FWP 1 dfwp.htm FWP FWP

Filed Pursuant to Rule 433

Issuer Free Writing Prospectus dated December 7, 2009

Relating to Preliminary Prospectus Supplement dated December 7, 2009

Registration No. 333-139520

Common Equity Offering
December 2009
Better ideas. Better banking.

2
Disclosure Statement
The Company proposes to issue the common shares pursuant to a prospectus supplement that will be filed as part of an existing shelf registration statement previously filed with
the Securities and Exchange Commission on Form S-3. The offering may be made only by means of a prospectus and related prospectus supplement. Prospective investors should
read the prospectus in that registration statement, the preliminary prospectus supplement and the other documents incorporated by reference therein that the Company has filed
with the SEC for more complete information about the Company and the offering. Investors may obtain these documents without charge by visiting EDGAR on the SEC website
at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the prospectus relating to the offering may be obtained from Sandler O'Neill + Partners, L.P.,
919 Third Avenue, 6th Floor, New York, NY 10022, 1-866-805-4128 and D.A. Davidson & Co., 8 Third Street North, Great Falls, MT 59401, 1-800-332-5915. The documents
can also be obtained for free from the website at www.sandleroneill.com/prospectus/BANR-Prospectus.pdf.
The Private Securities Litigation Report Act of 1995 provides a "safe harbor" for certain forward-looking statements.  This presentation contains forward-looking statements with
respect to the Corporation's financial condition, results of operations, plans, objectives, future performance or business.  These forward-looking statements are subject to certain
risks and uncertainties, including those identified below, which could cause future results to differ materially from historical results or those anticipated.
The words "believe," "expect," "anticipate," "intend," "estimate," "goals,” "would," "could," "should" and other expressions which indicate future events and trends identify
forward-looking statements.  We caution readers not to place undue reliance on these forward-looking statements, which is based only on information known to the Corporation,
speak only as of their dates, and if no date is provided, then such statements speak only as of today.  There are a number of important factors that could cause future results to
differ materially from historical results or those anticipated, including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan
delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be impacted by deterioration in the housing and commercial real
estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between
short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes, land and
other properties and fluctuations in real estate values in our market areas; secondary market conditions for loans and our ability to sell loans in the secondary market; results of
examinations of us by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) and of our bank subsidiaries by the Federal Deposit Insurance
Corporation (the “FDIC”), the Washington State Department of Financial Institutions, Division of Banks (the “Washington DFI”) or other regulatory authorities, including the
possibility that any such regulatory authority may, among other things, institute a formal or informal enforcement action against us or any of the Banks which could require us to
increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could
adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, or the
interpretation of regulatory capital or other rules; our ability to attract and retain deposits; further increases in premiums for deposit insurance; our ability to control operating costs
and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;
staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; the failure or security
breach of computer systems on which we depend; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and
judgments; our ability to implement our growth strategy; our ability to successfully integrate into our operations any assets, liabilities, customers, systems, and management
personnel we have acquired or may in the future acquire and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges
related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to
address changes in laws, rules, or regulations or to respond to regulatory actions; our ability to pay dividends on our common and preferred stock and interest or principal
payments on our junior subordinated debentures; 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, including additional guidance
and interpretation on accounting issues and details of the implementation of new accounting methods; other economic, competitive, governmental, regulatory, and technological
factors affecting our operations, pricing, products and services and the other risks described elsewhere in the preliminary prospectus supplement, the accompanying prospectus and
the documents incorporated therein by reference; and future legislative changes in the United States Department of Treasury (“Treasury”) Troubled Asset Relief Program
(“TARP”) Capital Purchase Program.
The Corporation does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-
looking statement is made.

