Banner Corp to acquire Pacific Financial in all-stock merger valued at 0.2633 exchange ratio

On April 30, 2026, Banner Corporation, a Washington corporation (“Banner”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Pacific Financial Corporation, a Washington corporation (“Pacific Financial”), pursuant to which Pacific Financial will merge with and into Banner (the “Merger”), with Banner as the surviving corporation in the Merger.

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, $1.00 par value, of Pacific Financial (“Pacific Financial Common Stock”) outstanding immediately prior to the Effective Time, other than certain shares held by Banner or any holder of Pacific Financial Common Stock who properly exercises dissenters’ rights under the Washington Business Corporation Act, will be converted into the right to receive 0.2633 shares (the “Exchange Ratio”) of common stock, par value $0.01 per share, of Banner (“Banner Common Stock”).

The completion of the Merger is subject to conditions, including, among others (1) receipt of the requisite approval by Pacific Financial shareholders, which under Washington corporate law applicable to Pacific Financial requires the affirmative vote of holders of two-thirds of the outstanding shares of Pacific Financial Common Stock, (2) receipt of all required regulatory approvals, including the approval of the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Washington State Department of Financial Institutions, Division of Banks, and no required regulatory approval may contain or may have resulted in, or would reasonably be expected to result in, the imposition of a Burdensome Condition (as defined in the Merger Agreement) as it relates to Banner

The Merger Agreement provides certain termination rights for both Banner and Pacific Financial and further provides that a termination fee of $6,300,000 would be payable by Pacific Financial to Banner upon termination of the Merger Agreement under certain circumstances, including termination following a withdrawal or change in the recommendation of the Pacific Financial Board of Directors that Pacific Financial shareholders vote in favor of the Merger Agreement, Pacific Financial’s material breach or failure to perform its covenants relating to its shareholder meeting or a subsequent acquisition proposal, or a determination by the Pacific Financial Board of Directors, after specified conditions have been satisfied, to enter into a definitive agreement providing for a Superior Proposal (as defined in the Merger Agreement).

On April 30, 2026, Banner and Pacific Financial issued a joint press release announcing the execution of the Merger Agreement.

On April 30, 2026, Banner posted on its investor relations website, https://investor.bannerbank.com, under “Events and Presentations” an investor presentation relating to the Merger.

Banner will file a registration statement on Form S-4 with the SEC in connection with the proposed transaction. The registration statement will include a proxy statement of Pacific Financial that also constitutes a prospectus of Banner. After the registration statement is declared effective by the SEC, Pacific Financial will mail a definitive proxy statement/prospectus to its shareholders.

Actual results and outcomes may differ, possibly materially, from the anticipated results or outcomes indicated in these forward-looking statements because of risks and uncertainties, including, but are not limited to the risk that: (1) the business of Pacific Financial may not be integrated with Banner’s business successfully or such integration may be more difficult, time-consuming or costly than expected; (2) any of the anticipated benefits of the proposed Merger may not be realized or may not be realized within the expected time period; (3) customer and employee relationships and business operations may be disrupted by the Merger or the announcement of the Merger, and the parties may be challenged in retaining key relationships both during the pendency of the Merger and following the completion of the Merger if that occurs; (4) the parties may not meet expectations regarding the timing of the proposed Merger; (5) required regulatory approvals or the approval of Pacific Financial shareholders may not be obtained or such approvals may be more difficult, time-consuming or costly than expected; (6) there may be challenges in satisfying the other conditions to completion of the Merger or the Merger may fail to close for any other reason; (7) management’s attention may be diverted from ongoing business operations and opportunities due to the proposed Merger; and (8) there may be potential negative impacts caused by the dilution resulting from Banner’s issuance of shares of Banner Common Stock in connection with the Merger.

Agreement and Plan of Merger, by and between Banner Corporation and Pacific Financial Corporation, dated April 30, 2026

Form of Voting and Support Agreement, entered into as of April 30, 2026, by and among Banner Corporation, Pacific Financial Corporation and the directors and/or officers of Pacific Financial Corporation identified therein.

Joint press release of Banner Corporation and Pacific Financial Corporation issued April 30, 2026.