas region achieved an increase in net revenue driven by double digit increases in the Consumer, Financial Services, and Life Sciences practices. The sequential increase in Europe’s net revenue was driven by improvements in the Consumer, Financial Services, and Industrial practices, as well as Leadership Consulting Services. Asia Pacific saw good sequential improvement in net revenue from the Financial Services, Industrial and Technology practices, and from Leadership Consulting Services. All three regions achieved higher operating income and operating margins compared to the 2009 second quarter.

Nine Months Results

For the nine months ended September 30, 2009, consolidated net revenue of $285.8 million declined 40.6 percent from $481.0 million in the first nine months of 2008, or approximately 36 percent on a constant currency basis. The number of executive searches confirmed in the first nine months of 2009 declined 31 percent compared to the first nine months of 2008. The reported operating loss of $37.2 million compares to operating income of $50.4 million for the first nine months of 2008. The reported net loss for the first nine months of 2009 was $30.3 million and the net loss per share was $1.80, reflecting an effective tax benefit rate of 24.8 percent. Net income for the first nine months of 2008 was $33.8 million and diluted earnings per share were $1.89, which reflected an effective tax rate of 38.5 percent. Excluding restructuring and impairment charges of $25.4 million, which management believes more appropriately reflects core operations, the operating loss for the first nine months of 2009 was $11.8 million.

2009 Outlook

The company expects that fourth quarter net revenue will be between $103 million and $108 million, resulting in 2009 net revenue of between $389 million and $394 million. With the changes the company has made to improve its operating cost structure, and excluding restructuring and impairment charges, the company believes that breakeven operating income in 2009 is still achievable at the high end of its revenue guidance. Net income (loss) and earnings per share in 2009 are expected to reflect a full-year effective tax benefit rate between 23 percent and 26 percent but may be impacted by country-level results and by discrete items that require immediate recognition in a particular quarter.

Kelly added, “As difficult as 2009 has been, I am excited by the progress we have made in executing our strategy to become the world’s premier Leadership Advisory Firm, fully integrating our executive search and leadership consulting services. Many of our clients are already benefiting from Heidrick & Struggles’ leadership advisory capabilities. This progress, combined with the significant restructuring of our cost structure, make me very enthusiastic about the firm’s growth potential as the economy recovers. We have already seen the results of our initiatives in the third quarter and expect to see positive trends continue in the fourth quarter of 2009 and into 2010.”

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review 2009 third quarter results today, October 27, at 9:00 am central time. Participants may access the company’s call and supporting slides through the internet at www.heidrick.com. For those unable to participate on the live call, a webcast and copy of the slides will be archived at www.heidrick.com and available for up to 30 days following the investor call.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc. is the world’s premier provider of senior-level executive search and leadership consulting services, including succession planning, executive assessment, talent retention management, executive development, transition consulting for newly appointed executives, and M&A human capital integration consulting. For more than 55 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit www.heidrick.com.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company’s financial performance that excludes or includes amounts different than the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets or statements of cash flow of the company. Pursuant to the requirements of Regulation G, the Corporation has provided a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.

The non-GAAP financial measures used within this earnings release are: operating income (loss), net income (loss), and net income (loss) per share (i.e., EPS) to the extent presented as “excluding restructuring and impairment charges.” These measures are presented because management uses this information to monitor and evaluate financial results and trends. Management believes this information is also useful for investors.

Safe Harbor Statement

This press release contains forward-looking statements. The forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate and management’s beliefs and assumptions. Forward-looking statements may be identified by the use of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. Factors that may affect the outcome of the forward-looking statements include, among other things: our ability to attract and retain qualified executive search consultants; further declines in the global economy and our ability to execute successfully through business cycles; the timing, speed or robustness of any future economic recovery; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; the ability to forecast, on a quarterly basis, variable compensation accruals that ultimately are determined based on the achievement of annual results; our ability to realize our tax loss carryforwards; the timing of the establishment or reversal of valuation allowance on deferred tax assets; the mix of profit and loss by country; an impairment of our goodwill and other intangible assets; delays in the development and/or implementation of new technology and systems; and the ability to meet and achieve the expected savings resulting from cost-reduction initiatives and restructuring activities. Our reports filed with the U.S. Securities and Exchange Commission also include information on factors that may affect the outcome of forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

               Heidrick & Struggles International, Inc.
                Consolidated Statements of Operations
                 (In thousands, except per share data)
                              (Unaudited)

                               Three Months Ended
                                   September 30,
                             ---------------------
                                 2009      2008     $ Change  % Change
                             ---------- ---------- ---------- --------
 Revenue:
   Revenue before
    reimbursements
    (net revenue)            $ 103,523  $ 158,318  $ (54,795)   -34.6%
    Reimbursements               4,747      7,009     (2,262)   -32.3%
                             ---------- ---------- ----------
     Total revenue             108,270    165,327    (57,057)   -34.5%

 Operating expenses:
   Salaries and employee
    benefits                    68,184    108,611    (40,427)   -37.2%
   General and administrative
    expenses                    28,623     28,849       (226)    -0.8%
   Reimbursed expenses           4,747      7,009     (2,262)   -32.3%
                             ---------- ---------- ----------
     Total operating expenses  101,554    144,469    (42,915)   -29.7%
                             ---------- ---------- ----------
     Operating income            6,716     20,858    (14,142)   -67.8%

 Non-operating income:
   Interest income, net             64      1,181
   Other, net                      470        499
                             ---------- ----------
     Net non-operating income      534      1,680

 Income before income taxes      7,250     22,538

 Provision for income taxes      2,842      8,559
                             ----------

 Net income                  $   4,408  $  13,979
                             ========== ==========

 Basic weighted average
  common shares outstanding     17,030     16,455
 Diluted weighted average
  common shares outstanding     17,635     17,395
 Basic earnings per common
  share                      $    0.26  $    0.85
 Diluted earnings per common
  share                      $    0.25  $    0.80
 Salaries and employee
  benefits as a percentage of
  net revenue                     65.9%      68.6%
 General and administrative
  expense as a percentage of
  net revenue                     27.6%      18.2%
 Operating income as a
  percentage of net revenue        6.5%      13.2%
 Effective tax rate               39.2%      38.0%

               Heidrick & Struggles International, Inc.
                         Segment Information
                            (In thousands)

                            Three Months Ended September 30,
              --------------------------------------------------------
                                                       2009     2008
                 2009     2008    $ Change  % Change Margin * Margin *
              --------- --------- --------- -------- -------- --------
 Revenue:
  Americas    $  50,949 $  81,844 $ (30,895)  -37.7%
  Europe         31,513    49,906   (18,393)  -36.9%
  Asia Pacific   21,061    26,568    (5,507)  -20.7%
              --------- --------- ---------
   Revenue
    before
    reimburse-
    ments (net
    revenue)    103,523   158,318   (54,795)  -34.6%
  Reimburse-
   ments          4,747     7,009    (2,262)  -32.3%
              --------- --------- ---------
   Total
    revenue   $ 108,270 $ 165,327 $ (57,057)  -34.5%
              ========= ========= =========

 Operating
  income:
  Americas    $   8,578 $  13,989 $  (5,411)  -38.7%    16.8%    17.1%
  Europe          2,093     7,931    (5,838)  -73.6%     6.6%    15.9%
  Asia Pacific    4,303     5,443    (1,140)  -20.9%    20.4%    20.5%
              --------- --------- ---------
   Total
    regions      14,974    27,363   (12,389)  -45.3%    14.5%    17.3%
  Corporate      (8,258)   (6,505)   (1,753)  -26.9%
              --------- --------- ---------
   Operating
    income    $   6,716 $  20,858 $ (14,142)  -67.8%     6.5%    13.2%
              ========= ========= =========

   * Margin based on revenue before reimbursements (net revenue).

               Heidrick & Struggles International, Inc.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)
                              (Unaudited)

                                Nine Months Ended
                                  September 30,
                             ---------------------
                                2009       2008     $ Change  % Change
                             ---------- ---------- ---------- --------
 Revenue:
   Revenue before
    reimbursements (net
    revenue)                 $ 285,779  $ 480,975  $(195,196)   -40.6%
   Reimbursements               13,812     22,108     (8,296)   -37.5%
                             ---------- ---------- ----------
     Total revenue             299,591    503,083   (203,492)   -40.4%

 Operating expenses:
   Salaries and employee
    benefits                   212,110    336,535   (124,425)   -37.0%
   General and administrative
    expenses                    85,447     94,039     (8,592)    -9.1%
   Reimbursed expenses          13,812     22,108     (8,296)   -37.5%
   Restructuring and
    impairment charges          25,439         --     25,439
                             ---------- ---------- ----------
     Total operating expenses  336,808    452,682   (115,874)   -25.6%
                             ---------- ---------- ----------
     Operating income (loss)   (37,217)    50,401    (87,618)  -173.8%

 Non-operating income
  (expense):
  Interest income, net             912      4,127
  Other, net                    (3,974)       394
                             ---------- ----------
     Net non-operating income
      (expense)                 (3,062)     4,521

 Income (loss) before income
  taxes                        (40,279)    54,922

 Provision for (benefit from)
  income taxes                  (9,993)    21,131
                             ---------- ----------

 Net income (loss)           $ (30,286) $  33,791
                             ========== ==========

 Basic weighted average
  common shares outstanding     16,845     16,877
 Diluted weighted average
  common shares outstanding     16,845     17,841
 Basic earnings (loss) per
  common share               $   (1.80) $    2.00
 Diluted earnings (loss) per
  common share               $   (1.80) $    1.89
 Salaries and employee
  benefits as a percentage of
  net revenue                     74.2%      70.0%
 General and administrative
  expense as a percentage of
  net revenue                     29.9%      19.6%
 Operating income (loss) as a
  percentage of net revenue         n/a      10.5%
 Effective tax rate               24.8%      38.5%

               Heidrick & Struggles International, Inc.
                         Segment Information
                            (In thousands)

                              Nine Months Ended September 30,
              --------------------------------------------------------
                                                       2009      2008
                 2009     2008    $ Change  % Change Margin * Margin *
              --------- --------- --------- -------- -------- --------
 Revenue:
  Americas    $ 145,669 $ 246,183 $(100,514)  -40.8%
  Europe         87,075   156,116   (69,041)  -44.2%
  Asia Pacific   53,035    78,676   (25,641)  -32.6%
              --------- --------- ---------
   Revenue
    before
    reimburse-
    ments (net
    revenue)    285,779   480,975  (195,196)  -40.6%
  Reimburse-
   ments         13,812    22,108    (8,296)  -37.5%
              --------- --------- ---------
   Total
    revenue   $ 299,591 $ 503,083 $(203,492)  -40.4%
              ========= ========= =========

 Operating
  income
  (loss):
  Americas    $   6,211 $  38,271 $ (32,060)  -83.8%     4.3%    15.5%
  Europe            885    20,872   (19,987)  -95.8%     1.0%    13.4%
  Asia Pacific    5,453    14,784    (9,331)  -63.1%    10.3%    18.8%
              --------- --------- ---------
   Total
    regions      12,549    73,927   (61,378)  -83.0%     4.4%    15.4%
  Corporate     (24,327)  (23,526)     (801)   -3.4%
              --------- --------- ---------
   Operating
    income
    (loss)
    before
    restructu-
    ring and
    impairment
    charges     (11,778)   50,401   (62,179) -123.4%             10.5%
 Restructuring
  and
  impairment
  charges       (25,439)       --   (25,439)
              --------- --------- ---------
   Operating
    income
    (loss)    $ (37,217)$  50,401 $ (87,618) -173.8%             10.5%
              ========= ========= =========

   * Margin based on revenue before reimbursements (net revenue).

               Heidrick & Struggles International, Inc.
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                           September 30,  December 31,
                                               2009          2008
                                           ------------- -------------
                                            (Unaudited)
 Current assets:
   Cash and cash equivalents               $     75,294  $    234,531
   Restricted cash                                6,043            --
   Accounts receivable, net                      76,736        68,233
   Other receivables                              7,409         8,586
   Prepaid expenses                              21,838        19,520
   Other current assets                           1,981         1,788
   Income taxes recoverable, net                 16,360         7,719
   Deferred income taxes, net                    13,474        13,893
                                           ------------- -------------
       Total current assets                     219,135       354,270
                                           ------------- -------------

 Non-current assets:
   Property and equipment, net                   25,917        28,172
   Restricted cash                                4,171         9,655
   Assets designated for retirement and
    pension plans                                26,150        24,973
   Investmentsng income (loss)                   10,275        12,594
   Other non-current assets                       5,621         7,203
   Goodwill                                     109,182       101,234
   Other intangible assets, net                   9,251        13,543
   Deferred income taxes, net                    36,073        35,313
                                           ------------- -------------
       Total non-current assets                 226,640       232,687
                                           ------------- -------------

 Total assets                              $    445,775  $    586,957
                                           ------------- -------------

 Current liabilities:
   Accounts payable                        $      6,410  $     11,977
   Accrued salaries and employee benefits        62,355       163,695
   Other current liabilities                     35,986        49,443
   Current portion of accrued restructuring
    charges                                       3,491         2,280
                                           ------------- -------------
       Total current liabilities                108,242       227,395
                                           ------------- -------------

 Non-current liabilities:
   Retirement and pension plans                  30,113        27,503
   Other non-current liabilities                 26,352        25,755
                                           ------------- -------------
       Total non-current liabilities             56,465        53,258
                                           ------------- -------------

 Stockholders' equity                           281,068       306,304
                                           ------------- -------------

 Total liabilities and stockholders'
  equity                                   $    445,775  $    586,957
                                           ------------- -------------

               Heidrick & Struggles International, Inc.
                Consolidated Statements of Cash Flows
                            (In thousands)

                                                Three Months Ended
                                                  September 30,
                                           ---------------------------
                                               2009           2008
                                           ------------- -------------
                                            (Unaudited)

 Cash flows from operating activities:
   Net income                              $      4,408  $     13,979
   Adjustments to reconcile net income to
    net cash provided by operating
    activities:
     Depreciation and amortization                2,777         2,708
     Write-off of software development
      project                                     1,329            --
     Deferred income taxes                       (2,495)          491
     Net realized and unrealized (gains)
      losses on investments                         939          (525)
     Stock-based compensation expense, net        4,357         6,198
     Cash paid for restructuring charges         (6,462)         (716)
     Changes in assets and liabilities, net
      of effects of acquisitions:
       Trade and other receivables              (11,929)        4,649
       Accounts payable                             690          (674)
       Accrued expenses                          10,263        33,826
       Income taxes payable, net                  5,111         3,039
       Prepayments                                  396          (122)
       Other assets and liabilities, net          2,756        (1,712)
                                           ------------- -------------
         Net cash provided by operating
          activities                             12,140        61,141
                                           ------------- -------------

 Cash flows from investing activities:
   Restricted cash                                 (642)           --
   Acquisition of businesses, net of cash
    acquired                                         --        (3,610)
   Capital expenditures                            (590)       (2,760)
   Proceeds from sales of equity securities          --           353
   Payments to consultants related to sales
    of equity securities                             (3)          (60)
   Other, net                                         5            --
                                           ------------- -------------
         Net cash used in investing
          activities                             (1,230)       (6,077)
                                           ------------- -------------

 Cash flows from financing activities:
   Proceeds from stock options exercised             --           251
   Purchases of treasury stock                       --        (5,051)
   Cash dividends paid                           (2,231)       (2,142)
   Payment of employee tax withholdings on
    equity transactions                             (52)         (233)
                                           ------------- -------------
         Net cash used in financing
          activities                             (2,283)       (7,175)
                                           ------------- -------------