3
Use of Non-GAAP Financial Measures
Tangible equity, tangible common equity and tangible common equity to tangible assets are non-
GAAP financial measures. We calculate tangible equity by excluding the balance of goodwill and other
intangible
assets
from
shareholders’
equity.
We
calculate
tangible
common
equity
by
excluding
preferred equity from tangible equity. We calculate tangible assets by excluding the balance of
goodwill and other intangible assets from total assets.  We believe that this is consistent with the
treatment by our bank regulatory agencies, which exclude goodwill and other intangible assets from
the calculation of risk-based capital ratios. Accordingly, management believes that these non-GAAP
financial measures provide information to investors that is useful in understanding the basis of our risk-
based
capital
ratios.
In
addition,
by
excluding
preferred
equity
(the
level
of
which
may
vary
from
company to company), it allows investors to more easily compare our capital adequacy to other
companies in the industry who also use this measure. We calculate normalized pre-tax, pre-provision
earnings by adding provision for loan losses to income before income taxes.  Management believes
normalized pre-tax, pre-provision earnings is useful in assessing the Company's core performance
and trends, particularly during times of economic stress.
These non-GAAP financial measures are supplemental and are not a substitute for any analysis based
on GAAP financial measures. Because not all companies use the same calculations of tangible
common equity, tangible assets and normalized pre-tax, pre-provision earnings, these presentations
may not be comparable to other similarly titled measures as calculated by other companies.
Reconciliations of the non-GAAP financial measures are provided on page 22 and in Appendix A of
this presentation.

4
Transaction Overview
Issuer:
Banner Corporation
Ticker / Exchange:
BANR / NASDAQ GSM
Type of Offering:
Follow-on Public Offering
Type of Security:
Common Stock
Transaction Size:
$75 million
Over-Allotment Option:
15%
Use of Proceeds:
Provide capital to Banner Bank to
support growth and for general
working capital purposes
Book-Running Manager:
Sandler O'Neill + Partners, L.P.
Co-Manager:
D.A. Davidson & Co.

5
Presenting Today
D. Michael
Jones,
President
and
Chief
Executive
Officer
Mr. Jones joined Banner Corporation in 2002 as President and Chief Executive Officer. Mr. Jones is a
Certified Public Accountant (Inactive) and served as President and Chief Executive Officer from 1996 to
2001 for Source Capital Corporation, a lending company in Spokane, Washington. From 1987 to 1995, Mr.
Jones served as President of West One Bancorp, a large regional banking franchise based in Boise, Idaho.
He is also a director of Banner Corporation and Banner Bank.
Lloyd
W.
Baker,
Executive
Vice
President
&
Chief
Financial
Officer
Mr.
Baker
joined
Banner
Bank
as
Asset
Liability
Manager
in
1995.
He
was
promoted
to
Senior
Vice
President and made a member of the Executive Committee in 1998 and was named to his current position
in
August
of
2000.
Prior
to
joining
Banner,
he
served
in
several
asset
liability
and
portfolio
management
positions with Far West Federal Bank in Portland, Oregon, and Fidelity Mutual Savings Bank in Spokane,
Washington.
He
also
served
as
Chief
Financial
Officer
of
Western
Heritage
Federal
Savings
&
Loan
in
Pendleton, Oregon, and Community Savings & Loan Association in Wenatchee, Washington.
Richard
B.
Barton,
Executive
Vice
President
&
Chief
Lending/Credit
Officer
Mr. Barton joined Banner Bank in 2002 as Chief Credit Officer and was named to his current position in
2008.  Previously, Mr. Barton worked in a variety of commercial lending and credit risk management
capacities
for
Seafirst
Bank/Bank
of
America
for
30
years,
beginning
in
1972.
Key
jobs
included
commercial lending, commercial credit administration, special credits collection work, including six years
involving the Seafirst Penn Square/Energy loan portfolio, commercial/residential real estate credit
administration for the Pacific Northwest, and homebuilder real estate credit administration for the West
Coast.

6
Offering Objectives
Strengthens our capital position
Pro forma TCE/TA of 7.2%¹
Pro forma Tier 1 leverage ratio of 11.0%¹
Pro forma Total risk based capital ratio of 14.3%¹
Allows for continued execution of our problem loan resolution
process
Better positions us to capture business opportunities resulting from
market dislocation
¹
Based on September 30, 2009 ratios; assumes gross proceeds of $75mm, 5.75% underwriting discount and $300,000 in other expenses

7
Investment Summary
Strategically-located Pacific Northwest branch network
Solid and growing deposit base
Loan portfolio with diversification in geographic and loan type
Diversified economic drivers across markets
Thorough and conservative approach to credit risk management has
led to flattening credit quality trends
Management team with extensive operating and credit cycle
experience in Pacific Northwest markets
Solid core operating results
Attractive current valuation

