SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 25, 2006
Banner Corporation
(Exact name of registrant as specified in its charter)
Washington	0-26584	91-1691604
State or other jurisdiction	Commission	(I.R.S. Employer
of incorporation	File Number	Identification No.)
10 S. First Avenue, Walla Walla, Washington		99362
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number (including area code) (509) 527-3636
Not Applicable
(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[   ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
        240.14d-2(b))

[   ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
        240.13e-4(c))

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Item 2.02 Results of Operations and Financial Condition

        On April 25, 2006, Banner Corporation issued its earnings release for the quarter ended March 31, 2006. A copy of the earnings release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

            (c)            Exhibits

            99.1         Press Release of Banner Corporation dated April 25, 2006.

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 SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	BANNER CORPORATION
Date: April 25, 2006	By: /s/D. Michael Jones
	D. Michael Jones
	President and Chief Executive Officer

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Exhibit 99.1

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                                                                                CONTACT:     D. MICHAEL JONES,
                                                                                                        PRESIDENT AND CEO
                                                                                                        LLOYD W. BAKER,CFO
                                                                                                        (509) 527-3636

News Release

BANNER CORPORATION'S FIRST QUARTER PROFITS INCREASE 44%
TO RECORD $6.8 MILLION

Walla Walla, WA - April 25, 2006 - Banner Corporation (Nasdaq: BANR), the parent company of Banner Bank, today reported improved net interest margin contributed to record first quarter earnings. In the first quarter of 2006, net income increased 44% to $6.8 million, or $0.56 per diluted share, compared to $4.7 million, or $0.39 per diluted share, in the first quarter a year ago.

"Dramatic improvement in our first quarter net interest margin was a result of our balance sheet restructuring completed at the end of 2005, changes in the mix of our loan portfolio and our growing ability to attract and retain core deposits. As planned, the restructuring transactions eliminated positions that had become a significant drag on earnings and now allow us to place less reliance on wholesale assets and liabilities," said D. Michael Jones, President and CEO. "In addition, the substantial growth in loans and deposits has strengthened our net interest income and contributed to the margin expansion. We have invested significant time and resources in expanding our branch network, adding twelve branches and relocating four others in the past 15 months. The 26% increase in non-interest bearing deposits this year over last is a direct result of franchise growth and our ongoing emphasis on building our deposit base system-wide."

In the fourth quarter of 2005, Banner sold $207 million of securities and prepaid $142 million of high-cost, fixed-term Federal Home Loan Bank (FHLB) borrowings. The remainder of the proceeds were applied to repay other relatively high-cost short-term borrowings from the FHLB.

First Quarter 2006 Highlights (compared to first quarter 2005)

• Net income increased 44% to $6.8 million.
• Net interest margin improved 53 basis points to 4.24%.
• Revenues advanced 18% to $34.4 million.
• Net interest income before provision for loan losses grew 19% to $29.9 million.
• Loans increased 19% to $2.54 billion.
• Non-interest bearing deposits increased 26% to $325.3 million and total deposits increased 21% to $2.42 billion.
• Credit quality continues to improve with non-performing assets down 54% and representing 0.28% of total assets.

Income Statement Review

Banner's net interest margin improved 31 basis points to 4.24% for the first quarter of 2006 from 3.93% in the previous quarter, and gained 53 basis points from 3.71% in the first quarter a year ago. "In addition to the benefits from the restructuring transactions, net interest margin also expanded as a result of our success in attracting higher earning loans and lower cost deposits. Further, the net interest margin has benefited modestly as rising interest rates have had a more immediate impact on floating rate loan yields than on the rates paid on most deposit products. We expect our net interest margin to further expand as we continue to replace high-cost funding with non-interest bearing and other transaction deposits," said Jones. Funding costs increased 22 basis points compared to the previous quarter and 72 basis points from the first quarter a year earlier. Asset yields, however, were also higher, increasing by 53 basis points from the prior linked q uarter and 125 basis points from a year ago.

Revenues (net interest income before the provision for loan losses plus other operating income) grew 18% to $34.4 million in the first quarter compared to $29.2 million in the first quarter of 2005. For the first quarter of 2006, net interest income before the provision for loan losses increased 19% to $29.9 million compared to $25.2 million in the same quarter a year ago. Net interest income included approximately $400,000 of non-accrued delinquent interest collected in the first quarter. "Over the past few years, we have adopted a conservative approach to loan classification and accounting for problem loans. As the economic recovery in the Pacific Northwest accelerates, we believe there will be additional opportunities to recognize the collection of past-due interest and generate recoveries from previously charged-off loans in future periods," said Jones.