 Effect of exchange rate fluctuations on
  cash  and cash equivalents                      2,039       (10,940)
                                           ------------- -------------

 Net increase in cash and cash equivalents       10,666        36,949
 Cash and cash equivalents at beginning of
  period                                         64,628       146,074
                                           ------------- -------------
 Cash and cash equivalents at end of
  period                                   $     75,294  $    183,023
                                           ============= =============

 Supplemental schedule of noncash financing
  activities:
   Beginning of period - Accrued treasury
    stock purchases                        $         --  $        706
   Treasury stock purchases                          --         5,378
   Cash paid for treasury stock purchases            --        (5,051)
                                           ------------- -------------
       Accrued treasury stock purchases    $         --  $      1,033
                                           ============= =============

               Heidrick & Struggles International, Inc.
                 Consolidated Statements of Cash Flows
                            (In thousands)

                                                Nine Months Ended
                                                   September 30,
                                           ---------------------------
                                                2009         2008
                                           ------------- -------------
                                            (Unaudited)

 Cash flows from operating activities:
   Net income (loss)                       $    (30,286) $     33,791
    Adjustments to reconcile net income
     (loss) to net cash used in operating
     activities:
      Depreciation and amortization               8,360         8,068
      Write-off of investment                     2,977            --
      Write-off of software development
       project                                    1,329            --
      Deferred income taxes                      (6,214)        5,466
      Net realized and unrealized (gains)
       losses on investments                      1,831          (910)
      Stock-based compensation expense, net      15,027        18,767
      Impairment charge                           3,849            --
      Restructuring charges                      21,590            --
      Cash paid for restructuring charges       (23,439)       (2,121)
      Changes in assets and liabilities,
       net of effects of acquisitions:
        Trade and other receivables              (4,350)      (29,134)
        Accounts payable                           (152)         (313)
        Accrued expenses                       (101,975)      (34,508)
        Income taxes recoverable, net            (8,568)       (4,054)
        Prepayments                              (1,556)       (6,094)
        Other assets and liabilities, net         1,538        (3,224)
                                           ------------- -------------
          Net cash used in operating
           activities                          (120,039)      (14,266)
                                           ------------- -------------

 Cash flows from investing activities:
   Restricted cash                                 (483)          138
   Acquisition of businesses, net of cash
    acquired                                    (15,453)      (14,655)
   Capital expenditures                         (10,053)       (7,928)
   Purchases of equity method investments        (1,300)           --
   Proceeds from sales of equity securities           6           779
   Payments to consultants related to sales
    of equity securities                             (3)         (229)
   Proceeds from sales of short-term
    investments                                      --        22,275
   Proceeds from sale of a business                  --         1,559
   Other, net                                        15             8
                                           ------------- -------------
          Net cash provided by (used in)
           investing activities                 (27,271)        1,947
                                           ------------- -------------

 Cash flows from financing activities:
   Proceeds from stock options exercised          1,238           831
   Purchases of treasury stock                       --       (47,038)
   Cash dividends paid                           (7,063)       (6,623)
   Payment of employee tax withholdings on
    equity transactions                          (3,117)       (8,356)
                                           ------------- -------------
          Net cash used in financing
           activities                            (8,942)      (61,186)
                                           ------------- -------------

 Effect of exchange rate fluctuations on
  cash  and cash equivalents                     (2,985)       (4,052)
                                           ------------- -------------

 Net decrease in cash and cash equivalents     (159,237)      (77,557)
 Cash and cash equivalents at beginning of
  period                                        234,531       260,580
                                           ------------- -------------
 Cash and cash equivalents at end of
  period                                   $     75,294  $    183,023
                                           ============= =============

 Supplemental schedule of noncash financing
  activities:
   Beginning of period - Accrued treasury
    stock purchases                        $         --  $      1,605
   Treasury stock purchases                          --        46,466
   Cash paid for treasury stock purchases            --       (47,038)
                                           ------------- -------------
          Accrued treasury stock purchases $         --  $      1,033
                                           ============= =============

CONTACT:  Heidrick & Struggles International, Inc.
          Investors & Analysts:
          Julie Creed, VP, Investor Relations
          +1 312 496 1774
          jcreed@heidrick.com

Hiland Partners, LP and Hiland Holdings GP, LP Announce Extension of Merger Agreements

ENID, Okla., Oct. 27 /PRNewswire-FirstCall/ — Hiland Partners, LP (Nasdaq: HLND) and Hiland Holdings GP, LP (Nasdaq: HPGP) announced today that each company will adjourn its special meeting of unitholders scheduled for this morning. The meetings are being adjourned to allow the boards of directors and conflicts committees additional time to consider the previously announced proposals made by Harold Hamm, on behalf of certain of his affiliates, to increase the merger consideration payable to each company’s common unitholders.

The Hiland Partners special meeting will be adjourned and the vote postponed until November 3, 2009 at 3:30 p.m., central time, and the Hiland Holdings special meeting will be adjourned and the vote postponed until November 3, 2009 at 4:30 p.m., central time. Each special meeting will be held at 302 N. Independence, Ball Room, Second Floor, Enid, Oklahoma 73701.

On October 26, 2009, in letters to the conflicts committees of the Hiland companies, Mr. Hamm proposed amending the merger agreements between certain of his affiliates and each Hiland company to increase the consideration payable to Hiland Partners common unitholders from $7.75 to $10.00 per common unit and to increase the consideration payable to Hiland Holdings common unitholders from $2.40 to $3.20 per common unit, respectively.

In connection with Mr. Hamm’s proposal and the adjournment of the Hiland Partners special meeting, Hiland Partners and Mr. Hamm have agreed to amend the merger agreement between Hiland Partners and affiliates of Mr. Hamm to extend its end date to November 6, 2009. Similarly, Hiland Holdings and Mr. Hamm have agreed to amend the merger agreement between Hiland Holdings and affiliates of Mr. Hamm to extend its end date to November 6, 2009. In his letter to each conflicts committee, Mr. Hamm indicated that, if his proposals are accepted, he expects that the end date under each merger agreement would be further extended as necessary to consummate the transactions.

The record date for determining unitholders eligible to vote at the special meetings will remain September 9, 2009. Valid proxies submitted by unitholders of Hiland Partners or Hiland Holdings prior to the adjourned October 27, 2009 special meetings will continue to be valid for purposes of the reconvened special meetings scheduled for November 3, 2009.

Common unitholders of Hiland Partners or Hiland Holdings as of September 9, 2009 who have not voted but wish to do so or who would like to change their vote should contact D.F. King at 1-800-967-4612.

About the Hiland Companies

Hiland Partners, LP is a publicly traded midstream energy partnership engaged in purchasing, gathering, compressing, dehydrating, treating, processing and marketing of natural gas, and fractionating, or separating, and marketing of natural gas liquids, or NGLs. Hiland Partners, LP also provides air compression and water injection services for use in oil and gas secondary recovery operations. Hiland Partners, LP’s operations are primarily located in the Mid-Continent and Rocky Mountain regions of the United States. Hiland Partners, LP’s midstream assets consist of fifteen natural gas gathering systems with approximately 2,147 miles of gathering pipelines, six natural gas processing plants, seven natural gas treating facilities and three NGL fractionation facilities. Hiland Partners, LP’s compression assets consist of two air compression facilities and a water injection plant.

Hiland Holdings GP, LP owns the two percent general partner interest, 2,321,471 common units and 3,060,000 subordinated units in Hiland Partners, LP, and the incentive distribution rights of Hiland Partners, LP.

Forward-Looking Statements

This press release includes certain statements concerning expectations for the future that are forward-looking statements, including statements about potential amendments to each of the merger agreements and statements about the intentions Mr. Hamm expressed in his proposal letters. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the definitive joint proxy statement filed by Hiland Partners and Hiland Holdings, in Hiland Partners’ and Hiland Holdings’ Annual Reports on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. Any such forward looking statements are made as of the date of this press release and neither Hiland Partners nor Hiland Holdings undertakes any obligation to update or revise any such forward-looking statements to reflect new information or events.

China Technology Development Group (CTDC) to Acquire Majority Interest in On-Grid Solar Power Station Business

HONG KONG, Oct. 27, 2009 (GLOBE NEWSWIRE) — China Technology Development Group Corporation (Nasdaq:CTDC) (“CTDC” or “the Company”), a growing integrated clean energy group based in China that provides solar energy products and solutions, today announced that the Company has entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with China Technology Solar Power Holdings Limited (“CTSPHL Group”) and its direct and indirect shareholders to acquire a 51% equity interest and become the major shareholder of CTSPHL Group.

CTSPHL Group, through its wholly-owned subsidiary, is developing a 100MW grid-connected solar power plant project located in Delingha City of Qaidam Basin in Qinghai Province, Northwestern China (the “Delingha 100MW Solar Project”). Upon closing of the acquisition, the Company and CTSPHL Group will jointly develop the Delingha 100MW Solar Project. CTDC believes that its co-development of the Delingha 100MW Solar Project will further its goal of becoming an integrated solar company with strong capabilities in designing, building and operating solar power plants.

CTSPHL Group has obtained a 25-year operating license from the Qinghai Provincial Development and Reform Commission for the first phase of the Delingha 100MW Solar Project, consisting of 10MW. Construction commenced on the first phase on 28th September 2009 and is expected to be completed by the end of 2010. Warm congratulations on the project commencement were received from Liaison Office of the Central People’s Government in Hong Kong S.A.R, and Mr. Shi Dinghuan, Counselor of State Council of the PRC and Director General of Chinese Renewable Energy Association. Mr. Shi commented, “China’s new energy industry is only at its beginning stage. We really welcome more overseas companies to work together with local PV companies to grow and strengthen the new energy sector.”

“We are very pleased to become a controlling shareholder of CTSPHL Group. This marks a significant step that CTDC has made to enter into the solar power station arena and become one of the first overseas listed Chinese companies to hold an operating license from the Chinese government to operate on-grid solar power stations in China,” commented by Mr. Alan Li, Chairman and CEO of the Company. “The Chinese government has been very supportive of the development of renewable energy. Chinese President Hu Jintao listened to our project briefing in March in Beijing with great interest. He highly praised our endeavor in solar plant development. On September 22, 2009, President Hu reiterated China’s goal of reaching 15% renewable energy by 2020 at the UN climate summit in New York.”

Mr. Li further commented, “In response to President Hu’s call for a greener and cleaner environment, we are greatly honoured to undertake the responsibility and looking forward to closely cooperating with CTSPHL Group and Qinghai local governments. We are committed to making the Qaidam Basin a leading solar power plant base in the world.”

About CTDC:

CTDC is a growing integrated clean energy group based in China to provide solar energy products and solutions. CTDC’s major shareholders include China Merchants Group (http://www.cmhk.com), a state-owned conglomerate in China, and Beijing Holdings Limited, the largest offshore subsidiary established by Beijing Municipal Government.

For more information, please visit our website at http://www.chinactdc.com.

Forward-Looking Statement Disclosure:

Certain statements herein which are not historical facts, including, without limitation, those regarding: A) the timing of product, service and solution deliveries; B) our ability to develop, implement and commercialize new products, services, solutions and technologies; C) expectations regarding market growth, developments and structural changes; D) expectations regarding our product volume growth, market share, prices and margins; E) expectations and targets for our results of operations; F) the outcome of pending and threatened litigation; G) expectations regarding the successful completion of contemplated acquisitions on a timely basis and our ability to achieve the set targets upon the completion of such acquisitions; and H) statements preceded by “believe,” “expect,” “anticipate,” “foresee,” “target,” “estimate,” “designed,” “plans,” “will” or similar expressions are forward-looking statements. These statements are based on management’s assumptions and beliefs in light of the information currently available to it. Because these forward-looking statements involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors that could cause these differences include the risk factors specified on our annual report on Form 20-F for the year ended December 31, 2008 under “Item 3.D Risk Factors.” Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. CTDC does not undertake any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

Elron (ELRN) Announces Receipt of Non-Binding Indication of Interest to Acquire Medingo

Oct. 26, 2009 (Business Wire) — Elron Electronic Industries Ltd. (NASDAQ:ELRN)(TASE:ELRN) today announced that a non-binding indication of interest (the “Indication”) of a third party regarding a potential acquisition of Medingo Ltd. (“Medingo”), an Elron subsidiary, has been received.

The Indication relates to an acquisition of Medingo’s entire share capital for a cash consideration ranging from $150 million to $170 million and a contingent additional cash consideration conditional upon one or more milestone(s) to be mutually agreed, which may bring total consideration up to between $185 million and $213 million. The transaction would be subject mainly to (i) the parties entering into a mutually agreed definitive agreement; (ii) satisfactory completion of a full due diligence by the third party; and (iii) the parties obtaining applicable corporate and regulatory approvals.

In the event of consummation of such transaction, Elron would be expected to record a net gain initially estimated at this stage to be between approximately $54 million and approximately $80 million. This gain includes Elron’s share in the net gain expected to be recorded by RDC Rafael Development Corporation Ltd. (“RDC”), through which Elron owns part of its holding in Medingo.

There is no assurance of the occurrence, timing or terms of any such transaction.

Medingo is 92% held by Elron (including 83% held by RDC, Elron’s 50.1% subsidiary). Medingo is engaged in the development and commercialization of a miniature insulin dispensing patch pump for the needs of insulin-dependent diabetic patients. For more information concerning Medingo, see Item 4 of our annual report on Form 20-F for 2008 which is available on the SEC’s website at www.sec.gov.

Elron Electronic Industries Ltd. (TASE & NASDAQ: ELRN), a member of the IDB Holding group, is a high-technology holding company traded in the Nasdaq and in the Tel-Aviv Stock Exchange. Elron’s group companies currently comprise a diverse range of publicly-traded and privately held companies primarily in the fields of medical devices, information & communications technology, clean technology and semiconductors. Included in our group companies are well established companies which are leaders in their fields, such as Given Imaging and 013 NetVision, together with innovative start-up s who possess growth potential in Israel and the rest of the world. For further information, please visit www.elron.com.

Magnum Hunter Resources Corp. (MHR) Announces New $150 Million Senior Secured Revolving Credit Facility

HOUSTON, TX — (Marketwire) — 10/26/09 — Magnum Hunter Resources Corporation (NYSE Amex: MHR) (the “Company”) announced today that the Company has received a commitment for a new $150 million three-year term senior secured revolving credit facility (“the new bank facility”) provided by the Bank of Montreal (“BMO”). The new bank facility will be used for general corporate purposes, including the acquisition of crude oil and natural gas properties.

The new bank facility will be governed by a semi-annually redetermined borrowing base value assigned to the Company’s proved crude oil and natural gas reserves. An initial borrowing base of $25 million has been established. Based on values assigned to crude oil and natural gas properties which may be either acquired or discovered over time, the Company’s borrowing base may be increased up to a maximum of $150 million commitment level.

All other terms and conditions are those usual and customary for this type of commercial bank borrowing facility. The applicable interest rate margin for this new bank facility will range from LIBOR plus 2.50% to LIBOR plus 3.50% depending on the actual level of outstanding borrowings. The final agreement which includes the specific terms and covenants governing the Company’s new bank facility will be filed with the Securities and Exchange Commission at closing.

BMO will act as Lead Arranger, Book Runner and Administrative Agent for the Company’s new bank facility. It is anticipated that the final closing of this new bank facility will occur by November 15, 2009.