8
Company Overview
Founded in 1890
89 branches and 8 loan production
offices focused on complementary
mix of urban and middle markets:
Seattle
Spokane
Portland
Boise
Columbia Basin
Focused on serving small-to-
midsize businesses and individuals
Financial Highlights:
Total Assets:
$4.8 billion
Total Loans:
$3.9 billion
Total Deposits:
$3.9 billion
Total
Shareholders’
Equity¹:
$407
million
Note: Financial data as of September 30, 2009
¹
Includes
$124
million
of
preferred
stock
and
warrants
issued
to
the
U.S.
Treasury
under
the
Capital
Purchase
Program
(TARP)
Branch
Loan Center
Islanders Bank
Seattle
Portland
Boise
Spokane

9
Loan Portfolio Composition
Geographic Breakdown
Loan Category Breakdown
Diversified lending by both collateral type and geography
Minimal out-of-market lending
Banner’s strategic plan is aimed at changing the loan category mix by increasing
commercial and consumer lending activity
$677
$226
$303
$153
$369
$678
$482
$585
$424
$0
$100
$200
$300
$400
$500
$600
$700
$800
Portland
$651
17%
Columbia Basin
$1,018
26%
Other
$43
1%
Puget Sound
$1,421
37%
Spokane
$513
13%
Boise
$251
6%
Note: Data as of September 30, 2009; dollars in millions

10
Loan and Credit Quality Comparison
Proactive credit management and problem recognition
Commercial real estate portfolios are being proactively managed including loan by loan stress testing to
identify potential problem assets
90% of past due loans are on nonaccrual
Credit issues remain concentrated in 1-4 family residential construction and land portfolios
68% ($4.2 million) of losses in the 1-4 family real estate category were mark-to-market charges for
loans
made
in
conjunction
with
the
“Great
Northwest
Home
Rush”
program
that
focused
on
facilitating the sale of completed homes financed for builders
Credit losses in agriculture were related to a particular issue with a single borrower
(Dollars in Thousands)
Balances
Classified
NPL
YTD NCOs
Past Due
Loan Category
($)
(%)
($)
(%)
($)
(%)
($)
(%)
($)
(%)
CRE: Owner occupied
$481,698
12.4
$22,334
4.6
$3,069
0.6
-
           
0.0
$4,467
0.9
CRE: Investment properties
585,206
    
15.0
18,211
     
3.1
4,248
       
0.7
-
           
0.0
7,143
       
1.2
Multifamily real estate
152,832
    
3.9
263
          
0.2
-
           
0.0
-
           
0.0
452
          
0.3
Commercial construction
83,937
     
2.2
1,840
       
2.2
-
           
0.0
113
          
0.1
1,565
       
1.9
Multifamily construction
62,614
     
1.6
-
           
0.0
-
           
0.0
-
           
0.0
-
           
0.0
1-4 family construction
277,419
    
7.1
104,692
    
37.7
68,565
     
24.7
16,007
     
5.8
70,501
     
25.4
Residential land and development
322,030
    
8.3
166,512
    
51.7
109,668
    
34.1
34,165
     
10.6
95,799
     
29.7
Commercial land and development
47,182
     
1.2
20,793
     
44.1
17,138
     
36.3
2,212
       
4.7
17,138
     
36.3
Commercial business
678,187
    
17.4
55,205
     
8.1
15,070
     
2.2
8,946
       
1.3
18,404
     
2.7
Agricultural business, including secured by farmland
225,603
    
5.8
15,403
     
6.8
6,624
       
2.9
3,159
       
1.4
8,460
       
3.7
One- to four-family real estate
676,928
    
17.4
30,257
     
4.5
18,797
     
2.8
6,182
       
0.9
20,370
     
3.0
Consumer
302,558
    
7.8
390
          
0.1
110
          
0.0
1,230
       
0.4
980
          
0.3
Total
$3,896,194
100.0
$435,900
11.2
$243,289
6.2
$72,014
1.8
$245,279
6.3
Note: Data as of September 30, 2009; Percentages in table are expressed as a percentage of the total loan portfolio balances.

