s-30825.htm
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As
filed with the Securities and Exchange Commission on August 26,
2008
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Registration
Statement No. 333-______
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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FORM
S-3
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REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BANNER
CORPORATION
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(Exact
name of registrant as specified in its charter)
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Washington
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91-1691604
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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10
S. First Avenue
Walla
Walla, Washington 99362
(509)
527-3636
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(Address,
including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
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Albert
H. Marshall
Vice
President
Banner
Corporation
10
S. First Avenue
Walla
Walla, Washington 99362
(509)
526-8894
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(Name,
address, including zip code, and telephone number, including area code, of
agent for service)
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Copies
of communications to:
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John
F. Breyer, Jr., Esquire
Breyer
& Associates PC
8180
Greensboro Drive, Suite 785
McLean,
Virginia 22102
(703)
883-1100
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Approximate date of commencement of
proposed sale to the public: From time to time after this registration
statement becomes effective, subject to market conditions and other
factors.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box:
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering:
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering:
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box.
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated
filer [ ] Accelerated
Filer [X]
Non-accelerated
filer [ ] Smaller
reporting company [ ]
(Do not check if a smaller reporting
company)
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CALCULATION
OF REGISTRATION FEE
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Title
of each class of
Securities
to be registered
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Amount
to be
registered
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Proposed
maximum
offering
price per unit
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Proposed
maximum
aggregate
offering price
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Amount
of
registration
fee
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Common
stock,
$.01
par value per share
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3,000,000(1)
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$10.28(2)
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$30,840,000
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$1,212
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| (1) |
Together with an
indeterminate number of additional shares which may be necessary to adjust
the number of shares reserved for issuance pursuant to the Banner
Corporation Dividend Reinvestment and Direct Stock Purchase and Sale Plan
as a result of a stock split, stock dividend or similar adjustment of the
outstanding common stock of the Registrant. |
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Estimated in
accordance with Rule 457(c), calculated on the basis of $10.28 per share,
the average of the high and low share prices of the Registrant’s common
stock on the Nasdaq Global Select Market on August 21,
2008. |
Pursuant
to Rule 429, the prospectus included in this Registration Statement is combined
with the prospectus relating to shares of common stock registered on Form S-3
Registration Statement No. 333-147946 previously filed by the registrant. Upon
its effectiveness, this Registration Statement will constitute Post-Effective
Amendment No. 1 to such previously filed registration statement.
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
PROSPECTUS
BANNER
CORPORATION
DIVIDEND
REINVESTMENT AND DIRECT STOCK PURCHASE AND SALE PLAN
3,000,000
Shares of Common Stock, Par Value $.01 Per Share
We are
offering you the opportunity to participate in our Dividend Reinvestment and
Direct Stock Purchase and Sale Plan. This prospectus describes and
constitutes the Plan. Please read this prospectus carefully and keep
it for future reference. Participation in this Plan is entirely
voluntary and you can discontinue your participation at any time. Details of the
Plan, including information on Computershare Trust Company, N.A., the Plan
Administrator, are provided in this prospectus.
PLAN
HIGHLIGHTS
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If
you are an existing shareholder, you may purchase additional shares of our
common stock by reinvesting all or a portion of the cash dividends paid on
your shares of common stock and by making optional cash payments of not
less than $50 and up to a maximum of $40,000 per month. We may
permit optional cash payments in excess of this maximum in some
instances.
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You
may participate in the Plan regardless of whether you hold your shares
directly, or they are held by a bank, broker or other
nominee.
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If
you are a new investor, you may join the Plan by making an initial
investment of not less than $250 and up to a maximum of
$40,000. We may permit initial investments in excess of this
maximum in some instances.
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As
a participant in the Plan, you may authorize electronic deductions from
your bank account for optional cash
payments.
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We
may offer discounts ranging from 0% to 5% on dividend reinvestments and
optional and initial cash investments. At our discretion, the
discount may be offered at variable rates on one, all or a combination of
the sources of investments, or not at
all.
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Our
shares of common stock are quoted on the Nasdaq Global Select Market under the
symbol BANR. The last reported sales price of our common stock on
August 21, 2008 was $10.28. Our executive offices are located at 10
S. First Avenue, Walla Walla, Washington 99362. You can also contact
us by telephone at 1-509-527-3636, or through our website at
www.bannerbank.com. The information on our website is not part of
this prospectus. Unless specifically noted otherwise in this
prospectus, all references to “we,” “us,” “our,” or the “Company” refer to
Banner Corporation and its subsidiaries.
Investing
in our shares of common stock involves risks. You should consider
certain risk factors before enrolling in the Plan. See "Risk Factors"
beginning on page 2 of this prospectus and the documents incorporated herein by
reference for more information. We suggest you retain this prospectus
for future reference.
Shares
of our common stock are not savings or deposit accounts or other obligations of
any of our bank or non-bank subsidiaries, and they are not insured by the
Federal Deposit Insurance Corporation, the Deposit Insurance Fund or any other
governmental agency.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date
of this prospectus is August 26, 2008.
TABLE
OF CONTENTS
Page
You
should rely only on the information contained in this prospectus, any prospectus
supplement and the documents we have incorporated by reference. We
will disclose any material changes in our affairs in an amendment to this
prospectus, a prospectus supplement or a future filing with the Securities and
Exchange Commission incorporated by reference in this prospectus. No
person has been authorized to give any information or to make any
representations other than those contained or incorporated in this prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized. This prospectus does not constitute
an offer to sell or a solicitation of an offer to sell or to buy any securities
other than those to which it relates, or an offer or solicitation with respect
to those securities to which it relates to any persons in any jurisdiction where
such offer or solicitation would be unlawful. The delivery of this
prospectus at any time does not imply that the information contained or
incorporated herein at its date is correct as of any time subsequent to its
date.
FORWARD-LOOKING
STATEMENTS
This
prospectus and the documents incorporated herein by reference contain certain
“forward-looking statements” concerning the future operations of Banner
Corporation. Management desires to take advantage of the “safe
harbor” provisions of the Private Securities Litigation Reform Act of 1995 and
is including this statement for the express purpose of availing Banner
Corporation of the protections of such safe harbor with respect to all
“forward-looking statements” contained herein and in the documents incorporated
by reference. We have used “forward-looking statements” to describe
future plans and strategies, including our expectations of Banner Corporation’s
future financial results. Management’s ability to predict results or
the effect of future plans or strategies is inherently
uncertain. 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
Federal Reserve 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 any anticipated
revenue synergies and cost savings therefrom 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; 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; and other economic, competitive, governmental, regulatory,
and technological factors affecting our operations, pricing, products and
services and the other risks described elsewhere in this prospectus and the
incorporated documents and in our other filings with the Securities and Exchange
Commission or “SEC.”
Some of
these and other factors are discussed in this prospectus under the caption “Risk
Factors” and elsewhere in this prospectus and in the incorporated documents.
Such developments could have a material adverse impact on our financial
condition and our results of operations.
Any
forward-looking statements are based upon management’s beliefs and assumptions
at the time they are made. We undertake no obligation to publicly update or
revise any forward-looking statements included or incorporated by reference in
this prospectus or to update the reasons why actual results could differ from
those contained in such statements, whether as a result of new information,
future events or otherwise. In light of these risks, uncertainties and
assumptions, the forward-looking statements discussed in this prospectus or the
incorporated documents might not occur, and you should not put undue reliance on
any forward-looking statements.
OUR
BUSINESS
Banner
Corporation is a bank holding company incorporated in the State of Washington.
We are primarily engaged in the business of planning, directing and coordinating
the business activities of our wholly owned subsidiaries, Banner Bank and,
subsequent to May 1, 2007, Islanders Bank. Banner Bank is a
Washington-chartered commercial bank that conducts business from its main office
in Walla Walla, Washington and, as of June 30, 2008, its 83 branch offices and
12 loan production offices located in 29 counties in Washington, Oregon and
Idaho. Islanders Bank is also a Washington-chartered commercial bank
that we acquired in May 2007 and that conducts business from three locations in
San Juan County, Washington. Banner Corporation is subject to
regulation by the Board of Governors of the Federal Reserve System (“Federal
Reserve”). Banner Bank and Islanders Bank are subject to regulation
by the Washington State Department of Financial Institutions, Division of Banks
and the Federal Insurance Deposit Corporation (“FDIC”). The primary
source of liquidity for us is dividend payments from Banner Bank and to a
substantially lesser extent dividend payments from Islanders
Bank. Banner Bank and Islanders Bank are subject to certain legal
restrictions on their ability to pay dividends or make loans or advances to
us. For information about these restrictions, please see “Risk
Factors – There are regulatory and contractual limitations that may limit or
prevent us from paying dividends on the common stock and we may limit or
eliminate our dividends to shareholders” and “Item 1. Business-Regulation” and
note 21 to our consolidated financial statements contained in our Annual Report
on Form 10-K for the year ended December 31, 2007, which has been filed with the
SEC and is available as described under “Where You Can Find More
Information.”
As of
June 30, 2008, we had total consolidated assets of $4.6 billion, total loans of
$3.9 billion, total deposits of $3.8 billion and total stockholders’ equity of
$381 million.
Banner
Bank is a regional bank which offers a wide variety of commercial banking
services and financial products to individuals, businesses and public sector
entities in its primary market areas. Islanders Bank is a community
bank which offers similar banking services to individuals, businesses and public
entities located in the San Juan Islands in the State of
Washington. Our primary business is that of a traditional financial
institution, accepting deposits and originating loans in locations surrounding
our offices in portions of Washington, Oregon and Idaho. Banner Bank
is also an active participant in the secondary residential mortgage market,
engaging in mortgage banking operations largely through the origination and sale
of one- to four-family residential loans. Lending activities include
commercial business and commercial real estate loans, agriculture business
loans, construction and land development loans, one- to four-family residential
loans and consumer loans. A portion of Banner Bank’s construction and
mortgage lending activities are conducted through its subsidiary, Community
Financial Corporation, which is located in the Lake Oswego area of Portland,
Oregon.
Our
common stock is traded on the Nasdaq Global Select Market under the ticker
symbol “BANR.” Our principal executive offices are located at 10
South First Avenue, Walla Walla, Washington 99362-0265. Our telephone
number is (509) 527-3636.
For
additional information about our business, see our Annual Report on Form 10-K
for the year ended December 31, 2007, our Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2008 and June 30, 2008 and the other documents we file
with the Securities and Exchange Commission, which are incorporated into this
Registration Statement by reference. See “Where You Can Find More
Information” on page 25.
RISK
FACTORS
An
investment in our common stock is subject to certain risks. You should carefully
review the following risk factors and other information contained in this
prospectus and the documents incorporated by reference, before deciding whether
this investment is suited to your particular circumstances. The risks
and uncertainties not presently known to us or that we currently deem immaterial
also may impair our business operations. If any of the following risks actually
occur, our business, results of operations and financial condition could suffer.
In that event, the trading price of our common stock could decline, and you may
lose all or part of your investment in our common stock. The risks discussed
below also include forward-looking statements, and our actual results may differ
substantially from those discussed in these forward-looking
statements. In addition, you should consult your own financial and
legal advisors before making an investment.
Our
business is subject to general economic risks that could adversely impact our
results of operations and financial condition.
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Changes
in economic conditions, particularly a further economic slowdown in
Washington, Oregon or Idaho, could hurt our
business.
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Our
business is directly affected by market conditions, trends in industry and
finance, legislative and regulatory changes, and changes in governmental
monetary and fiscal policies and inflation, all of which are beyond our
control. In 2007, the housing and real estate sectors experienced an
economic slowdown that has continued. Further deterioration in economic
conditions, in particular within the Washington, Oregon or Idaho real estate
markets, could result in the following consequences, among others, any of which
could hurt our business materially:
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loan
delinquencies may increase;
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assets and foreclosures may
increase;
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demand
for our products and services may decline;
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collateral
for loans made by us, especially real estate, may decline in value, in
turn reducing a customer’s borrowing power and reducing the value of
assets and collateral securing our
loans.
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Downturns
in the Washington, Oregon or Idaho real estate markets could hurt our
business.
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Our
business activities and credit exposure are primarily concentrated in parts of
Washington, Oregon and Idaho. While we do not have any sub-prime
loans, our construction and land loan portfolios, our commercial and multifamily
loan portfolios and certain of our other loans have been affected by the
downturn in the residential real estate market. Substantially all of
our loan portfolio consisted of loans secured by real estate located in
Washington, Oregon or Idaho. If real estate values continue to
decline, especially in Washington, Oregon or Idaho, the collateral for our loans
will provide less security. As a result, our ability to recover on
defaulted loans by selling the underlying real estate will be diminished, and we
would be more likely to suffer losses on defaulted loans. The events
and conditions described in this risk factor could therefore have a material
adverse effect on our business, results of operations and financial
condition.
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We
may suffer losses in our loan portfolio despite our underwriting
practices.
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We seek
to mitigate the risks inherent in our loan portfolio by adhering to specific
underwriting practices. Although we believe that our underwriting
criteria are appropriate for the various kinds of loans we make, we may incur
losses on loans that meet our underwriting criteria, and these losses may exceed
the amounts set aside as reserves in our allowance for loan losses.
Recent
negative developments in the financial industry and credit markets may continue
to adversely impact our financial condition and results of
operations.
Negative
developments in the sub-prime mortgage market and the securitization markets for
such loans, together with substantially increased oil prices and other factors,
have resulted in uncertainty in the financial markets in general and a related
general economic downturn. Many lending institutions, including us,
have experienced substantial declines in the performance of their loans,
including construction and land loans, multifamily loans, commercial loans and
consumer loans. Moreover, competition among depository institutions
for deposits and quality loans has increased significantly. In addition, the
values of real estate collateral supporting many construction and land,
commercial and multifamily and other commercial loans and home mortgages have
declined
and may
continue to decline. Bank and bank holding company stock prices have been
negatively affected, as has the ability of banks and bank holding companies to
raise capital or borrow in the debt markets compared to recent years. These
conditions may have a material adverse effect on our financial condition and
results of operations. In addition, as a result of the foregoing
factors, there is a potential for new federal or state laws and regulations
regarding lending and funding practices and liquidity standards, and bank
regulatory agencies are expected to be very aggressive in responding to concerns
and trends identified in examinations, including the expected issuance of formal
enforcement orders. Negative developments in the financial industry
and the impact of new legislation in response to those developments could
restrict our business operations, including our ability to originate or sell
loans, and adversely impact our results of operations and financial
condition.
We
may experience future goodwill impairment.