Management Comments

Mr. Ronald D. Ormand, Executive Vice President and Chief Financial Officer of the Company, commented, “As part of our strategy to position the Company for future growth, we are pleased to have received this new $150 million revolving credit facility. We appreciate the work performed by the senior credit officers at the Bank of Montreal to put this new lending facility into place during a difficult period in the overall financial markets. Having one of the premier lenders to the North American energy industry approving a $150 million facility is a testament to senior management’s track record with the banking industry, as well as our relationship with BMO in particular. The new credit facility will allow the Company to make accretive oil and gas property acquisitions to enhance shareholder value. Magnum Hunter now has increased financial capabilities, allowing the Company to continue moving forward on the growth and acquisition efforts we initiated several months ago.”

About Magnum Hunter Resources

Magnum Hunter Resources Corporation and subsidiaries are a Houston, Texas based independent exploration and production company engaged in the acquisition of exploratory leases and producing properties, secondary enhanced oil recovery projects, exploratory drilling, and production of oil and natural gas in the United States.

For more information, please view our website at www.magnumhunterresources.com

Forward-looking Statements

The statements contained in this press release that are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements, without limitation, regarding the Company’s expectations, beliefs, intentions or strategies regarding the future. Such forward-looking statements may relate to, among other things: (1) the Company’s proposed exploration and drilling operations on its various properties, (2) the expected production and revenue from its various properties, (3) the Company’s proposed redirection as an operator of certain properties and (4) estimates regarding the reserve potential of its various properties. These statements are qualified by important factors that could cause the Company’s actual results to differ materially from those reflected by the forward-looking statements. Such factors include but are not limited to: (1) the Company’s ability to finance the continued exploration, drilling and operation of its various properties, (2) positive confirmation of the reserves, production and operating expenses associated with its various properties; and (3) the general risks associated with oil and gas exploration, development and operation, including those risks and factors described from time to time in the Company’s reports and registration statements filed with the Securities and Exchange Commission, including but not limited to the Company’s Annual Report on Form 10-K, Form 10-K/A and Form10-K/A for the year ended December 31, 2008 filed with the Securities and Exchange Commission on March 31, 2009, April 29, 2009 and September 11, 2009, respectively, and the Company’s Quarterly Reports on Form 10-Q for the quarters ending March 31, 2009 and June 30, 2009, filed on My 11, 2009 and August 14, 2009, respectively. The Company cautions readers not to place undue reliance on any forward-looking statements. The Company does not undertake, and specifically disclaims any obligation, to update or revise such statements to reflect new circumstances or unanticipated events as they occur.

Collectors Universe (CLCT) Resumes Payment of Cash Dividends

NEWPORT BEACH, Calif., Oct. 26 /PRNewswire-FirstCall/ — Collectors Universe, Inc. (Nasdaq: CLCT), a leading provider of value-added authentication and grading services to dealers and collectors of high-value collectibles, today announced that its Board of Directors has approved a cash dividend policy that calls for the payment of $0.25 per share per quarter. The first of the quarterly cash dividends of $0.25 per share under the new dividend policy will be paid on November 24, 2009 to Stockholders of Record as of November 10, 2009.

The declaration of cash dividends in the future, pursuant to the Company’s dividend policy, is subject to final determination each quarter by the Board of Directors based on a number of factors, including the Company’s financial performance and its available cash resources, its cash requirements and alternative uses of cash that the Board may conclude would represent an opportunity to generate a greater return on investment for the Company. For these reasons, as well as others, there can be no assurance that dividends in the future will be equal or similar in amount to the amounts described in this press release or that the Board of Directors will not decide to suspend or discontinue the payment of cash dividends in the future.

About Collectors Universe

Collectors Universe, Inc. is a leading provider of value added services to the high-value collectibles markets. The Company authenticates and grades collectible coins, trading cards, autographs and stamps. The Company also compiles and publishes authoritative information about United States and world coins, collectible trading cards and sports memorabilia and collectible stamps and operates its CCE dealer-to-dealer Internet bid-ask market for certified coins and its Expos trade show and conventions business. This information is accessible to collectors and dealers at the Company’s web site, http://www.collectors.com, and is also published in print.

ParkerVision (PRKR) Announces Sample Phones Tested and Accepted by Its Commercial Chipset Customer

JACKSONVILLE, Fla., Oct. 26, 2009 (GLOBE NEWSWIRE) — ParkerVision, Inc. (Nasdaq:PRKR) (“ParkerVision”) announced today that it has successfully delivered sample 3G mobile handsets incorporating its d2p radio frequency integrated circuits to its commercial chipset customer. The performance of these sample handsets was tested, verified and accepted by the chipset customer, a licensee of ParkerVision’s d2p and d2d(TM) technologies. The sample handsets were assembled for the purpose of verifying the d2p technology in working mobile handset implementations, testing the technology in actual network operation, and creating sales samples for handset OEM/ODMs who purchase chipsets from ParkerVision’s licensee.

The handsets met all relevant industry standards and passed a series of tests that verify operational performance of the hardware when deployed on mobile phone networks. The customer verified that the d2p transmit chain achieved power consumption savings at all points along the RF transmit power curve when compared against the mass produced transmit chain that d2p replaced in the mobile phone reference design. The customer also determined that the power savings achieved by the sample handsets incorporating the d2p technology exceeded their own internal expectations for the initial mass production run of d2p chips.

ParkerVision’s commercial chipset customer is a global supplier of chipsets that support 2G, 2.5G and 3G mobile standards with engineering design and sales locations in both North America and Asia. This customer designs and supplies chipsets and related handset reference designs, predominantly to ODMs, for incorporation into mobile handsets and reported three of the top five handset manufacturers among its customer base. The name of ParkerVision’s chipset customer remains confidential in accordance with the terms of their licensing agreement.

About ParkerVision

ParkerVision, Inc. is in the business of designing, developing and selling its proprietary radio frequency technologies and products for use in semiconductor circuits for wireless communication products. ParkerVision is headquartered in Jacksonville, Florida. For more information please visit www.parkervision.com. (PRKR-G)

Safe Harbor Statement

This press release contains forward-looking information. Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. Such statements are subject to certain risks and uncertainties which are disclosed in the Company’s SEC reports, including the Form 10K/A for the year ended December 31, 2008 and the Forms 10Q for the quarters ended March 31, 2009 and June 30, 2009. These risks and uncertainties could cause actual results to differ materially from those currently anticipated or projected.

012 Smile.Communications to Acquire a Controlling Interest in Bezeq The Israel Telecommunication Corp.

PETACH TIKVA, Israel, Oct. 25 /PRNewswire-FirstCall/ — 012 Smile.Communications Ltd. (Nasdaq Global Market and TASE: SMLC), an Israeli telecommunications service provider, today announced that it has entered into a definitive share purchase agreement under which it will acquire a controlling interest of approximately 30.6% in Bezeq The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BZEQ) from Ap.Sb.Ar. Holdings Ltd. (the Apax Partners-Saban Capital Group Inc.-Arkin consortium), in a cash transaction currently valued at approximately NIS 6.5 billion, or NIS 8.00 per share, representing a 7.0% discount on the shares of Bezeq based on Bezeq’s closing share price prior to the announcement (as of October 22, 2009). 012 Smile will be entitled to receive all dividends payable by Bezeq to Ap.Sb.Ar. prior to closing. The transaction, which was approved by the Board of Directors of 012 Smile, is subject to the receipt of necessary regulatory approvals, including approvals from the Israeli Ministry of Communications, the Israeli Antitrust Commissioner and from the Prime Minister and the Minister of Communications of the State of Israel.

Stella Handler, Chief Executive Officer of 012 Smile, said: “This transaction is in line with our strategy to become, through selective investments, the leading integrated player in Israel’s telecom marketplace. Given its unique competitive positioning and strong cash flow generation, Bezeq represents an attractive investment for 012 Smile.”

As the largest telecom operator in Israel, Bezeq provides wired and wireless telephone and other communications services to consumer and business subscribers throughout Israel. Bezeq, which has over 2.5 million access lines and about 1 million broadband ASL lines, also provides mobile services through its cellular phone subsidiary, Pelephone Communications, to approximately 2,700,000 accounts. Bezeq serves approximately 560,000 satellite television viewers with its YES brand through its DBS Satellite subsidiary. Additionally, Bezeq International is an ISP and data service provider and an international long distance service provider in Israel.

The transaction will be financed through a combination of cash, debt and stock. 012 Smile has agreed to sell its current telecommunications assets in order to obtain anti-trust approval, which proceeds will also be used to finance the transaction. 012 Smile will announce the composition of its financing package in the near future.

The company expects that the transaction will close in approximately six months, subject to receipt of all requisite regulatory approvals.

J.P. Morgan plc acted as exclusive financial adviser and Fischer Behar Chen Well Orion & Co. as legal adviser to 012 Smile in connection with the transaction.

About 012 Smile.Communications

012 Smile.Communications is a growth-oriented communication services provider in Israel with a leading market position, offering a wide range of broadband and traditional voice services. Its broadband services include broadband Internet access with a suite of value-added services, specialized data services and server hosting, as well as new innovative services such as local telephony via voice over broadband and a WiFi network of hotspots across Israel. Traditional voice services include outgoing and incoming international telephony, hubbing, roaming and signaling and calling card services. 012 Smile.Communications services residential and business customers, as well as Israeli cellular operators and international communication services providers through its integrated multipurpose network, which allows it to provide services to almost all of the homes and businesses in Israel.

012 Smile is a 75.3 % owned subsidiary of Internet Gold – Golden Lines Ltd. (Nasdaq: IGLD) one of Israel’s leading communications groups with a major presence across all Internet-related sectors. In addition to 012 Smile, its 100% owned Smile.Media subsidiary manages a growing portfolio of Internet portals and e-Commerce sites. Internet Gold and 012 Smile are part of the Eurocom Communications Group. 012 Smile’s shares trade on the Nasdaq Global Market and on the Tel Aviv Stock Exchange.

For additional information about 012 Smile.Communications Ltd., please visit the Company’s investors’ site at http://www.012.net.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in 012 Smile.Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

RightNow Technologies (RNOW) Announces Third Quarter 2009 Financial Results

Oct. 22, 2009 (Business Wire) — RightNow® Technologies, Inc. (NASDAQ:RNOW) today announced results for the third quarter ended September 30, 2009. Total revenue in the third quarter of 2009 was $38.7 million, compared to $36.2 million in the third quarter of 2008. Recurring revenue in the third quarter of 2009 increased 15% to $29.7 million from $25.9 million in the third quarter of 2008. Net income in the third quarter of 2009 was $2.0 million, or $0.06 per share, compared to a net loss of $(1.4) million, or $(0.04) per share, in the third quarter of 2008. Non-GAAP net income in the third quarter of 2009, which excludes stock-based compensation charges of $1.8 million, was $3.8 million, or $0.12 per share, compared to non-GAAP net income of $85,000, or $0.00 per share, in the third quarter of 2008.

Revenue for the nine months ended September 30, 2009 was $111.1 million, compared to $104.4 million for the comparable period in 2008. Net income for the nine months ended September 30, 2009 was $3.3 million, or $0.10 per share, compared to a net loss of $(8.0) million, or $(0.24) per share, for the comparable period in 2008. Non-GAAP net income for the nine months ended September 30, 2009, which excludes stock-based compensation charges of $6.1 million, was $9.4 million, or $0.29 per share, compared to non-GAAP net loss of $(3.3) million, or $(0.10) per share, for the comparable period in 2008.

New, renewed and expanded customer relationships during the third quarter of 2009 included Epson, FICO, iRobot, Lucent-Alcatel, The Men’s Wearhouse, Nike, Photobox, TiVo, U.S. Air Force and Virgin Mobile.

“Our focus on delivering meaningful business results for large consumer organizations translated into another great quarter, both in terms of our financial results and our overall business,” stated Greg Gianforte, CEO and Founder. “As we head into our Annual Summit next week, we are excited to share our customers’ success, and demonstrate our vision to combine the social experience with our existing customer experience solutions.”

“We are pleased to report revenue and earnings ahead of guidance, which was driven by recurring revenue growth,” said Jeff Davison, CFO. “During the third quarter recurring revenue grew $2.3 million, or 9% sequentially over the second quarter of 2009. Through three quarters, we have generated $0.29 non-GAAP earnings per share, well ahead of our guidance.”

Guidance

• For the fourth quarter of 2009, revenue is expected to be in the range of approximately $39 to $40 million. Fourth quarter net income (loss) per share is expected to be in the range of $(0.01) to $0.01. Non-GAAP net income per share, which excludes stock-based compensation, is expected to be in the range of $0.04 to $0.06. This would equate to full year revenue of approximately $150 to $151 million, net income per share of $0.09 to $0.11 and non-GAAP net income per share of $0.33 to $0.35

Quarterly Conference Call

RightNow Technologies will discuss its quarterly results today via teleconference at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time.) To access the call, please dial 877-627-6585, or outside the U.S. 719-325-4805, at least five minutes prior to the 2:30 p.m. MT start time. A live webcast of the call will also be available at http://investor.rightnow.com/index.cfm under the Investor Webcasts menu. An audio replay will be available between 5:30 p.m. MT October 22, 2009 and 9:59 p.m. MT November 5, 2009 by calling 888-203-1112 or 719-457-0820, with passcode 3459047. The replay will also be available on our website at http://investor.rightnow.com.

About RightNow Technologies

RightNow (NASDAQ:RNOW) delivers the high-impact technology solutions and services organizations need to cost-efficiently deliver a consistently superior customer experience across their frontline service, sales and marketing touch-points. Approximately 1,900 corporations and government agencies worldwide depend on RightNow to achieve their strategic objectives and better meet the needs of those they serve. RightNow is headquartered in Bozeman, Montana. For more information, please visit www.rightnow.com.

RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of The NASDAQ Stock Market LLC.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, risks associated with general economic conditions; fluctuations in foreign currency exchange; our business model; our ability to develop or acquire, and gain market acceptance for, new products in a cost-effective and timely manner; the success of our efforts to integrate HiveLive’s people and processes, following our recent acquisition of that company; the risk of asset impairment associated with the acquisition of HiveLive; the gain or loss of key customers; competitive pressures; our ability to expand or contract operations and to grow profitability; fluctuations in our earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; our ability to manage and expand our partner relationships; any unanticipated ambiguities in fair value accounting standards; and our ability to expand, retain and motivate our employees. Further information on potential factors that could affect our financial results is included in our most recent Annual Report on Form 10-K and quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

FRNOW

[a] Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, which is effective for periods beginning January 1, 2006.

Healthways (HWAY) Reports Third-Quarter Earnings of $0.26 Per Diluted Share

Oct. 22, 2009 (Business Wire) — Healthways, Inc. (NASDAQ: HWAY) today announced financial results for the third quarter and nine months ended September 30, 2009. Total revenues for the quarter were $181.6 million compared with revenues of $187.4 million for the three months ended September 30, 2008. Net income for the third quarter of 2009 was $8.8 million, or $0.26 per diluted share, which was two cents above the Company’s earnings guidance range. Net income for the third quarter of 2008 was $15.6 million, or $0.45 per diluted share.

Ben R. Leedle, Jr., chief executive officer of Healthways, commented, “The performance of our domestic operations once again enabled us to exceed our revenue and earnings expectations for the quarter. These better than expected results for the third quarter were driven primarily by the timing of performance-based revenue recognition, as certain performance targets were measured and achieved earlier than forecast, and by higher than projected billed lives. The strong earnings performance by our domestic operations was slightly offset by higher than anticipated net costs in our international operations, primarily related to the start-up of the Australian contract with Hospitals Contribution Fund.

“The Company’s cash flow from operations was a strong $42.1 million for the third quarter. In addition to investing approximately $13.4 million in capital expenditures during the quarter, we also reduced our debt by $34.1 million. This reduction contributed to a debt to EBITDA ratio as calculated under our credit agreement of 2.0 at the end of the quarter, which is the low end of the forecasted range for 2009. Combined with our debt reduction during the first six months of the year, our total debt to capitalization has improved 410 basis points to 42.1% at the end of the third quarter from 46.2% at December 31, 2008.