11
Loan Portfolio: Construction
Commercial
and
Multifamily
Const.
-
$147mm
Residential
Construction
-
$277mm
The commercial construction portfolio is less than 4% of the total loan portfolio and has no non-
performing loans
There are no past due, classified or non-performing multifamily construction loans
The
residential
construction
portfolio
is
largely
in
the
Seattle
and
Portland
markets
with
significant
borrower and submarket diversification
Residential construction balances declined 58% from their peak at June 30, 2007
The residential construction portfolio represents approximately 28% of total non-performing loans
as of September 30, 2009
Idaho
$15
5%
Washington
$133
48%
Oregon
$130
47%
Note: Data as of September 30, 2009; dollars in millions
$31
$13
$6
$7
$63
$23
$4
$0
$10
$20
$30
$40
$50
$60
$70

12
Loan Portfolio: Land and Land Development
Breakdown by Type
Geographic Breakdown
Idaho
$46
12%
Washington
$180
49%
Oregon
$143
39%
Note: Data as of September 30, 2009; dollars in millions
Total land and land development portfolio of $369 million at September 30, 2009
Land
and
land
development
balances
have
decreased
over
23%
since
September
30,
2008
Concentration has fallen from 12% to 10% of total loans
As of September 30, 2009, non-performing loans in this segment were $127 million
(approximately 52% of
total non-performing loans)
$51
$21
$17
$182
$89
$9
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200

13
Loan
Portfolio:
CRE
–
Owner
Occupied
Breakdown by Type
Geographic Breakdown
Idaho
$42
9%
Washington
$380
79%
Oregon
$60
12%
Note: Data as of September 30, 2009; dollars in millions
Total CRE-owner occupied portfolio of $482 million at September 30, 2009
Average portfolio loan size of $536 thousand
As of September 30, 2009, non-performing loans in this segment were $3 million, or
approximately 1% of total non-performing loans
Delinquency rate of 0.9% as of September 30, 2009
$45
$124
$38
$92
$82
$84
$17
$0
$20
$40
$60
$80
$100
$120
$140

14
Loan
Portfolio:
CRE
–
Income
Property
and
Multifamily
Loans
Breakdown by Type
Geographic Breakdown
Note: Data as of September 30, 2009; dollars in millions
Total CRE income property and multifamily portfolio of $738 million at September 30, 2009
Average portfolio loan size of $682 thousand
At
September
30,
2009,
non-performing
loans
were
$4.2
million,
or
approximately
2%
of
total
non-
performing loans
Delinquency rate of 1.0% as of September 30, 2009
$81
$45
$127
$53
$43
$153
$181
$55
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Idaho
$52
7%
Washington
$566
77%
Oregon
$105
14%
Other
$14
2%

15
Credit Philosophy Is Yielding Results
Banner’s goal is to identify and resolve problems early instead of waiting for problems to mature
before taking action
No single template that fits all problem credits
The
actions
below
are
a
representative
cross
sample
of
Banner’s
credit
risk
management
in
action
Actions:
Results:
1)
“Great
NW
Home
Rush”
program
to
assist
builders in
selling completed homes. Banner provided special
financing, advertizing and required builder and realtor
participation
2)
Stress testing of CRE portfolio loan by loan
3)
Asset Disposition Committee formed to consider
alternatives for RE loans and OREO
4)
On site C&I/Agriculture portfolio review by executive
management/senior credit staff
5)
Annual loan by loan risk rating certification
6)
Special issue research to determine portfolio impact
(example: project to determine credits vulnerable to
spiked energy costs)
7)
Rolling four quarter forecast of portfolio metrics
8)
Adequate staffing for credit risk management
1)
Since
March
2009,
375
of
612
homes
sold,
reducing
loan totals by over $120 million
2)
Identified
“credits
to
watch”
while
CRE
credit
still
performing
3)
With involvement of RE industry members, higher
recoveries anticipated
4)
Identify emerging credit issues, portfolio management
weaknesses and training needs
5)
Ensure accuracy of portfolio risk ratings
6)
Identification
of
“hot
spots”
in
the
portfolio
and
changes
needed in new loan underwriting
7)
Assess trends in portfolio quality and ALLL adequacy
8)
In the past 12 months staff adds have been made in
Special Assets, Credit Examination, and Credit
Administration