If our
estimates of the fair value of our goodwill change as a result of changes in our
business or other factors, we may determine that an impairment charge is
necessary. Estimates of fair value are based on a complex model using, among
other things, cash flows and company comparisons. If our estimates of
future cash flows or other components of our fair value calculations are
inaccurate, the fair value of goodwill reflected in our financial statements
could be inaccurate and we could be required to take asset impairment charges,
which could have a material adverse effect on our results of operations and
financial condition.
If
our allowance for loan losses is not sufficient to cover actual loan losses or
if we are required to increase our provision for loan losses, our results of
operations and financial condition could be materially adversely
affected.
We make
various assumptions and judgments about the collectibility of our loan
portfolio, including the creditworthiness of our borrowers and the value of the
real estate and other assets serving as collateral for the repayment of many of
our loans. In determining the amount of the allowance for loan
losses, we review our loans and the loss and delinquency experience, and
evaluate economic conditions. If our assumptions are incorrect, the
allowance for loan losses may not be sufficient to cover losses inherent in our
loan portfolio, resulting in the need for additions to our allowance through an
increase in the provision for loan losses. Material additions to the
allowance or increases in our provision for loan losses could have a material
adverse effect on our financial condition and results of
operations.
In
addition, bank regulators periodically review our allowance for loan losses and
may require us to increase our provision for loan losses or recognize further
loan charge-offs. Any increase in our allowance for loan losses or
loan charge-offs as required by these regulatory authorities may have a material
adverse effect on our financial condition and results of
operations.
Furthermore,
we may elect to increase our provision for loan losses in light of our
assessment of economic conditions and other factors from time to
time. For example, as described below under “We may be required to
make further increases in our provisions for loan losses and to charge off
additional loans in the future, which could adversely affect our results of
operations,” we increased our provision for loan losses during the first half of
2008, which adversely affected our results of operations. We may
elect to make further increases in our provision for loan losses in the future,
particularly if economic conditions continue to deteriorate, which also could
have a material adverse effect on our financial condition and results of
operations.
We
may be required to make further increases in our provisions for loan losses and
to charge off additional loans in the future, which could adversely affect our
results of operations.
As noted
in our June 30, 2008 Quarterly Report on Form 10-Q, which is incorporated by
reference herein and may be obtained as described under “Where You Can Find More
Information,” we are experiencing increasing loan delinquencies and credit
losses. With the exception of residential construction and land
development loans, non-performing loans and assets generally reflect unique
operating difficulties for individual borrowers rather than weakness in the
overall economy of the Pacific Northwest. However, slower sales and
excess inventory in certain housing markets have been the primary cause of the
increase in delinquencies for residential construction and land development
loans, which represent approximately 81% of our non-performing assets. Further,
our portfolio is concentrated in construction and land loans and commercial and
multi-family loans, all of which have a higher risk of loss than residential
mortgage loans. See “Our loan portfolio is concentrated in loans with
a higher risk of loss” below. If current trends in the housing and
real estate markets continue, we expect that we will continue to experience
higher than normal delinquencies and credit losses. Moreover, if a
recession occurs we expect that it would negatively impact economic conditions
in our market areas and that we could experience significantly higher
delinquencies
and credit losses. As a result, we may be required to make further
increases in our provision for loan losses and to charge off additional loans in
the future, which could adversely affect our results of operations.
Liquidity
risk could impair our ability to fund operations and jeopardize our financial
condition.
Liquidity
is essential to our business. An inability to raise funds through deposits,
borrowings, the sale of loans and other sources could have a substantial
negative effect on our liquidity. Our access to funding sources in amounts
adequate to finance our activities or on terms which are acceptable to us could
be impaired by factors that affect us specifically or the financial services
industry or economy in general. Factors that could detrimentally impact our
access to liquidity sources include a decrease in the level of our business
activity as a result of a downturn in the Washington, Oregon or Idaho markets in
which our loans are concentrated or adverse regulatory action against us. Our
ability to borrow could also be impaired by factors that are not specific to us,
such as a disruption in the financial markets or negative views and expectations
about the prospects for the financial services industry in light of the recent
turmoil faced by banking organizations and the continued deterioration in credit
markets.
The
maturity and repricing characteristics of our assets and liabilities are
mismatched and subject us to interest rate risk which could adversely affect our
results of operations and financial condition.
Our
financial condition and results of operations are influenced significantly by
general economic conditions, including the absolute level of interest rates, as
well as changes in interest rates and the slope of the yield
curve. Our ability to operate profitably is dependent to a large
extent on our net interest income, which is the difference between the interest
received from our interest-earning assets and the interest expense incurred on
our interest-bearing liabilities. Significant changes in market
interest rates or errors or misjudgments in our interest rate risk management
procedures could have a material adverse effect on our results of operations and
financial condition. We currently believe that declining interest
rates will adversely affect our results of operations.
Our
activities, like other financial institutions, inherently involve the assumption
of interest rate risk. Interest rate risk is the risk that changes in
market interest rates will have an adverse impact on our financial condition and
results of operations. Interest rate risk is determined by the
maturity and repricing characteristics of our assets, liabilities and
off-balance-sheet contracts. Interest rate risk is measured by the
variability of financial performance and economic value resulting from changes
in interest rates. Interest rate risk is the primary market risk
affecting our financial performance.
We
believe that the greatest source of interest rate risk to us results from the
mismatch of maturities or repricing intervals for our rate sensitive assets,
liabilities and off-balance-sheet contracts. This mismatch, or “gap,”
is generally characterized by a substantially shorter maturity structure for
interest-bearing liabilities than interest-earning assets, although our
floating-rate assets tend to be more immediately responsive to changes in market
rates than most funding liabilities. Additional interest rate risk
results from mismatched repricing indices and formulae (basis risk and yield
curve risk), and product caps and floors and early repayment or withdrawal
provisions (option risk), which may be contractual or market driven, that are
generally more favorable to customers than to us.
Our
primary monitoring tool for assessing interest rate risk is asset/liability
simulation modeling, which is designed to capture the dynamics of balance sheet,
interest rate and spread movements and to quantify variations in net interest
income and net market value of equity resulting from those movements under
different rate environments. We update and prepare our simulation
modeling at least quarterly for review by senior management and our
directors. Nonetheless, the interest rate sensitivity of our net
interest income and net market value of our equity could vary substantially if
different assumptions were used or if actual experience differs from the
assumptions used and, as a result, our interest rate risk management strategies
may prove to be inadequate.
Our
loan portfolio is concentrated in loans with a higher risk of loss.
We
originate construction and land loans, commercial and multifamily mortgage
loans, commercial business loans, consumer loans, agricultural mortgage loans
and agricultural loans as well as residential mortgage loans primarily within
our market areas. Generally, these types of loans, other than the
residential mortgage loans, have a higher risk of loss than the residential
mortgage loans. These loans have greater credit risk than residential
real estate loans for a number of reasons, including those described
below:
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Construction and Land
Loans. This type of lending contains the inherent
difficulty in estimating both a property’s value at completion of the
project and the estimated cost (including interest) of the
project. If the estimate of construction cost proves to be
inaccurate, we may be required to advance funds beyond the amount
originally committed to permit completion of the project. If
the estimate of value upon completion proves to be inaccurate, we may be
confronted at, or prior to, the maturity of the loan with a project the
value of which is insufficient to assure full repayment. In
addition, speculative construction loans to a builder are often associated
with homes that are not pre-sold, and thus pose a greater potential risk
to us than construction loans to individuals on their personal
residences. Loans on land under development or held for future
construction also pose additional risk because of the lack of income being
produced by the property and the potential illiquid nature of the
collateral. These risks can be significantly impacted by supply
and demand conditions. As a result, this type of lending often
involves the disbursement of substantial funds with repayment dependent on
the success of the ultimate project and the ability of the borrower to
sell or lease the property, rather than the ability of the borrower or
guarantor themselves to repay principal and interest. During
the years ended December 31, 2006 and 2005, we significantly increased our
origination of construction and land loans. While new
construction loan originations decreased by approximately 35% in 2007 and
have further decreased during the first six months of 2008, we continue to
have a significant investment in construction and land loan
balances. Most of our construction loans are for the
construction of single family
residences.
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Commercial and Multifamily
Mortgage Loans. These loans typically involve higher
principal amounts than other types of loans, and repayment is dependent
upon income generated, or expected to be generated, by the property
securing the loan in amounts sufficient to cover operating expenses and
debt service, which may be adversely affected by changes in the economy or
local market conditions. Commercial and multifamily mortgage
loans also expose a lender to greater credit risk than loans secured by
residential real estate because the collateral securing these loans
typically cannot be sold as easily as residential real
estate. In addition, many of our commercial and multifamily
real estate loans are not fully amortizing and contain large balloon
payments upon maturity. Such balloon payments may require the
borrower to either sell or refinance the underlying property in order to
make the payment, which may increase the risk of default or
non-payment.
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Commercial Business
Loans. Our commercial loans are primarily made based on
the cash flow of the borrower and secondarily on the underlying collateral
provided by the borrower. The borrowers’ cash flow may be
unpredictable, and collateral securing these loans may fluctuate in
value. Most often, this collateral is accounts receivable,
inventory, equipment or real estate. In the case of loans secured by
accounts receivable, the availability of funds for the repayment of these
loans may be substantially dependent on the ability of the borrower to
collect amounts due from its customers. Other collateral
securing loans may depreciate over time, may be difficult to appraise and
may fluctuate in value based on the success of the
business.
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Agricultural
Loans. Repayment of agricultural loans is dependent upon
the successful operation of the business, which is greatly dependent on
many things outside the control of either us or the
borrowers. These factors include weather, commodity prices and
interest rates, among others. Collateral securing these loans
may be difficult to evaluate, manage or liquidate and may not provide an
adequate source of repayment.
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Consumer
Loans. Consumer loans (such as personal lines of credit)
are collateralized, if at all, with assets that may not provide an
adequate source of payment of the loan due to depreciation, damage, or
loss. In addition, consumer loan collections are dependent on
the borrower’s financial stability, and thus are more likely to be
adversely affected by job loss, divorce, illness or personal
bankruptcy. Furthermore, the application of various federal and
state laws, including federal and state bankruptcy and insolvency laws,
may limit the amount that can be recovered on these
loans.
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We
may face risks with respect to our recent acquisitions and future
expansion.
We
completed three bank acquisitions in 2007 and may acquire other financial
institutions or parts of those institutions in the future. We also
plan to continue to engage in additional de novo branch expansion although at
a
slower
pace than previously. We may also consider and enter into new lines
of business or offer new products or services. Acquisitions and
mergers involve a number of risks, including:
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the
time and costs associated with identifying and evaluating potential
acquisitions and merger partners;
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the
estimates and judgments used to evaluate credit, operations, management
and market risks with respect to the target institution may not be
accurate;
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the
time and costs of evaluating new markets, hiring experienced local
management and opening new offices, and the time lags between these
activities and the generation of sufficient assets and deposits to support
the costs of the expansion;
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our
ability to finance an acquisition and possible dilution to our existing
shareholders;
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the
diversion of our management’s attention to the negotiation of a
transaction, and the integration of the operations and personnel of the
acquired businesses;
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entry
into new markets where we lack
experience;
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the
introduction of new products and services into our
business;
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the
incurrence and possible impairment of goodwill associated with an
acquisition and possible adverse short-term effects on our results of
operations; and
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the
risk of loss of key employees and
customers.
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We may
incur substantial costs to acquire other companies, businesses or assets in the
future and we can give no assurance that the results of any such acquisition
will meet our expectations or enhance our results of operations. We
may also incur substantial expenses integrating the operations of any acquired
company, business or assets with our existing operations. In that
regard, Islanders Bank, which we acquired in 2007, is currently utilizing the
same accounting and financial systems that it had in place prior to the time of
the acquisition, and while we have no current plans or immediate timetable, we
likely will incur expenses, which could be substantial, to migrate Islanders
Bank to our accounting and financial systems at some future
date. Also, we may issue equity securities, including common stock
and securities convertible into shares of our common stock, in connection with
future acquisitions, which could cause ownership and economic dilution to
holders of our common stock. There is no assurance that, following
any future mergers or acquisition, our integration efforts will be successful or
that, after giving effect to the acquisition, our results of operations will be
comparable to or better than, or will not be worse than, our historical results
of operations.
There
is no assurance that the change in the mix of our assets and liabilities will
benefit our operating results.
In
addition to lending and deposit gathering activities, we previously emphasized
investments in government agency and mortgage-backed securities, funded with
wholesale borrowings. This policy was designed to enhance our operating results
by allowing asset growth with relatively low associated overhead expense,
although these securities generally have lower yields than loans, resulting in a
lower interest rate spread and lower interest income. In recent
years, we have pursued a strategy to change the mix of our assets and
liabilities to have proportionately more loans and fewer securities and more
customer deposits, particularly transaction and savings deposits, and fewer
borrowings. Our implementation of this strategy has included
significant loan and deposit growth and was accelerated by a series of
balance-sheet restructuring transactions which we executed in the fourth quarter
of 2005. While the objective of this strategy, including the
balance-sheet restructuring, is to improve our results of operations in future
periods through an enhanced net interest margin, there is no assurance that this
strategy will succeed.
If
we are not able to achieve profitability on new branches it will negatively
affect our results of operations.
We have
expanded our presence throughout our market area, and although the pace of our
de novo branch expansion has slowed considerably, we intend to pursue further
expansion by opening additional new branches. The
success
of our expansion strategy will depend on whether the revenue that we generate
from the new branches will exceed the increased expenses resulting from
operating these branches. Largely as a result of this de novo
branching strategy, our operating expenses have increased significantly,
adversely affecting our operating efficiency. As a result, our
efficiency ratio, which is the ratio of non-interest expense to net interest
income and other income, is higher than many of our competitor
institutions. We expect that it may take a period of time before
certain of these branches can become profitable, especially in areas in which we
do not have an established presence, and it is possible that some of these
branches may not achieve profitability. As a result, the expense of
operating these branches may negatively affect our results of
operations.
If
external funds were not available, this could adversely impact our growth and
prospects.
We rely
on deposits and advances from the Federal Home Loan Bank (“FHLB”) of Seattle and
other borrowings to fund our operations. Although we have
historically been able to replace maturing deposits and advances as necessary,
we might not be able to replace such funds in the future if, among other things,
our results of operations or financial condition or the results of operations or
financial condition of the FHLB of Seattle or market conditions were to
change. Although we consider such sources of funds adequate for our
liquidity needs, there can be no assurance in this regard and we may be
compelled or elect to seek additional sources of financing in the
future. Likewise, we may seek additional debt in the future to
achieve our long-term business objectives, in connection with future
acquisitions or for other reasons. There can be no assurance
additional borrowings, if sought, would be available to us or, if available,
would be on favorable terms. If additional financing sources are
unavailable or not available on reasonable terms, our financial condition,
results of operations and future prospects could be materially adversely
affected.