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BANR-First Quarter 2006 Results
April 25, 2006
Page 2

Total other operating income for the first quarter increased 13% to $4.5 million compared to $4.0 million in the same quarter last year. Income from deposit fees and other service charges increased 25% to $2.5 million in the first quarter, reflecting the strong growth in deposit accounts and balances. Income from mortgage banking operations increased slightly from the fourth quarter of 2005 and decreased only 6% from the first quarter of 2005, despite the effect of rising interest rates on demand for residential loans, particularly in the refinance sector.

Other operating expenses were $23.2 million in the first quarter of 2006, up 9% from $21.3 million in the first quarter a year ago, and down 3% from operating expenses (excluding FHLB prepayment fees) in the fourth quarter of 2005. The ratio of other operating expense (expense ratio) to average assets was 3.09% in the first quarter of 2006, compared to 2.95% for the first quarter last year and 3.05% (excluding FHLB prepayment fees) for the fourth quarter of 2005.

"In the first quarter we opened a branch office in Meridian, Idaho and made progress on the construction of two additional southwestern Idaho branch offices, which we expect to open later this year. We continue to explore further branch expansion opportunities in our major markets: the Puget Sound area, the Portland, Oregon area and southwestern Idaho. Although expenses were down on a linked quarter basis, we expect to see higher operating expenses in future periods as a result of our expansion. However, over time these new branches should further improve our profitability by providing low-cost deposits and proportionately reducing our borrowings from the Federal Home Loan Bank, which were cut by more than half in the last year," said Jones.

Banner's return on equity (ROE) was 12.07% for the first quarter compared to 8.69% a year ago. The efficiency ratio was 67.42% in the quarter ended March 31, 2006, versus 72.89% a year earlier.

Balance Sheet Review

Net loans increased $407 million, or 19%, to $2.54 billion at March 31, 2006, compared to $2.13 billion a year earlier. "Loan production for the quarter was strong and the major components of the loan portfolio showed significant growth over the prior year's balances," said Jones. "Compared to a year ago, we increased commercial and multifamily real estate loans 6%, construction and land loans 43%, commercial and agricultural business loans 9% and consumer loans 21%. In addition, our credit quality continues to improve."

Total deposits increased $422 million, or 21%, to $2.42 billion at March 31, 2006, compared to $1.99 billion at the end of March 2005. Non-interest bearing deposits increased 26% at quarter-end compared to a year earlier. Total transaction and savings accounts increased 20% during the twelve months ending March 31, 2006, while certificates of deposit increased 22%. "We have seen a shift towards certificates of deposits as interest rates have risen to a level customers find attractive; however, we continue to have significant success in adding transaction and savings accounts as well," noted Jones. "As we continue to expand our delivery system, we are adding customers and account totals, as well as deposit balances, which should contribute to continued earnings growth in future periods."

Largely as a result of the restructuring transactions in the fourth quarter of 2005, but also reflecting maturities and principal prepayments, the securities portfolio declined by 49% to $299 million at March 31, 2006, from $591 million a year earlier. Similarly, FHLB borrowings declined by 55% to $269 million at March 31, 2006, from $595 million a year earlier and were nearly unchanged from the level at December 31, 2005.

Assets were $3.12 billion at March 31, 2006, a 5% increase from $2.97 billion a year earlier. Book value per share improved to $19.05 at March 31, 2006, from $18.55 a year earlier, and tangible book value per share was $15.99 at quarter-end, compared to $15.40 a year earlier.

Credit Quality

Non-performing assets decreased 54% to $8.6 million, or 0.28% of total assets, at March 31, 2006, compared to $18.9 million, or 0.64% of total assets, a year ago, reflecting significant progress in reducing credit risk. Non-performing assets decreased 21% compared to the previous quarter. "We successfully resolved one of our largest problem credit issues during the quarter, which resulted in a substantial decrease in non-performing loans and the collection of more than $550,000 in delinquent interest and attorneys' fees," said Jones. The provision for loan losses for the first quarter was $1.2 million, relatively unchanged from the provision in the first quarter of 2005. Net loan charge-offs in the first quarter of 2006 were $204,000, or 0.01% of average loans outstanding, compared to $1.1 million, or 0.05% of average loans outstanding in the first quarter of 2005. At March 31, 2006, the allowance for loan losses totaled $31.9 million, representing 1.24% of total loans outstanding.

