Banner Corporation (BANR), Siuslaw Financial Enter Merger Agreement

Banner Corporation (NASDAQ: BANR) and Siuslaw Financial Group, Inc. (OTCBB: SFGP), the holding company for Siuslaw Bank, an Oregon state chartered commercial bank, announced the signing of an agreement pursuant to which Banner will acquire Siuslaw and merge it with and into Banner. The agreement also calls for the merger of Siuslaw Bank with and into Banner Bank. The combined company will have approximately $5.1 billion in assets and will be the fourth largest commercial bank headquartered in the Pacific Northwest, as ranked by assets.

"We are pleased to have Siuslaw Bank join the Banner Bank team," stated Mark Grescovich, Banner's President and Chief Executive Officer. "This transaction presents a unique opportunity for us to expand our presence in Oregon, including our entry into Eugene which is the second largest metropolitan market in the state. The combination of our two organizations provides the opportunity to create revenue and cost synergies while offering Siuslaw customers a broader product offering, increased lending limits and an expanded branch delivery system that stretches throughout the Pacific Northwest."

Johan Mehlum, Chairman and Chief Executive Officer of Siuslaw Financial Group, Inc., commented, "This combination allows us to partner with a strong community bank that is focused on providing great customer service, a deep commitment to the communities where it operates and an excellent environment for employees to perform and advance. We are proud of our long history of developing lasting relationships with our clients and serving our market areas. We look forward to working with the management team at Banner Bank to expand the scope of our products and services to even better serve Lane County residents and businesses."

The Boards of Banner and Siuslaw unanimously approved the transaction, which is subject to approval by Siuslaw shareholders, regulatory approval and other customary conditions of closing. The approximately 90% stock and 10% cash transaction provides for shareholders of Siuslaw to receive $1.41622 in cash plus 0.32231 of a share of Banner common stock in exchange for each share of Siuslaw common stock. In connection with the transaction, the Siuslaw preferred stock will convert to Siuslaw common stock and the preferred shareholders will receive the same merger consideration as the other Siuslaw common shareholders. Based on the Banner closing price of $39.14 per share on August 7, 2014, the merger consideration would be $14.03 per Siuslaw share and the transaction would have an aggregate value of $57.5 million. As of June 30, 2014, Siuslaw had tangible common equity of $37.9 million. Banner expects the transaction to be immediately accretive to earnings per share, excluding one-time transaction expenses. Upon closing of the transaction, which is anticipated to take place in the latter part of the fourth quarter of 2014, Siuslaw will be merged into Banner and Siuslaw Bank will be merged into Banner Bank.

Banner was advised in the transaction by McAdams, Wright Ragen, Inc., as financial advisor, and Breyer & Associates PC and Silver, Freedman, Taff & Tiernan, L.L.P., as legal counsel. Siuslaw was advised by Sandler O'Neill & Partners, L.P., as financial advisor, and Lane Powell, PC, as legal counsel.

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