We
may elect or be compelled to seek additional capital in the future, but that
capital may not be available when it is needed.
We are
required by federal and state regulatory authorities to maintain adequate levels
of capital to support our operations. In addition, we may elect to
raise additional capital to support our business or to finance acquisitions, if
any, or we may otherwise elect to raise additional capital. In that
regard, a number of financial institutions have recently raised considerable
amounts of capital as a result of a deterioration in their results of operations
and financial condition arising from the turmoil in the mortgage loan market,
deteriorating economic conditions, declines in real estate values and other
factors. Should we be required by regulatory authorities to raise
additional capital, we may seek to do so through the issuance of, among other
things, our common stock or preferred stock.
Our
ability to raise additional capital, if needed, will depend on conditions in the
capital markets, economic conditions and a number of other factors, many of
which are outside our control, and on our financial performance. Accordingly, we
cannot assure you of our ability to raise additional capital if needed or on
terms acceptable to us. If we cannot raise additional capital when needed, it
may have a material adverse effect on our financial condition, results of
operations and prospects.
Strong
competition within our market areas may limit our growth and adversely affect
our operating results.
Competition
in the banking and financial services industry is intense. We compete
in our market areas with commercial banks, savings institutions, mortgage
brokerage firms, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms operating locally and
elsewhere. Some of these competitors have substantially greater
resources and lending limits than we do, have greater name recognition and
market presence that benefit them in attracting business and deposits, and offer
certain services that we do not or cannot provide. In addition,
larger competitors may be able to price loans and deposits more aggressively
than we do. Our results of operations depend upon our continued
ability to successfully compete in our market areas. The greater
resources and deposit and loan products offered by some of our competitors may
limit our ability to increase or maintain our interest-earning assets, deposit
funding base and non-interest revenues.
The
loss of key members of our senior management team could adversely affect our
business.
We
believe that our success depends largely on the efforts and abilities of our
senior management and that their experience and industry contacts significantly
benefit us. The competition for qualified personnel in the financial
services industry is intense, and the loss of any of our key personnel or an
inability to continue to attract, retain and motivate key personnel could have a
material adverse effect on our business.
We
are subject to extensive government regulation and supervision.
We are
subject to extensive federal and state regulation and supervision, primarily
through Banner Bank and Islanders Bank and certain non-bank
subsidiaries. Banking regulations are primarily intended to protect
depositors’ funds, federal deposit insurance funds and the banking system as a
whole, and not holders of our common stock. These regulations affect
our lending practices, capital structure, investment practices, dividend policy
and growth, among other things. Congress and federal regulatory
agencies continually review banking laws, regulations and policies for possible
changes. Changes to statutes, regulations or regulatory policies,
including changes in interpretation or implementation of statutes, regulations
or policies, could affect us in substantial and unpredictable
ways. Such changes could subject us to additional costs, limit the
types of financial services and products we may offer and/or increase the
ability of non-banks to offer competing financial services and products, among
other things. Failure to comply with laws, regulations or policies
could result in sanctions by regulatory agencies, civil money penalties and/or
reputational damage, which could have a material adverse effect on our business,
financial condition and results of operations. While we have policies
and procedures designed to prevent any such violations, there can be no
assurance that such violations will not occur. In addition, we may be
subject to new legislation in response to negative developments in the financial
industry and the economy as described under “Recent negative developments in the
financial industry and credit markets may continue to adversely impact our
financial condition and results of operations,” which also could have a material
adverse effect on our results of operations and financial
condition.
In
addition, we are subject to government regulations that could limit or prevent
us from paying dividends on our common stock, including those described under
“There are regulatory and contractual limitations that may limit or prevent us
from paying dividends on the common stock and we may limit or eliminate our
dividends to shareholders."
The
level of our commercial real estate loan portfolio may subject us to additional
regulatory scrutiny.
The FDIC,
the Federal Reserve and the Office of the Comptroller of the Currency, have
promulgated joint guidance on sound risk management practices for financial
institutions with concentrations in commercial real estate
lending. Under the guidance, a financial institution that, like us,
is actively involved in commercial real estate lending should perform a risk
assessment to identify concentrations. A financial institution may have a
concentration in commercial real estate lending if, among other factors, (i)
total reported loans for construction, land development, and other land
represent 100% or more of total capital or (ii) total reported loans secured by
multifamily and non-farm residential properties, loans for construction, land
development and other land and loans otherwise sensitive to the general
commercial real estate market, including loans to commercial real estate related
entities, represent 300% or more of total capital. The guidance also
provides that management should employ heightened risk management practices
including board and management oversight and strategic planning, development of
underwriting standards, risk assessment and monitoring through market analysis
and stress testing. We have concluded that we have a concentration in
commercial real estate lending under the foregoing standards. While
we believe we have implemented policies and procedures with respect to our
commercial real estate loan portfolio consistent with this guidance, bank
regulators could require us to implement additional policies and procedures
consistent with their interpretation of the guidance which could result in
additional costs to us.
Our
information systems may experience an interruption or breach in
security.
We rely
heavily on communications and information systems to conduct our
business. Any failure, interruption or breach in security of these
systems could result in failures or disruptions in our customer relationship
management, general ledger, deposit, loan and other systems. While we
have policies and procedures designed to prevent or limit the effect of the
failure, interruption or security breach of our information systems, there can
be no assurance that any such failures, interruptions or security breaches will
not occur or, if they do occur, that they will be adequately
addressed. The occurrence of any failures, interruptions or security
breaches of our information systems could damage our reputation, result in a
loss of customer business, subject us to additional regulatory scrutiny, or
expose us to civil litigation and possible financial liability, any of which
could have a material adverse effect on our financial condition and results of
operations.
If
we fail to maintain an effective system of internal control over financial
reporting, we may not be able to accurately report our financial results or
prevent fraud, and, as a result, investors and depositors could lose confidence
in our financial reporting, which could materially adversely affect our
business, the trading price of our common stock and our ability to attract
additional deposits.
In
connection with the enactment of the Sarbanes-Oxley Act of 2002 (“Act”) and the
implementation of the rules and regulations promulgated by the SEC, we document
and evaluate our internal control over financial reporting in order to satisfy
the requirements of Section 404 of the Act. This requires us to
prepare an annual management report on our internal control over financial
reporting, including among other matters, management’s assessment of the
effectiveness of internal control over financial reporting and an attestation
report by our independent auditors addressing these assessments. If
we fail to identify and correct any deficiencies in the design or operating
effectiveness of our internal control over financial reporting or fail to
prevent fraud, current and potential shareholders and depositors could lose
confidence in our internal controls and financial reporting, which could
materially adversely affect our business, financial condition and results of
operations, the trading price of our common stock and our ability to attract
additional deposits. In that regard, we acquired Islanders Bank in
2007 and did not fully integrate Islanders Bank into our internal control
assessment and reporting for the year ended December 31, 2007. We
will need to successfully complete this integration in order for our management
to issue its report on our internal control over financial reporting for 2008
and our independent auditors to issue their related assessment
report.
We
rely on dividends from subsidiaries for substantially all of our
revenue.
As
described below in the first risk factor under “Risks Relating to the Offering,”
Banner Corporation receives substantially all of its revenue as dividends from
its subsidiaries. Various federal and/or state laws and regulations
limit the amount of dividends that Banner Bank, Islanders Bank and certain
non-bank subsidiaries may pay to Banner Corporation. In the event the
Banks are unable to pay dividends to Banner Corporation, Banner Corporation may
not be able to service its debt, pay its other obligations or pay dividends on
our common stock. Accordingly, the inability to receive dividends
from the Banks could also have a material adverse effect on our business,
financial condition and results of operations.
There
are regulatory and contractual limitations that may limit or prevent us from
paying dividends on the common stock and we may limit or eliminate our dividends
to shareholders.
As a
Washington corporation, under Washington law we are subject to restrictions on
the payment of dividends. In addition, as a bank holding company,
Banner Corporation’s ability to declare and pay dividends is dependent on
certain federal regulatory considerations. Banner Corporation is an entity
separate and distinct from its principal subsidiaries, Banner Bank and Islanders
Bank, and derives substantially all of its revenue in the form of dividends from
those subsidiaries. Accordingly, Banner Corporation is and will be
dependent upon dividends from Banner Bank and Islanders Bank to pay the
principal of and interest on its indebtedness, to satisfy its other cash needs
and to pay dividends on its common stock. Banner Bank’s and Islanders
Bank’s ability to pay dividends is subject to their ability to earn net income
and to meet certain regulatory requirements. In the event the Banks
are unable to pay dividends to Banner Corporation, it may not be able to service
its debt, pay its obligations or pay dividends on Banner Corporation’s common
stock. See “Regulations –Dividends” and Note 21 of the Notes to
Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2007. Also, Banner Corporation’s
right to participate in a distribution of assets upon a subsidiary’s liquidation
or reorganization is subject to the prior claims of the subsidiary’s
creditors. This includes claims under the liquidation account
maintained for the benefit of certain eligible deposit account holders of Banner
Bank established in connection with Banner Bank’s conversion from the mutual to
the stock form of ownership.
Banner
Corporation is also subject to certain contractual restrictions that could
prohibit it from declaring or paying dividends or making liquidation payments on
its common stock. See “If we defer payments of interest on our
outstanding junior subordinated debentures or if certain defaults relating to
those debentures occur, we will be prohibited from declaring or paying dividends
or distributions on, and from making liquidation payments with respect to, our
common stock” below.
Our board
of directors regularly reviews our dividend policy in light of current economic
conditions for financial institutions as well as our capital
needs. On a quarterly basis, the board of directors determines
whether a dividend will be paid and in what amount. No assurance can
be given concerning dividend payments in future periods.
If
we defer payments of interest on our outstanding junior subordinated debentures
or if certain defaults relating to those debentures occur, we will be prohibited
from declaring or paying dividends or distributions on, and from making
liquidation payments with respect to, our common stock.
We have
issued a significant amount of junior subordinated debentures issued in
connection with the sale of trust preferred securities by certain of our
subsidiaries that are statutory business trusts. We have also guaranteed those
trust preferred securities. There are currently six separate series of these
junior subordinated debentures outstanding, each series having been issued under
a separate indenture and with a separate guarantee. Each of these indentures,
together with the related guarantee, prohibits us, subject to limited
exceptions, from declaring or paying any dividends or distributions on, or
redeeming, repurchasing, acquiring or making any liquidation payments with
respect to, any of our capital stock (including the common stock offered hereby)
at any time when (i) there shall have occurred and be continuing an event of
default under such indenture or any event, act or condition that with notice or
lapse of time or both would constitute an event of default under such indenture;
or (ii) we are in default with respect to payment of any obligations under such
guarantee; or (iii) we have deferred payment of interest on the junior
subordinated debentures outstanding under that indenture. In that regard, we are
entitled, at our option but subject to certain conditions, to defer payments of
interest on the junior subordinated debentures of each series from time to time
for up to five years.
Events of
default under each indenture generally consist of our failure to pay interest on
the junior subordinated debentures outstanding under that indenture under
certain circumstances, our failure to pay any principal of or premium on such
junior subordinated debentures when due, our failure to comply with certain
covenants under such indenture, and certain events of bankruptcy, insolvency or
liquidation relating to us or, in the case of certain of these indentures, any
of our “significant subsidiaries” (as defined) that is a depository
institution.
As a
result of these provisions, if we were to elect to defer payments of interest on
any series of junior subordinated debentures, or if any of the other events
described in clause (i) or (ii) of the first paragraph of this risk factor were
to occur, we would be prohibited from declaring or paying any dividends on the
common stock offered hereby, from repurchasing or otherwise acquiring any such
common stock, and from making any payments to holders of common stock in the
event of our liquidation, which would likely have a material adverse effect on
the market value of our common stock. Moreover, without notice to or
consent from the holders of our common stock, we may issue additional series of
junior subordinated debentures in the future with terms similar to those of our
existing junior subordinated debentures or enter into other financing agreements
that limit our ability to purchase or to pay dividends or distributions on our
capital stock, including our common stock.
The
price of our common stock may fluctuate significantly, and this may make it
difficult for you to resell the common stock when you want or at prices you find
attractive.
We cannot
predict how the shares of our common stock will trade in the future. The market
price of our common stock will likely continue to fluctuate in response to a
number of factors including the following, most of which are beyond our control,
as well as the other factors described in this “Risk Factors”
section:
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actual
or anticipated quarterly fluctuations in our operating and financial
results;
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developments
related to investigations, proceedings or litigation that involve
us;
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changes
in financial estimates and recommendations by financial
analysts;
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dispositions,
acquisitions and financings;
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actions
of our current shareholders, including sales of common stock by existing
shareholders and our directors and executive
officers;
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fluctuations
in the stock price and operating results of our
competitors;
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regulatory
developments; and
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developments
related to the financial services
industry.
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The
market price of our common stock may also be affected by market conditions
affecting the stock markets in general, including price and trading fluctuations
on the Nasdaq Global Select Market. These conditions may result in
(i) volatility in the level of, and fluctuations in, the market prices of
stocks generally and, in turn, our common stock and (ii) sales of
substantial amounts of our common stock in the market, in each case that could
be unrelated or disproportionate to changes in our operating performance. These
broad market fluctuations may adversely affect the market prices of our common
stock.
There
may be future sales of additional common stock or other dilution of our equity,
which may adversely affect the market price of our common stock.
We are
not restricted from issuing additional common stock or preferred stock,
including any securities that are convertible into or exchangeable for, or that
represent the right to receive, common stock or preferred stock or any
substantially similar securities. The market price of our common stock could
decline as a result of sales by us of a large number of shares of common stock
or preferred stock or similar securities in the market after this offering or
the perception that such sales could occur.
The
issuance of additional common stock or preferred stock could adversely affect
holders of common stock, which may negatively impact your
investment.
Our board
of directors is authorized to cause us to issue additional common stock, as well
as classes or series of preferred stock, without any action on the part of the
shareholders. The board of directors also has the power, without shareholder
approval, to set the terms of any such classes or series of preferred stock that
may be issued, including voting rights, dividend rights and preferences over the
common stock with respect to dividends or upon the liquidation, dissolution or
winding-up of our business and other terms. If we issue preferred stock in the
future that has a preference over the common stock with respect to the payment
of dividends or upon liquidation, dissolution or winding-up, or if we issue
preferred stock with voting rights that dilute the voting power of the common
stock, the rights of holders of the common stock or the market price of the
common stock could be adversely affected.
The
federal banking laws limit the ownership of our common stock.
