Banner Corporation Announces All-Stock Acquisition of Pacific Financial Corporation

Key Highlights for Investors

• Definitive Merger Agreement: Banner Corporation (“Banner”) (NASDAQ: BANR), the holding company for Banner Bank, will acquire Pacific Financial Corporation (“Pacific Financial”) (OTCQX: PFLC), the holding company for Bank of the Pacific, in an all-stock transaction.
• Transaction Value: Under the terms, Pacific Financial shareholders will receive 0.2633 shares of Banner common stock for each share of Pacific Financial common stock. Based on Banner’s closing share price of \$66.25 on April 29, 2026, the implied value is \$17.44 per Pacific Financial share, or approximately \$177 million in aggregate.
• Pro Forma Company Size: Upon closing, the combined company will have approximately \$18 billion in assets, significantly enhancing Banner’s scale and market presence in the Pacific Northwest.
• Ownership Structure: Pacific Financial shareholders are expected to own roughly 7% of the combined company, with Banner shareholders holding the remaining 93%.
• Strategic Benefits: The merger expands Banner’s footprint and density in attractive markets across Western Washington and Western Oregon, allowing Pacific Financial customers access to broader product offerings, enhanced technology, higher commercial lending limits, and an expanded branch network.
• Executive Team Integration: Denise Portmann, President and CEO of Pacific Financial, will join the Banner Bank executive team upon completion of the merger.
• Accretive to Earnings: Banner expects the transaction to be immediately accretive to earnings per share in 2027, excluding one-time transaction expenses.
• Board Approval and Closing Timeline: The boards of both companies have unanimously approved the merger. The transaction is subject to Pacific Financial shareholder approval, regulatory approvals, and other customary closing conditions. Closing is targeted for the third quarter of 2026.
• Tax Considerations: The merger is expected to qualify as a tax-free reorganization for Pacific Financial shareholders.

Details of the Transaction

Bank of the Pacific, a well-established community bank with 18 branches/offices across Western Washington and Northern Oregon, boasts \$1.29 billion in assets, a high-quality loan portfolio of \$762 million, and a low-cost deposit base of \$1.14 billion as of March 31, 2026. Banner Bank, with more than 135 years of experience and assets of \$16.34 billion, operates a broad network across Washington, Oregon, Idaho, and California.

The merger is positioned as a strategic move to combine two financially strong, community-focused institutions with complementary strengths and shared values, including a commitment to customer service and local communities. Banner’s President and CEO, Mark Grescovich, emphasized the expanded capabilities and opportunities for all stakeholders, while Pacific Financial’s CEO, Denise Portmann, highlighted the alignment in culture and the increased prospects for employees, customers, and shareholders.

Important Considerations for Shareholders

• Merger Ratio and Implied Value: Pacific Financial shareholders are to receive 0.2633 Banner shares per share held, translating to an implied value of \$17.44 per Pacific Financial share based on the pre-announcement Banner share price.
• Shareholder Vote Required: The transaction is contingent on approval from Pacific Financial shareholders.
• Regulatory Approvals: The deal requires regulatory clearance, which could entail delays or changes to terms if not secured as anticipated.
• Potential Impact on Share Price: The merger is expected to be accretive to Banner’s earnings per share in 2027 (excluding merger costs), which may positively impact the share price. However, risks such as integration challenges, disruption to customer and employee relationships, and dilution from new Banner shares should be considered.
• Forward-Looking Statements: The press release contains forward-looking statements regarding the anticipated benefits, timing, and integration of the merger. Actual outcomes may differ materially due to a variety of factors, including regulatory, operational, and market risks.
• Availability of Further Information: Banner will file a registration statement on Form S-4 with the SEC, which will include a proxy statement/prospectus. Shareholders are strongly advised to read all relevant materials once available.

Advisors

• Pacific Financial: Advised by Piper Sandler (financial) and Miller Nash LLP (legal).
• Banner: Advised by BofA Securities (financial) and Ballard Spahr LLP (legal).

About the Companies

Banner Corporation is a \$16.34 billion bank holding company providing a full range of banking services through its extensive branch network in four western states.
Pacific Financial Corporation is the holding company for Bank of the Pacific, a community bank with a strong presence in several counties in Washington and Oregon.

Forward-Looking Statements and Risks

The transaction is subject to various risks and uncertainties such as integration issues, realization of anticipated benefits, regulatory and shareholder approvals, potential dilution, and operational challenges. Investors should thoroughly review all forward-looking statements and risk factors in Banner’s and Pacific Financial’s SEC filings.

Next Steps and Shareholder Action

Once the registration statement is effective, Pacific Financial shareholders will receive a definitive proxy statement/prospectus and are advised to read it carefully prior to voting, as it will contain vital information regarding the merger and its implications.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Investors should review all available official filings and consult their financial advisors before making any investment decisions. The information herein is based on publicly available data as of the date of publication and may be subject to change.

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