Banner Corporation Signs Definitive Agreement to Acquire Oregon Business Bank.

Business Editors

WALLA WALLA, Wash.--(BUSINESS WIRE)--Sept. 26, 2001

Banner Corporation (NASDAQ:BANR), the parent company of Banner Bank, today announced it is increasing its presence in the highly populated and growing I-5 corridor in Oregon.

Banner recently signed a definitive agreement to acquire Oregon Business Bank of Lake Oswego, Oregon, in an all cash transaction valued at approximately $10.0 million. The acquisition, which has been approved by the Board of Directors of each company, is subject to, among other contingencies, approval by regulators and Oregon Business Bank shareholders. The transaction is expected to close by the end of the fourth quarter of 2001.

"Oregon Business Bank was the fastest growing financial institution in Oregon in 2000 and is located just blocks from our construction and mortgage lending subsidiary, Community Financial Corporation (CFC)," said Gary Sirmon, President and Chief Executive Officer of Banner Corporation. "The officers, employees and board members of Oregon Business Bank have created a dynamic and expanding community bank with a growing reputation for quality service in its market area. The addition of Oregon Business Bank to our franchise broadens our presence in the important Portland market and allows us to serve our growing customer base with a full range of products. We believe that a combination of Oregon Business Bank and Banner Bank will be a positive step for each bank's shareholders, customers and employees."

"Banner practices the same philosophy of providing outstanding customer service with competitive products and quality employees that has made Oregon Business Bank so successful. We are delighted to be joining Banner," said James W. Shires, President of Oregon Business Bank. "By becoming a division of Banner Bank, Oregon Business Bank will be able to offer additional deposit products, larger lending limits, improved technology and administrative efficiencies, all while retaining our focus on customer service and local decision making. Partnering with Banner Bank provides us with the resources for further growth and diversification in the Portland market."

Opened in October 1999, Oregon Business Bank is a commercial community bank with $41.5 million in assets, $32.5 million in gross loans, $35.8 million in deposits and shareholders' equity of $4.7 million at August 31, 2001. The Bank specializes in meeting the financial needs of small and medium sized businesses as well as professionals. Oregon Business Bank is a state-chartered institution that is not publicly traded. The purchase price represents approximately 212% of book value at August 31, 2001.

"Given Oregon Business Bank's rapid growth and experienced staff, complemented by CFC's current customer base, we expect this acquisition to be immediately accretive to net income and ROE," said Sirmon. "Banner Bank has been considering a full-service banking facility in the Lake Oswego area since we opened CFC. When this opportunity arose, we viewed it as a way to meet our objective in a timely and efficient manner."

Banner Corporation is the parent of Banner Bank, a Washington state chartered commercial bank. It operates a total of 38 branch offices and six loan offices in 18 counties in Washington, Oregon and Idaho. Banner serves the rapidly growing 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.banrbank.com.

Statements concerning future performance, developments or events, expectations for earnings, growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that are beyond the Company's control and might cause actual results to differ materially from stated objectives. These factors include but are not limited to: competition in the financial services market for both deposits and loans as well as regional and general economic conditions; and Banner's ability to successfully complete consolidation and conversion activities, incorporate acquisitions into its operations, retain key employees, increase its customer base, achieve cost savings and successfully generate commercial, consumer and real estate loans. Banner undertakes no responsibility to update or revise any forward-looking statements.