Because
we are a bank holding company, purchasers of 10% or more of our common stock may
be required to obtain approvals under the Change in Bank Control Act of 1978, as
amended, or Bank Holding Company Act of 1956, as amended (and in certain cases
such approvals may be required at a lesser percentage of
ownership). Specifically, under regulations adopted by the Federal
Reserve, (a) any other bank holding company may be required to obtain the
approval of the Federal Reserve to acquire or retain 5% or more of the common
stock and (b) any person other than a bank holding company may be required to
obtain the approval of the Federal Reserve to acquire or retain 10% or more of
the common stock.
The
voting limitation provision in our articles of incorporation could limit your
voting rights as a holder of our common stock.
Our
articles of incorporation provide that, subject to certain limited exceptions,
if any person or group acting in concert acquires beneficial ownership of more
than 10% of any class of our equity securities (which would include our common
stock) without the prior approval by a two-thirds vote of our “Continuing
Directors,” (as defined therein), then with respect to each share of voting
stock in excess of 10% of all shares of our voting stock, such person shall be
entitled to cast only one-hundredth of one vote per share. See
“Description of Securities – Anti-takeover Effects – Restrictions on Voting
Rights.” This means that any person owning more than 10% of our
common stock will have limited voting rights with respect to the shares owned in
excess of 10% of the number of shares of outstanding common stock.
Anti-takeover
provisions could negatively impact our shareholders.
Provisions
in our articles of incorporation and bylaws, the corporate law of the State of
Washington and federal regulations could delay, defer or prevent a third party
from acquiring us, despite the possible benefit to our shareholders, or
otherwise adversely affect the market price of any class of our equity
securities, including our common stock. These provisions
include: limitations on voting rights of beneficial owners of more than 10% of
our common stock, supermajority voting requirements for certain business
combinations with any person who owns 10% or more of our outstanding common
stock; the election of directors to staggered terms of three years;
advance
notice
requirements for nominations for election to our board of directors and for
proposing matters that shareholders may act on at shareholder meetings, a
requirement that only directors may fill a vacancy in our board of directors,
supermajority voting requirements to remove any of our directors and the other
provisions described under “Description of SecuritiesÄAnti-Takeover
Effects.” In addition, we are subject to Washington laws, including
one that prohibits us from engaging in a significant business combination with
any shareholder who acquires 10% or more of our voting stock for a period of
five years from the date of that acquisition unless certain conditions are met.
Additionally, our articles of incorporation authorize our board of directors to
issue preferred stock as described under “The issuance of additional common
stock or preferred stock could adversely affect holders of our common stock,
which may negatively impact your investment," and preferred stock could be
issued as a defensive measure in response to a takeover
proposal. These provisions may discourage potential takeover
attempts, discourage bids for our common stock at a premium over market price or
adversely affect the market price of, and the voting and other rights of the
holders of, our common stock. These provisions could also discourage
proxy contests and make it more difficult for you and other shareholders to
elect directors other than the candidates nominated by our board of
directors.
You
will not know the price of the shares you are purchasing under the Plan at the
time you authorize the investment or elect to have your dividends
reinvested.
The price
of our shares may fluctuate between the time you decide to purchase shares under
the Plan and the time of actual purchase. In addition, during this
time period, you may become aware of additional information that might affect
your investment decision.
The Plan
Administrator administers the Plan. If you instruct the Plan
Administrator to sell shares under the Plan, you will not be able to direct the
time or price at which your shares are sold. The price of our shares
may decline between the time you decide to sell shares and the time of actual
sale.
Future
dividends and a return on your investment are not guaranteed.
This
prospectus does not represent a change in our dividend policy or a guarantee of
future dividends, which will continue to depend upon our earnings, financial
requirements, government regulations and other factors. We cannot
assure you a profit, or protect you against losses, on shares purchased pursuant
to the Plan. The market price of common stock can fluctuate
substantially, as described under “The price of our common stock may fluctuate
significantly, and this may make it difficult for you to resell the common stock
when you want or at prices you find attractive.” You must accept the
risks as well as the benefits of the Plan.
THE
PLAN
What
is the Plan?
Our
Dividend Reinvestment and Direct Stock Purchase and Sale Plan enables new
investors to make an initial investment in our common stock and existing
investors to increase their holdings of our common
stock. Participants can purchase our common stock with optional cash
investments and cash dividends.
The Plan
is designed for long-term investors who wish to invest and build their share
ownership over time. The Plan is not intended to provide holders of
shares of common stock with a mechanism for generating assured short-term
profits through rapid turnover of shares acquired at a discount. The
Plan’s intended purpose precludes any person, organization or other entity from
establishing a series of related accounts for the purpose of conducting
arbitrage operations and/or exceeding the optional monthly cash investment
limit. We accordingly reserve the right to modify, suspend or
terminate participation by a shareholder who is using the Plan for purposes
inconsistent with its intended purpose.
What
features does the Plan offer?
Initial
investment. If you are not an existing shareholder, you can
make an initial investment in our common stock, starting with as little as $250
and up to a maximum of $40,000. See “How do I purchase shares if I am not
currently a Banner shareholder?” below for more information.
Optional monthly cash
investments. Once you are a shareholder, you can buy our
common stock and pay fees and commissions lower than those typically charged by
stockbrokers for small transactions. You can increase your holdings
of our common stock through optional cash investments of $50 or more, up to a
maximum of $40,000 per month. You can make optional cash investments
by check or electronically with deductions from your personal bank
account. If you wish to make optional cash investments in excess of
$40,000 in any month or an initial investment in excess of $40,000, see “How do I make cash investments in
excess of $40,000?” below for more information.
Automatic dividend
reinvestment. You can also increase your holdings of our
common stock through automatic reinvestment of your cash
dividends. You will also be credited with dividends on fractions of
shares you hold in the Plan. You can elect to reinvest all or a portion of your
dividends on your shares. You can receive dividends electronically or
by check. See “How
do I purchase additional shares if I am already a Banner shareholder?”
below for more information.
Share
safekeeping. You can deposit your stock certificate(s)
representing shares of our common stock for safekeeping with the Plan
Administrator. See “What is safekeeping of certificates
and how do I submit my certificates?” below for more
information.
Automated
transactions. Unless you are participating through your bank,
broker or nominee, you can execute many of your Plan transactions online via the
Plan Administrator’s website at www.computershare.com. The
information on the Plan Administrator’s website is not part of this
prospectus. See instructions below describing how to purchase and
sell shares for more information. Refer to “What are the fees associated with
participation?” below for details on fees charged for these transactions
and services.
Who
is the Plan Administrator and what does the Plan Administrator do?
Computershare
Trust Company, N.A. (“Computershare”) currently is the Plan
Administrator, registered transfer agent, and designated agent for each
participating shareholder. Computershare, as Plan Administrator, administers the
Plan, purchases and holds shares acquired for you under the Plan, keeps records,
sends statements of account activity and performs other duties related to the
Plan. The Plan Administrator holds for safekeeping the shares
purchased for you together with shares forwarded by you to the Plan
Administrator for safekeeping until termination of your participation in the
Plan or receipt of your request for a certificate for all or part of your
shares. Shares purchased under the Plan and held by the Plan
Administrator will be registered in the Plan Administrator’s name or the name of
its nominee, in either case as your agent. In the event that the Plan
Administrator should resign or otherwise cease to act as agent, we will appoint
a new administrator to administer the Plan. The Plan Administrator
also acts as dividend disbursing agent, transfer agent and registrar for shares
of our common stock.
We and
the Plan Administrator will not be liable in administering the Plan for any act
done in good faith or as required by applicable securities laws or for any good
faith omission to act including, without limitation, any claim or liability
arising out of failure to terminate your account upon your death, or with
respect to the prices at which shares are purchased or sold for your account and
the times when such purchases or sales are made or with respect to any
fluctuation in the market value after purchase or sale of
shares. Neither we nor the Plan Administrator shall have any duties,
responsibilities or liabilities except such as are expressly set forth in the
Plan.
How
do I contact the Plan Administrator?
Unless
you are participating in the Plan through your bank, broker or nominee, if you
have questions regarding the Plan, please write to the Plan Administrator at the
following address:
Banner
Corporation
c/o
Computershare Trust Company, N.A.
P.O. Box
43078
Providence,
RI 02940-3078
or call
the Plan Administrator at 1-800-697-8924 within the United States and Canada or
1-312-360-5219 outside the United States and Canada. Include your name,
address, daytime telephone number, account number and reference Banner on all
correspondence. All transaction requests should be directed to the Plan
Administrator at P.O. Box 43078, Providence, RI 02940-3078.
In
addition, you may visit the Plan Administrator’s website at
www.computershare.com. At this website, you can enroll in the Plan,
obtain information and perform certain transactions for your Plan account
(unless you are participating in the Plan through your bank, broker or nominee)
via the “Investor Centre” on the website.
If you
participate in the Plan through your bank, broker or nominee, you must contact
your bank, broker or nominee for all information regarding the Plan and all Plan
transactions.
Are
there fees associated with participation in the Plan?
Yes. The
following fees apply to your participation in the Plan:
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Fees
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If
Purchases Are Made
Directly from
Us
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If
Purchases Are Made
in the Open
Market
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Enrollment
fee for new investors
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None
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None
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Service
fee for optional cash investments made via check or
Internet
payment
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$5.00
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$5.00
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Service
fee for optional cash investments made via recurring
automatic
monthly investment
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None
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None
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Service
fee for dividend reinvestment
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None
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None
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Processing
fee (including any brokerage commissions the Plan
Administrator
is required to pay)
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None
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$0.12
per share
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Fee
for safekeeping
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None
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None
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Service
fee for a batch order sale of shares (partial or full)
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$15.00
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$15.00
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Service
fee for a market order sale of shares (partial or full)
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$25.00
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$25.00
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Service
fee for sale of a fractional share at termination or
withdrawal
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Up
to $15.00
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Up
to $15.00
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Processing
fee for sale of shares
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$0.12
per share
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$0.12
per share
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Returned
check or failed electronic payment fee
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$25.00
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$25.00
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Thus for
example, if 20 shares were acquired by the Plan Administrator on your behalf in
the open market, you would pay the Plan Administrator $7.40 for the transaction
consisting of a check payment service fee of $5.00 and a per share commission of
$0.12 per share.
We can
change the fee structure of the Plan at any time. We will give you
notice of any fee changes prior to the changes becoming effective.
How
do I purchase shares if I am not currently a Banner shareholder?
To make
an investment online, log on to
www.computershare.com, click “Investment Plans,” then select “All Plans”
under “Quick Search.” Select “Banner Corporation.” Then
select “Buy Now” and follow the enrollment wizard, which will guide you through
the simple investment process. You will be prompted to provide your
banking account number and ABA routing number to allow for the direct debit of
funds from your savings or checking account. You will receive an
email confirming receipt of your transaction as soon as you complete the
investment process, as well as a subsequent statement in the mail confirming the
number of shares purchased and their price.
To invest
by mail, simply fill out an Initial Enrollment Form, which can be obtained by
calling the Plan Administrator at 1-800-697-8924, and enclose a check (minimum
$250) made payable to “Computershare” for the value of your
investment. The Initial Enrollment Form may also be downloaded from
the Plan Administrator’s website (www.computershare.com)
and mailed to the Plan Administrator.
Your cash
payment, less applicable service charges and commissions, will be used to
purchase shares for your account. Both full and fractional shares up
to six decimal places (if applicable) will be credited to your Plan
account. The Plan Administrator will commingle net dividend funds (if
applicable) with cash payments from all participants to purchase shares either
directly from Banner or on the open market.
You may
also purchase your initial shares by authorizing the Plan Administrator, on the
Direct Debit Authorization Form or through the Plan Administrator’s website, to
make monthly purchases of a specified dollar amount, paid for by automatic
withdrawal from your U.S. bank account if at least $50 a month for five
consecutive months. Funds will be withdrawn from your bank account,
via electronic funds transfer, or EFT, on the fourth day of each month (or the
next business day if the fourth is not a business day). To terminate
monthly purchases by automatic withdrawal, you must send the Plan Administrator
written, signed instructions. It is your responsibility to notify the
Plan Administrator if your direct debit information changes.
How
do I make optional cash investments of $40,000 or less if I am already a Banner
shareholder?
If you
are a registered holder (i.e., your shares of Banner common stock are registered
in the stock transfer books of Banner in your name), to make an investment
online, log on to www.computershare.com and select “Investor Centre” and follow
the online instructions. Optional cash investments may also be
mailed to the Plan Administrator with the tear-off portion of your account
statement or via detailed written instructions.
You may
also authorize the Plan Administrator, on a Direct Debit Authorization Form or
the Plan Administrator’s website, to make monthly purchases of a specified
dollar amount, paid for by automatic withdrawal from your U.S. bank
account. Funds will be withdrawn from your bank account, via EFT, on
the fourth day of each month (or the next business day if the fourth is not a
business day). To terminate monthly purchases by automatic
withdrawal, you must send the Plan Administrator written, signed
instructions. It is your responsibility to notify the Plan
Administrator if your direct debit information changes.
In the
event that any check, draft or electronic funds transfer you may tender or order
as payment to the Plan Administrator to purchase Banner common stock is
dishonored, refused or returned, you agree that the purchased shares when
credited to your account may be sold, on the Plan Administrator’s order without
your consent or approval, to satisfy the amount owing on the
purchase. The “amount owing” will include the purchase price paid,
any purchase and sale transaction fees, any brokerage commissions and the Plan
Administrator’s returned check or failed electronic payment fee of
$25.00. If the sale proceeds of purchased shares are insufficient to
satisfy the amount owing, you authorize the Plan Administrator to sell
additional shares then credited to your account as necessary to cover the amount
owing, without your further consent or authorization. The Plan
Administrator may sell shares to cover an amount owing as a result of your order
in any manner consistent with applicable securities laws. Any sale
for that purpose on a national securities market, such as the Nasdaq Global
Select Market, will be
considered
to be commercially reasonable. You grant the Plan Administrator a
security interest in all shares credited to your account including securities
subsequently acquired and held or tendered for deposit, for purposes of securing
any amount owing as described in this paragraph.
If you
are a beneficial owner (i.e., you are a beneficial owner of Banner shares that
are registered in a name other than your own, such as a bank, broker or other
nominee) and wish to purchase additional Banner shares, you must either become a
registered holder by having your shares transferred into your own name and
following the instructions above, or you must instruct your bank, broker or
other nominee to invest on your behalf.
How
do I make cash investments in excess of $40,000?
If you
want to make optional cash investments in excess of $40,000 in any month or an
initial investment in excess of $40,000, you must receive our written
approval. To obtain our written approval, you must submit a request
for waiver form. You can obtain a request for waiver form by
contacting Banner directly by calling us at 1-509-526-8894. We have
the sole discretion to approve or refuse any request to make an optional cash
investment or initial investment in excess of the maximum amount and to set the
terms of any such optional cash investment or initial investment.