16
Charge-offs and Reserves
Charge offs have been concentrated in the residential construction and land portfolio with the
majority of the losses coming from the land portion of the portfolio
90%
of
non-performing
loans
have
had
detailed
individual
SFAS
114
specific
impairment
analysis
at September 30, 2009
Non performing loans have been reduced by $38 million of charge-offs and have an additional $17
million of specific reserves
Renegotiated loans were underwritten using current property valuations
$9.0 million (9.4% of total allowance) of unallocated reserves
(Dollars in Thousands)
Gross
NPAs /
Renegotiated
Quarterly
Loan Loss
Reserves /
Quarter
Loans
NPLs
OREO
Other¹
NPAs
Assets
Loans
NCOs
Reserves
Loans
2008Q1
3,839,993
54,435
7,572
7
62,014
1.36%
2,026
1,881
50,446
1.31%
2008Q2
3,973,299
89,918
11,390
7
101,315
2.19%
7,771
6,876
58,570
1.47%
2008Q3
3,999,179
119,366
10,147
6
129,519
2.79%
15,514
7,724
58,846
1.47%
2008Q4
3,961,408
187,345
21,782
104
209,231
4.56%
23,635
16,649
75,197
1.90%
2009Q1
3,915,547
224,097
38,951
318
263,366
5.84%
27,550
17,473
79,724
2.04%
2009Q2
3,913,081
225,069
56,967
230
282,266
6.23%
55,031
34,030
90,694
2.32%
2009Q3
3,896,194
243,288
53,576
1,425
298,289
6.23%
55,161
20,511
95,183
2.44%
¹
Represents securities on nonaccrual at fair value and other repossessed assets held for sale, net

17
Illustrative SCAP Analysis
¹
Loss rates based on midpoints of rate ranges in Table 1 of FRB's May 7, 2009 SCAP results
Balance as of 12/31/08
Loss Severity
¹
(%)
Total Loss ($000s)
Loan Type
($000s)
(%)
Baseline
More Adverse
Baseline
More Adverse
First Lien Mortgages
$612,692
15.5%
2.00%
3.50%
$12,254
$21,444
Closed-end Junior Lien Mortgages
50,669
1.3%
19.00%
23.50%
9,627
11,907
HELOCs
153,327
3.9%
7.00%
9.50%
10,733
14,566
C&I
623,455
15.7%
3.50%
6.50%
21,821
40,525
Agriculture Product
148,290
3.7%
3.50%
6.50%
5,190
9,639
Farm Real Estate
55,764
1.4%
6.25%
10.50%
3,485
5,855
Construction & Development
1,047,055
26.4%
10.00%
16.50%
104,706
172,764
Multi-Family
151,815
3.8%
5.00%
10.50%
7,591
15,941
CRE (Non-Farm, Non-Resi)
1,015,717
25.6%
4.50%
8.00%
45,707
81,257
Credit Cards
22,605
0.6%
14.50%
19.00%
3,278
4,295
Consumer
68,752
1.7%
5.00%
10.00%
3,438
6,875
Other Loans
18,372
0.5%
3.00%
7.00%
551
1,286
Loan
Portfolio
-
12/31/08
$3,961,408
5.59%
9.57%
$221,275
$379,249
Roll Forward to 9/30/09
Net Charge-offs Q1 2009
17,473
17,473
Net Charge-offs Q2 2009
34,030
34,030
Net Charge-offs Q3 2009
20,511
20,511
September 30, 2009 Exposure
$149,261
$307,235

18
Pro Forma Capital Position
¹
Assumes gross proceeds of $75mm with underwriters' discount of 5.75% and expenses of $300,000
²
Assumes proceeds risk-weighted at 20%
³
Assumes quarterly intangible amortization of $647 thousand, quarterly pre-tax, pre-provision earnings of $10 million and $4.5 million of equity
issued quarterly as part of the DRIP program; earnings will be applied to assets, and capital raised will be applied to liabilities
As of September 30, 2009
Projected September 30, 2011³
Actual
Pro Forma¹
Baseline¹
More Adverse¹
SCAP Projected Loan Losses (Less YTD 2009 NCO's)
--
--
$149,261
$307,235
Common Equity / Assets
6.05%
7.41%
7.75%
4.65%
Equity / Assets
8.49%
9.82%
10.19%
7.17%
Tangible Common Equity / Tangible Assets
5.82%
7.19%
7.59%
4.48%
Tangible Equity / Tangible Assets
8.27%
9.60%
10.12%
7.10%
Well-
Capitalized
Tier 1 Leverage Ratio
5.00%
9.66%
11.02%
11.58%
8.47%
Tier 1 Risk-Based Ratio²
6.00%
11.27%
13.02%
13.67%
10.06%
Total Risk-Based Ratio²
10.00%
12.54%
14.28%
14.87%
11.26%