“Since the beginning of the third quarter, we have signed new, expanded or extended contracts that reflect demand across the breadth of our solutions from new and existing Healthways customers, representing regional Blue Cross Blue Shield health plans, state governments, and Fortune 100 employers. Under these agreements, we will provide our chronic condition management, Silver Sneakers®, QuitNet® comprehensive smoking cessation, lifestyle health coaching, and/or WholeHealth solutions.

“Among these customers, we are pleased to report today a significant new agreement that expands our long-term relationship with Health Care Service Corporation (HCSC), one of the nation’s largest health plans. Under the terms of this multi-year agreement, Healthways will make its national fitness center network available to approximately 6.7 million of HCSC’s commercial members. With this unique business model and related services, we have created a new consumer solution designed to support healthy behaviors for individuals in a commercial population. This agreement is a further example of how our extensive infrastructure allows for the rapid creation of innovative solutions that differentiate Healthways competitively in the commercial market, just as Silver Sneakers has done in the Medicare Advantage market.”

Financial Guidance

Based on the performance of the Company’s domestic operations for the first nine months of 2009, Healthways today increased its guidance for 2009 revenues to a range of $708 million to $717 million from the previous range of $685 million to $700 million. This revision includes a new range for revenues from domestic operations of $691 million to $697 million, up from $668 million to $680 million previously. Guidance for 2009 revenues from international operations remains unchanged in a range of $17 million to $20 million.

Due to the anticipated increase in 2009 revenues, Healthways also revised its guidance for 2009 adjusted net income per diluted share, which excludes previously announced lawsuit settlement costs of $0.73 per diluted share, to a range of $1.01 to $1.05 compared with the previous range of $0.97 to $1.05. This new earnings guidance also reflects the expected $0.02 per diluted share net cost impact of the HealthHonors acquisition announced last week. Guidance for 2009 adjusted net income per diluted share includes a new range for domestic operations of $1.13 to $1.15 compared with $1.07 to $1.13 previously, while the net cost impact from international operations has increased to a range of $0.10 to $0.12 from the previous range of $0.08 to $0.10.

The Company’s guidance for net income per diluted share for the fourth quarter of 2009 is in a range of $0.19 to $0.23. Domestic operations are expected to produce net income per diluted share of $0.20 to $0.22, including the effect of the HealthHonors acquisition. Fourth-quarter 2009 results from international operations are expected to be in a range of $0.01 net cost per diluted share to $0.01 net income per diluted share.

Summary

Mr. Leedle concluded, “We are pleased by the better than expected financial performance of our domestic operations for the third quarter and throughout 2009 and by our continued contracting momentum. We are also building our potential for future growth through the expansion of our value proposition as evidenced by our recently announced third-quarter WholeHealth contract with a Fortune 100 company and our new contract with HCSC.

“While encouraged by the Company’s progress, we remain cautious in our near-term outlook because of uncertainty about the economic environment and the possible impact of both the high domestic unemployment rate and potential healthcare reform on our customers. Given today’s economic environment, we believe the timeframe for sustained and significant improvement in the rate of unemployment is still unclear and that the possibility remains for further attrition. Despite our caution, we believe we are well positioned to continue managing through the current environment, with substantial cash flow from operations, a strengthening financial position and ample liquidity.

“Longer-term, we remain confident of the Company’s prospects for further substantial growth. In both the U.S and internationally, health plans, employers and governments are increasingly focused on the potential for reducing the future growth of healthcare costs by reducing health risks and preventing or delaying disease onset and progression. Healthways has been a leading pioneer in the development and application of these strategies with a proven record that healthier people cost less. With solutions demonstrated to be the most comprehensive, integrated and scalable in the market, we are well positioned to leverage this increased focus to expand the populations we serve and, through successful performance, to create further shareholder value.”

Conference Call

Healthways will hold a conference call to discuss this release today at 5:00 p.m. Eastern Time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.healthways.com and clicking Investor Relations, or by going to www.earnings.com, at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 719-457-0820, code 5006460, and the replay will also be available on the Company’s web site for the next 12 months.

Safe Harbor Provisions

This press release contains forward-looking statements, including our guidance and financial expectations for future periods, which are based upon current expectations and involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company, including, without limitation, all statements regarding the Company’s future earnings and results of operations. In order for the Company to utilize the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, investors are hereby cautioned that the following important factors, among others, may affect these forward-looking statements. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. The important factors include but are not limited to:

• the Company’s ability to sign and implement new contracts;
• the Company’s ability to accurately forecast performance in order to provide forward-looking guidance;
• the Company’s ability to reach mutual agreement with the Centers for Medicare and Medicaid Services (CMS) with respect to the Company’s results under Phase I of Medicare Health Support;
• the Company’s ability to accurately forecast the costs necessary to establish a presence in international markets;
• the risks associated with foreign currency exchange rate fluctuations;
• the Company’s ability to achieve estimated annualized revenue in backlog;
• the ability of the Company’s customers to provide timely and accurate data that is essential to the operation and measurement of the Company’s performance;
• the risks associated with changes in macroeconomic conditions;
• the Company’s ability to integrate acquired businesses or technologies into the Company’s business;
• the Company’s ability to renew and/or maintain contracts with its customers under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company’s results of operations;
• the Company’s ability to obtain adequate financing to provide the capital that may be necessary to support the Company’s operations and to support or guarantee the Company’s performance under new contracts;
• the impact of litigation involving the Company and/or its subsidiaries;
• the impact of future state, federal, and international health care and other applicable legislation and regulations, including health care reform, on the Company’s ability to deliver its services and on the financial health of the Company’s customers and their willingness to purchase the Company’s services; and
• other risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2008, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and other filings with the Securities and Exchange Commission.

The Company undertakes no obligation to update or revise any such forward-looking statements.

About Healthways

Healthways is the leading provider of specialized, comprehensive solutions to help millions of people maintain or improve their health and well-being and, as a result, reduce overall costs. Healthways’ solutions are designed to help healthy individuals stay healthy, mitigate and slow the progression of disease associated with family or lifestyle risk factors and promote the best possible health for those already affected by disease. Our proven, evidence-based programs provide highly specific and personalized interventions for each individual in a population, irrespective of age or health status, and are delivered to consumers by phone, mail, internet and face-to-face interactions, both domestically and internationally. Healthways also provides a national, fully accredited complementary and alternative Health Provider Network and a national Fitness Center Network, offering convenient access to individuals who seek health services outside of, and in conjunction with, the traditional healthcare system. For more information, please visit www.healthways.com.

(1) Domestic EPS guidance excluding lawsuit settlement costs is a non-GAAP financial measure. The Company excludes EPS (loss) attributable to lawsuit settlement costs from this measure because of its comparability to the Company’s historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider Domestic EPS guidance excluding lawsuit settlement costs in isolation or as a substitute for EPS guidance determined in accordance with accounting principles generally accepted in the United States.

(2) Adjusted EPS guidance is a non-GAAP financial measure. The Company excludes EPS (loss) attributable to lawsuit settlement costs from this measure because of its comparability to the Company’s historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider Adjusted EPS guidance in isolation or as a substitute for EPS guidance determined in accordance with accounting principles generally accepted in the United States.

(3) EPS (loss) attributable to lawsuit settlement costs consists of pre-tax charges of $40.0 million related to the Company’s settlement of a qui tam lawsuit.

Align Technology (ALGN) Announces Third Quarter Fiscal 2009 Results

Oct. 22, 2009 (GlobeNewswire) —

 * includes training, ancillary products, and retainers

 * Utilization = # of cases shipped/# of doctors to whom cases
   were shipped

 ALIGN TECHNOLOGY, INC.
 BUSINESS OUTLOOK SUMMARY
 (unaudited)

Rocky Brands, Inc. (RCKY) Announces Third Quarter Fiscal 2009 Results

Oct. 22, 2009 (Business Wire) — Rocky Brands, Inc. (Nasdaq: RCKY) today announced financial results for its third quarter ended September 30, 2009.

For the third quarter of 2009, net sales were $66.6 million versus net sales of $72.5 million in the third quarter of 2008. The Company’s earnings before income taxes increased 53.4% to $4.4 million in third quarter 2009 compared to $2.9 million in the same period last year. Net earnings increased 17.2% to $2.8 million, or $0.50 per diluted share versus net earnings of $2.4 million, or $0.43 per diluted share a year ago. In the third quarter of 2008, the Company received a one-time prior year tax benefit of approximately $0.6 million, or $0.10 per diluted share. Excluding this one-time benefit, third quarter 2009 diluted EPS increased 51.5% to $.50 compared to $.33 in the third quarter of 2008.

Mike Brooks, Chairman and Chief Executive Officer, commented, “We are very pleased with our third quarter performance. Our recent results reflect the steps we have taken over the last 18 months to reduce expenses and improve efficiency in order to enhance our profitability and strengthen our balance sheet. For the fifth consecutive quarter we lowered our operating expenses double digits on a percentage basis as we continue to remove costs from our retail division by transitioning more customer transactions to the internet. At the same time, our ability to more effectively manage our inventory levels and receivables decreased borrowings under our credit facility and lowered our interest expense by 14%. Equally important, we began to see some stabilization of our sales base with several of our wholesale categories – Hunting, Western, and Duty – reporting positive gains. With inventories at retailers relatively clean, we are optimistic we will continue to benefit from a higher frequency of reorders and we are confident that we can deliver improved profitability year-over-year during the fourth quarter.”

Third Quarter Review

Net sales for the third quarter decreased to $66.6 million compared to $72.5 million a year ago. Wholesale sales for the third quarter decreased 2.1% to $54.5 million compared to $55.6 million for the same period in 2008. Retail sales for the third quarter were $11.5 million compared to $15.3 million for the same period last year. Retail sales were down year-over-year as a result of the ongoing transition to more internet driven transactions, and the decision to remove a portion of our Lehigh mobile stores from operation to help lower costs as discussed below. Military segment sales for the third quarter were $0.6 million versus $1.6 million for the same period in 2008. Third quarter 2009 military sales include the initial shipments of insulated boots under the $29 million blanket purchase agreement the company received from the General Services Administration (GSA) in July 2009.

Gross margin in the third quarter of 2009 was $24.7 million, or 37.1% of sales compared to $27.1 million, or 37.4% for the same period last year.

Selling, general and administrative (SG&A) expenses decreased $3.4 million or 15.4% to $18.6 million, or 27.9% of sales for the third quarter of 2009 compared to $22.0 million, or 30.3% of sales, a year ago. The decrease in SG&A expenses was primarily the result of a reduction in salaries & benefits, freight, Lehigh mobile store expenses and tradeshow expenses.

Income from operations increased $1.0 million, or 19.8% to $6.1 million, or 9.2% of sales for the period compared to income from operations of $5.1 million, or 7.1% sales in the prior year.

Interest expense decreased $0.3 million or 14.4% to $2.0 million for the third quarter of 2009 versus $2.3 million for the same period last year. The decrease is the result of a reduction in average borrowings combined with lower interest rates compared to the same period last year.

The Company’s funded debt decreased $24.1 million, or 22.4% to $83.4 million at September 30, 2009 versus $107.6 million at September 30, 2008.

Inventory decreased $15.3 million, or 18.3%, to $68.1 million at September 30, 2009 compared with $83.3 million on the same date a year ago.

The Company’s accounts receivable decreased 19.8% to $58.3 million at September 30, 2009 versus $72.7 million at September 30, 2008.

Conference Call Information

The Company’s conference call to review third quarter fiscal 2009 results will be broadcast live over the internet today, Thursday, October 22, 2009 at 4:30 pm Eastern Time. The broadcast will be hosted at www.rockybrands.com.

About Rocky Brands, Inc.

Rocky Brands, Inc. is a leading designer, manufacturer and marketer of premium quality footwear and apparel marketed under a portfolio of well recognized brand names including Rocky Outdoor Gear®, Georgia Boot®, Durango®, Lehigh®, and the licensed brands Dickies®, Michelin® and Mossy Oak®.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding intent, beliefs, expectations, projections, forecasts, and plans of the Company and its management, and include statements in this press release regarding a higher frequency of reorders and improved profitability (paragraph 3). These forward-looking statements involve numerous risks and uncertainties, including, without limitation, the various risks inherent in the Company’s business as set forth in periodic reports filed with the Securities and Exchange Commission, including the Company’s annual report on Form 10-K for the year ended December 31, 2008 (filed March 3, 2009) and the Company’s quarterly report on Form 10-Q for the quarters ended March 31, 2009 (filed May 4, 2009) and June 30, 2009 (filed July 31, 2009). One or more of these factors have affected historical results, and could in the future affect the Company’s businesses and financial results in future periods and could cause actual results to differ materially from plans and projections. Therefore there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the Company, or any other person should not regard the inclusion of such information as a representation that the objectives and plans of the Company will be achieved. All forward-looking statements made in this press release are based on information presently available to the management of the Company. The Company assumes no obligation to update any forward-looking statements.

Speedus Corp. (SPDE) Subsidiary Cleared as Apple iPhone Developer; Medical Applications for Smartphones Planned

STAMFORD, Conn., Oct. 21 /PRNewswire/ — Zargis Medical Corp., a subsidiary of Speedus Corp. (Nasdaq: SPDE) and a spin-off from Siemens Corporate Research (NYSE: SI), today announced that is has been cleared as an Apple(®) iPhone(®) developer and has begun development of medical diagnostic support software and related peripherals for the iPhone and other leading smartphones.

Zargis has identified the handheld environment as a logical delivery platform for its telemedicine and diagnostic software initiatives, and with its team of experienced developer’s plans to leverage the smartphone platform as a mobile hub between medical device peripherals and computer-aided diagnostic support located either locally or remotely.

A recent report released by Manhattan Research stated that 64% of doctors, more than double the number eight years ago, own smartphones, and that this figure will increase to 81% penetration in 2012. However, despite the rapid adoption of the iPhone and other smartphones by physicians, currently available healthcare applications for these devices are generally limited to medical reference libraries, educational tools and applications designed to manage patient medical records.

“The future of healthcare delivery is about connectivity and mobility. Zargis’ expertise in computer-aided auscultation and our advanced medical software platform positions us perfectly to create diagnostic software and peripherals that are a natural fit for smartphones. We intend to improve healthcare efficiency by helping clinicians bring medical technology to the patient, rather than the other way around,” stated Zargis CEO John Kallassy.

About Zargis Medical Corp.

Zargis Medical Corp. develops advanced diagnostic decision support products and services for primary care physicians, pediatricians, cardiologists and other healthcare professionals. Zargis was formed in 2001 when Siemens Corporate Research, a division of Siemens AG (NYSE: SI), and Speedus Corp. co-invested to develop and market an advanced acoustic technology designed to detect heart abnormalities identified through analysis of heart sounds.

For additional information about Zargis or Speedus Corp., contact Peter Hodge at 888.773.3669 (ext. 23) or phodge@zargis.com or visit the following Web sites: www.zargis.com and www.speedus.com.

Statements contained herein that are not historical facts, including but not limited to statements about the Company’s product, corporate identity and focus, may be forward-looking statements that are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by the Company, including, but not limited to, the continuing development of the Company’s sales, marketing and support efforts.