If we
approve your request for waiver, the Plan Administrator will notify you
promptly. In deciding whether to approve a request for waiver, we
will consider relevant factors, including, but not limited to, the
following:
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whether
the Plan is then acquiring newly issued shares directly from us or
acquiring shares in the open market or in privately negotiated
transactions from third parties;
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our
need for additional funds;
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the
attractiveness of obtaining additional funds through the sale of common
stock as compared to other sources of
funds;
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the
purchase price likely to apply to any sale of common
stock;
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the
shareholder submitting the request;
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the
extent and nature of the shareholder’s prior participation in the
Plan;
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the
number of shares of common stock held of record by the
shareholder;
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the
aggregate number of optional monthly cash investments and initial
investments in excess of $40,000 for which requests for waiver have been
submitted by all existing shareholders and new investors;
and
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our
current and projected capital
needs.
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If
requests for waiver are submitted for an aggregate amount in excess of the
amount we are then willing to accept, we may honor such requests in order of
receipt, pro rata or by any other method that we determine to be
appropriate. We may determine, in our discretion, the maximum amount
that an existing shareholder or new investor may invest pursuant to the Plan or
the maximum number of shares that may be purchased pursuant to a request for
waiver.
How
do I enroll to have my cash dividends reinvested?
If you
are the registered holder of shares, you may chose to reinvest all, a portion or
none of the cash dividends paid on your shares reinvested under the Plan in
additional shares by accessing your account online at www.computershare.com
or by completing an enrollment form and returning it to the Plan
Administrator. You can change your dividend reinvestment election at
any time by accessing the Plan Administrator’s website at www.computershare.com
or by completing and signing a new enrollment form and returning it to the
Plan
Administrator.
For your new or changed participation to be effective for a particular dividend,
your notification must be received on or before the record date for that
dividend.
You must
choose one of the following when completing the enrollment form:
(a) Full Dividend
Reinvestment – If you select this option, the Plan Administrator will
reinvest all cash dividends paid on all of the Banner shares registered in your
name and you will be able to make optional cash payments for the purchase of
additional shares in accordance with the Plan.
Or
(b) Partial Dividend
Reinvestment – If you select this option, the Plan Administrator will pay
you dividends in cash on the number of shares of Banner common stock that you
specify in the appropriate space on the enrollment form and apply the balance of
your dividends toward the purchase of additional shares in accordance with the
Plan. This option also permits you to make optional cash payments for
the purchase of additional shares in accordance with the Plan.
Or
(c) Voluntary Cash
Payments Only (No Dividend Reinvestment) – If you select this option,
your dividends will not be reinvested. Instead, you will receive
payment by check or automatic deposit for all of your cash
dividends. This option also permits you to make optional cash
payments for the purchase of additional shares in accordance with the
Plan.
You may
select any of the above investment options. If no option is selected
by you on the enrollment form which you return, you will be enrolled in the Full
Dividend Reinvestment Option. Regardless of your investment choice,
all shares purchased for you through the Plan will be credited to your account
by the Plan Administrator until you direct that these shares be sold or issued
to you in certificate form.
If you
are a beneficial owner of Banner shares, you must instruct your bank, broker or
nominee regarding reinvestment of dividends.
Must
I reinvest dividends?
No. Dividend
reinvestment is an option offered under the Plan. When you enroll in
the Plan by filling out the enrollment form, you may indicate whether you want
cash dividends on your shares reinvested. If you do not indicate a
preference, however, all cash dividends on your Plan shares will be
reinvested.
If you
choose to receive cash dividends on some or all of your shares, your cash
dividend can be deposited directly to your bank account. If you are
interested in this option, contact the Plan Administrator or your bank, broker
or nominee, as appropriate, and request forms for Authorization for Electronic
Direct Deposit. Alternatively, if you are a registered holder, you
may enroll to receive your cash dividends via direct deposit by accessing the
Plan Administrator’s website at www.computershare.com. Select
“Investor Centre” and follow the online instructions. If you
elect to receive cash dividends, and do not enroll in the direct deposit option
or do not enroll in the Plan at all, your dividend payments will continue to be
sent, by check, to the address of record on the account.
What
is the price I will pay for shares for reinvested dividends and cash investments
under $40,000?
If we
direct the Plan Administrator to purchase shares of common stock directly from
us with respect to reinvested dividends or optional cash investments of $40,000
or less, the purchase price of shares of common stock purchased will be the
average of the closing sales prices of the shares of common stock as reported on
the Nasdaq Global Select Market for the five trading days immediately preceding
the investment date, less the Plan discount, if any, then in
effect. A “trading day” is any day on which trades are reported on
the Nasdaq Global Select Market. We may offer discounts ranging from
0% to 5%. At our discretion, the discount may be offered at variable
rates on one, all or a combination of the sources of investments, or not at
all.
If the
Plan Administrator purchases shares of common stock in market transactions, then
your share price will be the weighted average price of all shares purchased for
that investment. The share price is the same for all
participants
in a given investment (i.e., initial investors, current investors sending
optional cash payments and participants reinvesting their
dividends).
What
is the investment date for reinvested dividends and cash investments under
$40,000?
The
“Purchase Date” is the date or dates on which the Plan Administrator purchases
shares of our common stock for the Plan, as described below.
Dividend
Reinvestments. If the Plan Administrator acquires shares
directly from us, it will combine the dividend funds of all Plan participants
whose dividends are automatically reinvested and will generally invest such
dividend funds on the dividend payment date (and any succeeding trading days
necessary to complete the order). If the dividend payment date falls
on a day that is not a Nasdaq Global Select Market trading day, then the
investment will occur on the next trading day. In addition, if the
dividend is payable on a day when optional cash payments are to be invested,
dividend funds may be commingled with any such pending cash investments and a
combined order may be executed. If the Plan Administrator acquires
shares from parties other than us through open market transactions, such
purchases will occur during a period beginning on the day that would be deemed
the Purchase Date if the shares were acquired directly from us and ending no
later than 30 days following the date on which we paid the applicable cash
dividend, except where completion at a later date is necessary or advisable
under any applicable federal or state securities laws or
regulations. The record date associated with a particular dividend is
referred to in this Plan as a “dividend record date.”
Initial and Optional Cash
Investments up to $40,000. If the Plan Administrator acquires
shares directly from us, then the Purchase Date for optional cash investments up
to $40,000 will be on the tenth calendar day of each month, or the next trading
day if the tenth day is not a trading day. If the Plan Administrator
acquires shares from third parties other than us through open market
transactions, it will attempt to buy our common stock in the open market through
a registered broker-dealer. Such purchases will begin on the day that
would be deemed the Purchase Date if the shares were acquired directly from us
and will be completed no later than 35 days following such date, except where
completion at a later date is necessary or advisable under any applicable
federal or state securities laws or regulations.
If you
are investing by mail, the Plan Administrator must receive your physical check
at least two business days prior to a Purchase Date. Initial and
optional cash investments received after the applicable investment date deadline
will be applied to purchase shares on the following Purchase Date. If
you are investing online, please refer to your confirmation page for the
estimated debit date for your one-time deduction. The Plan
Administrator will commingle all funds received from
participants. Once you have placed your order, you may not request a
cash refund or otherwise change your order. No interest will be paid
on funds pending investment held by the Plan Administrator.
What
is the price I will pay and what will be the investment date for cash
investments of more than $40,000?
Shares of
Banner common stock purchased pursuant to a request for waiver for optional cash
investments of more than $40,000 will be acquired at a price to you equal to the
average of the high and low sales prices, computed up to six decimal places, if
necessary, of Banner’s common stock on the Nasdaq Global Select Market for each
trading day during the pricing period. The pricing period for
optional investments made pursuant to an approved request for waiver will be the
day or days set forth in the request for waiver, which may be the investment
date or up to ten trading days prior to and including an investment
date. A request for waiver may specify one or more investment
dates. Shares purchased with optional cash investments of more than
$40,000 pursuant to a request for waiver may be purchased at a discount from the
purchase price and may be subject to a threshold price and will only be
purchased directly from us, and not through open market
transactions.
Unless we
waive our right to do so, we may establish for any investment date a minimum
price (the “threshold price”) for purchasing shares with optional cash
investments made pursuant to written requests for waiver. We will, at
least two business days prior to the commencement of the pricing period for an
investment date, determine whether to establish a threshold price and, if a
threshold price is established, its amount and so notify the Plan
Administrator. The determination whether to establish a threshold
price and, if a threshold price is established, its amount will be made by us in
our discretion after a review of current market conditions, the level of
participation in the Plan, and current and projected capital needs.
The
threshold price for optional cash investments made pursuant to written requests
for waiver, if established for any investment date, will be a stated dollar
amount that the average of the high and low sales prices of Banner’s common
stock on the Nasdaq Global Select Market for each trading day of the relevant
pricing period (not adjusted for discounts, if any) must equal or
exceed. If the threshold price is not satisfied for a trading day in
the pricing period, then that trading day and the trading prices for that day
will be excluded from that pricing period and a pro rata portion of the
participant’s cash will be returned, without interest. Thus, for
example, if an approved request for waiver specifies that the pricing period is
one day (that is, the investment date) and the threshold price is not satisfied
on that day, then no investment will be made and the participant’s cash will be
returned in full. Likewise, if the threshold price is not satisfied
for two of the five trading days in a particular pricing period, then the
average sales price for purchases and the amount of optional cash investments
which may be invested will be based upon the remaining three trading days when
the threshold price is satisfied. In such case, for each trading day
on which the threshold price is not satisfied, one-fifth of the optional cash
investment made by a participant pursuant to a request for waiver would be
returned to such participant, without interest, as soon as practicable after the
applicable investment date. Similarly, a pro rata portion of the
participant’s cash will be returned if there are fewer trading days prior to the
investment date than are specified as the pricing period in the request for
waiver or if no trades in Banner common stock are reported on the Nasdaq Global
Select Market for a trading day during the pricing period, due to a market
disruption or for any other reason.
We may
elect to activate for any particular pricing period the pricing period extension
feature, which will provide that the initial pricing period will be extended by
the number of days during such period that the threshold price is not satisfied,
or on which there are no trades of our common stock reported by the Nasdaq
Global Select Market, subject to a maximum of five trading days. If
we elect to activate the pricing period extension feature and the threshold
price is satisfied for any additional day that has been added to the initial
pricing period, then that day will be included as one of the trading days for
the pricing period in lieu of the day on which the threshold price was not met
or trades of our common stock were not reported. For example, if the
determined pricing period is ten days, and the threshold price is not satisfied
for three out of those ten days in the initial pricing period, and we had
previously announced at the time of the request for waiver acceptance that the
pricing period extension feature was activated, then the pricing period will
automatically be extended, and if the threshold price is satisfied on the next
three trading days (or a subset thereof), then those three days (or a subset
thereof) will be included in the pricing period in lieu of the three days on
which the threshold price was not met. As a result, the purchase
price will be based upon the ten trading days of the initial and extended
pricing period on which the threshold price was satisfied and all of the cash
investment will be invested (rather than 30% being returned).
The
threshold price and pricing period extension concepts and return procedure
discussed above apply only to optional cash investments made pursuant to written
requests for waiver. Setting a threshold price for an investment date
shall not affect the setting of a threshold price for any subsequent investment
date.
For any
particular investment date, we may waive our right to set a threshold price for
optional cash investments that exceed $40,000. Neither Banner nor the Plan
Administrator shall be required to provide any written notice to participants as
to the threshold price for any investment date. Participants,
however, may ascertain whether the threshold price applicable to an investment
date pursuant to a request for waiver has been set or waived, as applicable, by
telephoning Banner at 1-509-526-8894.
The
purchase price will not be known until the purchase is
completed. Participants should be aware that the price may fluctuate
during the period between submission of a purchase request, its receipt by the
Plan Administrator, and the ultimate purchase on the open market.
How
do I keep track of the transactions in my account?
If you
are a registered holder, the Plan Administrator will mail a year-to-date summary
plan statement after each cash dividend. In addition, a statement
will be mailed to you after each purchase, which statement will include the
number of shares purchased and the purchase price. You may also view
your transaction history online by logging into your account on the Plan
Administrator’s website at www.computershare.com. Details available
online include share price, commission and fees paid, and transaction type and
date.
If you
are a beneficial owner, you must contact your bank, broker or nominee for
information regarding transactions in your account.
What
is safekeeping of certificates and how do I submit my certificates?
If you
own shares of Banner common stock in stock certificate form, you may elect to
deposit the shares represented by those stock certificates into your Plan
account for safekeeping with the Plan Administrator. The Plan
Administrator will credit these shares to your Plan account. You may
later request issuance of a certificate from the Plan Administrator at any
time.
To
deposit shares with the Plan Administrator, send your stock certificates to the
Plan Administrator at the address listed on page __. We recommend
that you send your certificates via registered mail and insured for 3% of the
total value of the shares to protect against loss in transit.
How
do I withdraw shares held in my Plan account?
You may
request that the Plan Administrator issue a certificate for some or all of the
shares held in your Plan account by doing any of the following:
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Access
the Plan Administrator’s website at www.computershare.com. Select
“Investor Centre,” login to your account and then follow the online
instructions;
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Call
1-800-697-8924 to access the Plan Administrator’s automated telephone
system; or
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Complete
and sign the tear-off portion of your statement and mail the instructions
to the Plan Administrator.
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The Plan
Administrator will issue a certificate in the exact registered name shown on
your Plan statement. Certificates will be sent by first class mail,
generally within a few days of receiving your request. There is
no charge to you for this service.
How
do I transfer shares to another person?
You may
transfer ownership of some or all of your Plan shares to another person, whether
by gift, private sale, or otherwise. In order to transfer some or all
of your shares, you must properly complete a Transfer of Ownership Form, or an
executed stock power, and return it to the Plan
Administrator. Transfers may be made in book-entry or certificated
form.
Requests
for transfer of book-entry shares held under the Plan are subject to the same
requirements as the transfer of our common stock certificates, including the
requirement of a medallion signature guarantee. You may request a
copy of the Transfer of Ownership Form by contacting the Plan Administrator at
1-800-697-8924 or by downloading the forms from the Plan Administrator’s website
at www.computershare.com.
How
do I sell shares held in my account?
You can
sell some or all of the shares held in your Plan account by contacting the Plan
Administrator. You have two choices when making a sale, depending on
how you submit your sale request, as follows:
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Market
Order: A market order is a request to sell shares promptly at the
current market price. Market order sales are only available at
www.computershare.com
through Investor Centre or by calling the Plan Administrator directly at
1-800-697-8924. Market order sale requests received at www.computershare.com
through Investor Centre or by telephone will be placed promptly upon
receipt during market hours (normally 9:30 a.m. to 4:00 p.m. Eastern
time). Any orders received after 4:00 p.m. Eastern time will be
placed promptly on the next day the market is open. The price
shall be the market price of the sale obtained by the Plan Administrator's
broker, less a service fee of $25 and a processing fee of $0.12 per share
sold.
