// Once finished with the bitmap objects, we deallocate them.
originalBMP.Dispose();
bannerBMP.Dispose();
oGraphics.Dispose();
This is a programming style that you'll regret sooner or later. Sooner is knocking on the door, you forgot one. You are not disposing newBitmap. Which keeps a lock on the file until the garbage collector runs. If it doesn't run then the second time you try to save to the same file you'll get the klaboom. GDI+ exceptions are too miserable to give a good diagnostic so serious head-scratching ensues. Beyond the thousands of googlable posts that mention this mistake.
Always favor using the using statement. Which never forgets to dispose an object, even if the code throws an exception.
using (var newBitmap = new Bitmap(thumbBMP)) {
newBitmap.Save("~/image/thumbs/" + "t" + objPropBannerImage.ImageId, ImageFormat.Jpeg);
}
Albeit that it is very unclear why you even create a new bitmap, saving thumbBMP should already be good enough. Anyhoo, give the rest of your disposable objects the same using love.