TigerLogic (TIGR) Announces the General Availability of Omnis Studio 5

Banner Corporation (BANR) Announces Third Quarter Results

WALLA WALLA, Wash., Oct. 20, 2009 (GLOBE NEWSWIRE) — Banner Corporation (Nasdaq:BANR), the parent company of Banner Bank and Islanders Bank, today reported that it had a net loss of $6.4 million for the third quarter ended September 30, 2009, compared to a net loss of $991,000 for the third quarter of 2008. The current quarter’s results include a $25.0 million provision for loan losses and a $4.6 million net gain from the valuation of financial instruments carried at fair value. For the nine-month period ended September 30, 2009, Banner reported a net loss of $32.2 million compared to a net loss of $49.5 million for the nine months ended September 30, 2008. The nine month results for 2008 included a $50.0 million goodwill impairment charge.

In the fourth quarter a year ago, Banner issued $124 million of senior preferred stock to the U.S. Treasury as a participant in the Treasury’s Capital Purchase Program. In the quarter ended September 30, 2009, Banner paid a $1.6 million dividend on this preferred stock and accrued $373,000 for related discount accretion. Including the preferred stock dividend and related accretion, the net loss to common shareholders was $8.4 million, or $0.44 per diluted share, for the third quarter, compared to a net loss of $991,000, or $0.06 per diluted share, for the third quarter a year ago. Year-to-date, the net loss to common shareholders was $38.0 million, or $2.11 per diluted share, compared to a net loss of $49.5 million, or $3.09 per diluted share for the first nine months of 2008.

“Similar to recent quarters, our provision for loan losses during the third quarter reflects continued material levels of non-performing 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,” said 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. By contrast to construction and development loans, the non-housing related segments of our loan portfolio have continued to perform as expected with only normal levels of credit problems given the serious economic slowdown.”

“Retail deposit growth was a highlight again in the third quarter as we continued to replace public and brokered funds with attractively priced core deposits which will continue to strengthen our commercial banking franchise,” Jones continued. “Also notable in the quarter was strong mortgage banking revenues as exceptionally low interest rates resulted in continued refinancing opportunities for many of our customers, and lower home prices and first-time buyer incentives led to solid purchase financing activities. Continuing its earlier success, our Great Northwest Home Rush promotion contributed to additional home sales. Through the date of this announcement our builders have accepted purchase offers on 361 of the 617 homes listed under this program, with 289 of those sales having closed through September 30, 2009.”

Credit Quality

“In addition to the weakness in the residential construction market, property values exhibited further declines, particularly for land and developed building lots, resulting in additional charge-offs and impairment reserves,” said Jones. “As a result, our provision for loan losses for the quarter ended September 30, 2009, while significantly less than in the immediately preceding quarter, was in excess of our normal expectations. Although property values have declined, sales of finished homes have improved, our reserve levels are substantial, and both our impairment analysis and charge-off actions reflect current appraisals and valuation estimates as well as recent regulatory examination results. Unfortunately, with respect to land and lot loans, those appraisals generally reflect a very limited number of sales which frequently involve distressed transactions and assume in many cases that market recoveries will be protracted, resulting in disappointingly low and uncertain valuation estimates which required further loss provisioning. We remain hopeful that the final resolution of many of these loans will reflect better than currently recognized values and we are confident that we have the capital and human resources necessary to manage the collection of problem assets in the current economic environment.”

Banner recorded a $25.0 million provision for loan losses in the third quarter, compared to $45.0 million in the preceding quarter and $8.0 million in the third quarter of 2008. For the first nine months of the year, the provision for loan losses was $92.0 million compared to $29.5 million for the first nine months of 2008. The allowance for loan losses at September 30, 2009 was $95.2 million, representing 2.44% of total loans outstanding. Non-performing loans totaled $243.3 million at September 30, 2009, compared to $225.1 million in the preceding quarter and $119.4 million at September 30, 2008. In addition, Banner’s real estate owned and repossessed assets totaled $53.8 million at September 30, 2009, compared to $57.2 million three months earlier and $10.2 million at September 30, 2008. Banner’s net charge-offs in the quarter ended September 30, 2009 totaled $20.5 million, or 0.53% of average loans outstanding and year-to-date net charge-offs were $72.0 million, or 1.83% of average loans outstanding.

At September 30, 2009, the geographic distribution of our construction and land development loans, including residential and commercial properties, is approximately 33% in the greater Puget Sound market, 37% in the greater Portland, Oregon market, and 8% in the greater Boise, Idaho market, with the remaining 22% distributed in various eastern Washington, eastern Oregon and northern Idaho markets served by Banner Bank. One-to-four family residential construction and related lot and land loans represent 16% of the total loan portfolio and 73% of non-performing assets. The geographic distribution of non-performing construction, land and land development loans and real estate owned included approximately $110 million, or 44%, in the Puget Sound region, $84 million, or 34%, in the greater Portland market area and $27 million, or 11%, in the greater Boise market area.

Income Statement Review

Banner’s net interest margin was 3.30% for the third quarter, compared to 3.24% in the preceding quarter and 3.45% for the third quarter a year ago. Funding costs decreased 18 basis points compared to the previous quarter and decreased 67 basis points from the same quarter a year earlier, while asset yields decreased eight basis points from the prior linked quarter and 82 basis points from the third quarter a year ago, all reflecting the much lower interest rate environment. For the first nine months of 2009, the net interest margin was 3.27% compared to 3.52% for the first nine months of 2008.

“Funding costs continued to decline, which allowed our net interest margin to expand modestly despite the drag on earnings from the still high level of non-performing assets,” said Jones. Non-accruing loans reduced the margin by approximately 42 basis points in this year’s third quarter compared to approximately 45 basis points in the immediately preceding quarter of 2009 and approximately 24 basis points in the third quarter of 2008.

For the third quarter of 2009, net interest income before the provision for loan losses was $36.4 million, compared to $34.9 million in the preceding quarter and $37.6 million in the third quarter a year ago. In the first nine months of 2009, net interest income before the provision for loan losses was $106.2 million compared to $112.0 million in the first nine months of 2008. Revenues from core operations* (net interest income before the provision for loan losses plus total other operating income excluding fair value adjustments) were $45.2 million in the third quarter of 2009, compared to $43.9 million in the second quarter of 2009 and $45.7 million for the third quarter a year ago. Revenues from core operations for the first nine months of 2009 were $131.9 million, compared to $135.4 million for the same period of 2008.

Banner’s results for the quarter included a net gain of $4.6 million ($3.0 million after tax), compared to a net loss of $6.1 million ($3.9 million after tax) in the third quarter a year ago, for fair value adjustments as a result of changes in the valuation of financial instruments carried at fair value in accordance with the adoption of Statement of Financial Accounting Standards (SFAS) Nos. 157 and 159. The fair value adjustments in the current quarter predominantly reflect changes in the valuation of trust preferred securities, including pooled trust preferred securities, and junior subordinated debentures, both owned and issued by the Company.

Total other operating income, which includes the changes in the valuation of financial instruments noted above, was $13.4 million in the third quarter, compared to $20.0 million in the preceding quarter and $2.0 million for the same quarter a year ago. For the first nine months of 2009, total other operating income was $38.1 million, compared to $18.9 million in the same period in 2008. Total other operating income from core operations* (excluding fair value adjustments) for the current quarter was $8.8 million, compared to $8.9 million in the preceding quarter and $8.1 million for the same quarter a year ago. For the first nine months of 2009, total other operating income from core operations increased 9% to $25.6 million, compared to $23.4 million in the first nine months of 2008. Income from deposit fees and other service charges increased to $5.7 million in the third quarter of 2009, compared to $5.4 million for the preceding quarter; however, reflecting the reduction in customer transaction volumes in the current economic environment, fees were slightly less than the $5.8 million recorded in the third quarter a year ago despite growth in the number of accounts. Income from mortgage banking operations decreased to $2.1 million in the third quarter compared to $2.9 million in the preceding quarter, but was up substantially from the $1.5 million recorded in the third quarter a year ago.

“The soft economy continued to adversely affect our payment processing business compared to a year ago as activity levels for deposit customers, cardholders and merchants remained subdued; however, we are pleased with the year-over-year growth in our customer base and encouraged by the continuing improvement in activity compared to the very low levels we experienced earlier this year,” said Jones. “We are also pleased that our mortgage banking revenues remained strong and substantially above the levels reported a year ago. Although not as significant as in the first two quarters of the year, the high level of refinancing activity again resulted in accelerated termination of mortgage servicing rights as reflected in the impairment of loan servicing revenues in the third quarter. Amortization and write-off of mortgage servicing rights totaled $415,000 for the third quarter of 2009, compared to $912,000 and $559,000, respectively, in the first and second quarters of this year and $176,000 in the third quarter a year ago.”

“We had another good quarter of managing controllable operating expenses; however, collection and legal costs, including charges related to acquired real estate, remained high,” said Jones. “Compensation, occupancy and other manageable operating expenses have shown steady reductions over the past twelve months as we have made significant progress in improving our core operating efficiency. Unfortunately, compared to a year ago FDIC insurance expense has increased substantially and offset much of this improvement. FDIC insurance charges were $2.2 million and $7.8 million, respectively, for the quarter and nine months ended September 30, 2009, compared to $701,000 and $1.7 million, respectively, for the quarter and nine months ended September 30, 2008. In addition, expenses associated with acquired real estate increased to $2.8 million for the quarter and $5.2 million for the nine months ended September 30, 2009, compared to $758,000 and $1.6 million, respectively, for the same quarter and nine-month period a year earlier. We anticipate collection costs and FDIC insurance premiums will continue to be above historical levels for a number of future quarters.”

Total other operating expenses from core operations* (non-interest expenses excluding the goodwill write-off that occurred during the quarter ended June 30, 2008) were $36.6 million in the third quarter, compared to $36.9 million in the preceding quarter and $34.0 million in the third quarter a year ago. For the first nine months of the year, other operating expenses from core operations were $107.3 million compared to $102.9 million in the first nine months of 2008. Operating expenses from core operations as a percentage of average assets was 3.17% in the third quarter of 2009, compared to 3.27% in the preceding quarter and 2.91% in the third quarter a year ago.

*Earnings information excluding the goodwill impairment charge and fair value adjustments (alternately referred to as total other operating income from core operations, total other operating expenses from core operations, revenues from core operations, or operating expenses from core operations) represent non-GAAP (Generally Accepted Accounting Principles) financial measures. Management has presented these non-GAAP financial measures in this earnings release because it believes that they provide useful and comparative information to assess trends in the Company’s core operations reflected in the current quarter’s and year-to-date’s results. Where applicable, the Company has also presented comparable earnings information using GAAP financial measures.

Balance Sheet Review

Net loans were $3.80 billion at September 30, 2009, compared to $3.94 billion a year earlier. Total assets were $4.79 billion at September 30, 2009, compared to $4.65 billion a year earlier.

“In the third quarter of 2009, commercial and multifamily real estate loan balances increased by $19.6 million while commercial business loans were essentially unchanged compared to the prior quarter end. In addition, agricultural loans experienced an expected seasonal increase of $10.3 million and one-to-four family residential loans increased by $23.4 million,” said Jones. “However, the continued reductions in construction and land development loans resulted in a modest decrease in total loan balances compared to the prior quarter end. Although still slower than historical levels, home sales have improved, contributing to a $205 million reduction in our portfolio of one-to-four family construction loans over the past twelve months, including a $60.0 million decrease in the most recent quarter. As a result, at September 30, 2009 our one-to-four family construction loans totaled $277 million, a decline of $378 million from their peak quarter-end balance of $655 million at June 30, 2007.

Total deposits were $3.86 billion at September 30, 2009, compared to $3.75 billion at the end of the preceding quarter and $3.79 billion a year ago. Non-interest-bearing accounts increased by nearly $39 million during the quarter to $546 million at September 30, 2009, compared to $508 million at June 30, 2009 and $522 million a year ago. Interest-bearing accounts increased by $73 million in the third quarter of 2009 and at quarter end exceeded the year earlier balances by $45 million despite the substantial decrease in public funds and brokered deposits.

“Our retail deposit franchise had another strong quarter and we have now more than replaced all of the public funds and brokered deposits that we have chosen to run off,” said Jones. “Over the past twelve months, we have allowed $253 million in public funds to run off as the new higher collateralization requirements and the shared risk exposure under the Washington and Oregon State requirements have made retaining those deposits less desirable than in the past. In addition, although brokered deposits have never been an important component of our funding, we have reduced brokered deposits by $58 million over the same twelve-month period. We are pleased that we were able to produce this retail deposit growth while also significantly reducing our overall cost of deposits, including another 20 basis point decrease during the third quarter. This strong retail deposit growth, especially in the third quarter, has allowed us to steadily build our short-term liquidity, a key operating goal, and lower our loan-to-deposits ratio towards our long-term goal of 95%.”

“Despite the challenging operating environment, Banner Corporation 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,” said Jones. Banner Corporation’s Tier 1 leverage capital to average assets ratio was 9.66% and its total capital to risk-weighted assets ratio was 12.54% at September 30, 2009.

Tangible stockholders’ equity at September 30, 2009 was $395.2 million, including $117.0 million attributable to preferred stock, compared to $301.4 million a year ago. Tangible common stockholders’ equity was $278.2 million at September 30, 2009, or 5.82% of tangible assets, compared to $301.4 million, or 6.60% of tangible assets a year earlier. Tangible book value per common share was $14.13 at quarter-end, compared to $18.01 a year earlier. At September 30, 2009, Banner had 19.7 million shares outstanding, while it had 16.7 million shares outstanding a year ago.

“A frequently asked question about us is the date of our bank regulatory examinations. A regularly scheduled regulatory examination of Banner Bank, our lead bank, was conducted in the late third quarter of 2009. We have not yet received a written report of that examination but have had the normal field examiner exit conference and have incorporated the financial-related results of that conference in our third quarter financial results,” concluded Jones.

Conference Call

Banner will host a conference call on Wednesday, October 21, 2009, at 8:00 a.m. PDT, to discuss third quarter 2009 results. The conference call can be accessed live by telephone at 480-629-9723 using access code 4171247 to participate in the call. To listen to the call online, go to the Company’s website at www.bannerbank.com. A replay will be available for a week at (303) 590-3030, using access code 4171247.

About the Company

Banner Corporation is a $4.8 billion bank holding company operating two commercial banks in Washington, Oregon and Idaho. Banner serves the Pacific Northwest region with 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.