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Batch
Order: A batch order is an accumulation of all sale requests for a
security submitted together as a collective request. Batch
orders are submitted on each market day, assuming there are sale requests
to be processed. Sale instructions for batch orders received by
the Plan Administrator will be processed no later than five business days
after the date on which the order is received (except where deferral is
required under applicable federal or state laws or
regulations),
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assuming
the applicable market is open for trading and sufficient market liquidity
exists. Batch order sales are available at www.computershare.com
through Investor Centre or by calling the Plan Administrator directly at
1-800-697-8924. All sales requests with an anticipated market
value of $25,000 or more are expected to be submitted in
writing. All sales requests received in writing will be
submitted as batch order sales. The Plan Administrator will
cause your shares to be sold on the open market within five business days
of receipt of your request. To maximize cost savings for batch
order sales requests, the Plan Administrator may combine each selling Plan
participant's shares with those of other selling Plan
participants. In every case of a batch order sale, the price to
each selling Plan, participant shall be the weighted average sale price
obtained by the Plan Administrator's broker for each aggregate order
placed by the Plan Administrator and executed by the broker, less a
service fee of $15 and a processing fee of $0.12 per share
sold. Proceeds are normally paid by check, which are
distributed within 24 hours after your sale transaction has
settled.
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The Plan
Administrator reserves the right to decline to process a sale if it determines,
in its sole discretion, that supporting legal documentation is
required. In addition, no one will have any authority or power to
direct the time or price at which shares for the Plan are sold, and no one,
other than the Plan Administrator, will select the broker(s) or dealer(s)
through or from whom sales are to be made.
You
should be aware that the price of our common shares may rise or fall during the
period between a request for sale, its receipt by the Plan Administrator and the
ultimate sale on the open market. Instructions sent to the Plan
Administrator to sell shares are binding and may not be rescinded. If
you prefer to have complete control as to the exact timing and sales prices, you
can transfer the shares to a broker of your own choosing and sell them through a
broker.
How
do I close my account?
If you
are a registered holder, you may terminate Plan participation by directing the
Plan Administrator to sell all of the shares in your account. You may
submit a signed written instruction to the Plan Administrator, complete the
tear-off form from your account statement, or you may utilize the Plan
Administrator’s website. Follow the sales procedure outlined under
"How do I sell shares held in
my account?"above, making certain to elect the sale of all Plan
shares.
Alternatively,
you may elect to receive a certificate for the full shares held in your Plan
account and to sell any fractional share remaining. In such case, a
certificate will be issued for the whole shares and a cash payment will be made
for any remaining fractional share. That cash payment will be based
upon the current market price of the common stock, less any service fee, any
applicable brokerage commission and any other costs of sale.
You must
specifically inform the Plan Administrator that you wish to terminate
participation in the Plan (which option is listed separately on the tear-off
form attached to Plan statements). If you fail to do so, future
dividends on non-Plan shares will continue to be reinvested in accordance with
your pre-termination instructions, until you direct the Plan Administrator
otherwise.
If you
are a beneficial owner, you must contact your bank, broker or nominee to close
your account.
Additional
Information Regarding the Plan
We
reserve the right to curtail or suspend transaction processing until the
completion of any stock dividends, stock splits or other corporate
actions. Any stock dividends, distributions or stock split
shares distributed on stock held by the Plan Administrator for the participant
in the Plan will be credited directly into the participant’s
account.
Plan
participants may vote all shares (full and fractional) held in their Plan
account.
Neither
Banner nor the Plan Administrator will be liable for any act performed in good
faith or for any good faith omission to act, including, without limitation, any
claim of liability (i) arising out of failure to terminate a participant’s
account, sell stock held in the Plan, or invest optional cash payments or
dividends or (ii) with respect to the prices at which stock is purchased or sold
for the participant’s account and the time such purchases or sales are
made.
If, at
any time, the total number of shares in the participant’s account is less than
one share, any remaining fraction may be sold and the account
closed. See "What are the fees associated with participation?" above
for applicable fees associated with the sale of shares.
We
reserve the right to modify the terms of the Plan, including applicable fees, or
to terminate the Plan at any time. In addition, we reserve the right
to interpret and regulate the Plan as we deem necessary or desirable in
connection with its operation. The Plan is generally not for use by
institutional investors or financial intermediaries. The Plan shall
be governed by and construed in accordance with the laws of the State of
Washington. Participation in the Plan, via any of the means outlined
herein, shall constitute an offer by the participant to establish an agency
relationship with the Plan Administrator and shall be governed by the terms and
conditions of the Plan.
Neither
Banner nor the Plan Administrator will provide any advice, make any
recommendations, or offer any opinion with respect to whether or not you should
purchase or sell shares or otherwise participate under the Plan. You
must make independent investment decisions based on your own judgment and
research. The shares held in Plan accounts are not subject to
protection under the Securities Investor Protection Act of 1970.
Limitation
of Liability
The Plan
provides that neither we nor the Plan Administrator, nor any agent will be
liable in administering the Plan for any act done in good faith or any omission
to act in good faith in connection with the Plan. This limitation
includes, but is not limited to, any claims of liability relating
to:
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the
failure to terminate your Plan account upon your death prior to receiving
written notice of your death; or
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the
purchase or sale prices reflected in your Plan account or the dates of
purchases or sales of shares under the Plan;
or
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any
loss or fluctuation in the market value of our shares after the purchase
or sale of shares under the Plan.
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The
foregoing limitation of liability does not represent a waiver of any rights you
may have under applicable securities laws.
USE
OF PROCEEDS
We will
receive proceeds from purchases of our common stock through the Plan only if the
purchases are made directly from us. We have no current specific plan
for the use of any such proceeds other than for general business purposes. The
purpose for offering our shares through the Plan is to provide a benefit to our
shareholders while potentially increasing the capitalization of Banner
Corporation. We will not receive any proceeds from shares purchased
by the Plan Administrator in open market or negotiated purchases. We
do not know the number of shares that participants will purchase under the Plan
or the prices at which the shares will be sold to participants.
CERTAIN
FEDERAL INCOME TAX CONSEQUENCES
The
following is a brief summary of certain federal income tax considerations of
participation in the Plan. This summary is for general information
only and does not constitute tax advice. The information in this
section is based on the Internal Revenue Code of 1986, as amended (the “Code”),
Treasury Regulations thereunder, current administrative interpretations and
practices of the Internal Revenue Service (the “IRS”), and court decisions, all
as of the date of this prospectus. Future legislation, Treasury
Regulations, administrative interpretations and practices or court decisions
could significantly change the current law or adversely affect existing
interpretations of current law. Any change could apply retroactively
to transactions preceding the date of the change.
This
discussion assumes that you hold our common stock as a capital asset (i.e.,
property generally held for investment). This discussion does not
purport to deal with all aspects of taxation that may be relevant to you in
light of your personal investment circumstances, or if you are a type of
investor who is subject to special treatment under the Federal income tax laws
(including insurance companies, partnerships, tax-exempt organizations,
financial institutions or broker dealers, foreign corporations and persons who
are not citizens or residents of the United States.
The tax
consequences for participants who do not reside in the United States will vary
from jurisdiction to jurisdiction. In the case of a foreign
shareholder whose distributions are subject to U.S. income tax withholding, the
amount of the tax to be withheld will be deducted from the amount of the
distribution and only the balance will be reinvested.
If you
wish to participate in the Plan, you should consult your tax advisor regarding
the specific tax consequences (including the Federal, state, local and foreign
tax consequences) that may affect you if you participate in the Plan, and of
potential changes in applicable tax laws.
Tax
Consequences of Dividend Reinvestment
In the
case of shares of common stock purchased by the Plan Administrator from us, you
will be treated, for federal income tax purposes, as having received a
distribution equal to the fair market value, as of the investment date, of the
shares of common stock purchased with your reinvested dividends. This
amount includes the discount, if any, on reinvestment provided for by the
Plan. The fair market value should generally equal the average of the
daily high and low sale prices of our shares of common stock, as quoted by the
Nasdaq Global Select Market for the investment date.
In the
case of shares (including any fractional shares) purchased in market
transactions or in negotiated transactions with third parties, you will be
treated as having received a distribution equal to the amount of cash dividends
used to make those purchases, plus the amount of any brokerage fees paid by us
in connection with those purchases. You should be aware that, when we
pay brokerage fees on your behalf for shares purchased in market transactions,
the taxable income recognized by you as a participant in the Plan will be
greater than the taxable income that would have resulted solely from the receipt
of the dividend in cash.
The
distributions described above will constitute taxable dividend income to you to
the extent of our current and accumulated earnings and profits allocable to the
distributions. Under current law, which is scheduled to sunset at the end
of 2010, dividend income will be taxed to you (if you are an individual) at the
rates applicable to long-term capital gains, provided that a minimum holding
period and other requirements are satisfied. Dividends received after
2010 will be taxable to you at ordinary income rates. Any
distributions in excess of our current and accumulated earnings and profits will
constitute a return of capital that will reduce the basis of your shares of
common stock by the amount of the excess distribution, but not below
zero. To the extent that excess distributions exceed the tax basis in
your shares, and provided that you have held your shares as capital assets, you
will recognize capital gain, which will be taxable as long-term capital gain if
you have held your shares for more than one year.
The tax
basis of your shares of stock purchased with reinvested dividends will generally
equal the total amount of distributions you are treated as having received, as
described above. Your holding period in shares of common stock
(including fractional shares) acquired pursuant to the Plan will generally begin
on the day after the applicable dividend payment date in the case of shares
purchased from us and on the day after the shares are credited to your account
in the case of shares purchased in market transactions. Consequently,
shares of our common stock purchased at different times will have different
holding periods.
You will
not realize any income when you receive certificates for whole shares credited
to your account under the Plan, either upon withdrawal of those shares from your
Plan account or upon termination of the Plan. You will, however,
realize gain or loss upon the sale or exchange of shares held in the Plan and,
in the case of a fractional share, when you receive a cash payment for a
fraction of a share credited to your Plan account. You therefore will
recognize capital gain or loss equal to any difference between the amount of
cash you receive for the shares or fractional share and your tax basis
therein. Such capital gain or loss will be long-term capital gain or
loss if your holding period for your shares or fractional share exceeded one
year at the time of disposition.
Tax
Consequences of Optional Cash Payments
Participants
who choose to purchase additional shares by electing to make optional cash
payments, and who have also elected to have their dividends reinvested, will be
treated as having received a distribution equal to the excess, if any, of the
fair market value on the investment date of the shares of common stock purchased
over the amount of the cash payment made by the participant. The fair
market value should generally equal the average of the daily high and low sale
prices of our shares of common stock, as quoted by the Nasdaq Global Select
Market for the investment date. Any such distributions will be
subject to tax in accordance with the rules described above under "Tax
Consequences of Dividend Reinvestment." The tax treatment of
participants who purchase shares by
electing
to make optional cash payments or as an initial cash investment, but who have
not elected to have their dividends reinvested, is not entirely clear under
existing law. However, the IRS has indicated in certain private letter rulings
that such individuals will not be treated as having received a taxable
distribution with respect to any discount in purchase price offered pursuant to
the Plan. Private letter rulings are not binding on the IRS and
cannot be relied upon by any taxpayer other than those to whom the ruling is
addressed. Nevertheless such rulings often reflect the then-current
thinking of the IRS. Therefore, the tax treatment of a purchase of
shares under the Plan with an initial cash investment or an optional cash
investment may differ depending on whether you are participating in the dividend
reinvestment feature of the Plan.
The tax
basis of shares of common stock acquired by optional cash payments or as an
initial investment will generally equal the total amount of distribution you are
treated as having received, as described above, plus the amount of the cash
payment. Your holding period in such shares (including fractional
shares) generally begins on the day after the applicable dividend date in the
case of shares purchased from us and on the day after the shares are credited to
your account in the case of shares purchased in market
transactions.
Tax
Consequences of Dispositions
You may
realize gain or loss when shares of common stock are sold or exchanged, whether
the sale or exchange is made at your request upon withdrawal from the Plan or
takes place after withdrawal from or termination of the Plan and, in the case of
a fractional share, when you receive a cash payment for a fraction of a share of
common stock credited to your account. Assuming that shares have been
held as capital assets, such gain or loss will be capital in
nature. The amount of the capital gain or loss will be the difference
between the amount that you receive for the shares of common stock (including
fractional shares) and your tax basis in such shares or fraction
thereof. Net capital gains of individuals derived with respect to
capital assets held for more than one year are generally eligible for reduced
rates of taxation. The deductibility of capital losses is subject to
limitations.
Backup
Withholding and Information Reporting
Under
certain circumstances described below, we, or the Plan Administrator may be
required to deduct backup withholding on distributions paid to a shareholder,
regardless of whether those distributions are reinvested. Similarly,
the Plan Administrator may be required to deduct backup withholding from all
proceeds of sales of common shares held in a Plan account. A participant will be
subject to backup withholding if: (1) the participant has failed to properly
furnish us and the Plan Administrator with its taxpayer identification number;
(2) the IRS notifies us or the Plan Administrator that the identification number
furnished by the participant is incorrect; (3) the IRS notifies us or the Plan
Administrator that backup withholding should be commenced because the
participant has failed to report properly distributions paid to it; or (4) when
required to do so, the participant has failed to certify, under penalties of
perjury, that the participant is not subject to backup withholding.
Backup
withholding amounts will be withheld from dividends before those dividends are
reinvested under the Plan. Therefore, only this reduced amount will
be reinvested in Plan shares. Withheld amounts will generally
constitute a tax payment credited on such participant’s federal income tax
return.
The Plan
Administrator will report to you the amount of any dividends credited to your
account as well as any brokerage trading fees or other related charges paid by
us on your behalf. Such information will also be furnished to the IRS
to the extent required by law.
PLAN
OF DISTRIBUTION
Subject
to the discussion below, we may, at our sole discretion, distribute newly issued
shares of our common stock sold under the Plan. Alternatively, we may
purchase shares on the open market to be distributed pursuant to the
Plan. You will be responsible for certain fees, commissions and
expenses in connection with such transactions. The following is a
summary of fees for which you will be responsible:
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Dividend
Reinvestment
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None
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Optional
Cash Payments
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$5.00
fee for investments made via check or Internet payment (no fee per
transaction for investments made via recurring automatic investments
)
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Sale/Termination
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$15
per transaction (Batch order)
$25
per transaction (Market order)
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Safekeeping
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None
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Purchase
Commissions
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$0.12
per share on purchases (including reinvestment purchases) for shares
purchased on the open market, in addition to the applicable fees
above
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Sale
Commissions
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$0.12
per share sold
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In
connection with the administration of the Plan, we may be requested to approve
investments made pursuant to requests for waiver by or on behalf of existing
shareholders and new investors who may be engaged in the securities
business.
