Banner Corporation Increases Quarterly Cash Dividend to $0.17 Per Share.

WALLA WALLA, Wash. -- Banner Corporation (Nasdaq:BANR), the parent of Banner Bank, today announced its Board of Directors has declared a quarterly cash dividend of $0.17 per share, an increase of 6% from the regular quarterly dividend paid in the prior quarter. The dividend will be paid on January 10, 2005, to shareholders of record as of December 31, 2004.

"We are delighted to be able to raise the dividend payment to our shareholders once again," said D. Michael Jones, President and CEO. "This increase marks nine consecutive years of cash dividends for Banner Corporation."

In October, Banner reported third quarter net income increased 24% compared to a year earlier, to $5.2 million, or $0.44 per diluted share, on revenues of $29.9 million for the quarter, up 18% from $25.2 million in the third quarter of 2003. Non-performing assets declined 25% from the same quarter last year. Assets grew 13% to $2.8 billion, deposits increased 12% to $1.9 billion, and loans grew 17% to $1.95 billion during the twelve months ending September 30, 2004.

Banner Corporation is the parent of Banner Bank, a commercial bank that operates a total of 49 branch offices and twelve loan offices in 23 counties 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.

Statements concerning future performance, developments or events, concerning expectations for growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated objectives. These factors include but are not limited to: BANR's ability to maintain current dividend payments or increase dividend payouts to shareholders. Banner undertakes no responsibility to update or revise any forward-looking statements.