19
Geographic Deposit Composition and Market Share
Note: Data as of September 30, 2009; dollars in millions
Source: Company filings and SNL Financial
Boise / So Idaho
$264
7%
Greater Portland
$297
8%
Puget Sound
$1,227
32%
Admin
$250
6%
Columbia Basin
$1,353
35%
Greater
Spokane
$470
12%
Deposit growth opportunity in key Northwest metropolitan markets
complemented by our historically strong market position in the Columbia
Basin
June 30, 2009
MSA
Rank
Branches
Deposits
($000)
Market
Share
(%)
Seattle-Tacoma-Bellevue, WA
14
17
686,653
1.0
Walla Walla, WA
1
6
567,136
46.7
Spokane, WA
6
16
440,592
6.0
Yakima, WA
3
6
312,297
13.3
Pendleton-Hermiston, OR
1
6
277,258
33.2
Portland-Vancouver-Beaverton, OR-WA
15
9
263,281
0.8
Bellingham, WA
5
7
232,748
7.3
Kennewick-Pasco-Richland, WA
4
4
179,497
8.2
Lewiston, ID-WA
2
3
156,492
20.5
Wenatchee-East Wenatchee, WA
4
2
143,374
7.6
Boise City-Nampa, ID
16
5
120,009
1.6
La Grande, OR
4
1
47,628
14.4
Oak Harbor, WA
8
1
46,451
4.7
Twin Falls, ID
9
1
38,122
2.8
Mount Vernon-Anacortes, WA
14
1
34,601
1.6
Counties not in an MSA
Baker, Oregon
3
1
36,428
17.3
San Juan, Washington
1
3
176,475
42.6
Columbia, Washington
1
1
26,590
31.2

20
Deposit Franchise Highlights
Deposit Composition
2.16%
2.36%
2.54%
2.96%
3.88%
3.55%
2.46%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2005
2006
2007
2008
Q1 2009
Q2 2009
Q3 2009
Historical Deposit Cost
Retail deposits have increased $361 million (over 11%) year-to-date
Significant opportunity exists to further lower our cost of deposits as higher cost
deposits re-price in the near term
Regular savings
$522
14%
CDs <$100k
$956
25%
CDs >$100k
$1,053
26%
Non-int.-bearing
$547
14%
Int.-bearing
checking
$330
9%
Money market
$454
12%
Note: Data as of September 30, 2009; dollars in millions
Deposit Sources
CD Maturity Schedule
After 3 years
$39
2%
Within 1 year
$1,563
78%
Between 1 and 3
years
$407
20%
$3,532
$3,320
$3,158
$3,171
$3,225
$2,403
$2,061
$144
$183
$232
$339
$338
$257
$171
$186
$248
$238
$269
$57
$134
$92
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
2005
2006
2007
2008
Q1 2009
Q2 2009
Q3 2009
Retail Deposits
Public Funds
Brokered Funds

21
Core Operating Results
Actively expanding core deposit account base
Diversified lending platform including commercial, agriculture, consumer
and real estate
Potential net interest margin opportunity as higher-cost deposits re-price
Increasing mortgage banking fee activity
Demonstrated expense control
(Dollars in Thousands)
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Income (Loss) Before Provision For Income Taxes
($83,473)
($16,186)
($26,989)
($11,824)
ADD: Provision For Loan Losses
33,000
22,000
45,000
25,000
LESS: Net Change In Valuation Of Financial Instruments Carried At Fair Value
13,740
(3,253)
11,049
4,633
ADD: Goodwill Write-Off
71,121
0
0
0
Normalized Pre-Tax, Pre-Provision Earnings
$6,908
$9,067
$6,962
$8,543

22
Investment Portfolio
As
of
September
30,
2009,
the
securities
portfolio
had
a
carrying
value
of
$319
million
The portfolio primarily serves as collateral for public funds deposits and retail repo/sweep
accounts
The corporate bonds segment (primarily Trust Preferred securities and CDOs) has had significant
downward fair value adjustments
The municipal securities consist of local state issuers (WA, OR and ID)
The
mortgage-backed
securities
and
CMO
securities
are
either
seasoned
premium
coupons
or
senior non-complex structures
Note: Data as of September 30, 2009
Equity securities
0%
Corporate bonds
14%
Tax-exempt
municipal bonds
23%
FNMA
13%
U.S. Agency
obligations
26%
Taxable
municipal bonds
1%
GNMA
6%
FHLMC
15%
Private issuer
MBS
2%