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BANR-First Quarter 2006 Results
April 25, 2006
Page 3

Conference Call

The Company will host a conference call on Wednesday, April 26, 2006, at 8:00 a.m. PDT, to discuss first quarter results. The conference call can be accessed live by telephone at 303-262-2139. To listen to the call online, go to the Company's website at www.bannerbank.com or to www.fulldisclosure.com. Institutional investors may access the call via the subscriber-only site, www.streetevents.com. An archived recording of the call can be accessed by dialing 303-590-3000, passcode 11057624# until Wednesday, May 3, 2006 or via the Internet at www.fulldisclosure.com.

About the Company

Banner Corporation is the parent company of Banner Bank, a commercial bank that operates a total of 58 branch offices and 12 loan offices in 24 counties in Washington, Oregon and Idaho. Banner Bank serves the Pacific Northwest region with a full range of deposit services and business, commercial real estate, construction, residential, agricultural and consumer loans. Visit Banner Bank on the Web at www.bannerbank.com.

Statements concerning future performance, developments or events, expectations for earnings, growth and market forecasts, and any other guidance on future periods, constitute forward-looking statements, which are subject to a number of risks and uncertainties that are beyond Banner's control and might cause actual results to differ materially from the expectations and stated objectives. Factors which could cause actual results to differ materially include, but are not limited to, regional and general economic conditions, management's ability to generate continued improvement in asset quality and profitability, changes in interest rates, deposit flows, demand for mortgages and other loans, real estate values, competition, loan delinquency rates, the successful operation of the newly-opened branches and loan offices, changes in accounting principles, practices, policies or guidelines, changes in legislation or regulation, other economic, competitive, governmental, regulatory and technological factors affecting operations, pricing, products and services and Banner's ability to successfully resolve outstanding credit issues and/or recover check kiting losses and other risks detailed in Banner's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Accordingly, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. Banner undertakes no responsibility to update or revise any forward-looking statements.

(tables follow)

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BANR-First Quarter 2006 Results
April 25, 2006
Page 4

RESULTS OF OPERATIONS				Quarters Ended
( In thousands except share and per share data )				Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
INTEREST INCOME:
	Loans receivable		$	49,126	$	45,773	$	36,137
	Mortgage-backed securities			2,083		2,747		3,673
	Securities and cash equivalents			1,778		2,644		2,849
				52,987		51,164		42,659
INTEREST EXPENSE:
	Deposits			17,431		15,607		10,414
	Federal Home Loan Bank advances			3,126		4,442		5,617
	Other borrowings			698		569		332
	Junior subordinated debentures			1,828		1,788		1,067
				23,083		22,406		17,430
	Net interest income before provision for loan losses			29,904		28,758		25,229
PROVISION FOR LOAN LOSSES				1,200		1,100		1,203
	Net interest income			28,704		27,658		24,026
OTHER OPERATING INCOME:
	Deposit fees and other service charges			2,492		2,516		2,004
	Mortgage banking operations			1,152		1,099		1,231
	Loan servicing fees			390		315		439
	Miscellaneous			468		321		323
				4,502		4,251		3,997
	Gain (loss) on sale of securities			- -		(7,310)		- -
	Total other operating income (loss)			4,502		(3,059)		3,997
OTHER OPERATING EXPENSE:
	Salary and employee benefits			15,489		15,337		13,793
	Less capitalized loan origination costs			(2,592)		(2,342)		(2,041)
	Occupancy and equipment			3,794		3,623		3,227
	Information / computer data services			1,300		1,214		1,117
	Miscellaneous			5,207		5,975		5,207
				23,198		23,807		21,303
	FHLB prepayment penalties			- -		6,077		- -
	Total other operating expense			23,198		29,884		21,303
	Income (loss) before provision for income taxes			10,008		(5,285)		6,720
PROVISION (BENEFIT) FOR INCOME TAXES				3,220		(2,340)		2,013
NET INCOME (LOSS)			$	6,788	$	(2,945)	$	4,707
Earnings (loss) per share
		Basic	$	0.58	$	(0.25)	$	0.41
		Diluted	$	0.56	$	(0.25)	$	0.39
Cumulative dividends declared per common share			$	0.18	$	0.18	$	0.17
Weighted average shares outstanding
		Basic		11,789,858		11,635,243		11,470,028
		Diluted		12,124,533		12,006,686		11,920,812
Shares repurchased during the period				8,068		24,924		8,028
PROFORMA DISCLOSURES OF FOURTH QUARTER 2005 RESTRUCTURING CHARGES
NET INCOME (LOSS) from above			$	6,788	$	(2,945)	$	4,707
	ADJUSTMENTS FOR BALANCE-SHEET
		RESTRUCTURING CHARGES
	Loss on sale of securities			- -		7,310		- -
	FHLB prepayment penalties			- -		6,077		- -
	Income tax benefit related to restructuring charges			- -		(4,819)		- -
		Restructuring charges net of income tax benefit		- -		8,568		- -
NET INCOME FROM RECURRING OPERATIONS			$	6,788	$	5,623	$	4,707
Earnings per share EXCLUDING restructuring charges
		Basic	$	0.58	$	0.48	$	0.41
		Diluted	$	0.56	$	0.47	$	0.39