This press release contains statements that the Company believes are “forward-looking statements.” These statements relate to the Company’s financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially include, but are not limited to, the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Board of Governors of the Federal Reserve System and our bank subsidiaries by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or to write-down assets; fluctuations in agricultural commodity prices, crop yields and weather conditions; our ability to control operating costs and expenses; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; our ability to pay dividends; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board; war or terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and other risks detailed in Banner’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

 BANR - Third Quarter 2009 Results
 RESULTS OF OPERATIONS
 (in thousands except shares and per share data)

                     Quarters Ended                Nine Months Ended
            ----------------------------------  ----------------------
              Sep 30,     Jun 30,     Sep 30,     Sep 30,    Sep 30,
               2009        2009        2008        2009       2008
            ----------  ----------  ----------  ----------  ----------

 INTEREST
  INCOME:
  Loans
   receiv-
   able     $   56,175  $   55,500  $   64,181  $  168,022  $  196,348
  Mortgage-
   backed
   securi-
   ties          1,422       1,569       1,040       4,792       3,280
  Securi-
   ties and
   cash
   equi-
   valents       1,976       2,089       2,786       6,248       8,374
            ----------  ----------  ----------  ----------  ----------
                59,573      59,158      68,007     179,062     208,002

 INTEREST
  EXPENSE:
  Deposits      20,818      21,638      26,818      65,548      84,446
  Federal
   Home
   Loan Bank
   advances        630         675       1,160       2,025       4,310
  Other
   borrow-
   ings            655         671         734       1,553       1,874
  Junior
   subord-
   inated
   deben-
   tures         1,118       1,249       1,669       3,700       5,399
            ----------  ----------  ----------  ----------  ----------
                23,221      24,233      30,381      72,826      96,029
            ----------  ----------  ----------  ----------  ----------

  Net
   interest
   income
   before
   provision
   for loan
   losses       36,352      34,925      37,626     106,236     111,973

 PROVISION
  FOR LOAN
  LOSSES        25,000      45,000       8,000      92,000      29,500
            ----------  ----------  ----------  ----------  ----------

  Net
   interest
   income
   (loss)       11,352     (10,075)     29,626      14,236      82,473

 OTHER
  OPERATING
  INCOME:
  Deposit
   fees and
   other
   service
   charges       5,705       5,408       5,770      16,049      16,277
  Mortgage
   banking
   opera-
   tions         2,065       2,860       1,500       7,640       4,694
  Loan
   servicing
   fees            282         248         536         260       1,485
  Miscell-
   aneous          768         412         286       1,700         980
            ----------  ----------  ----------  ----------  ----------
                 8,820       8,928       8,092      25,649      23,436
  Increase
   (Decrease)
   in
   valuation
   of fin-
   ancial
   instru-
   ments
   carried
   at fair
   value         4,633      11,049      (6,056)     12,429      (4,584)
            ----------  ----------  ----------  ----------  ----------

  Total
   other
   operating
   income       13,453      19,977       2,036      38,078      18,852

 OTHER
  OPERATING
  EXPENSE:
  Salary
   and
   employee
   benefits     17,379      17,528      18,241      52,508      57,623
  Less
   capital-
   ized
   loan
   origi-
   nation
   costs        (2,060)     (2,834)     (2,040)     (7,010)     (7,009)
  Occupancy
   and
   equipment     5,715       5,928       5,956      17,697      17,813
  Informa-
   tion/
   computer
   data
   services      1,551       1,599       1,560       4,684       5,389
  Payment
   and card
   process-
   ing
   services      1,778       1,555       1,913       4,786       5,212
  Profess-
   ional
   services      1,456       1,183       1,117       3,833       3,203
  Adver-
   tising
   and
   market-
   ing           1,899       2,207       1,572       5,938       4,667
  Deposit
   insurance     2,219       4,102         701       7,818       1,661
  State/
   municipal
   business
   and use
   taxes           558         532         572       1,630       1,712
  Real
   estate
   opera-
   tions         2,799       1,805         758       5,227       1,592
  Miscell-
   aneous        3,335       3,286       3,650      10,202      11,067
            ----------  ----------  ----------  ----------  ----------

                36,629      36,891      34,000     107,313     102,930
  Goodwill
   write-
   off              --          --          --          --      50,000
            ----------  ----------  ----------  ----------  ----------

   Total
    other
    operat-
    ing
    expense     36,629      36,891      34,000     107,313     152,930
            ----------  ----------  ----------  ----------  ----------

   Income
    (Loss)
    before
    pro-
    vision
    (benefit)
    for
    income
    taxes      (11,824)    (26,989)     (2,338)    (54,999)    (51,605)

  PROVISION
   FOR
   (BENEFIT
   FROM)
   INCOME
   TAXES        (5,376)    (10,478)     (1,347)    (22,777)     (2,143)
            ----------  ----------  ----------  ----------  ----------

  NET
   INCOME
   (LOSS)   $   (6,448) $  (16,511) $     (991) $  (32,222) $  (49,462)
            ==========  ==========  ==========  ==========  ==========

  PREFERRED
   STOCK
   DIVIDEND
   AND
   DISCOUNT
   ACCRETION
   Preferred
    stock
    dividend     1,550       1,550          --       4,650          --
   Preferred
    stock
    discount
    accre-
    tion           373         373          --       1,119          --
            ----------  ----------  ----------  ----------  ----------

  NET INCOME
   (LOSS)
   AVAILABLE
   TO
   COMMON
   SHARE-
   HOLDERS  $   (8,371) $  (18,434) $     (991) $  (37,991) $  (49,462)
            ==========  ==========  ==========  ==========  ==========

  Earnings
   (Loss)
   per
   share
   available
   to
   common
   share-
   holder
   Basic    $    (0.44) $    (1.04) $    (0.06) $    (2.11) $    (3.09)
   Diluted  $    (0.44) $    (1.04) $    (0.06) $    (2.11) $    (3.09)

  Cumulative
   dividends
   declared
   per
   common
   share    $     0.01  $     0.01  $     0.05  $     0.03  $     0.45

  Weighted
   average
   common
   shares
   out-
   standing
   Basic    19,022,522  17,746,051  16,402,607  17,982,945  16,025,403
   Diluted  19,022,522  17,746,051  16,402,607  17,982,945  16,025,403

  Common
   shares
   repur-
   chased
   during
   the
   period           --          --          --          --     613,903
  Common
   shares
   issued
   in conn-
   ection
   with
   exercise
   of stock
   options
   or DRIP   1,507,485     780,906     675,186   2,781,905     653,036

 BANR - Third Quarter 2009 Results
 FINANCIAL  CONDITION
 (in thousands except shares and per share data)

                      Sep 30,      Jun 30,       Sep 30,     Dec 31,
                       2009         2009          2008        2008
                    -----------  -----------  -----------  -----------
 ASSETS
 Cash and due
  from banks        $    60,531  $    67,339  $    80,508  $    89,964
 Federal funds and
  interest-bearing
  deposits              270,623       16,919          403       12,786
 Securities -
  at fair value         167,944      167,476      239,009      203,902
 Securities -
  available for sale     74,527       50,980           --       53,272
 Securities - held
  to maturity            76,630       77,321       55,389       59,794
 Federal Home
  Loan Bank stock        37,371       37,371       37,371       37,371
 Loans receivable:
   Held for sale          4,781        8,377        6,085        7,413
   Held for
    portfolio         3,891,413    3,904,704    3,993,094    3,953,995
   Allowance for
    loan losses         (95,183)     (90,694)     (58,846)     (75,197)
                    -----------  -----------  -----------  -----------
                      3,801,011    3,822,387    3,940,333    3,886,211

 Accrued interest
  receivable             20,912       18,892       22,799       21,219
 Real estate owned
  held for sale, net     53,576       56,967       10,147       21,782
 Property and
  equipment, net        104,469      103,709       97,958       97,647
 Goodwill and other
  intangibles, net       11,718       12,365       85,513       13,716
 Bank-owned
  life insurance         54,037       53,341       52,500       52,680
 Other assets            54,659       47,475       28,329       34,024
                    -----------  -----------  -----------  -----------
                    $ 4,788,008  $ 4,532,542  $ 4,650,259  $ 4,584,368
                    ===========  ===========  ===========  ===========

 LIABILITIES
 Deposits:
   Non-interest-
    bearing         $   546,956  $   508,284  $   521,927  $   509,105
   Interest-bearing
    transaction and
    savings
    accounts          1,305,546    1,131,093    1,086,621    1,137,878
   Interest-bearing
    certificates      2,008,673    2,110,466    2,182,318    2,131,867
                    -----------  -----------  -----------  -----------
                      3,861,175    3,749,843    3,790,866    3,778,850

 Advances from
  Federal Home Loan
  Bank at fair value    255,806      115,946      209,243      111,415
 Customer
  repurchase
  agreements and
  other borrowings      174,770      158,249      104,496      145,230
 Junior
  subordinated
  debentures at
  fair value             47,859       49,563      101,358       61,776
 Accrued expenses
  and other
  liabilities            28,715       36,652       44,486       40,600
 Deferred
  compensation           12,960       12,815       12,880       13,149
                    -----------  -----------  -----------  -----------
                      4,381,285    4,123,068    4,263,329    4,151,020

 STOCKHOLDERS'
  EQUITY
 Preferred stock -
  Series A              117,034      116,661           --      115,915
 Common stock           327,385      322,582      306,741      316,740
 Retained earnings
  (accumulated
  deficit)              (36,402)     (27,826)      82,377        2,150
 Other components
  of stockholders'
  equity                 (1,294)      (1,943)      (2,188)      (1,457)
                    -----------  -----------  -----------  -----------
                        406,723      409,474      386,930      433,348
                    -----------  -----------  -----------  -----------
                    $ 4,788,008  $ 4,532,542  $ 4,650,259  $ 4,584,368
                    ===========  ===========  ===========  ===========
 Common Shares
  Issued:
 Shares outstanding
  at end of period   19,933,943   18,426,458   16,980,468   17,152,038
   Less unearned
    ESOP shares at
    end of period       240,381      240,381      240,381      240,381
                    -----------  -----------  -----------  -----------
 Shares outstanding
  at end of period
  excluding
  unearned
  ESOP shares        19,693,562   18,186,077   16,740,087   16,911,657
                    ===========  ===========  ===========  ===========
 Common
  stockholders'
  equity per
  share(1)          $     14.72  $     16.10  $     23.11  $     18.77
 Common
  stockholders'
  tangible equity
  per share(1)(2)   $     14.13  $     15.42  $     18.01  $     17.96
 Tangible common
  stockholders'
  equity to
  tangible
  assets                   5.82%        6.20%        6.60%        6.64%
 Consolidated
  Tier 1
  leverage capital
  ratio                    9.66%        9.90%        8.86%       10.32%

 (1) Calculation is based on number of common shares outstanding at
     the end of the period rather than weighted average shares
     outstanding and excludes unallocated shares in the ESOP.

 (2) Tangible common equity excludes preferred stock, goodwill, core
     deposit and other intangibles.

 BANR - Third Quarter 2009 Results
 ADDITIONAL FINANCIAL INFORMATION
 (dollars in thousands)

                          Sep 30,     Jun 30,     Sep 30,     Dec 31,
                           2009        2009        2008        2008
                        ----------  ----------  ----------  ----------
 LOANS (including
  loans held for sale):
 Commercial real
  estate
   Owner occupied       $  481,698  $  476,922  $  448,972  $  459,446
   Investment
    properties             585,206     572,999     564,947     554,263
 Multifamily real
  estate                   152,832     150,168     141,787     151,274
 Commercial
  construction              83,937      90,762     113,342     104,495
 Multifamily
  construction              62,614      56,968      22,236      33,661
 One- to
  four-family
  construction             277,419     337,368     482,443     420,673
 Land and land
  development
   Residential             346,308     359,994     417,041     424,002
   Commercial               47,182      43,703      64,480      62,128
 Commercial
  business                 678,187     678,273     694,688     679,867
 Agricultural
  business
  including secured
  by farmland              225,603     215,339     213,753     204,142
 One- to
  four-family real
  estate                   676,928     653,513     561,043     599,169
 Consumer                  278,280     277,072     274,447     268,288
                        ----------  ----------  ----------  ----------

  Total loans
   outstanding          $3,896,194  $3,913,081  $3,999,179  $3,961,408
                        ==========  ==========  ==========  ==========

 Restructured loans
  performing under
  their restructured
  terms                 $   55,161  $   55,031  $   15,514  $   23,635
                        ==========  ==========  ==========  ==========

 Loans 30 - 89 days
  past due and on
  accrual               $   21,243  $   34,038  $   18,587  $   61,124
                        ==========  ==========  ==========  ==========
 Total delinquent
  loans (including
  loans on
  non-accrual)          $  264,531  $  259,107  $  137,953  $  248,469
                        ==========  ==========  ==========  ==========

 Total delinquent
  loans / Total
  loans outstanding          6.79%       6.62%       3.45%       6.27%

 GEOGRAPHIC CONCENTRATION OF LOANS AT
  September 30, 2009

            Washington    Oregon      Idaho       Other        Total
            ----------  ----------  ----------  ----------  ----------
 Commercial
  real
  estate
  Owner
   occupied $  380,170  $   59,793  $   41,735  $       --  $  481,698
  Invest-
   ment
   proper-
   ties        423,431     107,090      44,243      10,442     585,206
 Multi-
  family
  real
  estate       127,882      12,823       8,800       3,327     152,832
 Commercial
  construc-
  tion          62,827      13,390       7,720          --      83,937
 Multi-
  family
  construc-
  tion          33,837      28,777          --          --      62,614
 One- to
  four-
  family
  construc-
  tion         133,319     129,552      14,548          --     277,419
 Land and
  land
  develop-
  ment
  Resi-
   dential     170,345     132,624      43,339          --     346,308
  Commercial    30,400      12,127       4,655          --      47,182
 Commercial
  business     483,451      94,828      74,621      25,287     678,187
 Agri-
  cultural
  business
  including
  secured
  by
  farmland     105,119      55,488      64,963          33     225,603
 One- to
  four-
  family
  real
  estate       470,912     169,564      33,205       3,247     676,928
 Consumer      196,305      64,056      17,418         501     278,280
            ----------  ----------  ----------  ----------  ----------

  Total
   loans
   outstand-
   ing      $2,617,998  $  880,112  $  355,247  $   42,837  $3,896,194
            ==========  ==========  ==========  ==========  ==========

  Percent
   of
   total
   loans         67.2%       22.6%        9.1%        1.1%      100.0%

 DETAIL OF LAND AND LAND DEVELOPMENT LOANS AT
   September 30, 2009

            Washington    Oregon       Idaho       Other       Total
            ----------  ----------  ----------  ----------  ----------
 Residential
  Acqui-
   sition &
   develop-
   ment     $   93,883  $   91,781  $   20,236  $       --  $  205,900
  Improved
   lots         53,187      33,431       2,754          --      89,372
  Unimproved
   land         23,275       7,412      20,349          --      51,036
            ----------  ----------  ----------  ----------  ----------

  Total
   resi-
   dential
   land and
   develop-
   ment     $  170,345  $  132,624  $   43,339  $       --  $  346,308
            ==========  ==========  ==========  ==========  ==========
 Commercial
   & indus-
   trial

  Acqui-
   sition &
   develop-
   ment     $    8,975  $       --  $      200  $       --  $    9,175
  Improved
   land          9,906      10,643          --          --      20,549
  Unimproved
   land         11,519       1,484       4,455          --      17,458
            ----------  ----------  ----------  ----------  ----------

  Total
   commer-
   cial
   land and
   develop-
   ment     $   30,400  $   12,127  $    4,655  $       --  $   47,182
            ==========  ==========  ==========  ==========  ==========

 BANR - Third Quarter 2009 Results
 ADDITIONAL FINANCIAL INFORMATION
 (dollars in thousands)

                             Quarters Ended        Nine Months Ended
                     ----------------------------  ------------------
                      Sep 30,   Jun 30,   Sep 30,  Sep 30,    Sep 30,
                       2009      2009      2008      2009      2008
                     --------  --------  --------  --------  --------
 CHANGE IN THE
  ALLOWANCE FOR
  LOAN LOSSES

 Balance, beginning
  of period          $ 90,694  $ 79,724  $ 58,570  $ 75,197  $ 45,827

 Provision             25,000    45,000     8,000    92,000    29,500

 Recoveries of loans
  previously
  charged off:
   Commercial real
    estate                 --        --     1,530        --     1,530
   Multifamily real
    estate                 --        --        --        --        --
   Construction
    and land              299       266        39       617        48
   One- to
    four-family
    real estate            21        89         4       112        44
   Commercial
    business              120       249       130       439       390
   Agricultural
    business,
    including
    secured by
    farmland                6        22       610        28       618
   Consumer               152        32        44       215       126
                     --------  --------  --------  --------  --------
                          598       658     2,357     1,411     2,756
 Loans charged-off:
   Commercial real
    estate                 --        --        --        --        (7)
   Multifamily real
    estate                 --        --        --        --        --
   Construction and
    land              (16,614)  (27,290)   (7,567)  (56,321)  (13,616)
   One- to
    four-family
    real estate          (856)   (1,181)     (220)   (3,128)     (411)
   Commercial
    business           (3,060)   (2,438)   (1,889)   (9,292)   (4,439)
   Agricultural
    business,
    including
    secured by
    farmland               --    (3,186)      (60)   (3,186)      (60)
   Consumer              (579)     (593)     (345)   (1,498)     (704)
                     --------  --------  --------  --------  --------
                      (21,109)  (34,688)  (10,081)  (73,425)  (19,237)
                     --------  --------  --------  --------  --------
   Net charge-offs    (20,511)  (34,030)   (7,724)  (72,014)  (16,481)
                     --------  --------  --------  --------  --------