Persons
who acquire shares of our common stock through the Plan and resell them shortly
after acquiring them, including coverage of short positions, under certain
circumstances, may be participating in a distribution of securities that would
require compliance with Regulation M under the Securities Exchange Act of 1934,
and may be considered to be underwriters within the meaning of the Securities
Act of 1933. We will not extend to any such person any rights or
privileges other than those to which he, she or it would be entitled as a
participant, nor will we enter into any agreement with any such person regarding
the resale or distribution by any such person of the shares of our common stock
so purchased. We may, however, accept optional cash payments and
initial investments made pursuant to requests for waiver by such
persons.
From time
to time, financial intermediaries, including brokers and dealers, and other
persons may engage in positioning transactions in order to benefit from any
waiver discounts applicable to optional cash payments and initial investments
made pursuant to requests for waiver under the Plan. Those
transactions may cause fluctuations in the trading volume of our common
stock. Financial intermediaries and such other persons who engage in
positioning transactions may be deemed to be underwriters. We have no
arrangements or understandings, formal or informal, with any person relating to
the sale of shares of our common stock to be received under the
Plan. We reserve the right to modify, suspend or terminate
participation in the Plan by otherwise eligible persons to eliminate practices
that are inconsistent with the purposes of the Plan.
WHERE
YOU CAN FIND MORE INFORMATION
We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”). Accordingly, we file annual, quarterly
and current reports, proxy statements and other information with the
SEC. You may read and copy any reports, statements or other
information that we may file with the SEC at the SEC’s Public Reference Room at
100 F Street, N.E., Room 1580, Washington, D.C., 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy
and information statements and other information about issuers that file
electronically with the SEC. The address of the SEC’s Internet site is
http://www.sec.gov.
The SEC
allows us to incorporate by reference the information we file with them, which
means that we can disclose important information to you by referring you to
those documents. The information that we incorporate by reference is considered
to be a part of this prospectus, and the information we later file with the SEC
that is incorporated by reference in this prospectus will automatically update
information previously contained in this prospectus supplement, the accompanying
prospectus and any incorporated document. Any statement contained in
this prospectus or in a document incorporated by reference in this prospectus
will be deemed modified or superseded to the extent that a later statement
contained in this prospectus supplement or in an incorporated document modifies
or supersedes such earlier statement.
These
documents are available without charge to you on the Internet at
http://www.bannerbank.com or if you call or write to: Investor Relations, Banner
Corporation, P.O. Box 907, Walla Walla, Washington 99362, telephone:
(800) 272-9933. The reference to our website is not intended to
be an active link and the information on our website is not, and you must not
consider the information to be, a part of this prospectus.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
We are
incorporating by reference certain documents we file with the Securities and
Exchange Commission, which means that we can disclose important information to
you by referring you to those documents. Any information that we reference this
way is considered part of this prospectus.
We
incorporate by reference into this prospectus the documents listed below and any
future filings we make with the SEC under sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this
prospectus. These additional documents include periodic reports, such
as annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K (other than information furnished under Items 2.02 and 7.01,
which is deemed not to be incorporated by reference in this
prospectus). You should review these filings as they may disclose a
change in our business, prospects, financial condition or other affairs after
the date of this prospectus.
This
prospectus incorporates by reference the documents listed below that we have
filed with the SEC but have not been included or delivered with this
document:
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our
Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, filed with the SEC on March 14,
2008;
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our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008,
filed with the SEC on May 9, 2008;
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our
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2008, filed with the SEC on August 8, 2008;
and
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our
Current Reports on Form 8-K filed with the SEC on January 23, 2008, May 1,
2008, and May 6, 2008.
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These
documents contain important information about us and our financial
condition. Information contained in this prospectus supersedes
information incorporated by reference that we have filed with the SEC prior to
the date of this prospectus, while information that we file with the SEC after
the date of this prospectus that is incorporated by reference will automatically
update and supersede this information.
Our
filings are available on our website, www.bannerbank.com. Information
contained in or linked to our website is not a part of this
prospectus. You may also request a copy of these filings, at no cost,
by writing or telephoning us at:
Banner
Corporation
Attention:
Albert H. Marshall
10 S.
First Avenue
Walla
Walla, Washington 99362
(509)
526-8894
DESCRIPTION
OF SECURITIES
Immediately
after the closing of this offering, our authorized capital stock will consist of
25,000,000 shares of common stock, par value $0.01 per share, and 500,000 shares
of preferred stock, par value $0.01 per share. As of June 30, 2008,
there were outstanding 16,305,282 shares of common stock, held of record by
approximately 1,370 shareholders. There were also outstanding options
to purchase 629,379 shares of common stock. There were no shares of preferred
stock or options to purchase preferred stock outstanding.
The
description of our common stock set forth below supersedes and replaces, in its
entirety, the information appearing in the Form 8-A that we filed with the
SEC on August 8, 1995 and any amendment or report
filed
with the SEC for purposes of updating such description. The
description of some of the terms of our common stock, articles of incorporation
and bylaws and Washington law is not complete and is subject to, and qualified
in its entirety by reference to our articles of incorporation and bylaws or
Washington law. You should refer to the provisions of our articles of
incorporation and bylaws because they, and not the summaries, define the rights
of holders of shares of our common stock. Our articles of
incorporation and bylaws have been filed or incorporated by reference as
exhibits to the registration statement of which this prospectus is a part and
may be obtained by following the directions under the heading “Where You Can
Find More Information.”
Common
Stock
Except as
described below under “Anti-takeover Effects – Restrictions
on Voting Rights,” each holder of common stock is entitled to one vote
for each share on all matters to be voted upon by the common shareholders. There
are no cumulative voting rights. Subject to preferences to which holders of any
shares of preferred stock may be entitled, holders of common stock will be
entitled to receive ratably any dividends that may be declared from time to time
by the Board of Directors out of funds legally available for that purpose. In
the event of our liquidation, dissolution or winding up, holders of common stock
will be entitled to share in our assets remaining after the payment or provision
for payment of our debts and other liabilities, distributions or provisions for
distributions in settlement of the liquidation account established in connection
with the conversion of Banner Bank from the mutual to the stock form of
ownership, and the satisfaction of any liquidation preferences granted to the
holders of any shares of preferred stock that may be outstanding. Holders of
common stock have no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions that apply to the
common stock. All shares of common stock currently outstanding are fully paid
and nonassessable. The rights, preferences and privileges of the holders of
common stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock that we may designate in the
future.
Preferred
Stock
The Board
of Directors is authorized, subject to any limitations imposed by law, without
shareholder approval, from time to time to issue up to a total of 500,000 shares
of preferred stock, par value $0.01 per share, in one or more series, each
series to have rights and preferences, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as the
Board of Directors may determine. The issuance of preferred stock,
while providing desirable flexibility in connection with possible acquisitions
and other corporate purposes, could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire, a majority of our outstanding voting stock. We have no present
plans to issue any preferred stock.
Anti-takeover
Effects
The
provisions of our Articles of Incorporation, our Bylaws, and Washington law
summarized in the following paragraphs may have anti-takeover effects and may
delay, defer, or prevent a tender offer or takeover attempt that a shareholder
might consider to be in such shareholder’s best interest, including those
attempts that might result in a premium over the market price for the shares
held by shareholders, and may make removal of management more
difficult.
Authorized
Shares. Our Articles of Incorporation authorize the issuance
of 25,000,000 shares of common stock and 500,000 shares of preferred
stock. These shares of common stock and preferred stock provide our
Board of Directors with as much flexibility as possible to effect, among other
transactions, financings, acquisitions, stock dividends, stock splits and the
exercise of employee stock options. However, these additional
authorized shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of us. The
Board of Directors also has sole authority to determine the terms of any one or
more series of preferred stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix voting
rights for a series of preferred stock, the Board has the power to the extent
consistent with its fiduciary duty to issue a series of preferred stock to
persons friendly to management in order to attempt to block a tender offer,
merger or other transaction by which a third party seeks control of us, and
thereby assist members of management to retain their positions.
Restrictions on Voting
Rights. Our Articles of Incorporation provide for restrictions
on voting rights of shares owned in excess of 10% of any class of our equity
security. Specifically, our Articles of Incorporation provide that if
any person or group acting in concert acquires the beneficial ownership of more
than 10% of any
class of
our equity security without the prior approval by a two-thirds vote of our
“Continuing Directors,” (as defined therein) then, with respect to each vote in
excess of 10% of the voting power of our outstanding shares of voting stock
which such person would otherwise have been entitled to cast, such person shall
be entitled to cast only one-hundredth of one vote per
share. Exceptions from this limitation are provided for, among other
things, any proxy granted to one or more of our “Continuing Directors” and for
our employee benefit plans. Under our Articles of Incorporation, the
restriction on voting shares beneficially owned in violation of the foregoing
limitations is imposed automatically, and the Articles of Incorporation provide
that a majority of our Continuing Directors have the power to construe the
forgoing restrictions and to make all determinations necessary or desirable to
implement these restrictions. These restrictions would, among other
things, restrict voting power of a beneficial owner of more than 10% of our
outstanding shares of common stock in a proxy contest or on other matters on
which such person is entitled to vote.
Board of
Directors. Our Board of Directors is divided into three
classes, each of which contains approximately one-third of the members of the
Board. The members of each class are elected for a term of three
years, with the terms of office of all members of one class expiring each year
so that approximately one-third of the total number of directors is elected each
year. The classification of directors, together with the provisions
in our Articles of Incorporation described below that limit the ability of
shareholders to remove directors and that permit only the remaining directors to
fill any vacancies on the Board of Directors, have the effect of making it more
difficult for shareholders to change the composition of the Board of Directors.
As a result, at least two annual meetings of shareholders will be required for
the shareholders to change a majority of the directors, whether or not a change
in the Board of Directors would be beneficial and whether or not a majority of
shareholders believe that such a change would be desirable.
Our
Articles of Incorporation provides that the size of the Board shall be not less
than five or more than 25 as set in accordance with the Bylaws. In
accordance with the Bylaws, the number of directors is currently set at
15. The Articles of Incorporation provide that any vacancy occurring
in the Board, including a vacancy created by an increase in the number of
directors, shall be filled by a vote of two-thirds of the directors then in
office and any director so chosen shall hold office for a term expiring at the
annual meeting of shareholders at which the term of the class to which the
director has been chosen expires. The classified Board is intended to
provide for continuity of the Board of Directors and to make it more difficult
and time consuming for a shareholder group to fully use its voting power to gain
control of the Board of Directors without the consent of incumbent members of
the Board. The Articles of Incorporation further provide that a
director may be removed from the Board of Directors prior to the expiration of
his term only for cause and only upon the vote of the holders of 80% of the
total votes eligible to be cast thereon. In the absence of this
provision, the vote of the holders of a majority of the shares could remove the
entire Board, but only with cause, and replace it with persons of such holders'
choice.
Cumulative Voting, Special Meetings
and Action by Written Consent. Our Articles of Incorporation
do not provide for cumulative voting for any purpose. Moreover, the
Articles of Incorporation provide that special meetings of shareholders may be
called only by our Board of Directors or a committee of the Board. In
addition, our Bylaws require that any action taken by written consent must
receive the consent of all of the outstanding voting stock entitled to vote on
the action taken.
Shareholder Vote Required to Approve
Business Combinations with Principal Shareholders. The
Articles of Incorporation require the approval of the holders of at least 80% of
our outstanding shares of voting stock to approve certain "Business
Combinations" (as defined therein) involving a "Related Person" (as defined
therein) except in cases where the proposed transaction has been approved in
advance by two-thirds of those members of Banner Corporation’s Board of
Directors who are unaffiliated with the Related Person and were directors prior
to the time when the Related Person became a Related Person. The term
"Related Person" is defined to include any individual, corporation, partnership
or other entity (other than tax-qualified benefit plans of Banner Corporation)
which owns beneficially or controls, directly or indirectly, 10% or more of the
outstanding shares of common stock of Banner Corporation or an affiliate of such
person or entity. This provision of the Articles of Incorporation
applies to any "Business Combination," which is defined to
include: (i) any merger or consolidation of Banner Corporation with
or into any Related Person; (ii) any sale, lease, exchange, mortgage, transfer,
or other disposition of 25% or more of the assets of Banner Corporation to a
Related Person; (iii) any merger or consolidation of a Related Person with or
into Banner Corporation or a subsidiary of Banner Corporation; (iv) any sale,
lease, exchange, transfer, or other disposition of certain assets of a Related
Person to Banner Corporation or a subsidiary of Banner Corporation; (v) the
issuance of any securities of Banner Corporation or a subsidiary of Banner
Corporation to a Related Person; (vi) the acquisition by Banner Corporation or a
subsidiary of Banner Corporation of any securities of a Related Person; (vii)
any reclassification of common stock of Banner Corporation or any
recapitalization involving the
common
stock of Banner Corporation; or (viii) any agreement or other arrangement
providing for any of the foregoing.
Washington
law imposes restrictions on certain transactions between a corporation and
certain significant shareholders. Chapter 23B.19 of the Washington Business
Corporation Act prohibits a "target corporation," with certain exceptions, from
engaging in certain "significant business transactions" with an "Acquiring
Person" who acquires 10% or more of the voting securities of a target
corporation for a period of five years after such acquisition, unless the
transaction or acquisition of shares is approved by a majority of the members of
the target corporation's board of directors prior to the date of the acquisition
or, at or subsequent to the date of the acquisition, the transaction is approved
by a majority of the members of the target corporation’s board of directors and
authorized at a shareholders’ meeting by the vote of at least two-thirds of the
outstanding voting shares of the target corporation, excluding shares owned or
controlled by the Acquiring Person. The prohibited transactions
include, among others, a merger or consolidation with, disposition of assets to,
or issuance or redemption of stock to or from, the Acquiring Person, termination
of 5% or more of the employees of the target corporation as a result of the
Acquiring Person's acquisition of 10% or more of the shares, or allowing the
Acquiring Person to receive any disproportionate benefit as a shareholder. After
the five-year period during which significant business transactions are
prohibited, certain significant business transactions may occur if certain "fair
price" criteria or shareholder approval requirements are met. Target
corporations include all publicly-traded corporations incorporated under
Washington law, as well as publicly traded foreign corporations that meet
certain requirements.