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BANR-First Quarter 2006 Results
April 25, 2006
Page 5

FINANCIAL CONDITION
( In thousands except share and per share data )			Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
ASSETS
Cash and due from banks		$	82,923	$	116,448	$	57,994
Securities available for sale			249,012		260,284		540,706
Securities held to maturity			49,993		50,949		50,515
Federal Home Loan Bank stock			35,844		35,844		35,844
Loans receivable:
	Held for sale		4,208		4,779		3,217
	Held for portfolio		2,566,323		2,434,952		2,158,620
	Allowance for loan losses		(31,894)		(30,898)		(29,736)
			2,538,637		2,408,833		2,132,101
Accrued interest receivable			16,881		17,395		15,982
Real estate owned held for sale, net			287		315		1,034
Property and equipment, net			51,136		50,205		42,261
Goodwill and other intangibles, net			36,306		36,280		36,347
Deferred income tax asset, net			8,488		7,606		7,964
Bank-owned life insurance			37,313		36,930		35,773
Other assets			15,137		19,466		16,261
		$	3,121,957	$	3,040,555	$	2,972,782
LIABILITIES
Deposits:
	Non-interest-bearing	$	325,265	$	328,840	$	257,437
	Interest-bearing transaction and savings accounts		801,048		792,370		678,483
	Interest-bearing certificates		1,290,143		1,202,103		1,058,610
			2,416,456		2,323,313		1,994,530
Advances from Federal Home Loan Bank			268,930		265,030		594,958
Other borrowings			78,900		96,849		63,263
Junior subordinated debentures			97,942		97,942		72,168
Accrued expenses and other liabilities			26,907		29,503		25,294
Deferred compensation			6,546		6,253		5,531
Income taxes payable			591		- -		3,375
			2,896,272		2,818,890		2,759,119
STOCKHOLDERS' EQUITY
Common stock			131,574		130,573		127,829
Retained earnings			101,417		96,783		95,082
Accumulated other comprehensive income ( loss )			(4,384)		(2,736)		(5,613)
Unearned shares of common stock issued to Employee Stock
	Ownership Plan ( ESOP ) trust: at cost		(2,494)		(2,480)		(3,096)
Net carrying value of stock related deferred compensation plans			(428)		(475)		(539)
			225,685		221,665		213,663
		$	3,121,957	$	3,040,555	$	2,972,782
Shares Issued:
Shares outstanding at end of period			12,146,992		12,082,476		11,890,541
	Less unearned ESOP shares at end of period		301,786		300,120		374,595
Shares outstanding at end of period excluding unearned ESOP shares			11,845,206		11,782,356		11,515,946
Book value per share (1)		$	19.05	$	18.81	$	18.55
Tangible book value per share (1)		$	15.99	$	15.73	$	15.40
Consolidated Tier 1 leverage capital ratio			8.96%		8.59%		8.72%
(1)	-   Calculation is based on number of shares outstanding at the end of the period rather than weighted        average shares outstanding and excludes unallocated shares in the employee stock ownership plan     ( ESOP ).

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BANR-First Quarter 2006 Results
April 25, 2006
Page 6