23
Attractive Market Demographics
Our markets demonstrate both strong past and projected growth trends
Five-Year
MSA
Market 
Rank
Branches
Deposits
in Market
($000)
Percent of
Franchise
(%)
Population
Change
2000-2009
(%)
Proj.
Population
Change
(%)
Proj.
HHI Change
(%)
Seattle-Tacoma-Bellevue, WA
14
17
686,653
18.1
12.64
6.04
5.58
Walla Walla, WA
1
6
567,136
15.0
6.98
2.93
6.10
Spokane, WA
6
16
440,592
11.6
11.97
5.52
5.37
Yakima, WA
3
6
312,297
8.3
7.34
3.49
5.84
Pendleton-Hermiston, OR
1
6
277,258
7.3
6.38
1.93
6.65
Portland-Vancouver-Beaverton, OR-WA
15
9
263,281
7.0
15.84
7.31
3.70
Bellingham, WA
5
7
232,748
6.2
18.14
8.40
6.57
Kennewick-Pasco-Richland, WA
4
4
179,497
4.7
26.42
11.79
7.00
Lewiston, ID-WA
2
3
156,492
4.1
4.58
2.33
7.15
Wenatchee-East Wenatchee, WA
4
2
143,374
3.8
11.85
5.63
6.21
Boise City-Nampa, ID
16
5
120,009
3.2
32.63
14.05
4.71
La Grande, OR
4
1
47,628
1.3
2.30
1.24
4.67
Oak Harbor, WA
8
1
46,451
1.2
13.77
5.76
5.64
Twin Falls, ID
9
1
38,122
1.0
16.48
8.16
6.70
Mount Vernon-Anacortes, WA
14
1
34,601
0.9
16.74
7.53
6.85
Banner: Weighted Average by MSA
93.7
12.24
5.53
5.82
Nationwide: Weighted Average by MSA
10.06
4.63
4.06
Counties not in an MSA
Baker, Oregon
3
1
36,428
1.0
(2.02)
(2.16)
4.10
San Juan, Washington
1
3
176,475
4.7
13.53
4.94
1.63
Columbia, Washington
1
1
26,590
0.7
0.71
(0.24)
4.45
Banner: Weighted Average Franchise
6.3
12.08
5.39
5.60
Nationwide: Aggregate
10.06
4.63
4.06
Source: SNL Financial

24
Investment Summary
Strategically-located Pacific Northwest branch network
Solid and growing deposit base
Loan portfolio with diversification in geographic and loan type
Diversified economic drivers across markets
Thorough and conservative approach to credit risk management has
led to flattening credit quality trends
Management team with extensive operating and credit cycle
experience in Pacific Northwest markets
Solid core operating results
Attractive current valuation

25
Appendix A: Reconciliation of Non-GAAP Measures
¹
Assumes gross proceeds of $75mm with underwriters' discount of 5.75% and expenses of $300,000
²
Assumes proceeds risk-weighted at 20%
³
Assumes quarterly intangible amortization of $647 thousand, quarterly pre-tax pre-provision earnings of $10 million and $4.5 million of equity
issued quarterly as part of the DRIP program; earnings will be applied to assets, and capital raised will be applied to liabilities
(Dollars in Thousands)
As of September 30, 2009
Projected September 30, 2011³
Actual
Pro Forma¹
Baseline¹
More Adverse¹
Stockholders’ equity
$406,723
$477,111
$488,961
$332,962
Goodwill
0
0
0
0
Other intangible assets, net
11,718
11,718
8,483
8,483
Tangible equity
395,005
465,393
480,478
324,479
Preferred equity
117,034
117,034
117,034
117,034
Tangible common equity
277,971
348,359
363,444
207,445
Total assets
4,788,008
4,858,396
4,799,858
4,643,859
Goodwill
0
0
0
0
Other intangible assets, net
11,718
11,718
8,483
8,483
Tangible assets
$4,776,290
$4,846,678
$4,791,375
$4,635,376