Amendment of Articles of
Incorporation and Bylaws. Amendments to our Articles of
Incorporation must be approved by our Board of Directors by a majority vote of
the Board and by our shareholders by a majority of the voting group comprising
all the votes entitled to be cast on the proposed amendment, and a majority of
each other voting group entitled to vote separately on the proposed amendment;
provided, however, that the affirmative vote of the holders of at least 80% of
votes entitled to be cast by each separate voting group entitled to vote thereon
(after giving effect to the provision limiting voting rights, if applicable) is
required to amend or repeal certain provisions of the Articles of Incorporation,
including the provision limiting voting rights, the provisions relating to the
removal of directors, shareholder nominations and proposals, the approval of
certain business combinations, calling special meetings, director and officer
indemnification by us and amendment of our Bylaws and Articles of
Incorporation. Our Bylaws may be amended by a majority vote of our
Board of Directors, or by a vote of 80% of the total votes entitled to vote
generally in the election of directors at a duly constituted meeting of
shareholders.
Shareholder Nominations and
Proposals. Our Articles of Incorporation generally require a
shareholder who intends to nominate a candidate for election to the Board of
Directors, or to raise new business at a shareholder meeting to give not less
than 30 nor more than 60 days' advance notice to the Secretary of Banner
Corporation. The notice provision requires a shareholder who desires
to raise new business to provide certain information to us concerning the nature
of the new business, the shareholder and the shareholder's interest in the
business matter. Similarly, a shareholder wishing to nominate any
person for election as a director must provide us with certain information
concerning the nominee and the proposing shareholder.
The
cumulative effect of the restrictions on a potential acquisition of us that are
contained in our Articles of Incorporation and Bylaws, and federal and
Washington law, may be to discourage potential takeover attempts and perpetuate
incumbent management, even though certain shareholders may deem a potential
acquisition to be in their best interests, or deem existing management not to be
acting in their best interests.
EXPERTS
The
consolidated statements of financial condition of Banner Corporation and
subsidiaries as of December 31, 2007 and 2006, and the related consolidated
statements of income, comprehensive income, changes in stockholders’ equity, and
cash flows for each of the years in the three-year period ended December 31,
2007, the Company’s internal controls over financial reporting as of December
31, 2007, have been incorporated in this prospectus by reference to the Annual
Report on Form 10-K for the year ended December 31, 2007, in reliance on the
reports of Moss Adams LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and
accounting.
PART
II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
The
following table sets forth the estimated expenses in connection with the
issuance and distribution of the securities covered by the Registration
Statement of which this prospectus is a part. We will bear all of these
expenses.
| Registration fee
under the Securities Act |
$ 1,212 |
|
| Legal fees and
expenses* |
$ 25,000 |
|
| Accounting fees and
expenses* |
$ 5,000 |
|
| Printing and other
miscellaneous fees and expenses* |
$ 6,000 |
|
| Total |
$
37,212 |
|
*Estimated
solely for the purpose of this Item. Actual expenses may be more or
less.
Item
15. Indemnification of Officers and Directors
Banner is
organized under the Washington Business Corporation Act (the "WBCA") which, in
general, empowers Washington corporations to indemnify a person made a party to
a threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal, other
than an action by or in the right of the corporation, by reason of the fact that
such person is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
partner, trustee, employee or agent of another enterprise, against expenses,
including attorney's fees, judgments, amounts paid in settlements, penalties and
fines actually and reasonably incurred in connection therewith if the person
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation or its shareholders and, with respect
to a criminal action or proceeding, if the person had no reasonable cause to
believe his or her conduct was unlawful. Washington corporations may not
indemnify a person in connection with such proceedings if the person was
adjudged to have received an improper personal benefit.
The WBCA
also empowers Washington corporations to provide similar indemnity to such a
person in connection with actions or suits by or in the right of the corporation
if the person acted in good faith and in a manner the person reasonably believed
to be in or not opposed to the interests of the corporation or its shareholders,
unless the person was adjudged liable to the corporation.
If
authorized by the articles of incorporation of a Washington corporation or by
its shareholders, a Washington corporation may indemnify and advance expenses to
the persons described above without regard to the limitations described above,
provided that such indemnity will not cover acts or omissions of the person
finally adjudged to be intentional misconduct or a knowing violation of law,
conduct finally adjudged to involve a violation of WBCA Section 310 (related to
certain unlawful distributions), and any transaction with respect to which it
was finally adjudged that the person received a benefit to which such person was
not legally entitled.
The WBCA
also permits a Washington corporation to purchase and maintain on behalf of such
person insurance against liabilities incurred in such capacities. Banner has
obtained a policy of directors' and officers' liability insurance.
The WBCA
further permits Washington corporations to limit the personal liability of
directors for a breach of their fiduciary duty. However, the WBCA does not
eliminate or limit the liability of a director for any of the following: (i)
acts or omissions that involve intentional misconduct by a director or a knowing
violation of law by a director; (ii) conduct violating WBCA Section 310; or
(iii) any transaction from which the director will personally receive a benefit
in money, property or services to which the director is not legally
entitled.
Banner's
Articles of Incorporation and Bylaws
Banner's
articles of incorporation limit the personal liability of directors for a breach
of their fiduciary duty except for under the circumstances required to excepted
under Washington law described above.
Banner's
articles of incorporation generally require Banner to indemnify directors,
officers, employees and agents to the fullest extent legally possible under the
WBCA. In addition, the articles of incorporation require Banner to similarly
indemnify any such person who is or was serving at the request of Banner as a
director, officer, partner, trustee, employee or agent of another entity.
Banner's articles of incorporation further provide for the advancement of
expenses under certain circumstances.
Item
16. Exhibits
The
following exhibits are filed with or incorporated by reference into this
Registration Statement:
|
Exhibit
Number
|
|
Description
of Document
|
|
|
|
|
|
4.1
|
|
Articles
of Incorporation of the Registrant(1)
|
|
|
|
|
|
4.2
|
|
Bylaws
of the Registrant(2)
|
|
|
|
|
|
5
|
|
Opinion
of Breyer & Associates PC
|
|
|
|
|
|
23.1
|
|
Consent
of Moss Adams LLP
|
|
|
|
|
|
23.3
|
|
Consent
of Breyer & Associates PC (contained in its opinion filed as Exhibit
5)
|
|
|
|
|
|
24
|
|
Power
of attorney (contained in the signature page of the Registration
Statement)
|
|
________________
|
|
|
(1)
|
Incorporated
by reference to Exhibit B to the Proxy Statement for the Annual Meeting of
Stockholders dated June 10,
1998.
|
|
|
(2)
|
Incorporated
by reference to Exhibit 3.2 filed with the Current Report on Form 8-K
dated December 18, 2007.
|
Item
17. Undertakings
(a) The
undersigned Registrant hereby undertakes:
1. To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change in
such information in the Registration Statement;
Provided,
however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the Registration Statement.
2. That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(b) The
undersigned Registrant hereby undertakes that, for the purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant’s
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officer and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of Walla
Walla, State of Washington, on the 26th day of August, 2008.
|
|
|
BANNER
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/D.
Michael Jones |
|
|
|
|
D.
Michael Jones
President
and Chief Executive Officer
(Duly
Authorized Representative)
|
POWER
OF ATTORNEY
Each of
the undersigned hereby constitutes and appoints D. Michael Jones and Lloyd W.
Baker, and each and either of them, as such person's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for such person and in such person's name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as such person might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his or her substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
|
SIGNATURE
|
TITLE
|
DATE
|
| |
|
|
| /s/
D. Michael Jones |
|
|
|
D.
Michael Jones
|
President & Chief Executive Officer
(Principal Executive Officer)
|
August
26, 2008
|
| |
|
|
| /s/
Lloyd W. Baker |
|
|
|
Lloyd
W. Baker
|
Treasurer and Chief Financial Officer
(Principal
Financial and Accounting
Officer)
|
August
26, 2008
|
| |
|
|
| /s/
Robert D. Adams |
|
|
|
Robert
D. Adams
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/ Gordon
E. Budke |
|
|
|
Gordon
E. Budke
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
David B. Casper |
|
|
|
David
B. Casper
|
Director
|
August
26, 2008
|
| /s/
Edward L. Epstein |
|
|
|
Edward
L. Epstein
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Jesse G. Foster |
|
|
|
Jesse
G. Foster
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/ David
A. Klaue |
|
|
|
David
A. Klaue
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Constance H. Kravas |
|
|
| Constance
H. Kravas |
Director |
August
26, 2008 |
| |
|
|
| |
|
|
| /s/
Robert J. Lane |
|
|
|
Robert
J. Lane
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
John R. Layman |
|
|
|
John
R. Layman
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/ Dean
W. Mitchell |
|
|
|
Dean
W. Mitchell
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Brent A. Orrico |
|
|
|
Brent
A. Orrico
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Wilber Pribilsky |
|
|
|
Wilber
Pribilsky
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Gary Sirmon |
|
|
|
Gary
Sirmon
|
Director
|
August
26, 2008
|
| |
|
|
| |
|
|
| /s/
Michael M. Smith |
|
|
|
Michael
M. Smith
|
Director
|
August
26, 2008
|
EXHIBIT INDEX
|
Exhibit
|
|
Description
of Document
|
|
|
|
|
|
4.1
|
|
Articles
of Incorporation of the Registrant(1)
|
|
|
|
|
|
4.2
|
|
Bylaws
of the Registrant(2)
|
|
|
|
|
|
5
|
|
Opinion
of Breyer & Associates PC
|
|
|
|
|
|
23.1
|
|
Consent
of Moss Adams LLP
|
|
|
|
|
|
23.3
|
|
Consent
of Breyer & Associates PC (contained in its opinion filed as Exhibit
5)
|
|
|
|
|
|
24
|
|
Power
of attorney (contained in the signature page of the Registration
Statement)
|
|
_________________
|
|
(1)
|
Incorporated
by reference to Exhibit B to the Proxy Statement for the Annual Meeting of
Stockholders dated June 10,
1998.
|
(2) Incorporated
by reference to Exhibit 3.2 filed with the Current Report on Form 8-K dated
December 18, 2007.
Exhibit
5
Opinion
of Breyer & Associates PC
[Letterhead
of Breyer & Associates PC]
August
26, 2008
Board of
Directors
Banner
Corporation
10 S.
First Avenue
Walla
Walla, Washington 99362
Ladies
and Gentlemen:
We have
acted as special counsel to Banner Corporation, a Washington corporation (the
“Company”), in connection with the preparation of the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission (“Registration
Statement”) under the Securities Act of 1933, as amended, relating to 3,000,000
shares of common stock, $0.01 par value per share (the “Common Stock”) of the
Company, to be offered upon the terms and subject to the conditions set forth in
the Banner Corporation Dividend Reinvestment and Direct Stock Purchase and Sale
Plan (the “Plan”) included in the Registration Statement. The
Registration Statement also registers an indeterminate number of additional
shares which may be necessary to adjust the number of shares registered thereby
for issuance as the result of a stock split, stock dividend or similar
adjustment of the number of issued and outstanding shares of Common
Stock. You have requested the opinion of this firm with respect to
certain legal aspects of the proposed offering.
We have
reviewed the Registration Statement, the Articles of Incorporation and Bylaws of
the Company, the Plan, a specimen stock certificate evidencing the Common Stock
and such other documents and records as we have deemed necessary for purposes of
this opinion. We are relying upon the originals, or copies certified
or otherwise identified to our satisfaction, of the corporate records of the
Company and such other instruments, certificates and representations of public
officials, officers and representatives of the Company as we have deemed
applicable or relevant as a basis for the opinions set forth below. In addition,
we have assumed, without independent verification, the genuineness of all
signatures and the authenticity of all documents furnished to us and the
conformance in all respects of copies to originals, the legal capacity of all
persons or entities executing the same, the lack of any undisclosed termination,
modification, waiver or amendment to any document reviewed by us and the due
authorization, execution and delivery of all documents where due authorization,
execution and delivery are prerequisites to the effectiveness
thereof. We have also assumed that the certificates representing the
Common Stock will be when issued, properly signed by authorized officers of the
Company or their agents. Furthermore, we have made such factual
inquiries and reviewed such laws as we determined to be relevant for the
purposes of this opinion.
We are
admitted to practice law in the District of Columbia, and we render this opinion
only with respect to, and express no opinion herein concerning the application
or effect of the laws of any jurisdiction other than, the existing laws of the
United States of America and of the State of Washington.
In
connection with our opinion expressed below, we have assumed that, at or prior
to the time of the delivery of any shares of Common Stock under the Plan, the
Registration Statement will have been declared effective under the Securities
Act of 1933, as amended, that the registration will apply to such shares of
Common Stock and will not have been modified or rescinded and that there will
not have occurred any change in law affecting the validity of the issuance of
such shares of Common Stock.
Based on
the foregoing, and subject to the assumptions set forth herein, we are of the
opinion as of the date hereof that the shares of Common Stock that may be issued
pursuant to the Plan, upon receipt by the Company of any consideration required
thereby, as applicable, will be legally issued, fully paid and non-assessable
shares of Common Stock.
Board of
Directors
Banner
Corporation
August
26, 2008
Page
2
We
consent to the use of this opinion as an exhibit to the Registration Statement
and further consent to all references to us, if any, in the Registration
Statement, the Prospectus constituting a part thereof and any amendments
thereto. This opinion is intended solely for use in connection with
issuance and sale of shares subject to the Registration Statement and is not to
be relied upon for any other purpose. We assume no obligation to
advise you of any fact, circumstance, event or change in the law or the facts
that may hereafter be brought to our attention whether or not such occurrence
would affect or modify the opinions expressed herein.
We hereby
consent to the filing of this opinion as an exhibit to the Registration
Statement on Form S-3.
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
/s/Breyer
& Associates PC |
|
|
|
|
|
BREYER
& ASSOCIATES PC
|
Exhibit
23.1
Consent
of Moss Adams LLP
Consent
of Independent Registered Public Accounting Firm
The Board
of Directors
Banner
Corporation
Walla
Walla, Washington
We
consent to incorporation by reference in the Registration Statement on Form S-3
of Banner Corporation, relating to the Banner Corporation Dividend Reinvestment
and Direct Stock Purchase and Sale Plan, of our report dated March 14,
2008, with respect to the consolidated statements of financial condition of
Banner Corporation and subsidiaries as of December 31, 2007 and 2006, and
the related consolidated statements of income, comprehensive income, changes in
stockholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2007, the Company’s internal controls over
financial reporting as of December 31, 2007, which appears in the
December 31, 2007, annual report on Form 10-K of Banner
Corporation.
/s/Moss Adams LLP
Spokane,
Washington
August
25, 2008