 Balance, end
  of period          $ 95,183  $ 90,694  $ 58,846  $ 95,183  $ 58,846
                     ========  ========  ========  ========  ========

 Net charge-offs /
  Average loans
  outstanding            0.53%     0.87%     0.19%     1.83%     0.42%

                              Sep 30,  Jun 30,  Sep 30,  Dec 31,
                               2009     2009      2008    2008
                              -------  -------  -------  -------
 ALLOCATION OF
 ALLOWANCE FOR
 LOAN LOSSES

 Specific or allocated
  loss allowance
   Commercial real estate     $ 7,580  $ 5,333  $ 2,789  $ 4,199
   Multifamily real estate         89       83      103       87
   Construction and land       49,829   55,585   21,932   38,253
   One- to four-family
    real estate                 2,304    1,333      511      752
   Commercial business         20,906   19,474   23,085   16,533
   Agricultural business,
    including secured
    by farmland                 1,540    1,323    1,097      530
   Consumer                     1,758    1,540    2,935    1,730
                              -------  -------  -------  -------

     Total allocated           84,006   84,671   52,452   62,084

   Estimated allowance for
    undisbursed commitments     2,202    1,976    1,060    1,108
   Unallocated                  8,975    4,047    5,334   12,005
                              -------  -------  -------  -------

     Total allowance for
      loan losses             $95,183  $90,694  $58,846  $75,197
                              =======  =======  =======  =======

 Allowance for loan losses /
  Total loans outstanding        2.44%    2.32%    1.47%    1.90%

 BANR - Third Quarter 2009 Results
 ADDITIONAL FINANCIAL INFORMATION
 (dollars in thousands)

                             Sep 30,    Jun 30,    Sep 30,    Dec 31,
                               2009      2009       2008       2008
                            ---------  ---------  ---------  ---------

 NON-PERFORMING ASSETS
 Loans on non-accrual status
  Secured by real estate:
   Commercial               $   8,073  $   7,244  $   6,368  $  12,879
   Multifamily                     --         --         --         --
   Construction and land      193,281    180,989     98,108    154,823
   One- to four-family         18,107     15,167      6,583      8,649
  Commercial business          15,070     12,339      6,905      8,617
  Agricultural business,
   including secured by
   farmland                     5,868      7,478        265      1,880
  Consumer                         --        227        427        130
                            ---------  ---------  ---------  ---------
                              240,399    223,444    118,656    186,978

 Loans more than 90 days
  delinquent, still on
  accrual Secured by
  real estate:
   Commercial                      --         --         --         --
   Multifamily                     --         --         --         --
   Construction and land        2,090        603         --         --
   One- to four-family            690        624        635        124
   Commercial business             --        209         --         --
   Agricultural business,
    including secured by
    farmland                       --         --         --         --
   Consumer                       109        189         75        243
                            ---------  ---------  ---------  ---------

                                2,889      1,625        710        367
                            ---------  ---------  ---------  ---------
 Total non-performing
  loans                       243,288    225,069    119,366    187,345
 Securities on
  non-accrual at fair
  value                         1,236         --         --         --
 Real estate owned (REO)
   / Repossessed assets        53,765     57,197     10,153     21,886
                            ---------  ---------  ---------  ---------

  Total non-performing
   assets                   $ 298,289  $ 282,266  $ 129,519  $ 209,231
                            =========  =========  =========  =========

 Total non-performing
  assets / Total assets         6.23%      6.23%      2.79%      4.56%

 DETAIL & GEOGRAPHIC CONCENTRATION OF
  NON-PERFORMING ASSETS AT
   September 30, 2009

            Washington    Oregon       Idaho       Other       Total
            ----------  ----------  ----------  ----------  ----------

 Secured
  by real
  estate:
  Commer-
   cial     $    7,136  $      787  $      150  $       --  $    8,073
  Multi-
   family           --          --          --          --          --
  Construc-
   tion and
   land
   One- to
    four-
    family
    con-
    struc-
    tion        29,562      29,816       9,186          --      68,564
   Resi-
    dential
    land
    acqui-
    sition
    & devel-
    opment      31,480      36,222      10,097          --      77,799
   Resi-
    dential
    land
    improved
    lots        12,068       6,549       1,423          --      20,040
   Resi-
    dential
    land
    unim-
    proved       9,188         421       2,221          --      11,830
   Commer-
    cial
    land
    acqui-
    sition
    & devel-
    opment          --          --          --          --          --
   Commer-
    cial
    land
    improved        --      10,656          --          --      10,656
   Commer-
    cial
    land
    unim-
    proved       4,382          --       2,100          --       6,482
            ----------  ----------  ----------  ----------  ----------
   Total
    con-
    struc-
    tion
    and
    land        86,680      83,664      25,027          --     195,371
  One- to
   four-
   family        9,750       3,055       4,816       1,176      18,797
 Commercial
  business      13,000         631       1,439          --      15,070
 Agri-
  cultural
  business,
  including
  secured
  by
  farmland          --         253       5,615          --       5,868
 Consumer          109          --          --          --         109
            ----------  ----------  ----------  ----------  ----------
 Total non-
  performing
  loans        116,675      88,390      37,047       1,176     243,288
 Securities
  on non-
  accrual           --          --          --       1,236       1,236
 Real
  estate
  owned
  (REO) and
  reposs-
  essed
  assets        40,312       9,025       4,428          --      53,765
            ----------  ----------  ----------  ----------  ----------
   Total
    non-
    per-
    forming
    assets
    at end
    of the
    period  $  156,987  $   97,415  $   41,475  $    2,412  $  298,289
            ==========  ==========  ==========  ==========  ==========

 BANR - Third Quarter 2009 Results
 ADDITIONAL FINANCIAL INFORMATION
 (dollars in thousands)

 DEPOSITS & OTHER
  BORROWINGS
                       Sep 30,      Jun 30,      Sep 30,      Dec 31,
                        2009         2009         2008         2008
                     ----------   ----------   ----------   ----------
 BREAKDOWN OF
  DEPOSITS

 Non-interest-
  bearing            $  546,956   $  508,284   $  521,927   $  509,105
                     ----------   ----------   ----------   ----------

 Interest-bearing
  checking              329,820      312,024      373,496      378,952
 Regular savings
  accounts              521,663      499,447      519,285      474,885
 Money market
  accounts              454,063      319,622      193,840      284,041
                     ----------   ----------   ----------   ----------

   Interest-bearing
    transaction &
    savings
    accounts          1,305,546    1,131,093    1,086,621    1,137,878
                     ----------   ----------   ----------   ----------

 Interest-bearing
  certificates        2,008,673    2,110,466    2,182,318    2,131,867
                     ----------   ----------   ----------   ----------

   Total deposits    $3,861,175   $3,749,843   $3,790,866   $3,778,850
                     ==========   ==========   ==========   ==========

 INCLUDED IN
  TOTAL DEPOSITS

 Public
  transaction
  accounts           $   44,645   $   48,644   $  100,776   $  117,402
 Public interest-
  bearing
  certificates           98,906      134,213      295,432      221,915
                     ----------   ----------   ----------   ----------

   Total public
    deposits         $  143,551   $  182,857   $  396,208   $  339,317
                     ==========   ==========   ==========   ==========

 Total brokered
  deposits           $  186,087   $  247,514   $  243,723   $  268,458
                     ==========   ==========   ==========   ==========

 INCLUDED IN OTHER
  BORROWINGS
 Customer
  repurchase
  agreements /
  "Sweep accounts"   $  124,795   $  108,277   $  103,496   $  145,230
                     ==========   ==========   ==========   ==========

 GEOGRAPHIC CONCENTRATION OF DEPOSITS AT
  September 30, 2009

                     Washington     Oregon       Idaho        Total
                     ----------   ----------   ----------   ----------

                     $2,998,259   $  599,166   $  263,750   $3,861,175
                     ==========   ==========   ==========   ==========

  REGULATORY CAPITAL RATIO AT                        Minimum for
  September 30, 2009                               Capital Adequacy
                            Actual               or "Well Capitalized"
                     -----------------------   -----------------------
                       Amount       Ratio        Amount       Ratio
                     ----------   ----------   ----------   ----------

 Banner Corporation-
  consolidated
   Total capital to
    risk-weighted
    assets           $  491,587        12.54%  $  313,651         8.00%
   Tier 1 capital to
    risk-weighted
    assets              442,009        11.27%     156,826         4.00%
   Tier 1 leverage
    capital to
    average assets      442,009         9.66%     183,122         4.00%

 Banner Bank
   Total capital to
    risk-weighted
    assets              449,907        12.02%     374,243        10.00%
   Tier 1 capital to
    risk-weighted
    assets              402,549        10.76%     224,546         6.00%
   Tier 1 leverage
    capital to
    average assets      402,549         9.18%     219,310         5.00%

 Islanders Bank
   Total capital to
    risk-weighted
    assets               25,899        12.93%      20,028        10.00%
   Tier 1 capital to
    risk-weighted
    assets               24,259        12.11%      12,017         6.00%
   Tier 1 leverage
    capital to
    average assets       24,259        11.31%      10,727         5.00%

 BANR - Third Quarter 2009 Results
 ADDITIONAL FINANCIAL INFORMATION
 (dollars in thousands)
 (rates / ratios annualized)

                                                         Nine
                      Quarters Ended                 Months  Ended
             ---------------------------------  ----------------------
 OPERATING
 PERFORMANCE
               Sep 30,     Jun 30,    Sep 30,     Sep 30,     Sep 30,
                2009        2009       2008        2009        2008
             ----------  ---------  ----------  ----------  ----------
 Average
  loans      $3,905,763  3,925,196  $4,001,999  $3,924,487  $3,917,155
 Average
  securities
  and
  deposits      461,360    394,244     342,153     419,924     330,474
 Average
  non-
  interest-
  earning
  assets        219,780    199,981     296,572     204,414     334,733
             ----------  ---------  ----------  ----------  ----------
  Total
   average
   assets    $4,586,903  4,519,421  $4,640,724  $4,548,825  $4,582,362
             ==========  =========  ==========  ==========  ==========

 Average
  deposits   $3,821,065  3,679,653  $3,810,718  $3,731,782  $3,712,530
 Average
  borrow-
  ings          377,976    429,708     415,517     408,111     415,453
 Average
  non-
  interest-
  bearing
  lia-
  bilities     (25,527)   (18,421)     25,506     (17,357)     31,967
             ----------  ---------  ----------  ----------  ----------
  Total
   average
   lia-
   bilities   4,173,514  4,090,940   4,251,741   4,122,536   4,159,950

 Total
  average
  stock-
  holders'
  equity        413,389    428,481     388,983     426,289     422,412
             ----------  ---------  ----------  ----------  ----------
  Total
   average
   lia-
   bilities
   and
   equity
             $4,586,903  4,519,421  $4,640,724  $4,548,825  $4,582,362
             ==========  =========  ==========  ==========  ==========

 Interest
  rate
  yield on
  loans            5.71%      5.67%       6.38%       5.72%       6.70%
 Interest
  rate
  yield on
  securities
  and
  deposits         2.92%      3.72%       4.45%       3.52%       4.71%
             ----------  ---------  ----------  ----------  ----------

  Interest
   rate
   yield
   on
   interest-
   earning
   assets         5.41%      5.49%       6.23%       5.51%       6.54%
             ----------  ---------  ----------  ----------  ----------

 Interest
  rate
  expense
  on
  deposits         2.16%      2.36%       2.80%       2.35%       3.04%
 Interest
  rate
  expense
  on
  borrowings       2.52%      2.42%       3.41%       2.38%       3.72%
             ----------  ---------  ----------  ----------  ----------

  Interest
   rate
   expense
   on
   interest-
   bearing
   lia-
   bilities        2.19%      2.37%       2.86%       2.35%       3.11%
             ----------  ---------  ----------  ----------  ----------

 Interest
  rate
  spread           3.22%      3.12%       3.37%       3.16%       3.43%
             ==========  =========  ==========  ==========  ==========

 Net
  interest
  margin           3.30%      3.24%       3.45%       3.27%       3.52%
             ==========  =========  ==========  ==========  ==========

 Other
  operating
  income /
  Average
  assets           1.16%      1.77%       0.17%       1.12%       0.55%

 Other
  operating
  income
  (loss)
  EXCLUDING
  change
  in
  valuation
  of
  financial
  instruments
  carried
  at fair
  value /
  Average
  assets(1)        0.76%      0.79%       0.69%       0.75%       0.68%

 Other
  operating
  expense /
  Average
  assets           3.17%      3.27%       2.91%       3.15%       4.46%

 Other
  operating
  expense
  EXCLUDING
  goodwill
  write-
  off /
  Average
  assets(1)        3.17%      3.27%       2.91%       3.15%       3.00%

 Efficiency
  ratio
  (other
   operating
  expense /
  revenue)        73.54%     67.19%      85.72%      74.36%     116.90%

 Return
  (Loss)
  on
  average
  assets          (0.56%)    (1.47%)     (0.08%)     (0.95%)     (1.44%)

 Return
  (Loss)
  on
  average
  equity          (6.19%)   (15.46%)     (1.01%)    (10.11%)    (15.64%)

 Return
  (Loss)
   on
  average
  tangible
  equity(2)       (6.37%)   (15.93%)     (1.30%)    (10.42%)    (21.82%)

 Average
  equity /
  Average
  assets           9.01%      9.48%       8.38%       9.37%       9.22%

 (1) Earnings information excluding the fair value adjustments and
     goodwill impairment charge (alternately referred to as operating
     income (loss) from core operations and expenses from core
     operations) represent non-GAAP (Generally Accepted Accounting
     Principles) financial measures.

 (2) Average tangible equity excludes goodwill, core deposit and other
     intangibles.

HMN Financial, Inc. (HMNF) Announces Third Quarter Results

Oct. 20, 2009 (Business Wire) — HMN Financial, Inc. (NASDAQ:HMNF):

Third Quarter Highlights

• Net income of $881,000 compared to net loss of $7.1 million in third quarter of 2008
• Diluted earnings per share of $0.12 compared to diluted loss per share of $1.93 in third quarter of 2008
• Provision for loan losses down $12.4 million from third quarter of 2008
• Net interest margin of 3.46%, up 25 basis points from third quarter of 2008
• Nonperforming assets of $77.2 million, down $2.3 million from second quarter of 2009

Year to Date Highlights

• Net loss of $10.9 million compared to net loss of $7.6 million in the first nine months of 2008
• Diluted loss per share of $3.32 compared to diluted loss per share of $2.08 in the first nine months of 2008
• Provision for loan losses up $4.8 million over first nine months of 2008
• Net interest margin of 3.35%, up 14 basis points from first nine months of 2008
• Nonperforming assets of $77.2 million, up $2.4 million in the first nine months of 2009
• Total assets decreased $113 million in first nine months of 2009

HMN Financial, Inc. (HMN or the Company) (NASDAQ:HMNF), the $1.0 billion holding company for Home Federal Savings Bank (the Bank), today reported net income of $881,000 for the third quarter of 2009, a $7.9 million change from a net loss of $7.1 million for the third quarter of 2008. Net income available to common shareholders for the third quarter of 2009 was $443,000, a change of $7.5 million, from a net loss available to common shareholders of $7.1 million for the third quarter of 2008. Diluted earnings per common share for the third quarter of 2009 were $0.12, up $2.05 from the diluted loss per share of $1.93 for the third quarter of 2008. The increase in net income for the third quarter of 2009 is due primarily to a $12.4 million decrease in the loan loss provision between the periods. The provision decreased primarily because of the $12.0 million provision and related charge-off recorded in the third quarter of 2008 due to apparently fraudulent activity on a commercial loan.