ADDITIONAL FINANCIAL INFORMATION
( Dollars in thousands )
				Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
LOANS ( including loans held for sale ):
Commercial real estate			$	565,752	$	555,889	$	559,195
Multifamily real estate				144,354		144,512		113,205
Commercial construction				73,514		51,931		39,468
Multifamily construction				62,990		62,624		78,236
One- to four-family construction				412,046		348,661		274,868
Land and land development				246,765		228,436		161,988
Commercial business				447,582		442,232		406,948
Agricultural business including secured by farmland				137,747		147,562		130,776
One- to four-family real estate				382,007		365,903		316,345
Consumer				97,774		91,981		80,808
		Total loans outstanding	$	2,570,531	$	2,439,731	$	2,161,837
NON-PERFORMING ASSETS:				Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
Loans on non-accrual status			$	8,225	$	10,349	$	17,718
Loans more than 90 days delinquent, still on accrual				64		104		108
Total non-performing loans				8,289		10,453		17,826
Real estate owned ( REO ) / Repossessed assets				328		506		1,072
		Total non-performing assets	$	8,617	$	10,959	$	18,898
Total non-performing assets / Total assets				0.28%		0.36%		0.64%
				Quarters Ended
CHANGE IN THE				Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
ALLOWANCE FOR LOAN LOSSES:
Balance, beginning of period			$	30,898	$	30,561	$	29,610
Provision				1,200		1,100		1,203
Recoveries of loans previously charged off				156		269		373
Loans charged-off				(360)		(1,032)		(1,450)
		Net ( charge-offs ) recoveries		(204)		(763)		(1,077)
Balance, end of period			$	31,894	$	30,898	$	29,736
Net charge-offs / Average loans outstanding				0.01%		0.03%		0.05%
Allowance for loan losses / Total loans outstanding				1.24%		1.27%		1.38%
DEPOSITS				Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
Non-interest-bearing			$	325,265	$	328,840	$	257,437
Interest-bearing checking				306,706		293,395		246,201
Regular savings accounts				141,000		153,218		159,102
Money market accounts				353,342		345,757		273,180
	Interest-bearing transaction & savings accounts			801,048		792,370		678,483
Three-month maturity money market certificates				188,672		151,515		132,187
Other certificates				1,101,471		1,050,588		926,423
	Interest-bearing certificates			1,290,143		1,202,103		1,058,610
		Total deposits	$	2,416,456	$	2,323,313	$	1,994,530
Included in other borrowings
Retail repurchase agreements / "Sweep accounts"			$	61,086	$	52,166	$	36,057

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BANR-First Quarter 2006 Results
April 25, 2006
Page 7

ADDITIONAL FINANCIAL INFORMATION
( Dollars in thousands )
( Rates / Ratios Annualized )
			Quarters Ended
OPERATING PERFORMANCE:			Mar 31, 2006		Dec 31, 2005		Mar 31, 2005
Average loans		$	2,509,552	$	2,394,069	$	2,125,833
Average securities and deposits			349,197		510,808		633,420
Average non-interest-earning assets			190,350		189,087		169,633
	Total average assets	$	3,049,099	$	3,093,964	$	2,928,886
Average deposits		$	2,321,217	$	2,272,710	$	1,960,545
Average borrowings			468,540		562,239		719,544
Average non-interest-earning liabilities			31,260		36,739		29,163
	Total average liabilities		2,821,017		2,871,688		2,709,252
Total average stockholders' equity			228,082		222,276		219,634
			`
	Total average liabilities and equity	$	3,049,099	$	3,093,964	$	2,928,886
Interest rate yield on loans			7.94%		7.59%		6.89%
Interest rate yield on securities and deposits			4.48%		4.19%		4.18%
	Interest rate yield on interest-earning assets		7.52%		6.99%		6.27%
Interest rate expense on deposits			3.05%		2.72%		2.15%
Interest rate expense on borrowings			4.89%		4.80%		3.95%
	Interest rate expense on interest-bearing liabilities		3.36%		3.14%		2.64%
Interest rate spread			4.16%		3.85%		3.63%
Net interest margin			4.24%		3.93%		3.71%
Other operating income / Average assets			0.60%		(0.39%)		0.55%
Other operating expense / Average assets			3.09%		3.83%		2.95%
Efficiency ratio ( other operating expense / revenue )			67.42%		116.28%		72.89%
Return on average assets			0.90%		(0.38%)		0.65%
Return on average equity			12.07%		(5.26%)		8.69%
Average equity / Average assets			7.48%		7.18%		7.50%
	Operating performance for the quarter ended December 31, 2005 EXCLUDING the effects of the BALANCE-SHEET RESTRUCTURING CHARGES
Other operating income EXCLUDING restructuring loss
	/ Average assets				0.55%
Other operating expense EXCLUDING restructuring expense
	/ Average assets				3.05%
Efficiency ratio ( other operating expense / revenue
	EXCLUDING effects of restructuring charges )				72.12%
Return on average assets EXCLUDING net restructuring charges					0.72%
Return on average equity EXCLUDING net restructuring charges					10.04%

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