President’s Statement

“We are pleased to report positive earnings for the third quarter of 2009” said Bradley Krehbiel, Principal Executive Officer of HMN. “While the economic environment for commercial real estate continues to be challenging, we are encouraged by some recent sales and renewed interest in some of our non-performing real estate. We continue to focus our efforts on reducing non-performing assets, reducing industry loan concentrations, increasing our core retail and commercial deposit relationships and reducing expenses. We believe that, over time, our focus on these areas will be effective in generating improved financial results. In the meantime, Home Federal Savings Bank continues to have adequate available liquidity and its capital position remains above the levels required for it to be considered a well capitalized financial institution by regulatory standards.”

Third Quarter Results

Net Interest Income

Net interest income was $8.6 million for the third quarter of 2009, the same as for the third quarter of 2008. Interest income was $14.3 million for the third quarter of 2009, a decrease of $2.1 million, or 12.5%, from $16.4 million for the same period in 2008. Interest income decreased primarily because of a decrease in the average yields earned on loans and investments. The decreased average yields were the result of the 175 basis point decrease in the prime interest rate between the periods. Decreases in the prime rate, which is the rate that banks charge their prime business customers, generally decrease the rates on adjustable rate consumer and commercial loans in the portfolio and on new loans originated. Interest income was also adversely affected by the increase in non-performing loans between the periods. The average yield earned on interest-earning assets was 5.77% for the third quarter of 2009, a decrease of 37 basis points from the 6.14% average yield for the third quarter of 2008.

Interest expense was $5.7 million for the third quarter of 2009, a decrease of $2.1 million, or 26.5%, compared to $7.8 million for the third quarter of 2008. Interest expense decreased primarily because of the lower interest rates paid on money market accounts and certificates of deposits. The decreased rates were the result of the 175 basis point decrease in the federal funds rate that occurred between the periods and the 225 basis point decrease that occurred in the first nine months of 2008. Decreases in the federal funds rate, which is the rate that banks charge other banks for short term loans, generally have a lagging effect and decrease the rates banks pay for deposits. The lagging effect of deposit rate changes is primarily due to the Bank’s deposits that are in the form of certificates of deposit which do not reprice immediately when the federal funds rate changes. The average interest rate paid on interest bearing liabilities was 2.43% for the third quarter of 2009, a decrease of 69 basis points from the 3.12% average rate paid in the third quarter of 2008. Net interest margin (net interest income divided by average interest earning assets) for the third quarter of 2009 was 3.46%, an increase of 25 basis points, compared to 3.21% for the third quarter of 2008.

Provision for Loan Losses

The provision for loan losses was $3.4 million for the third quarter of 2009, a decrease of $12.4 million, compared to $15.8 million for the third quarter of 2008. The provision decreased primarily because of the $12.0 million provision and related charge-off recorded in the third quarter of 2008 due to apparently fraudulent activity on a commercial loan. The loan loss provision for the third quarter of 2009 includes $3.2 million related to a commercial loan that was charged off during the quarter because the collateral supporting the loan was determined to be inadequate due to the apparently fraudulent activity of the borrower. Total non-performing assets were $77.2 million at September 30, 2009, a decrease of $2.3 million, or 2.8%, from $79.5 million at June 30, 2009. Non-performing loans decreased $1.0 million and foreclosed and repossessed assets decreased $1.3 million during the third quarter. The non-performing loan and foreclosed and repossessed asset activity for the quarter was as follows:

The following table summarizes the amounts and categories of non-performing assets in the Bank’s portfolio and loan delinquency information as of the end of the two most recently completed quarters and December 31, 2008.

(1) Excludes non-accrual loans.

The following table summarizes the number and types of commercial real estate loans (the largest category of non-performing loans) that were non-performing as of the end of the two most recently completed quarters and December 31, 2008.

Non-Interest Income and Expense

Non-interest income was $1.9 million for the third quarter of 2009, a decrease of $156,000, or 7.7%, from $2.0 million for the same period in 2008. Securities gains decreased $479,000 as a result of decreased investment sales. Fees and service charges decreased $129,000 between the periods primarily because of decreased service charges and overdraft fees. Gains on sales of loans increased $435,000 due to an increase in the single-family mortgage loans that were sold. Mortgage servicing fees increased $22,000 because of an increase in the single-family mortgage loans being serviced between the periods as more loans were sold with the servicing rights retained.

Non-interest expense was $6.0 million for the third quarter of 2009, a decrease of $611,000, or 9.2%, from $6.6 million for the same period of 2008. Losses (gains) on real estate owned changed from $0 in the third quarter of 2008 to a gain of $357,000 in the third quarter of 2009 primarily because the gains recognized on the sale of two commercial real estate properties exceeded the loss recognized on a residential development that was written down due to a decrease in the estimated value. Data processing costs decreased $187,000 primarily because of decreases in third party vendor charges for internet and other banking services as a result of the system conversion that occurred in the fourth quarter of 2008. Occupancy expense decreased $161,000 primarily because of a decrease in depreciation expense and non-capitalized software and equipment purchases. Other non-interest expenses decreased $61,000 primarily because the increased FDIC deposit insurance assessments and other real estate expenses in the third quarter of 2009 were less than the litigation settlement expense recorded in the third quarter of 2008. Amortization of mortgage servicing rights decreased $21,000 due to a decrease in the prepayments between the periods of single-family mortgage loans being serviced. Compensation expense increased $170,000 between the periods primarily because of an increase in the number of employees in the mortgage, commercial and computer operations areas of the Bank.

The effect of income taxes changed $5.0 million between the periods from a benefit of $4.8 million in the third quarter of 2008 to an expense of $0.2 million in the third quarter of 2009. The change was due to an increase in taxable income and an effective tax rate that decreased from 40.4% in the third quarter of 2008 to 16.6% in the third quarter of 2009. In the third quarter of 2009, the Company recorded a tax adjustment that reduced income tax expense $264,000. This adjustment was related to an immaterial correction of the previously recorded second quarter income tax expense. Excluding this adjustment, the effective tax rate would have been 41.6% for the third quarter of 2009.

Return on Assets and Equity

Return on average assets for the third quarter of 2009 was 0.34%, compared to (2.54%) for the third quarter of 2008. Return on average equity was 3.52% for the third quarter of 2009, compared to (29.14%) for the same period of 2008. Book value per common share at September 30, 2009 was $18.09, compared to $20.77 at September 30, 2008.

Nine Month Period Results

Net Income (Loss)

The net loss was $10.9 million for the nine-month period ended September 30, 2009, an increased loss of $3.3 million, from the $7.6 million loss for the nine month period ended September 30, 2008. The net loss available to common shareholders was $12.3 million for the nine month period ended September 30, 2009, an increased loss of $4.7 million, from the net loss available to common shareholders of $7.6 million for the same period of 2008. Diluted loss per common share for the nine month period in 2009 was $3.32, an increased loss of $1.24, from the diluted loss per share of $2.08 for the same period in 2008. The increase in net loss for the first nine months of 2009 is primarily due to a $4.8 million increase in the loan loss provision between the periods as a result of increased commercial loan charge offs.

Net Interest Income

Net interest income was $25.9 million for the first nine months of 2009, an increase of $0.5 million, or 1.7%, from $25.4 million for the same period in 2008. Interest income was $44.5 million for the nine-month period ended September 30, 2009, a decrease of $5.9 million, or 11.8%, from $50.4 million for the same period in 2008. Interest income decreased primarily because of a decrease in the average yields earned on loans and investments. The decreased average yields were the result of the 175 basis point decrease in the prime interest rate between the periods. Decreases in the prime rate generally decrease the rates on adjustable rate consumer and commercial loans in the portfolio and on new loans originated. Interest income was also adversely affected by the increase in non-performing loans between the periods. The average yield earned on interest-earning assets was 5.75% for the first nine months of 2009, a decrease of 62 basis points from the 6.37% average yield for the same period of 2008.

Interest expense was $18.6 million for the nine-month period ended September 30, 2009, a decrease of $6.4 million, or 25.5%, from $25.0 million for the same period in 2008. Interest expense decreased primarily because of the lower interest rates paid on money market accounts and certificates of deposits. The decreased rates were the result of the 175 basis point decrease in the federal funds rate that occurred between the periods and the 225 basis point decrease that occurred in the first nine months of 2008. Decreases in the federal funds rate generally have a lagging effect and decrease the rates banks pay for deposits. The lagging effect of deposit rate changes is because many of the Bank’s deposits are in the form of certificates of deposit which do not reprice immediately when the federal funds rate changes. The average interest rate paid on interest bearing liabilities was 2.55% for the first nine months of 2009, a decrease of 83 basis points from the 3.38% average rate paid in the same period of 2008. Net interest margin (net interest income divided by average interest earning assets) for the first nine months of 2009 was 3.35%, an increase of 14 basis points, compared to 3.21% for the first nine months of 2008.

Provision for Loan Losses

The provision for loan losses was $23.3 million for the first nine-months of 2009, an increase of $4.8 million, from $18.5 million for the same nine-month period in 2008. The provision for loan losses increased primarily as the result of an increase in the loan loss allowance recorded for specific commercial real estate loans due to decreases in the estimated value of the underlying collateral supporting the loans. An additional provision for loan losses of $2.9 million was recorded on two non-performing residential development loans and a $3.0 million provision for loan losses was established on two alternative fuel plants based on updated appraised values during the first nine months of 2009. An analysis of the loan portfolio during the first nine months of the year resulted in a $2.7 million increase in the loan loss provision for other risk rated loans. The loan loss provision for the first nine months of 2009 also includes a $6.9 million increase related to two unrelated commercial loans that were charged off after it was determined that the collateral supporting the loans was inadequate due to the apparently fraudulent actions of the respective borrowers. The loan loss provision for the first nine months of 2008 included a $12.0 million provision and related charge off due to apparently fraudulent activity on a commercial loan. Total non-performing assets were $77.2 million at September 30, 2009, an increase of $2.4 million, or 3.3%, from $74.8 million at December 31, 2008. Non-performing loans decreased $2.5 million and foreclosed and repossessed assets increased $4.9 million during the nine month period. The non-performing loan and foreclosed and repossessed asset activity for the first nine months of 2009 was as follows:

A rollforward of the Company’s allowance for loan losses for the nine-month periods ended September 30, 2009 and 2008 follows:

Non-Interest Income and Expense

Non-interest income was $6.0 million for the first nine months of 2009, an increase of $529,000, or 9.7%, from $5.5 million for the same period in 2008. Gains on sales of loans increased $1.4 million between the periods primarily because of an increase in sales of single family mortgages between the periods. Mortgage servicing fees increased $48,000 between the periods due to an increase in the single-family mortgage loans being serviced. Security gains decreased $474,000 due to decreased investment sales. Other income decreased $418,000 primarily as a result of decreased commissions on the sale of uninsured investment products. Fees and service charges decreased $43,000 between the periods primarily because of decreased service charges and overdraft fees.

Non-interest expense was $25.1 million for the first nine months of 2009, an increase of $2.2 million, or 9.7%, from $22.9 million for the same period in 2008. Losses on real estate owned increased $3.8 million between the periods primarily because the losses recognized on three residential developments caused by a decrease in their estimated value exceeded the gains recognized on the sale of two commercial real estate properties. Other non-interest expenses increased $2.1 million primarily because of a $1.0 million increase in Federal Deposit Insurance Corporation (FDIC) insurance premiums, $557,000 increase in costs related to other real estate, $461,000 increase for interest expense on a pending state tax assessment as a result of an unfavorable tax court ruling and $155,000 increase in legal fees primarily related to the ongoing state tax assessment challenge. Compensation expense increased $907,000 between the periods primarily because of additional staffing in the mortgage, commercial and computer operations areas and costs associated with the employment agreement of a former executive officer. These increases were offset by a $3.8 million decrease in goodwill impairment charges between the periods. Data processing costs decreased $435,000 primarily because of decreases in third party vendor charges for internet and other banking services as a result of the system conversion that occurred in the fourth quarter of 2008. Occupancy expense decreased $353,000 primarily because of a decrease in depreciation expense and non-capitalized software and equipment purchases. Amortization of mortgage servicing rights decreased $25,000 due to a decrease in the prepayments between the periods of single-family mortgage loans being serviced.

The effect of income taxes changed $2.6 million between the periods from a benefit of $2.9 million for the nine month period ended September 30, 2008 to a benefit of $5.5 million for the nine month period ended September 30, 2009. The change was due to an increase in taxable loss and an effective tax rate that decreased from 42.9% in the first nine months of 2008, excluding the goodwill impairment charge, to 33.5% for the first nine months of 2009. The goodwill impairment charge recorded in the first nine months of 2008 was not tax deductible and therefore no tax benefit was realized related to the impairment charge. In the first nine months of 2009, the Company recorded additional income tax expense of $1.0 million, which was a reduction of the overall tax benefit, as a result of an unfavorable tax court ruling related to the tax treatment of the inter-company dividends paid to the Bank by a former subsidiary in prior tax years. Excluding this adjustment, the effective tax rate would have been 39.6% for the first nine months of 2009.

Return on Assets and Equity

Return on average assets for the nine-month period ended September 30, 2009 was (1.34%), compared to (0.92%) for the same period in 2008. Return on average equity was (13.79%) for the nine-month period ended September 30, 2009, compared to (10.36%) for the same period in 2008.

General Information

HMN Financial, Inc. and Home Federal Savings Bank are headquartered in Rochester, Minnesota. The Bank operates ten full service offices in southern Minnesota located in Albert Lea, Austin, Eagan, LaCrescent, Rochester, Spring Valley and Winona and two full service offices in Iowa located in Marshalltown and Toledo. Home Federal Private Banking operates branches in Edina and Rochester, Minnesota. Home Federal Savings Bank also operates loan origination offices located in Rochester, Minnesota and Sartell, Minnesota.

Safe Harbor Statement

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding adequate available liquidity, reducing non-performing assets, reducing industry loan concentrations, increasing core retail and commercial deposit relationships, reducing expenses and generating improved financial results. These statements are often identified by such forward-looking terminology as “expect,” “intent,” “look,” “believe,” “anticipate,” “estimate,” “project,” “seek,” “may,” “will,” “would,” “could,” “should,” “trend,” “target,” and “goal” or similar statements or variations of such terms. A number of factors could cause actual results to differ materially from the Company’s assumptions and expectations. These include but are not limited to the adequacy and marketability of real estate securing loans to borrowers, possible legislative and regulatory changes and adverse economic, business and competitive developments such as shrinking interest margins; reduced collateral values; deposit outflows; reduced demand for financial services and loan products; changes in accounting policies and guidelines, or monetary and fiscal policies of the federal government or tax laws; international economic developments, changes in credit or other risks posed by the Company’s loan and investment portfolios; technological, computer-related or operational difficulties; adverse changes in securities markets; results of litigation; the Company’s use of the proceeds from the sale of securities to the U.S. Treasury Department or other significant uncertainties. Additional factors that may cause actual results to differ from the Company’s assumptions and expectations include those set forth in the Company’s most recent filings on Form 10-K and Form 10-Q with the Securities and Exchange Commission. All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements.