BANNER CORPORATION
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(Exact name of registrant as specified in its charter)
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Washington
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6021
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91-1691604
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(State or other jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer Identification No.)
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incorporation or organization)
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Classification Code Number)
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10 S. First Avenue
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Walla Walla, WA 99362
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(509) 527-3636
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(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)
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Albert H. Marshall
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Senior Vice President and Secretary
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Banner Corporation
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10 S. First Avenue
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Walla Walla, WA 99362
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(509) 527-3636
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With copies to:
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John F. Breyer, Jr.
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Gordon E. Crim
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Breyer & Associates PC
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Lane Powell PC
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8180 Greensboro Drive, Suite 785
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601 SW Second Avenue, Suite 2100
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McLean, Virginia 22102
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Portland, Oregon 97204-3158
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Telephone: (703) 883-1100
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Telephone: (503) 778-2100
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Facsimile: (703) 883-2511
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Facsimile: (503) 778-2200
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Large accelerated filer ☐
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Accelerated Filer ⊠
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Non-accelerated filer ☐
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Smaller reporting company ☐
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(Do not check if a smaller reporting company)
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Title of each class of
securities to be registered
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Amount to
be registered(1)
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Proposed maximum
offering price
per share
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Proposed maximum
aggregate offering price(2)
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Amount of
registration fee
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Common Stock, $0.01 par value
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1,319,995 shares
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N/A
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$49,692,937.42
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$5,775.00 *
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(1)
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Represents the maximum number of shares of common stock of Banner Corporation (“Banner”) estimated to be issuable upon completion of the merger described herein in exchange for shares of the common stock of Siuslaw Financial Group, Inc. (“Siuslaw”) that are currently outstanding or preferred stock that will convert to common stock in connection with this transaction. Pursuant to Rule 416, this registration statement also covers additional securities that may be issued as a result of stock splits, stock dividends or similar transactions.
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(2)
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Calculated in accordance with Rule 457(f) under the Securities Act of 1933, the proposed maximum offering price of $49,692,937.42 is computed by subtracting $5,800,017.13 (the estimated cash to be paid by Banner to holders of Siuslaw common stock) from $55,492,954.55 (the market value of Siuslaw common stock) which is based on (A) $13.55, which is the average of the high and low prices per share of Siuslaw common stock on the over the counter market on October 3, 2014, times (B) the maximum number of shares of Siuslaw common stock expected to be exchanged for the shares of Banner common stock being registered.
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Prospectus of Banner Corporation | Proxy Statement of Siuslaw Financial Group, Inc. |
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Date: _______ ____, 2015
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Time: 5:30 p.m., local time
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Place: Siuslaw Bank,
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the approval of the Agreement and Plan of Merger, dated as of August 7, 2014, by and between Banner and Siuslaw, pursuant to which Siuslaw will merge with and into Banner (which we refer to as the “merger proposal”);
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a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”); and
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any other matters properly brought before the special meeting or any adjournment or postponement of the special meeting.
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By Order of the Board of Directors,
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Johan Mehlum
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Chairman and Chief Executive Officer
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Siuslaw Financial Group, Inc.
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Banner Corporation
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10 South First Avenue
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Walla Walla, Washington 99362
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Attention: Albert H. Marshall,
Senior Vice President and Corporate Secretary
(509) 527-3636
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Page | ||
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING | 1 | |
SUMMARY | 6 | |
RISK FACTORS | 14 | |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS | 20 | |
SELECTED CONSOLIDATED HISTORICAL FINANCIAL INFORMATION OF BANNER AND COMPARATIVE
UNAUDITED PRO FORMA PER SHARE DATA
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23 | |
Selected Consolidated Historical Financial Information of Banner | 23 | |
Selected Consolidated Historical Financial Information of AmericanWest | 26 | |
Comparative Unaudited Pro Forma Per Share Data | 26 | |
COMPARATIVE MARKET PRICES OF AND DIVIDENDS ON COMMON STOCK | 28 | |
THE SPECIAL MEETING | 29 | |
Time, Date, and Place | 29 | |
Matters to be Considered at the Meeting | 29 | |
Recommendation of the Siuslaw Board of Directors | 29 | |
Record Date and Quorum | 29 | |
Required Vote | 30 | |
How to Vote - Shareholders of Record | 30 | |
How to Vote - Shares Held in “Street Name” | 30 | |
Revocation of Proxies | 31 | |
Shares Subject to Voting Agreements; Shares Held by Directors and Executive Officers | 31 | |
Solicitation of Proxies | 31 | |
Attending the Meeting | 31 | |
Adjournments and Postponements | 32 | |
Questions and Additional Information | 32 | |
THE MERGER | 33 | |
Background of the Merger | 33 | |
Siuslaw’s Reasons for the Merger; Recommendation of Siuslaw’s Board of Directors | 35 | |
Banner’s Reasons for the Merger | 38 | |
Opinion of Siuslaw’s Financial Advisor | 39 | |
Material U.S. Federal Income Tax Consequences of the Merger | 50 | |
Accounting Treatment | 54 | |
Regulatory Approvals | 54 | |
Dissenters’ Rights of Siuslaw Shareholders | 54 | |
Interests of Siuslaw Executive Officers and Directors in the Merger | 55 | |
Stock Listing | 57 | |
THE MERGER AGREEMENT | 57 | |
The Merger | 57 | |
Effective Time and Completion of the Merger | 57 | |
Merger Consideration | 57 | |
Exchange of Stock Certificates | 58 | |
Conduct of Business Pending the Merger | 59 | |
Agreement Not to Solicit Other Offers | 61 | |
Representations and Warranties | 62 | |
Special Meeting and Recommendation of Siuslaw's Board of Directors | 64 | |
Conditions to Completion of the Merger | 64 |
Termination of the Merger Agreement | 65 | |
Employee and Benefit Plan Matters | 66 |
Indemnification and Continuance of Director and Officer Liability Coverage | 66 | |
Trust Preferred Securities | 66 | |
Expenses | 67 | |
Amendment, Waiver and Extension of the Merger Agreement | 67 | |
Voting Agreements | 67 | |
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
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68 | |
THE COMPANIES | 91 | |
Banner | 91 | |
Siuslaw | 92 | |
DESCRIPTION OF BANNER’S CAPITAL STOCK | 94 | |
General | 94 | |
Common Stock | 94 | |
Preferred Stock | 94 | |
Other Anti-Takeover Provisions | 95 | |
COMPARISON OF SHAREHOLDER RIGHTS | 95 | |
LEGAL MATTERS | 106 | |
EXPERTS | 106 | |
WHERE YOU CAN FIND MORE INFORMATION | 106 | |
APPENDICES
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A Agreement and Plan of Merger, dated as of August 7, 2014, by and between Banner Corporation and Siuslaw Financial Group, Inc.
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B Opinion of Sandler O’Neill + Partners, L.P.
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C Sections 60.551 to 60.594 of the Oregon Revised Statutes, Regarding Dissenters’ Rights
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Q:
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What is the merger?
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A:
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Banner and Siuslaw have entered into an Agreement and Plan of Merger, dated as of August 7, 2014 (which we refer to as the “merger agreement”), pursuant to which Siuslaw will be merged with and into Banner, with Banner continuing as the surviving corporation (we refer to this transaction as the “merger”). Immediately following the merger, Siuslaw’s wholly owned subsidiary bank, Siuslaw Bank, will merge with Banner’s wholly owned subsidiary bank, Banner Bank (we refer to this transaction as the “bank merger”). A copy of the merger agreement is attached to this proxy statement/prospectus as Appendix A.
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Q:
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Why am I receiving this proxy statement/prospectus?
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A:
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We are delivering this document to you because you are a shareholder of Siuslaw and you are being asked to vote on the merger and the mergaer agreement at the special meeting of shareholders. This document is a proxy statement being used by Siuslaw’s board of directors to solicit proxies of its shareholders in connection with approval of the merger, approval of the adjournment of the meeting, if necessary, and any other matters properly presented at the meeting. This document is also a prospectus that is being delivered to Siuslaw shareholders because Banner is offering shares of its stock to Siuslaw shareholders in connection with the merger.
The merger cannot be completed unless the shareholders of Siuslaw approve the merger agreement (which we refer to as the “merger proposal”).
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Q:
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In addition to the merger proposal, what else are Siuslaw shareholders being asked to vote on?
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A:
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Siuslaw is soliciting proxies from holders of its stock with respect to one additional proposal; completion of the merger is not conditioned upon approval of this additional proposal:
● a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”); and
● to consider and vote on any other matters that may properly come before the special meeting.
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Q:
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What will Siuslaw shareholders receive in the merger?
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A:
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Each outstanding share of Siuslaw stock (except for dissenting shares) will be converted into the right to receive, promptly following the completion of the merger, 0.32231 of a share of Banner common stock, and $1.41622 in cash (which we refer to as the “merger consideration”). Immediately prior to the merger, each outstanding share of Siuslaw preferred stock will automatically convert to one share of Siuslaw common stock and each holder thereof will receive the same merger consideration as the other Siuslaw common shareholders. Banner will not issue any fractional shares of Banner common stock in the merger. Siuslaw shareholders who would otherwise be entitled to a fractional share of Banner common stock upon completion of the merger will instead receive an amount in cash equal to the fractional share interest multiplied by the average of the volume weighted closing price (rounded to the nearest one ten thousandth) of Banner common stock on NASDAQ for the ten trading days immediately preceding the fifth day before the closing date of the merger (which we refer to as the “average Banner common stock price”).
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Although the number of shares of Banner common stock that holders of Siuslaw common stock will receive is fixed, the market value of the stock portion of the merger consideration will fluctuate with the market price of Banner common stock and will not be known at the time Siuslaw shareholders vote on the merger agreement.
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Q:
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How does Siuslaw’s board of directors recommend that I vote at the special meeting?
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A:
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After careful consideration, Siuslaw’s board of directors unanimously recommends that you vote “FOR” the merger proposal and “FOR” the adjournment proposal.
All of the directors and executive officers of Siuslaw have entered into voting agreements with Banner, pursuant to which they have agreed to vote all of their shares of Siuslaw common stock "FOR" the merger proposal. For more information regarding the voting agreements, please see the section entitled "The Merger Agreement—Voting Agreements" on page 67.
For a more complete description of Siuslaw's reasons for the merger and the recommendations of the Siuslaw board of directors, please see the section entitled "The Merger—Siuslaw’s Reasons for the Merger; Recommendation of Siuslaw’s Board of Directors" beginning on page 35.
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Q:
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When and where is the special meeting?
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The special meeting will be held at the Florence Office, Siuslaw Bank, 777 Highway 101, Florence, Oregon on ____________, 2015, at 5:30 p.m . local time.
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What do I need to do now?
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A:
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After you have carefully read this proxy statement/prospectus and have decided how you wish your shares to be voted, please promptly take the steps identified in the following sentences so that your shares are represented and voted at the special meeting. If you hold your shares in your name as a shareholder of record, you must complete, sign, date and mail your proxy card in the enclosed return envelope as soon as possible. Alternatively, you can provide your proxy directing how you want your shares voted through the internet. Information and applicable deadlines for providing your proxy through the internet is set forth in the enclosed proxy card instructions. If you hold your shares in “street name” through a bank or broker, you must direct your bank or broker how to vote in accordance with the instructions you have received from your bank or broker.
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Q:
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Who is entitled to vote?
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A:
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Holders of record of Siuslaw common stock and preferred stock at the close of business on __________, 2015 , which is the date that the Siuslaw board of directors has fixed as the record date for the special meeting, are entitled to vote at the special meeting.
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Q:
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What constitutes a quorum?
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A:
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The presence at the special meeting, in person or by proxy, of holders of at least a majority of the outstanding shares of Siuslaw stock entitled to vote at the special meeting will constitute a quorum for the transaction of business. Abstentions and broker-nonvotes will be treated as shares that are present at the meeting for the purpose of determining the presence of a quorum.
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Q:
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If my shares are held in “street name” through a bank, broker or other nominee, will my bank, broker or other nominee vote my shares for me?
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A:
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No. Your bank, broker or other nominee cannot vote your shares without instructions from you. Please follow the voting instruction form provided by your bank, broker or other nominee. The effects of failing to instruct your bank, broker or other nominee how to vote your shares of Siuslaw stock on each of the proposals to be considered at the special meeting is described below.
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Q:
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What is the vote required to approve each proposal at the special meeting?
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A:
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Merger proposal: To approve the merger proposal, at least a majority of the Siuslaw stock outstanding and entitled to vote at the special meeting must be voted in favor of such proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the merger proposal, it will have the same effect as a vote “AGAINST” the merger proposal.
Adjournment proposal: To approve the adjournment proposal, more shares of Siuslaw stock present in person or by proxy at the special meeting must be voted in favor of such proposal than shares voted against the adjournment proposal. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or fail to vote in person at the special meeting or fail to instruct your bank or broker how to vote with respect to the adjournment proposal, it will have no effect on such proposal.
Other matters: To approve action on any other matter properly presented at the meeting, more shares of Siuslaw stock present in person or by proxy at the special meeting must be voted in favor of such matter than shares voted against the matter. We are not aware of any other matter that is expected to be brought before the meeting.
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Why is my vote important?
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If you do not vote by proxy or in person at the special meeting, it will be more difficult for Siuslaw to obtain the necessary quorum to hold its special meeting. In addition, your failure to submit a proxy or vote in person, or failure to instruct your bank or broker how to vote, or abstention from voting will have the same effect as a vote “AGAINST” the merger proposal at the special meeting. The merger agreement must be approved by the affirmative vote of the holders of at least a majority of Siuslaw stock entitled to vote at the special meeting.
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What happens if I return my proxy but do not indicate how to vote my shares?
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If you sign and return your proxy card, but do not provide instructions on how to vote your shares, your shares will be voted “FOR” approval of the merger proposal and adjournment proposal.
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Can I attend the special meeting and vote my shares in person?
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Yes. All shareholders of Siuslaw, including shareholders of record and shareholders who hold their shares through banks, brokers, nominees or any other holder of record, are invited to attend the special meeting. Holders of record of Siuslaw stock can vote in person at the special meeting. If you wish to vote in person at the special meeting and if you are a shareholder of record, you should bring the enclosed proxy card and proof of identity. If you hold your shares in street name through a broker, or beneficially own your shares through another holder of record, you will need to bring with you and provide to the inspectors of election proof of identity and a letter from your bank, broker, nominee or other holder of record confirming your beneficial ownership of common stock as of the record date and authorization for you to vote such shares at the special meeting (a “legal proxy” from your holder of record). At the appropriate time during the special meeting, the shareholders present will be asked whether anyone wishes to vote in person. You should raise your hand at this time to receive a ballot to record your vote. Everyone who attends the special meeting must abide by the rules distributed at the meeting for the conduct of the meeting.
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Can I change my proxy or voting instructions?
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Yes. If you are a holder of record of Siuslaw stock, you may revoke your proxy at any time before it is voted by (1) signing and returning a proxy card with a later date, (2) delivering a written revocation to Siuslaw’s corporate secretary, (3) attending the special meeting in person and voting by ballot at the special meeting, or (4) voting by the internet at a later time. Attendance at the special meeting by itself will not automatically revoke your proxy. A revocation or later-dated proxy received by Siuslaw after the vote is taken at the special meeting will not affect your previously submitted proxy. Siuslaw’s corporate secretary’s mailing address is: Corporate Secretary, Siuslaw Financial Group, Inc., P.O. Box 280, Florence, Oregon 97439. If you hold your
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shares in “street name” through a bank or broker, you should contact your bank or broker to change your voting instructions.
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Will Siuslaw be required to submit the proposal to approve the merger agreement to its shareholders even if Siuslaw’s board of directors has withdrawn, modified or qualified its recommendation?
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A:
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Yes. Unless the merger agreement is terminated before the special meeting, Siuslaw is required to submit the proposal to approve the merger agreement to its shareholders even if Siuslaw’s board of directors has withdrawn or modified its recommendation.
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Q:
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What are the U.S. federal income tax consequences of the merger to Siuslaw shareholders?
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A:
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The merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, or Code. Assuming the merger qualifies as a reorganization, a U.S. holder of Siuslaw common stock generally will not recognize any gain or loss upon receipt of Banner common stock in exchange for Siuslaw common stock in the merger, and will recognize gain (but not loss) in an amount not to exceed any cash received as part of the merger consideration (except with respect to any cash received upon exercise of dissenters’ rights under Oregon law and in lieu of a fractional share of Banner common stock, as discussed below under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger—Receipt of Only Cash Consideration Upon Exercise of Dissenters’ Rights and Cash Received Instead of a Fractional Share of Banner Common Stock” on page 53). It is a condition to the completion of the merger that Banner receive a written opinion from its counsel to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.
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Q:
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Are Siuslaw shareholders entitled to dissenter’s rights?
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A:
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Yes. Under Oregon law, Siuslaw shareholders have the right to dissent from the merger and receive cash for the fair value of their shares of Siuslaw stock. To perfect dissenters’ rights, a Siuslaw shareholder must send or deliver a notice to Siuslaw prior to the special meeting and must not vote in favor of the merger. Following the special shareholders meeting, Banner will deliver a written dissenters’ notice to all shareholders who have satisfied the statutory provisions described above. Dissenting shareholders who receive the notice must demand payment and satisfy certain other requirements. In any case, a shareholder electing to dissent must strictly comply with all the procedures required by Oregon law. These procedures are described later in this document, and a copy of the relevant provisions of Oregon law is attached as Appendix C. Note that if you return a signed proxy card without voting instructions or with instructions to vote “FOR” the merger proposal, agreement, your shares will be automatically voted in favor of the merger agreement and you will lose all dissenters’ rights available under Oregon law.For further information, see “The Merger—Dissenters’ Rights of Siuslaw Shareholder” on page 54.
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Q:
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If I am a holder of Siuslaw common or preferred stock in certificated form, should I send in my Siuslaw stock certificates now?
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A:
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No. Please do not send in your Siuslaw stock certificates with your proxy. After the merger, an exchange agent will send you instructions for exchanging Siuslaw stock certificates for the merger consideration. See “The Merger Agreement—Exchange of Stock Certificates” on page 58.
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What should I do if I hold my shares of Siuslaw common or preferred stock in book-entry form?
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A:
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You are not required to take any special additional actions if your shares of Siuslaw stock are held in book-entry form. After the completion of the merger, an exchange agent will send you instructions for exchanging your shares for the merger consideration. See “The Merger Agreement—Exchange of Stock Certificates” on page 58.
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Q:
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Whom may I contact if I cannot locate my Siuslaw stock certificate(s)?
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A:
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If you are unable to locate your original Siuslaw stock certificate(s), you should contact OTR Transfer, Siuslaw’s transfer agent, at (503) 225-0375.
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Q:
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What should I do if I receive more than one set of voting materials?
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A:
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Siuslaw shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of Siuslaw stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of Siuslaw stock and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this proxy statement/prospectus to ensure that you vote every share of Siuslaw stock that you own.
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Q:
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When do you expect to complete the merger?
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A:
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Banner and Siuslaw expect to complete the merger in the first quarter of 2015. However, neither Banner nor Siuslaw can assure you of when or if the merger will be completed. Siuslaw must obtain the approval of the merger agreement by its shareholders and the parties must obtain necessary regulatory approvals and satisfy certain other closing conditions.
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Q:
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What happens if the merger is not completed?
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A:
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If the merger is not completed, holders of Siuslaw stock will not receive any consideration for their shares in connection with the merger. Instead, Siuslaw will remain an independent company. In addition, if the merger agreement is terminated in certain circumstances, a termination fee may be required to be paid by Siuslaw. See “The Merger Agreement—Termination of the Merger Agreement” on page 65 for a complete discussion of the circumstances under which a termination fee would be required to be paid.
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Q:
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Whom should I call with questions?
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A:
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If you have any questions concerning the merger or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, or need help voting your shares of Siuslaw stock, please contact Lonnie Iholts, Corporate Secretary, at (541) 997-3486, or Johan Mehlum, Chairman, at 541-342-4000.
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Q:
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What if I sell my shares prior to closing the merger?
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A:
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Unless you are the record or beneficial holder of shares as of the effective date of the merger, you will not receive merger consideration at the time the merger is completed.
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Q:
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Will I continue to receive quarterly dividends on my Siuslaw stock?
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A:
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The merger agreement provides that Siuslaw may declare and pay quarterly dividends in keeping with past practice. The merger agreement further provides that dividends for the quarter in which closing occurs will be declared and paid on the same dates that Banner declares and pays its regular quarterly dividend so as to ensure that Siuslaw shareholders receive dividends consistent with past practice but do not receive dividends from both companies in the same quarter.
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Date
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Banner
Closing Price
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Siuslaw
Closing Price
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Implied Value of
Merger
Consideration for
One Share of
Siuslaw
Common Stock
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August 7, 2014
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$39.14
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$8.85
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$14.03
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______, 2015
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$
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$
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$
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approve the merger agreement (which we refer to as the “merger proposal”);
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approve a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the merger proposal (which we refer to as the “adjournment proposal”); and
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consider and vote on any other matters that may properly come before the special meeting.
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the approval of the merger proposal by Siuslaw shareholders;
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the authorization for listing on NASDAQ of the shares of Banner common stock to be issued in the merger;
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the receipt of all required regulatory approvals without the imposition of any unduly burdensome conditions upon Banner following the merger or upon Banner Bank following the bank merger;
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the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus is a part;
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the absence of any stop order, injunction, decree or law preventing or making illegal the completion of the merger or the bank merger;
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subject to the standards set forth in the closing conditions in the merger agreement, the accuracy of the representations and warranties of Banner and Siuslaw on the date of the merger agreement and the closing date of the merger;
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performance in all material respects by each of Banner and Siuslaw of its obligations under the merger agreement;
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receipt by Siuslaw of third party consents to the merger;
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receipt by Banner of an opinion from its counsel as to certain U.S. federal income tax matters; and
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as an additional condition to Banner’s obligation to complete the merger, the shares of Siuslaw common stock whose holders have perfected dissenters’ rights under Oregon law shall be less than ten percent of the total number of outstanding shares of Siuslaw common stock.
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by mutual written consent of Banner and Siuslaw;
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by either Banner or Siuslaw if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or bank merger and such denial has become final and non-appealable or any governmental entity of competent jurisdiction has issued a final non-appealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the merger or bank merger, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;
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by either Banner or Siuslaw if the merger has not been completed on or before March 31, 2015 (which we refer to as the “termination date”), unless the failure of the merger to be completed by that date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;
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by either Banner or Siuslaw (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement) if there is a breach of any of the covenants or agreements or any of the representations or warranties set forth in the merger agreement on the part of the other party which either individually or in the aggregate would constitute, if occurring or continuing on the closing date the merger, the failure of a closing condition of the terminating party and which is not cured within 20 days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date);
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by Banner, if the board of directors of Siuslaw fails to recommend in this proxy statement/prospectus that its shareholders approve the merger proposal, or the Siuslaw board withdraws, modifies or makes or causes to be made any third party or public communication proposing or accouncing an intention to modify or withdraw such recommendation in any manner adverse to Banner, or Siuslaw materially breaches any of its obligations relating to third party acquisition proposals;
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by either Banner or Siuslaw, if Siuslaw does not obtain shareholder approval of the merger proposal at the special meeting; or
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by Siuslaw prior to Siuslaw obtaining shareholder approval of the merger proposal in order to enter into a definitive acquisition agreement with respect to a superior proposal. A superior proposal means a third party unsolicited tender or exchange offer, merger or consolidation or other business combination involving Siuslaw or Siuslaw Bank or any third party unsolicited proposal to acquire at least a majority of the voting power in, or at least a majority of the fair market value of the business, assets or deposits of, Siuslaw or Siuslaw Bank that the board of directors of Siuslaw concludes in good faith is more favorable to the shareholders of Siuslaw than the merger proposal after considering a variety of factors and the advice of outside advisors
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•
|
a termination by Banner based on (i) the board of directors of Siuslaw either failing to continue its recommendation that the Siuslaw shareholders approve the merger proposal or adversely changing such recommendation or (ii) Siuslaw materially breaching the provisions of the merger agreement relating to third party acquisition proposals;
|
•
|
a termination by Siuslaw prior to it obtaining shareholder approval of the merger proposal in order to enter into a definitive acquisition agreement with respect to a superior proposal; or
|
•
|
a termination by either party as a result of the failure of Siuslaw’s shareholders to approve the merger proposal and if, prior to such termination, there is publicly announced a proposal for a tender or exchange offer, for a merger or consolidation or other business combination involving Siuslaw or Siuslaw Bank or for the acquisition of a majority of the voting power in, or a majority of the fair market value of the business, assets or deposits of, Siuslaw or Siuslaw Bank and, within one year of the termination, Siuslaw or Siuslaw Bank either enters into a definitive agreement with respect to an acquisition proposal or consummates an acquisition proposal.
|
·
|
the expected cost savings, synergies and other financial benefits from the merger with Siuslaw and business combination with AmericanWest might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters might be greater than expected;
|
·
|
the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses which could necessitate additional provisions for loan losses, resulting both from loans originated and loans acquired from other financial institutions;
|
·
|
changes in economic conditions in general and in Washington, Idaho, Oregon and California in particular;
|
·
|
changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, net interest margin and funding sources;
|
·
|
risks related to acquiring assets in or entering markets in which Banner has not previously operated and may not be familiar;
|
·
|
the impact of repricing and competitors' pricing initiatives on loan and deposit products;
|
·
|
fluctuations in the demand for loans, the number of unsold homes 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;
|
·
|
the ability to access cost-effective funding;
|
·
|
results of examinations by bank regulators or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require increases to the allowance for loan losses, the write-down of assets, or a change in regulatory capital position of our banks or affect the ability of our banks to borrow funds or maintain or increase deposits, which could adversely affect liquidity and earnings;
|
·
|
legislative or regulatory changes, including changes in regulatory policies and principles, or the interpretation of regulatory capital or other rules as a result of Basel III;
|
·
|
the ability to adapt successfully to technological changes to meet customers' needs and developments in the market place;
|
·
|
our ability to control operating costs and expenses;
|
·
|
new legislation or regulatory changes, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and regulations adopted thereunder, changes in capital requirements pursuant to the Dodd-Frank Act and the implementation of the Basel III capital standards, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities;
|
·
|
increases in premiums for deposit insurance;
|
·
|
the use of estimates in determining fair value of certain assets, which estimates may prove to be incorrect and result in significant declines in valuation;
|
·
|
difficulties in reducing risk associated with the loans on our balance sheet;
|
·
|
staffing fluctuations in response to product demand or the implementation of corporate strategies that affect the workforce and potential associated changes;
|
·
|
failure or security breach of computer systems on which we depend;
|
·
|
our ability to retain key members of the senior management team;
|
·
|
costs and effects of litigation, including settlements and judgments;
|
·
|
Banner’s ability to implement its business strategies;
|
·
|
future acquisitions by Banner of other depository institutions or lines of business;
|
·
|
AmericanWest’s pending acquisition of Greater Sacramento Bancorp may fail to be consummated;
|
·
|
future goodwill impairment due to changes in Banner’s business, changes in market conditions, or other factors;
|
·
|
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;
|
·
|
Banner’s ability to pay dividends on its common stock;
|
·
|
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
|
·
|
and other risks detailed from time to time in Banner’s filings with the SEC.
|
(unaudited) | ||||||||||||||||||||||||
At September 30,
|
December 31,
|
|||||||||||||||||||||||
(In thousands)
|
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||||||
Total assets
|
$ | 4,759,389 | $ | 4,388,166 | $ | 4,265,564 | $ | 4,257,312 | $ | 4,406,082 | $ | 4,722,221 | ||||||||||||
Cash and securities (1)
|
769,615 | 772,614 | 811,902 | 754,396 | 729,345 | 640,657 | ||||||||||||||||||
Loans receivable, net
|
3,732,364 | 3,343,455 | 3,158,223 | 3,213,426 | 3,305,716 | 3,694,852 | ||||||||||||||||||
Deposits
|
3,991,181 | 3,617,926 | 3,557,804 | 3,475,654 | 3,591,198 | 3,865,550 | ||||||||||||||||||
Borrowings
|
145,479 | 184,234 | 160,000 | 212,649 | 267,761 | 414,315 | ||||||||||||||||||
Common stockholders’ equity
|
574,058 | 538,972 | 506,919 | 411,748 | 392,472 | 287,721 | ||||||||||||||||||
Total stockholders’ equity
|
574,058 | 538,972 | 506,919 | 532,450 | 511,472 | 405,128 | ||||||||||||||||||
Shares outstanding
|
19,572 | 19,544 | 19,455 | 17,553 | 16,165 | 3,077 | ||||||||||||||||||
Shares outstanding excluding unearned,
|
||||||||||||||||||||||||
restricted shares held in ESOP
|
19,572 | 19,509 | 19,421 | 17,519 | 16,130 | 3,042 |
OPERATING DATA:
|
(unaudited) | |||||||||||||||||||||||||||
Nine Months Ended September 30,
|
For the Year Ended December 31,
|
|||||||||||||||||||||||||||
(In thousands)
|
2014
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||||
Interest income
|
$ | 141,410 | $ | 135,116 | $ | 179,712 | $ | 187,162 | $ | 197,563 | $ | 218,082 | $ | 237,370 | ||||||||||||||
Interest expense
|
8,199 | 10,007 | 12,996 | 19,514 | 32,992 | 60,312 | 92,797 | |||||||||||||||||||||
Net interest income before provision for loan losses
|
133,211 | 125,109 | 166,716 | 167,648 | 164,571 | 157,770 | 144,573 | |||||||||||||||||||||
Provision for loan losses
|
— | — | — | 13,000 | 35,000 | 70,000 | 109,000 | |||||||||||||||||||||
Net interest income
|
133,211 | 125,109 | 166,716 | 154,648 | 129,571 | 87,770 | 35,573 | |||||||||||||||||||||
Deposit fees and other
service charges
|
22,237 | 19,911 | 26,581 | 25,266 | 22,962 | 22,009 | 21,394 | |||||||||||||||||||||
Mortgage banking
operations revenue
|
7,282 | 9,002 | 11,170 | 13,812 | 6,146 | 6,370 | 8,893 | |||||||||||||||||||||
Other-than-temporary
impairment recoveries
(losses)
|
— | 409 | 409 | (409 | ) | 3,000 | (4,231 | ) | (1,511 | ) | ||||||||||||||||||
Net change in valuation of financial instruments carried at fair value
|
1,662 | (1,954 | ) | (2,278 | ) | (16,515 | ) | (624 | 1,747 | 12,529 | ||||||||||||||||||
All other operating
income
|
11,161 | 3,395 | 7,460 | 4,748 | 2,506 | 3,253 | 2,385 | |||||||||||||||||||||
Total other operating income
|
42,342 | 30,763 | 43,342 | 26,902 | 33,990 | 29,148 | 43,690 | |||||||||||||||||||||
REO operations expense
(recoveries), net
|
(260 | ) | (1,047 | ) | (689 | ) | 3,354 | 22,262 | 26,025 | 7,147 | ||||||||||||||||||
All other operating
expenses
|
112,772 | 105,093 | 141,664 | 138,099 | 135,842 | 134,776 | 134,933 | |||||||||||||||||||||
Total other operating expense
|
112,512 | 104,046 | 140,975 | 141,453 | 158,104 | 160,801 | 142,080 | |||||||||||||||||||||
Income (loss) before provision for income tax expense (benefit)
|
63,041 | 51,826 | 69,083 | 40,097 | 5,457 | (43,883 | ) | (62,817 | ) | |||||||||||||||||||
Provision for income tax
expense (benefit)
|
20,620 | 16,825 | 22,528 | (24,785 | ) | — | 18,013 | (27,053 | ) | |||||||||||||||||||
Net income (loss)
|
$ | 42,421 | $ | 35,001 | $ | 46,555 | $ | 64,882 | $ | 5,457 | $ | (61,896 | ) | $ | (35,764 | ) |
PER COMMON SHARE DATA:
|
(unaudited) | |||||||||||||||||||||||||||
Nine Months Ended September 30,
|
At or For the Year Ended December 31,
|
|||||||||||||||||||||||||||
2014
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||||||||||
Net income (loss):
|
||||||||||||||||||||||||||||
Basic
|
$ | 2.19 | $ | 1.81 | $ | 2.40 | $ | 3.17 | $ | (0.15 | ) | $ | (7.21 | ) | $ | (16.31 | ) | |||||||||||
Diluted
|
2.19 | 1.80 | 2.40 | 3.16 | (0.15 | ) | (7.21 | ) | (16.31 | ) | ||||||||||||||||||
Common stockholders’
equity per share (2)(9)
|
29.33 | 27.17 | 27.63 | 26.10 | 23.50 | 24.33 | 94.58 | |||||||||||||||||||||
Cash dividends
|
0.54 | 0.39 | 0.54 | 0.04 | 0.10 | 0.28 | 0.28 | |||||||||||||||||||||
Dividend payout ratio
(basic)
|
24.66 | % | 21.55 | % | 22.50 | % | 1.26 | % | (66.67 | ) % | (3.88 | ) % | (1.72 | ) % | ||||||||||||||
Dividend payout ratio
(diluted)
|
24.66 | % | 21.67 | % | 22.50 | % | 1.27 | % | (66.67 | ) % | (3.88 | ) % | (1.72 | ) % |
OTHER DATA: (unaudited)
|
At September 30,
|
December 31,
|
|||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||
Full time equivalent employees
|
1,106
|
1,104
|
1,074
|
1,078
|
1,060
|
1,060
|
|||||||||
Number of branches
|
93
|
88
|
88
|
89
|
89
|
89
|
KEY FINANCIAL RATIOS: (unaudited)
|
||||||||||||||||||||||
Nine Months Ended September 30,
|
For the Year Ended December 31,
|
|||||||||||||||||||||
2014
|
2013
|
2013
|
2012
|
2011
|
2010
|
2009
|
||||||||||||||||
Performance Ratios:
|
||||||||||||||||||||||
Return on average assets (3)(9)
|
1.24
|
%
|
1.10
|
%
|
1.09
|
%
|
1.54
|
%
|
0.13
|
%
|
(1.36)
|
%
|
(0.78)
|
%
|
||||||||
Return on average common equity (4)(9)
|
10.17
|
8.97
|
8.85
|
14.03
|
1.37
|
(17.19)
|
(11.69)
|
%
|
||||||||||||||
Average common equity to average assets
|
12.17
|
12.31
|
12.36
|
10.96
|
9.31
|
7.90
|
6.71
|
|||||||||||||||
Interest rate spread (5)(9)
|
4.05
|
4.12
|
4.08
|
4.13
|
3.99
|
3.61
|
3.23
|
|||||||||||||||
Net interest margin (6)(9)
|
4.07
|
4.15
|
4.11
|
4.17
|
4.05
|
3.67
|
3.33
|
|||||||||||||||
Non-interest income to average assets(9)
|
1.23
|
0.97
|
1.02
|
0.64
|
0.79
|
0.64
|
0.96
|
|||||||||||||||
Non-interest expense to average assets(9)
|
3.28
|
3.28
|
3.31
|
3.35
|
3.69
|
3.53
|
3.12
|
|||||||||||||||
Efficiency ratio (7)
|
64.09
|
66.75
|
67.11
|
72.71
|
79.62
|
86.03
|
75.47
|
|||||||||||||||
Average interest-earning assets to interest-
bearing liabilities
|
108.72
|
108.10
|
108.28
|
109.11
|
106.90
|
104.32
|
104.55
|
|||||||||||||||
Selected Financial Ratios:
|
||||||||||||||||||||||
Allowance for loan losses as a percent of total
loans at end of period
|
1.95
|
2.32
|
2.19
|
2.39
|
2.52
|
2.86
|
2.51
|
|||||||||||||||
Net charge-offs as a percent of average outstanding loans during the period
|
--
|
0.03
|
0.30
|
0.57
|
1.50
|
1.88
|
2.28
|
|||||||||||||||
Non-performing assets as a percent of
total assets
|
0.50
|
0.70
|
0.66
|
1.18
|
2.79
|
5.77
|
6.27
|
|||||||||||||||
Allowance for loan losses as a percent of
non-performing loans (8)
|
375.81
|
305.39
|
302.77
|
225.33
|
110.09
|
64.30
|
44.55
|
|||||||||||||||
Consolidated Capital Ratios:
|
||||||||||||||||||||||
Total capital to risk-weighted assets
|
16.59
|
17.41
|
16.99
|
16.96
|
18.07
|
16.92
|
12.73
|
|||||||||||||||
Tier 1 capital to risk-weighted assets
|
15.33
|
16.15
|
15.73
|
15.70
|
16.80
|
15.65
|
11.47
|
|||||||||||||||
Tier 1 leverage capital to average
assets
|
13.14
|
13.63
|
13.64
|
12.74
|
13.44
|
12.24
|
9.62
|
|||||||||||||||
_____________
|
||||||||||||||||||||||
91(1)
|
Includes securities available-for-sale and held-to-maturity and held for trading.
|
|||||||||||||||||||||
(2)
|
Calculated using shares outstanding excluding unearned restricted shares held in ESOP and adjusted for 1-for-7 reverse stock split.
|
|||||||||||||||||||||
(3)
|
Net income divided by average assets.
|
|||||||||||||||||||||
(4)
|
Net income divided by average common equity.
|
|||||||||||||||||||||
(5)
|
Difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
|
|||||||||||||||||||||
(6)
|
Net interest income before provision for loan losses as a percent of average interest-earning assets.
|
|||||||||||||||||||||
(7)
|
Other operating expenses divided by the total of net interest income before loan losses and other operating income (non-interest income).
|
|||||||||||||||||||||
(8)
|
Non-performing loans consist of nonaccrual and 90 days past due loans.
|
|||||||||||||||||||||
(9) | Results for six month periods annualized. |
Selected Financial Data
|
Nine Months Ended
September 30,
|
December 31,
|
|||||||||||||||||
2014
|
2013
|
2013
|
2012
|
2011
|
2010
|
||||||||||||||
Total assets
|
$
|
4,094,783
|
$
|
3,701,442
|
$
|
3,943,195
|
$
|
2,763,445
|
$
|
2,299,081
|
$
|
1,664,456
|
|||||||
Cash and securities
|
1,144,057
|
1,022,280
|
1,217,242
|
723,685
|
725,269
|
524,191
|
|||||||||||||
Total net loans
|
2,543,034
|
2,242,374
|
2,283,548
|
1,717,631
|
1,350,073
|
965,896
|
|||||||||||||
Deposits
|
3,228,776
|
2,989,740
|
3,274,081
|
2,196,530
|
1,901,990
|
1,418,393
|
|||||||||||||
Borrowings
|
251,473
|
120,691
|
73,095
|
88,179
|
1,104
|
10,600
|
|||||||||||||
Total members’ equity
|
561,312
|
529,519
|
534,131
|
444,036
|
368,408
|
202,924
|
Operating Data
|
Nine Months Ended
September 30,
|
December 31,
|
|||||||||||||||||
2014
|
2013
|
2013
|
2012
|
2011
|
2010
|
||||||||||||||
Interest income
|
$
|
115,028
|
$
|
110,499
|
$
|
149,298
|
$
|
113,111
|
$
|
86,102
|
$
|
2,738
|
|||||||
Interest expense
|
4,976
|
3,998
|
5,739
|
4,594
|
4,149
|
159
|
|||||||||||||
Net interest income before
provision for loan losses
|
110,052
|
106,501
|
143,559
|
108,517
|
81,953
|
2,579
|
|||||||||||||
Provision for loan losses
|
997
|
4,148
|
4,211
|
3,807
|
366
|
203
|
|||||||||||||
Net interest income
|
109,055
|
102,353
|
139,348
|
104,710
|
81,587
|
2,376
|
|||||||||||||
Deposit fees and other service
charges
|
11,312
|
10,445
|
13,999
|
10,306
|
8,702
|
311
|
|||||||||||||
Mortgage banking operations
revenue
|
2,851
|
5,766
|
6,846
|
7,202
|
2,408
|
131
|
|||||||||||||
All other non-interest income
|
19,726
|
15,164
|
22,210
|
13,153
|
9,388
|
334
|
|||||||||||||
Total non-interest income
|
33,889
|
31,375
|
43,055
|
30,661
|
20,498
|
776
|
|||||||||||||
OREO expense
|
4,638
|
6,585
|
8,560
|
7,929
|
5,753
|
273
|
|||||||||||||
All other non-interest expenses
|
108,716
|
129,000
|
166,243
|
120,665
|
90,138
|
20,658
|
|||||||||||||
Total non-interest expense
|
113,354
|
135,585
|
174,803
|
128,594
|
95,891
|
20,931
|
|||||||||||||
Income (loss) before income tax expense (benefit)
|
29,590
|
(1,857)
|
7,600
|
6,777
|
6,194
|
(17,779)
|
|||||||||||||
Income tax expense
|
12,604
|
(294)
|
579
|
(63,307)
|
(56)
|
--
|
|||||||||||||
Net income (loss)
|
$
|
16,986
|
$
|
(1,563)
|
$
|
7,021
|
$
|
70,084
|
$
|
6,250
|
$
|
(17,779)
|
Pro Forma
|
||||||||||||||||||||||||
Pro Forma
|
Siuslaw
|
|||||||||||||||||||||||
Pro Forma
|
Combined
|
Equivalent
|
||||||||||||||||||||||
Combined
|
Pro Forma
|
Amounts for
|
Share for
|
|||||||||||||||||||||
Amounts for
|
Siuslaw
|
Banner,
|
Banner,
|
|||||||||||||||||||||
Banner
|
Siuslaw
|
Banner and
|
Equivalent
|
Siuslaw and
|
Siuslaw and
|
|||||||||||||||||||
Historical
|
Historical
|
Siuslaw (5)
|
Share (1)
|
AmericanWest (6)
|
AmericanWest (1)
|
|||||||||||||||||||
Book value per common share: (2)
|
||||||||||||||||||||||||
September 30, 2014
|
$ | 29.33 | $ | 9.64 | $ | 30.04 | $ | 9.68 | $ | 33.98 | $ | 10.95 | ||||||||||||
Cash dividends paid per common share:
|
||||||||||||||||||||||||
Year ended December 31, 2013 (3)
|
$ | 0.54 | $ | 0.20 | $ | 0.54 | $ | 0.17 | $ | 0.54 | $ | 0.17 | ||||||||||||
Nine months ended September 30, 2014
|
$ | 0.54 | $ | 0.15 | $ | 0.54 | $ | 0.17 | $ | 0.54 | $ | 0.17 | ||||||||||||
Basic and diluted earnings per common share:
|
||||||||||||||||||||||||
Year ended December 31, 2013 (4)
|
||||||||||||||||||||||||
Basic
|
$ | 2.40 | $ | 0.75 | $ | 2.36 | $ | 0.76 | $ | 1.71 | $ | 0.55 | ||||||||||||
Diluted
|
$ | 2.40 | $ | 0.75 | $ | 2.36 | $ | 0.76 | $ | 1.71 | $ | 0.55 | ||||||||||||
Ninemonths ended September 30, 2014
|
||||||||||||||||||||||||
Basic
|
$ | 2.19 | $ | 0.75 | $ | 2.17 | $ | 0.70 | $ | 1.88 | $ | 0.60 | ||||||||||||
Diluted
|
$ | 2.19 | $ | 0.75 | $ | 2.17 | $ | 0.70 | $ | 1.87 | $ | 0.60 |
(1)
|
Calculated by multiplying the Pro Forma Combined Amounts for Banner by 0.32231.
|
|||||||||||
(2)
|
Calculated by dividing the total equity by total common shares outstanding (Siuslaw preferred shares converted to common shares). Book value per Siuslaw Pro Forma Equivalent Share excludes the cash consideration of $1.41622 per share.
|
|||||||||||
(3)
|
Represents the historical cash dividends per share paid by Banner and Siuslaw for the period.
|
|||||||||||
(4)
|
Pro forma earnings per common share are based on pro forma combined net income and pro forma combined weighted average shares outstanding during the period.
|
|||||||||||
(5)
|
Pro forma adjustments include new Banner common equity issued to former Siuslaw shareholders (1,319,995 shares times $40.50) and the impact of the pro forma adjustments for the acquisition as noted in the pro forma financial statements for the periods indicated.
|
|||||||||||
(6)
|
Pro forma adjustments include new Banner common equity issued to former Siuslaw shareholders (1,319,995 shares times $40.50) and former AmericanWest equity holders (13,230,000 shares times $40.50) and the impact of the pro forma adjustments for the acquisitions as noted in the pro forma financial statements for the periods indicated.
|
Banner
Common Stock
|
Siuslaw
Common Stock
|
||||||||||||||
High
|
Low
|
Dividends
|
High
|
Low
|
Dividends
|
||||||||||
2014
|
|||||||||||||||
First Quarter
|
$45.08 | $35.51 | $0.18 | $8.50 | $8.21 | $0.05 | |||||||||
Second Quarter
|
42.29 | 37.03 | 0.18 | 8.50 | 8.21 | 0.05 | |||||||||
Third Quarter
|
40.78 | 37.50 | 0.18 | 14.00 | 8.10 | 0.05 | |||||||||
Fourth Quarter | 44.05 | 37.52 | 0.18 | 16.00 | 13.40 | 0.05 | |||||||||
2013
|
|||||||||||||||
First Quarter
|
32.03 | 29.14 | 0.12 | 8.00 | 6.50 | 0.05 | |||||||||
Second Quarter
|
34.30 | 29.33 | 0.12 | 8.25 | 7.25 | 0.05 | |||||||||
Third Quarter
|
38.44 | 33.78 | 0.15 | 8.30 | 8.00 | 0.05 | |||||||||
Fourth Quarter
|
45.15 | 35.62 | 0.15 | 8.35 | 8.20 | 0.05 | |||||||||
2012
|
|||||||||||||||
First Quarter
|
22.97 | 17.13 | 0.01 | 7.50 | 6.50 | 0.05 | |||||||||
Second Quarter
|
22.80 | 18.05 | 0.01 | 7.50 | 6.85 | 0.05 | |||||||||
Third Quarter
|
27.41 | 20.04 | 0.01 | 7.10 | 6.71 | 0.05 | |||||||||
Fourth Quarter
|
31.32 | 26.49 | 0.01 | 7.50 | 6.50 | 0.25* |
·
|
a proposal to approve the merger agreement (referred to as the “merger proposal”);
|
·
|
any proposal of the Siuslaw board of directors to adjourn or postpone the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement (referred to as the “adjournment proposal”); and
|
·
|
any other matters properly brought before the special meeting or any adjournment or postponement of the special meeting. Siuslaw is not aware of any other matters expected to be brought before the meeting.
|
·
|
submitting another valid proxy bearing a later date;
|
·
|
attending the special meeting and voting your shares in person; or
|
·
|
delivering prior to the special meeting a written notice of revocation to Siuslaw’s corporate secretary.
|
-
|
There is no overlapping of offices that would cause extensive employee cutbacks, typical of most mergers.
|
-
|
Banner has changed its proposal to 90% common stock and 10% cash from 75% common stock and 25% cash in the May 29, 2014 letter to minimize the tax impact on Siuslaw shareholders.
|
-
|
Banner has a culture which is similar to the culture at Siuslaw as was noted during the due diligence visit on June 20, 2014 through June 22, 2014.
|
·
|
the Siuslaw board of directors’s assessment, based in part on presentations by Sandler, Siuslaw’s financial advisor, and its management and the results of the due diligence investigation of Banner conducted by Siuslaw’s management and financial and legal advisors, of the business, financial performance, operations, capital level, asset quality, management, financial condition, competitive position and stock performance of Banner on an historical and a prospective basis, and of the combined company on a pro forma basis including anticipated cost savings;
|
·
|
the Siuslaw board of directors’ knowledge of Banner’s business, operations, financial condition, earnings, asset quality and prospects;
|
·
|
the financial and growth prospects for Siuslaw and its shareholders of a business combination with Banner as compared to continuing to operate as a stand-alone entity;
|
·
|
the information presented by Sandler to the Siuslaw board of directors with respect to the merger and the opinion of Sandler that, as of the date of that opinion, the merger consideration was fair to the
|
|
holders of Siuslaw common stock from a financial point of view (see “—Opinion of Siuslaw’s Financial Advisor” on page 39);
|
·
|
the benefits to Siuslaw and its customers of operating as a larger organization, including enhancements in products and services, higher lending limits, and greater financial resources;
|
·
|
the Siuslaw board of directors’ belief that the two companies share a common vision of the importance of customer service and local decision-making and that management and employees of Siuslaw and Banner possess complementary skills and expertise;
|
·
|
the current and prospective economic and competitive environment facing the financial services industry generally, and Siuslaw in particular, including the continued rapid consolidation in the financial services industry and the competitive effects of the increased consolidation on smaller financial institutions such as Siuslaw;
|
·
|
Banner’s interest in expanding its business banking and commercial real estate businesses in Siuslaw’s market areas, and the complementary market areas, banking philosophy and community focus of both Banner and Siuslaw;
|
·
|
Banner’s historical record and commitment with respect to the communities and employees of the companies it has acquired and its belief that Banner is a high quality financial services company with a compatible business culture and shared approach to customer service and increasing shareholder value;
|
·
|
the increasing importance of operational scale and financial resources in maintaining efficiency and remaining competitive over the long term and in being able to capitalize on technological developments which significantly impact industry competitive conditions;
|
·
|
the greater market capitalization and trading liquidity of Banner common stock in the event that Siuslaw shareholders desire to sell the shares of Banner common stock to be received by them following completion of the merger;
|
·
|
the expected social and economic impact of the merger on the constituencies served by Siuslaw, including its borrowers, customers, depositors, employees, suppliers and communities;
|
·
|
the employee and severance benefits to be provided to Siuslaw employees and career opportunities in a larger organization;
|
·
|
the expectation that the merger will be treated as a tax-free reorganization;
|
·
|
the fact that Banner has existing resources to fund the cash portion of the merger consideration;
|
·
|
the Siuslaw board of directors’ assessment, with the assistance of counsel, concerning the likelihood that Banner would obtain all regulatory approvals required for the merger;
|
·
|
the dividend histroy of Banner and psosible dividend amounts following the merger;
|
·
|
price premium to Siuslaw's existing stock price; and
|
·
|
stock consideration.
|
·
|
the potential risk of diverting management attention and resources from the operation of Siuslaw’s business and towards the completion of the merger;
|
·
|
the restrictions on the conduct of Siuslaw’s business prior to the completion of the merger, which are customary for public company merger agreements involving financial institutions, but which, subject to specific exceptions, could delay or prevent Siuslaw from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of Siuslaw absent the pending merger;
|
·
|
the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Siuslaw’s business, operations and workforce with those of Banner;
|
·
|
the merger-related costs;
|
·
|
the fact that the interests of certain of Siuslaw’s directors and executive officers may be different from, or in addition to, the interests of Siuslaw’s other shareholders as described under the heading “-Interests of Siuslaw Executive Officers and Directors in the Merger” on page 55;
|
·
|
the fact that, because the stock portion of the merger consideration consists of a fixed exchange ratio of shares of Banner common stock, Siuslaw shareholders could be adversely affected by a decrease in the trading price of Banner common stock during the pendency of the merger;
|
·
|
the fact that, while Siuslaw expects that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to complete the merger agreement will be satisfied, including the risk that necessary regulatory or shareholder approvals might not be obtained and, as a result, the merger may not be consummated;
|
·
|
the risk of potential employee attrition and/or adverse effects on Siuslaw’s business and customer relationships as a result of the pending merger;
|
·
|
the dividend history of Banner and possible dividend amounts following the merger;
|
·
|
the fact that: (i) the merger agreement includes a “force the vote” provision that would obligate Siuslaw to hold a shareholders’ meeting to consider the merger agreement even if the Siuslaw board of directors withdraws its favorable recommendation of the merger agreement after determining in good faith that it would be inconsistent with its fiduciary interests to recommend the merger agreement; (ii) Siuslaw would be prohibited from affirmatively soliciting acquisition proposals after execution of the merger agreement; and (iii) Siuslaw would be obligated to pay to Banner a termination fee of $2.3 million if the merger agreement is terminated under certain circumstances, all of which may discourage other parties potentially interested in a strategic transaction with Siuslaw from pursuing such a transaction; and
|
·
|
the other risks described under the heading “Risk Factors” beginning on page 14.
|
·
|
its knowledge of Siuslaw’s business, operations, financial condition, earnings and prospects, taking into account the results of Banner’s due diligence review of Siuslaw, including Banner’s assessments of Siuslaw’s credit policies, asset quality, adequacy of loan loss reserves, interest rate risk and litigation;
|
·
|
the fact that Siuslaw would enable Banner to expand its strategic presence through ten additional bank offices in Oregon;
|
·
|
The reports of Banner’s management and the financial presentation of Banner’s financial advisor concerning the business, operations, financial condition and earnings of Siuslaw on an historical and prospective basis and the pro forma financial impact of the merger;
|
·
|
the fact that Siuslaw’s shareholders would own approximately 6.3% of the outstanding shares of Banner immediately following the merger;
|
·
|
Siuslaw and Banner’s management teams share a common business vision and commitment to their respective customers, shareholders, employees and other constituencies;
|
·
|
Banner’s management believes that the merger will be accretive to Banner’s GAAP earnings in periods subsequent to incurring certain non-recurring acquisition, conversion and integration costs;
|
·
|
the merger is likely to provide an increase in shareholder value, including the benefits of a stronger strategic position;
|
·
|
the anticipated pro forma impact of the merger on the combined company, including potential synergies, and the expected impact on financial metrics such as earnings and tangible equity per share, as well as on regulatory capital levels;
|
·
|
the likelihood of a successful integration of Siuslaw’s business, operations and workforce with those of Banner;
|
·
|
the regulatory and other approvals required in connection with the transaction and the likelihood such approvals would be received in a timely manner and without unacceptable conditions;
|
·
|
the financial and other terms of the merger agreement, including the fixed exchange ratio for the stock portion of the merger consideration and the fixed per share amount for the cash portion of the merger consideration, tax treatment and termination fee provisions, which the Banner board of directors reviewed with its outside financial and legal advisors; and
|
·
|
the presentation of MWRI to the Banner Board on August 22, 2014 and the written opinion of MWRI, dated as of August 22, 2014, delivered to the Banner board of directors to the effect that, as of that date, and subject to and based on the various assumptions, considerations, qualifications and limitations set forth in the opinion, the merger consideration payable to holders of Siuslaw stock was fair, from a financial point of view, to Banner.
|
·
|
the potential risk of diverting management attention and resources from the operation of Banner’s business towards the completion of the merger;
|
·
|
the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating Siuslaw’s business, operations and workforce with those of Banner;
|
·
|
the merger-related costs;
|
·
|
the outcome of potential litigation in connection with the merger; and
|
·
|
the other risks described under the heading “Risk Factors” on page 14.
|
·
|
the merger agreement;
|
·
|
certain financial statements and other historical financial information of Siuslaw that Sandler deemed relevant;
|
·
|
certain financial statements and other historical financial information of Banner that Sandler deemed relevant;
|
·
|
certain internal financial estimates for Siuslaw for the years ending December 31, 2014 through December 31, 2018 as provided by senior management of Siuslaw;
|
·
|
publicly available mean analyst earnings per share estimates for Banner for the years ending December 31, 2014 and December 31, 2015 and an estimated long-term annual earnings per share growth rate for the years ending December 31, 2016 through December 31, 2018 as discussed with senior management of Banner;
|
·
|
the pro forma financial impact of the merger on Banner based on assumptions relating to transaction expenses, purchase accounting adjustments, cost savings and other synergies as prepared by and/or reviewed and discussed with the senior management of Banner;
|
·
|
a comparison of certain financial and other information for Siuslaw and Banner, including stock trading information, with similar publicly available information for certain other commercial banks, the securities of which are publicly traded;
|
·
|
the terms and structures of other recent merger and acquisition transactions in the commercial banking sector;
|
·
|
the current market environment generally and in the commercial banking sector in particular; and
|
·
|
such other information, financial studies, analyses and investigations and financial, economic and market criteria as Sandler considered relevant.
|
Transaction Value Per Share / Tangible Book Value Per Share:
|
148%
|
Transaction Value Per Share / Last Twelve Months Earnings Per Share:
|
17.3x
|
Tangible Book Premium to Core Deposits1:
|
6.0%
|
Market Premium as of August 6, 2014:
|
60.4%
|
AltaPacific Bancorp
|
Independence Bank
|
American Riviera Bank
|
Northwest Bancorporation, Inc.
|
BEO Bancorp
|
Puget Sound Bank
|
California Bank of Commerce
|
Santa Cruz County Bank
|
Capital Bank1
|
Sound Financial Bancorp, Inc.
|
Capital Pacific Bancorp
|
Summit State Bank
|
CommerceWest Bank
|
Valley Commercial Bancorp
|
County Commerce Bank
|
Comparable Company Analysis
|
||||
Siuslaw
|
Comparable
Group Median
|
Comparable
Group Mean
|
||
Total Assets (in millions)
|
$360
|
$379
|
$352
|
|
Market Capitalization (in millions)
|
$36
|
$42
|
$42
|
|
Price / Tangible Book Value
|
92%
|
118%
|
116%
|
|
Price / Last Twelve Months Earning Per Share
|
10.8x
|
13.9x
|
15.6x
|
|
Dividend Yield
|
2.26%
|
0.00%
|
0.65%
|
|
One-Year Stock Price Change
|
7.3%
|
13.9%
|
15.2%
|
|
Net Interest Margin
|
3.70%
|
4.22%
|
4.34%
|
|
Efficiency Ratio
|
75%
|
67%
|
67%
|
|
Return on Average Assets
|
0.96%
|
0.84%
|
0.86%
|
|
Tangible Common Equity / Tangible Assets
|
10.6%
|
10.2%
|
10.7%
|
|
Loans / Deposits
|
79.1%
|
90.1%
|
87.0%
|
|
Non-Performing Assets / Assets
|
4.03%
|
0.92%
|
0.88%
|
Banc of California, Inc.
|
Glacier Bancorp, Inc.
|
Central Pacific Financial
|
Heritage Financial Corporation
|
Columbia Banking System, Inc.
|
Opus Bank
|
CVB Financial Corp.
|
Westamerica Bancorporation
|
First Interstate BancSystem, Inc.
|
Comparable Company Analysis
|
||||||||||||||
Banner
|
Comparable
Group Median
|
Comparable
Group Mean
|
|
|||||||||||
Total Assets (in millions)
|
$ | 4,745 | $ | 4,931 | $ | 5,783 | ||||||||
Market Capitalization (in millions)
|
$ | 776 | $ | 1,167 | $ | 1,065 | ||||||||
Price / Tangible Book Value
|
139 | % | 185 | % | 184 | % | ||||||||
Price / Last Twelve Months Earnings Per Share
|
17.5 | x | 18.0 | x | 19.2 | x | ||||||||
Price / Estimated 2014 Earnings Per Share
|
14.8 | x | 16.8 | x | 17.2 | x | ||||||||
Price / Estimated 2015 Earnings Per Share
|
15.0 | x | 14.1 | x | 14.2 | x | ||||||||
Dividend Yield
|
1.82 | % | 2.50 | % | 2.41 | % | ||||||||
One-Year Stock Price Change
|
5.2 | % | 0.6 | % | 0.4 | % | ||||||||
Net Interest Margin
|
4.06 | % | 3.86 | % | 3.96 | % | ||||||||
Efficiency Ratio
|
68 | % | 63 | % | 64 | % | ||||||||
Return on Average Assets
|
1.02 | % | 1.08 | % | 0.95 | % | ||||||||
Tangible Common Equity / Tangible Assets
|
11.8 | % | 10.4 | % | 9.9 | % | ||||||||
Loans / Deposits
|
95.8 | % | 73.2 | % | 73.8 | % | ||||||||
Non-Performing Assets / Assets
|
1.22 | % | 1.51 | % | 1.35 | % |
Siuslaw’s One-Year Stock Performance
|
||||||||
Beginning Index Value
August 6, 2013
|
Ending Index Value
August 6, 2014
|
|||||||
Siuslaw
|
100 | % | 107 | % | ||||
Siuslaw Peer Group
|
100 | % | 120 | % | ||||
S&P 500 Index
|
100 | % | 113 | % | ||||
NASDAQ Index
|
100 | % | 119 | % |
Siuslaw’s Three-Year Stock Performance
|
||||||||
Beginning Index Value
August 6, 2011
|
Ending Index Value
August 6, 2014
|
|||||||
Siuslaw
|
100 | % | 111 | % | ||||
Siuslaw Peer Group
|
100 | % | 171 | % | ||||
S&P 500 Index
|
100 | % | 160 | % | ||||
NASDAQ Index
|
100 | % | 172 | % |
Banner’s One Year Stock Performance
|
||||||||
Beginning Index Value
August 6, 2013
|
Ending Index Value
August 6, 2014
|
|||||||
Banner
|
100 | % | 105 | % | ||||
Banner Peer Group
|
100 | % | 104 | % | ||||
S&P 500 Index
|
100 | % | 113 | % | ||||
NASDAQ Index
|
100 | % | 119 | % |
Banner’s Three Year Stock Performance
|
||||||||
Beginning Index Value
August 6, 2011
|
Ending Index Value
August 6, 2014
|
|||||||
Banner
|
100 | % | 245 | % | ||||
Banner Peer Group
|
100 | % | 172 | % | ||||
S&P 500 Index
|
100 | % | 160 | % | ||||
NASDAQ Index
|
100 | % | 172 | % |
Discount Rate
|
9.00x
|
10.75x
|
12.50x
|
14.25x
|
16.00x
|
17.75x
|
10.0%
|
7.20
|
8.47
|
9.73
|
11.00
|
12.27
|
13.53
|
12.0%
|
6.66
|
7.83
|
9.00
|
10.17
|
11.33
|
12.50
|
14.0%
|
6.17
|
7.25
|
8.33
|
9.41
|
10.49
|
11.57
|
16.0%
|
5.73
|
6.73
|
7.72
|
8.72
|
9.72
|
10.72
|
Discount Rate
|
80%
|
90%
|
100%
|
110%
|
120%
|
130%
|
10.0%
|
7.43
|
8.27
|
9.12
|
9.96
|
10.80
|
11.65
|
12.0%
|
6.87
|
7.65
|
8.43
|
9.21
|
9.98
|
10.76
|
14.0%
|
6.37
|
7.09
|
7.80
|
8.52
|
9.24
|
9.96
|
16.0%
|
5.91
|
6.57
|
7.24
|
7.90
|
8.57
|
9.23
|
Annual Net
Income
Variance
|
9.00x
|
10.75x
|
12.50x
|
14.25x
|
16.00x
|
17.75x
|
-20%
|
5.28
|
6.18
|
7.09
|
7.99
|
8.89
|
9.80
|
-10%
|
5.86
|
6.88
|
7.89
|
8.91
|
9.92
|
10.94
|
0%
|
6.44
|
7.57
|
8.70
|
9.83
|
10.96
|
12.08
|
10%
|
7.02
|
8.26
|
9.51
|
10.75
|
11.99
|
13.23
|
20%
|
7.60
|
8.96
|
10.31
|
11.67
|
13.02
|
14.37
|
Risk Free Rate
|
4.00%
|
Normalized 20yr UST
|
Equity Risk Premium
|
5.00%
|
Duff & Phelps
|
Size Premium
|
3.87%
|
Duff & Phelps
|
Discount Rate
|
12.87%
|
Discount Rate
|
13.0x
|
14.0x
|
15.0x
|
16.0x
|
17.0x
|
18.0x
|
7.0%
|
32.69
|
34.95
|
37.20
|
39.45
|
41.71
|
43.96
|
8.0%
|
31.41
|
33.57
|
35.73
|
37.89
|
40.05
|
42.22
|
9.0%
|
30.19
|
32.26
|
34.33
|
36.41
|
38.48
|
40.55
|
10.0%
|
29.02
|
31.01
|
33.00
|
34.99
|
36.98
|
38.97
|
11.0%
|
27.92
|
29.83
|
31.74
|
33.65
|
35.56
|
37.47
|
12.0%
|
26.86
|
28.70
|
30.53
|
32.37
|
34.20
|
36.04
|
Discount Rate
|
125%
|
145%
|
165%
|
185%
|
205%
|
225%
|
7.0%
|
37.68
|
43.17
|
48.66
|
54.15
|
59.63
|
65.12
|
8.0%
|
36.19
|
41.46
|
46.72
|
51.98
|
57.24
|
62.51
|
9.0%
|
34.78
|
39.83
|
44.88
|
49.92
|
54.97
|
60.02
|
10.0%
|
33.43
|
38.28
|
43.12
|
47.97
|
52.81
|
57.66
|
11.0%
|
32.15
|
36.80
|
41.45
|
46.10
|
50.75
|
55.41
|
12.0%
|
30.93
|
35.39
|
39.86
|
44.33
|
48.80
|
53.26
|
Annual EPS
Variance
|
13.0x
|
14.0x
|
15.0x
|
16.0x
|
17.0x
|
18.0x
|
-20%
|
24.73
|
26.38
|
28.04
|
29.69
|
31.35
|
33.00
|
-10%
|
27.42
|
29.28
|
31.14
|
33.00
|
34.86
|
36.73
|
0%
|
30.11
|
32.18
|
34.24
|
36.31
|
38.38
|
40.45
|
10%
|
32.80
|
35.07
|
37.35
|
39.62
|
41.90
|
44.17
|
20%
|
35.49
|
37.97
|
40.45
|
42.93
|
45.41
|
47.90
|
Risk Free Rate
|
4.00%
|
Normalized 20yr UST
|
Equity Risk Premium
|
5.00%
|
Duff & Phelps
|
2 Year Beta
|
1.013
|
Bloomberg
|
Discount Rate
|
9.07%
|
Acquirer / Target
|
Old National Bancorp / Founders Financial Corporation
|
First Merchants Corporation / Community Bancshares, Inc.
|
Univest Corporation of Pennsylvania / Valley Green Bank
|
BNC Bancorp / Harbor Bank Group, Inc.
|
Old National Bancorp / LSB Financial Corp.
|
Independent Bank Group, Inc. / Houston City Bancshares, Inc.
|
First Business Financial Services, Inc. / Aslin Group, Inc.
|
Glacier Bancorp, Inc. / FNBR Holding Corporation
|
Home BancShares, Inc. / Florida Traditions Bank
|
Institution for Savings in Newburyport / Rockport National Bankcorp, Inc.
|
CB Financial Services, Inc. / FedFirst Financial Corporation
|
MainSource Financial Group, Inc. / MBT Bancorp
|
Peoples Bancorp, Inc. / Ohio Heritage Bancorp, Inc.
|
Simmons First National Corporation / Delta Trust & Banking Corporation
|
Auto Club Insurance Association / National Bancorp, Inc.
|
First Citizens Bancshares, Inc. / Southern Heritage Bancshares, Inc.
|
Salisbury Bancorp, Inc. / Riverside Bank
|
CBFH, Inc. / MC Bancshares, Inc.
|
Southern Missouri Bancorp, Inc. / Peoples Service Company
|
CVB Financial Corp. / American Security Bank
|
Acquirer / Target
|
CVB Financial Corp. / American Security Bank
|
Heritage Oaks Bancorp / Mission Community Bancorp
|
Bank of Marin Bancorp / NorCal Community Bancorp
|
Sterling Financial Corporation / Commerce National Bank
|
Glacier Bancorp, Inc. / North Cascades Bancshares
|
Heritage Financial Corporation / Valley Community Bancshares, Inc.
|
Pacific Premier Bancorp, Inc. / San Diego Trust Bank
|
Glacier Bancorp, Inc. / Wheatland Bankshares, Inc.
|
Median
Nationwide
Transactions
|
Imputed
Per Share
Value
|
Mean
Nationwide
Transactions
|
Imputed
Per Share
Value
|
||
Transaction Value Per Share /
Tangible Book Value Per Share
|
152%
|
$14.53
|
154%
|
$14.71
|
|
Transaction Value Per Share /
Last Twelve Months Earnings Per Share
|
18.5x
|
$15.18
|
21.0x
|
$17.23
|
|
Transaction Value Per Share /
Tangible Book Premium to Core Deposits1
|
7.0%
|
$14.93
|
7.9%
|
$15.64
|
|
Market Premium as of August 6, 2014
|
31.0%
|
$11.59
|
31.0%
|
$11.59
|
Median
West
Transactions
|
Imputed
Per Share
Value
|
Mean
West
Transactions
|
Imputed
Per Share
Value
|
||
Transaction Value Per Share /
Tangible Book Value Per Share
|
133%
|
$12.77
|
134%
|
$12.82
|
|
Transaction Value Per Share /
Last Twelve Months Earnings Per Share
|
21.8x
|
$17.86
|
21.3x
|
$17.49
|
|
Transaction Value Per Share /
Tangible Book Premium to Core Deposits1
|
5.5%
|
$13.77
|
5.6%
|
$13.85
|
|
Market Premium as of August 6, 2014
|
22.4%
|
$10.83
|
18.5%
|
$10.49
|
·
|
financial institutions;
|
·
|
S corporations or other pass-through entities, or investors in pass-through entities;
|
·
|
persons who are subject to alternative minimum tax;
|
·
|
insurance companies;
|
·
|
tax-exempt organizations;
|
·
|
dealers in securities or currencies;
|
·
|
traders in securities that elect to use a mark-to-market method of accounting;
|
·
|
persons that hold Siuslaw common stock as part of a straddle, hedge, constructive sale, conversion or other integrated transaction;
|
·
|
regulated investment companies;
|
·
|
real estate investment trusts;
|
·
|
persons whose “functional currency” is not the U.S. dollar;
|
·
|
persons who are not U.S. holders; and
|
·
|
holders who acquired their shares of Siuslaw common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation.
|
·
|
no gain or loss will be recognized by Banner or Siuslaw as a result of the merger;
|
·
|
gain (but not loss) will be recognized by a U.S. holder of Siuslaw common stock who receives shares of Banner common stock and cash in exchange for shares of Siuslaw common stock pursuant to the merger in an amount equal to the lesser of (i) the amount by which the sum of the fair market value of the Banner common stock and cash received by such U.S. holder of Siuslaw stock exceeds such U.S. holder’s basis in its Siuslaw stock and (ii) the amount of cash received by such U.S. holder of Siuslaw common stock;
|
·
|
the aggregate basis of the Banner common stock received by a U.S. holder of Siuslaw common stock in the merger (including fractional shares of Banner common stock deemed received and redeemed as described below) will be the same as the aggregate basis of the Siuslaw common stock for which it is exchanged, decreased by the amount of cash received in the merger (other than cash received instead of a fractional share of Banner common stock), and increased by the amount of gain recognized on the exchange, other than with respect to cash received instead of a fractional share in Banner common stock (regardless of whether such gain is classified as capital gain or as dividend income, as discussed below under “—Potential Recharacterization of Gain as a Dividend”) on this page 52; and
|
·
|
the holding period of Banner common stock received by a U.S. holder of Siuslaw common stock in the merger in exchange for such U.S. holder’s shares of Siuslaw common stock (including fractional shares of Banner common stock deemed received and redeemed as described below) will include such U.S. holder’s holding period of the Siuslaw common stock for which it is exchanged.
|
·
|
use commercially reasonable best efforts to maintain and preserve intact its business organization and advantageous business relationships;
|
·
|
not take any action that is intended to or that would reasonably be expected to adversely affect or materially delay the ability of either party or its subsidiaries to obtain any necessary regulatory approvals or to complete the merger;
|
·
|
not take any action that is intended or that would reasonably be expected to cause the merger or the bank merger to fail to qualify as a reorganization under Section 368(a) of the Code or cause any of its representations and warranties in the merger agreement to be untrue in any material respect or any of the conditions in the merger agreement to be unsatisfied or to result in a violation of any provision of the merger agreement; and
|
·
|
not take any action that is likely to materially impair its ability to perform any of its obligations under the merger agreement or its subsidiary bank to perform any of its obligations under the bank merger agreement.
|
·
|
issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of its capital stock, other ownership interests or any warrants, options, rights, convertiblesecurities or other arrangements or commitments to acquire capital stock or other ownership interest,
|
|
except for the issuance of 102,484 shares of Siuslaw common stock upon the automatic conversion of the same number of outstanding shares of Siuslaw preferred stock;
|
·
|
issue any other capital securities, including trust preferred or other similar securities, voting debt securities or other securities;
|
·
|
pay any dividends or other distributions on its capital stock or other ownership interests, other (A) than dividends from wholly owned subsidiaries to Siuslaw or to another wholly owned subsidiary of Siuslaw, (B) the regular quarterly cash dividend on outstanding Siuslaw common stock in an amount not to exceed $0.05 per share, and a corresponding quarterly cash dividend on outstanding Siuslaw preferred stock in an amount not to exceed $0.0525 per share provided the declaration and payment thereof shall be made in accordance with past practice, and provided further Siuslaw shall cause the declaration and payment of its regular quarterly dividend for the last quarter prior to the closing to occur on the same declaration and payment dates of Banner’s regular quarterly dividend for such period or (C) regular distributions on Siuslaw’s trust preferred securities; or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire any shares of its capital stock, other ownership interests, or rights with respect to the foregoing;
|
·
|
(i) enter into, modify, renew or terminate any employment, severance or similar agreement or arrangement with any director, officer, employee, or independent contractor, or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments) other than (A) at will agreements, (B) normal increases in salary to rank and file employees, (C) severance in accordance with past practice, (D) bonuses as described above in “The Merger—Interests of Siuslaw Executive Officers and Directors in the Merger” on page 55, and (E) changes that are required by applicable law; (ii) hire any new officers; (iii) promote any employee to a rank of vice president or higher; or (iv) pay expenses in excess of a specified amount for employees and directors to attend conventions or similar meetings;
|
·
|
except as required by law, establish, modify, renew or terminate any employee benefit plan or accelerate the vesting of benefits under any employee benefit plan;
|
·
|
sell, transfer or encumber any of its assets, except in the ordinary course of business consistent with past practice, and in the case of a sale or transfer, at fair value, or sell or transfer any of its deposit liabilities;
|
·
|
enter into, modify or renew any data processing contract, service provider agreement or any lease, license or maintenance agreement relating to real or personal property or intellectual property, other than the annual renewal of an agreement that is necessary to operate its business in the ordinary course consistent with past practice, or permit to lapse its rights in any material intellectual property;
|
·
|
acquire the assets, business, deposits or properties of any person, other than pursuant to foreclosure, in a fiduciary capacity or in satisfaction of debts contracted prior to the date of the merger agreement;
|
·
|
sell or acquire any loans (excluding originations) or loan participations, except in the ordinary course of business consistent with past practice (but, in the case of a sale, after giving Banner or Banner Bank a first right of refusal to acquire such loan or participation), or sell or acquire any loan servicing rights;
|
·
|
amend its articles of incorporation or bylaws or similar governing documents;
|
·
|
materially change its accounting principles, practices or methods, except as may be required by accounting principles generally accepted in the United States or any governmental entity;
|
·
|
enter into, materially modify, terminate or renew any material contract;
|
·
|
settle any legal claims involving an amount in excess of $25,000, excluding amounts paid or reimbursed under any insurance policy;
|
·
|
foreclose upon any real property without obtaining a phase one environmental report, except for one- to four-family non-agricultural residential properties of five acres or less which it does not have reason to believe contains hazardous substances or might be in violation of or require remediation under environmental laws;
|
·
|
in the case of Siuslaw Bank, (i) voluntarily make a material change in its deposit mix; (ii) increase or decrease the interest rate paid on its time deposits or certificates of deposit except in a manner consistent with past practice and competitive factors in the marketplace; (iii) incur any liability or obligation relating to retail banking and branch merchandising, marketing and advertising activities and initiatives except in the ordinary course of business consistent with past practice; (iv) open any new branch or deposit taking facility; or (v) close or relocate any existing branch or other facility;
|
·
|
acquire any investment securities outside of the limits specified in the merger agreement;
|
·
|
make capital expenditures outside the limits specified in the merger agreement;
|
·
|
materially change its loan underwriting policies or make loans on extensions of credit in excess of amounts specified in the merger agreement;
|
·
|
invest in any new or existing joint venture or any new real estate development or construction activity;
|
·
|
materially change its interest rate and other risk management policies and practices;
|
·
|
incur any debt for borrowed funds other than in the ordinary course of business consistent with past practice with a term of one year or less;
|
·
|
create any lien on any of Sisulaw’s assets or properties other than pursuant to agreements with the Federal Home Loan Bank of Seattle and federal funds transactions;
|
·
|
make charitable contributions in excess of limits specified in the merger agreement;
|
·
|
enter into any new lines of business;
|
·
|
make, change or revoke any tax election, amend any tax return, enter into any tax closing agreement, or settle any liability with respect to disputed taxes; or
|
·
|
agree or commit to do any of the foregoing.
|
·
|
corporate matters, including due organization and qualification and subsidiaries;
|
·
|
capitalization;
|
·
|
authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the merger or bank merger;
|
·
|
required governmental and other regulatory filings, consents and approvals in connection with the merger and the bank merger;
|
·
|
reports to regulatory authorities;
|
·
|
financial statements, internal controls, books and records, and absence of undisclosed liabilities;
|
·
|
broker’s fees payable in connection with the merger;
|
·
|
the absence of certain changes or events;
|
·
|
legal proceedings;
|
·
|
tax matters;
|
·
|
employee benefit matters;
|
·
|
in the case of Banner, SEC Reports;
|
·
|
compliance with applicable laws;
|
·
|
in the case of Siuslaw, certain contracts;
|
·
|
absence of agreements with regulatory authorities;
|
·
|
derivative instruments and transactions;
|
·
|
environmental matters;
|
·
|
investment securities, commodities and, in the case of Siuslaw, bank owned life insurance;
|
·
|
real property;
|
·
|
intellectual property;
|
·
|
in the case of Siuslaw, related party transactions;
|
·
|
in the case of Siuslaw, inapplicability of takeover statutes;
|
·
|
absence of action or circumstance that would prevent the merger or the bank merger from qualifying as a reorganization under Section 368(a) of the Code;
|
·
|
receipt of a fairness opinion from its investment advisor and the absence of any amendment or rescission thereof;
|
·
|
the accuracy of information supplied for inclusion in this proxy statement/prospectus and other documents;
|
·
|
loan matters;
|
·
|
insurance matters
|
·
|
in the case of Siuslaw, fiduciary account matters;
|
·
|
in the case of Siuslaw, the accuracy and completeness of corporate and stock ownership records and in the case of Banner, the absence of Siuslaw stock ownership other than in a fiduciary or agency capacity; and
|
·
|
in the case of Siuslaw, the absence of claims requiring indemnification.
|
(1)
|
a material adverse effect on the business, properties, results of operations or financial condition of such party and its subsidiaries taken as a whole (provided that a material adverse effect will not be deemed to include the impact of (A) changes, after the date of the merger agreement, in generally accepted accounting principles or applicable regulatory accounting requirements, (B) changes, after the date of the merger agreement, in laws, rules or regulations of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities, (C) changes, after the date of the merger agreement, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally, (D) public disclosure of the transactions contemplated by the merger agreement or actions or inactions expressly required by the merger agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated by the merger agreement, or (E) a decline in the trading price of a party’s common stock or the failure, in and of itself, to meet earnings projections, but not, in either case, including the underlying causes thereof; except, with respect to subclauses (A), (B), or (C), to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its subsidiaries operate); or
|
(2)
|
a material adverse effect on the ability of such party or its bank subsidiary to timely consummate the merger or bank merger.
|
·
|
approval of the merger agreement by Siuslaw’s shareholders;
|
·
|
authorization for listing on the NASDAQ of the shares of Banner common stock to be issued in the merger;
|
·
|
the Registration Statement on Form S-4, of which this proxy statement/prospectus is a part, being effective and not subject to any stop order by the SEC; and
|
·
|
absence of any injunction or other legal restraint blocking the merger or the bank merger.
|
·
|
accuracy, as of the date of the merger agreement and as of the effective time of the merger, of the representations and warranties made by Siuslaw to the extent specified in the merger agreement, and the receipt by Banner of a certificate signed by the Chief Executive Officer or Chief Financial Officer of Siuslaw to that effect;
|
·
|
performance in all material respects by Siuslaw of the obligations required to be performed by it at or prior to the effective time of the merger and the receipt by Banner of a certificate signed by the Chief Executive Officer or Chief Financial Officer of Siuslaw to that effect;
|
·
|
receipt, to the extent specified in the merger agreement, of required consents from third parties by Siuslaw;
|
·
|
required regulatory approvals are received without the imposition of any unduly burdensome condition upon Banner or Banner Bank;
|
·
|
the holders of less than 10% of the outstanding shares of Siuslaw common stock exercising dissenters’ rights under Oregon law; and
|
·
|
the receipt by Banner an opinion of its legal counsel to the effect that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
|
·
|
accuracy, as of the date of the merger agreement and as of the effective time of the merger, of the representations and warranties made by Banner to the extent specified in the merger agreement, and the receipt by Siuslaw of a certificate signed by the Chief Executive Officer or Chief Financial Officer of Banner to that effect; and
|
·
|
performance in all material respects by Banner of the obligations required to be performed by it at or prior to the effective time of the merger and the receipt by Siuslaw of a certificate signed by the Chief Executive Officer or Chief Financial Officer of Banner to that effect.
|
·
|
if a regulatory or other governmental authority has denied approval of the merger or the bank merger and such denial has become final and non-appealable, provided that the denial is not due to the failure of the company seeking termination to fulfill its obligations under the merger agreement, or if a court or regulatory other governmental authority issues a final, non-appealable order prohibiting the merger or the bank merger;
|
·
|
if the merger has not been completed by March 31, 2015, unless due to the failure of the company seeking termination to perform or observe its covenants and agreements set forth in the merger agreement;
|
·
|
if the other company breaches any representation, warranty, covenant or other agreement (provided that the terminating company is not then in material breach of representation, warranty, covenant or
|
|
other agreement) , which breach results in a failure to satisfy the closing conditions of the company seeking termination and such breach is not cured within 20 days following written notice to the breaching company or by its nature or timing cannot be cured within that time period, or
|
·
|
if the provision giving Banner the right to terminate the merger agreement as described in the next sentence is not applicable and the shareholders of Siuslaw fail to approve the merger agreement at the special meeting of Siuslaw shareholders.
|
·
|
to vote, or cause to be voted, all of their shares of Siuslaw common stock in favor of approval of the merger proposal; and
|
·
|
not to sell, transfer or otherwise dispose of any such shares of Siuslaw common stock until after shareholder approval of the merger proposal, excluding (i) a transfer where the transferee has agreed in writing to abide by the terms of the voting agreement in a form reasonably satisfactory to Banner, (ii) a transfer by will or operation of law, or (iii) a transfer made with the prior written consent of Banner.
|
·
|
changes in the trading price for Banner’s common stock;
|
·
|
capital used or generated in Siuslaw’s, GSB’s and AmericanWest’s operations before completion of their respective mergers;
|
·
|
changes in the fair values of Siuslaw’s, GSB’s and AmericanWest’s assets and liabilities;
|
·
|
other changes in Siuslaw’s, GSB’s and AmericanWest’s net assets that occur prior to the completion of their respective mergers, which could cause material changes in the information presented below; and
|
·
|
the actual financial results of the combined company.
|
Pro Forma Consolidated Statements of Financial Condition
|
||||||||||||||
September 30, 2014
|
||||||||||||||
(in thousands)
|
Banner &
|
||||||||||||||||||||
Siuslaw
|
||||||||||||||||||||
Pro Forma
|
Combined
|
|||||||||||||||||||
Banner
|
Siuslaw
|
Adjustments
|
Notes
|
Pro Forma
|
||||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and equivalents
|
$ | 151,725 | $ | 114,851 | $ | (7,691 | ) | A | $ | 258,885 | ||||||||||
Investment securities
|
646,996 | 13,178 | - | 660,174 | ||||||||||||||||
Total cash and
securities
|
798,721 | 128,029 | (7,691 | ) | 919,059 | |||||||||||||||
Loans receivable
|
3,806,695 | 250,111 | (5,000 | ) | B | 4,051,806 | ||||||||||||||
Allowance for loan losses
|
(74,331 | ) | (4,070 | ) | 4,070 | C | (74,331 | ) | ||||||||||||
Net loans
|
3,732,364 | 246,041 | (930 | ) | 3,977,475 | |||||||||||||||
OREO
|
3,928 | 3,172 | - | 7,100 | ||||||||||||||||
Premises and equipment
|
91,291 | 5,769 | 2,000 | D | 99,060 | |||||||||||||||
Intangibles/CDI
|
3,362 | - | 5,600 | E | 8,962 | |||||||||||||||
Goodwill
|
- | - | 13,808 | F | 13,808 | |||||||||||||||
Deferred taxes
|
21,830 | 3,617 | (1,520 | ) | G | 23,927 | ||||||||||||||
Other assets
|
107,893 | 12,852 | - | 120,745 | ||||||||||||||||
Total Assets
|
$ | 4,759,389 | $ | 399,480 | $ | 11,267 | $ | 5,170,136 | ||||||||||||
LIABILITIES
|
||||||||||||||||||||
Non-interest bearing
|
$ | 1,304,720 | $ | 101,706 | $ | - | $ | 1,406,426 | ||||||||||||
Interest bearing deposits
|
2,686,398 | 245,606 | - | 2,932,004 | ||||||||||||||||
Total deposits
|
3,991,118 | 347,312 | - | 4,338,430 | ||||||||||||||||
Borrowings
|
67,855 | - | - | 67,855 | ||||||||||||||||
Junior subordinated
debentures
|
77,624 | 8,248 | (2,327 | ) | H | 83,545 | ||||||||||||||
Other liabilities
|
48,734 | 4,438 | - | 53,172 | ||||||||||||||||
Total liabilities
|
4,185,331 | 359,998 | (2,327 | ) | 4,543,002 | |||||||||||||||
EQUITY
|
||||||||||||||||||||
Equity (Banner)
|
574,058 | - | 53,076 | I | 627,134 | |||||||||||||||
Equity (Siuslaw)
|
- | 39,482 | (39,482 | ) | J | - | ||||||||||||||
Total Equity
|
574,058 | 39,482 | 13,594 | 627,134 | ||||||||||||||||
Total Liabilities and Equity
|
$ | 4,759,389 | $ | 399,480 | $ | 11,267 | $ | 5,170,136 |
Pro Forma Consolidated Statements of Financial Condition
|
||||||||||||||||||||||||||||||||
September 30, 2014
|
||||||||||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Starbuck
|
AmWest
|
|||||||||||||||||||||||||||||||
Bancshares
|
Pro Forma
|
Combined
|
||||||||||||||||||||||||||||||
SKBHC
|
Eliminations
|
Notes
|
(AmWest)
|
GSB
|
Adjustments
|
Notes
|
Pro Forma
|
|||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||||||
Cash and equivalents
|
$ | 85,230 | $ | - | $ | 85,230 | $ | 25,690 | $ | (60,319 | ) | A | $ | 50,601 | ||||||||||||||||||
Investment securities
|
1,058,827 | - | 1,058,827 | 160,896 | 1,504 | B | 1,221,227 | |||||||||||||||||||||||||
Total cash and securities
|
1,144,057 | - | 1,144,057 | 186,586 | (58,815 | ) | 1,271,828 | |||||||||||||||||||||||||
Loans receivable
|
2,558,193 | - | 2,558,193 | 273,279 | (5,938 | ) | C | 2,825,534 | ||||||||||||||||||||||||
Allowance for loan losses
|
(15,159 | ) | - | (15,159 | ) | (3,717 | ) | 3,717 | D | (15,159 | ) | |||||||||||||||||||||
Net loans
|
2,543,034 | - | 2,543,034 | 269,562 | (2,221 | ) | 2,810,375 | |||||||||||||||||||||||||
OREO
|
16,335 | - | 16,335 | 2,462 | (1,619 | ) | E | 17,178 | ||||||||||||||||||||||||
Premises and equipment
|
72,487 | - | 72,487 | 172 | (31 | ) | F | 72,628 | ||||||||||||||||||||||||
Intangibles/CDI
|
24,713 | - | 24,713 | - | 423 | G | 25,136 | |||||||||||||||||||||||||
Goodwill
|
57,219 | - | 57,219 | - | 21,615 | H | 78,834 | |||||||||||||||||||||||||
Deferred taxes
|
128,124 | - | 128,124 | 4,836 | 76 | I | 133,036 | |||||||||||||||||||||||||
Other assets
|
108,813 | (2 | ) |
A
|
108,811 | 17,256 | (74 | ) | J | 125,993 | ||||||||||||||||||||||
Total Assets
|
$ | 4,094,782 | $ | (2 | ) | $ | 4,094,780 | $ | 480,874 | $ | (40,646 | ) | $ | 4,535,008 | ||||||||||||||||||
LIABILITIES
|
||||||||||||||||||||||||||||||||
Non-interest bearing
|
$ | 809,248 | $ | 519 | B | $ | 809,767 | $ | 135,002 | $ | - | $ | 944,769 | |||||||||||||||||||
Interest bearing deposits
|
2,419,527 | - | 2,419,527 | 274,749 | 73 | K | 2,694,349 | |||||||||||||||||||||||||
Total deposits
|
3,228,775 | 519 | 3,229,294 | 409,751 | 73 | 3,639,118 | ||||||||||||||||||||||||||
Borrowings
|
251,473 | - | 251,473 | 20,039 | - | 271,512 | ||||||||||||||||||||||||||
Junior subordinated debentures
|
- | - | - | 8,248 | (2,410 | ) | L | 5,838 | ||||||||||||||||||||||||
Other liabilities
|
53,222 | (67 | ) | C | 53,155 | 3,991 | 536 | M | 57,682 | |||||||||||||||||||||||
Total liabilities
|
3,533,470 | 452 | 3,533,922 | 442,029 | (1,801 | ) | 3,974,150 | |||||||||||||||||||||||||
EQUITY
|
||||||||||||||||||||||||||||||||
Equity (AmWest)
|
561,312 | (454 | ) | D | 560,858 | - | - | 560,858 | ||||||||||||||||||||||||
Equity (GSB)
|
- | - | - | 38,845 | (38,845 | ) | N | - | ||||||||||||||||||||||||
Total Equity
|
561,312 | (454 | ) | 560,858 | 38,845 | (38,845 | ) | 560,858 | ||||||||||||||||||||||||
Total Liabilities and Equity
|
$ | 4,094,782 | $ | (2 | ) | $ | 4,094,780 | $ | 480,874 | $ | (40,646 | ) | $ | 4,535,008 |
Banner &
|
||||||||||||||||||||
Siuslaw
|
AmWest
|
|||||||||||||||||||
Combined
|
Combined
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||
Pro Forma
|
Pro Forma
|
Adjustments
|
Notes
|
Totals
|
||||||||||||||||
ASSETS
|
||||||||||||||||||||
Cash and equivalents
|
$ | 258,885 | $ | 50,601 | $ | (149,712 | ) | A | $ | 159,774 | ||||||||||
Investment securities
|
660,174 | 1,221,227 | - | 1,881,401 | ||||||||||||||||
Total cash and securities
|
919,059 | 1,271,828 | (149,712 | ) | 2,041,175 | |||||||||||||||
Loans receivable
|
4,051,806 | 2,825,534 | (16,098 | ) | B | 6,861,242 | ||||||||||||||
Allowance for loan losses
|
(74,331 | ) | (15,159 | ) | 15,159 | C | (74,331 | ) | ||||||||||||
Net loans
|
3,977,475 | 2,810,375 | (939 | ) | 6,786,911 | |||||||||||||||
OREO
|
7,100 | 17,178 | - | 24,278 | ||||||||||||||||
Premises and equipment
|
99,060 | 72,628 | (8,000 | ) | D | 163,688 | ||||||||||||||
Intangibles/CDI
|
8,962 | 25,136 | 17,971 | E | 52,069 | |||||||||||||||
Goodwill
|
13,808 | 78,834 | 115,406 | F | 208,048 | |||||||||||||||
Deferred taxes
|
23,927 | 133,036 | (3,161 | ) | G | 153,802 | ||||||||||||||
Other assets
|
120,745 | 125,993 | - | 246,738 | ||||||||||||||||
Total Assets
|
$ | 5,170,136 | $ | 4,535,008 | $ | (28,435 | ) | $ | 9,676,709 | |||||||||||
LIABILITIES
|
||||||||||||||||||||
Non-interest bearing
|
$ | 1,406,426 | $ | 944,769 | $ | - | $ | 2,351,195 | ||||||||||||
Interest bearing deposits
|
2,932,004 | 2,694,349 | - | 5,626,353 | ||||||||||||||||
Total deposits
|
4,338,430 | 3,639,118 | - | 7,977,548 | ||||||||||||||||
Borrowings
|
67,855 | 271,512 | - | 339,367 | ||||||||||||||||
Junior subordinated debentures
|
83,545 | 5,838 | - | 89,383 | ||||||||||||||||
Other liabilities
|
53,172 | 57,682 | - | 110,854 | ||||||||||||||||
Total liabilities
|
4,543,002 | 3,974,150 | - | 8,517,152 | ||||||||||||||||
EQUITY
|
||||||||||||||||||||
Equity (Banner)
|
627,134 | - | 532,423 | H | 1,159,557 | |||||||||||||||
Equity (AmWest)
|
- | 560,858 | (560,858 | ) | I | - | ||||||||||||||
Total Equity
|
627,134 | 560,858 | (28,435 | ) | 1,159,557 | |||||||||||||||
Total Liabilities and Equity
|
$ | 5,170,136 | $ | 4,535,008 | $ | (28,435 | ) | $ | 9,676,709 |
Pro Forma Consolidated Statement of Operations
|
||||||||||
Nine Months Ended September 30, 2014
|
||||||||||
(in thousands)
|
Banner &
|
||||||||||||||||||||
Siuslaw
|
||||||||||||||||||||
Pro
|
Combined
|
|||||||||||||||||||
Banner
|
Siuslaw
|
Forma Adjustments
|
Notes
|
Pro Forma
|
||||||||||||||||
Interest income:
|
||||||||||||||||||||
Interest and fees on loans
|
$ | 131,439 | $ | 9,377 | $ | - | $ | 140,816 | ||||||||||||
Interest on cash and securities
|
9,971 | 540 | (93 | ) | K | 10,418 | ||||||||||||||
Total interest income
|
141,410 | 9,917 | (93 | ) | 151,234 | |||||||||||||||
Interest expense:
|
||||||||||||||||||||
Interest on deposits
|
5,776 | 301 | - | 6,077 | ||||||||||||||||
Interest on borrowings
|
2,423 | 184 | 54 | L | 2,661 | |||||||||||||||
Total interest expense
|
8,199 | 485 | 54 | 8,738 | ||||||||||||||||
Net interest income before
provision
|
133,211 | 9,432 | (147 | ) | 142,496 | |||||||||||||||
Loan loss provision expense
|
- | - | - | - | ||||||||||||||||
Net interest income after
provision for loan losses
|
133,211 | 9,432 | (147 | ) | 142,496 | |||||||||||||||
Other operating income:
|
||||||||||||||||||||
Deposit fees and charges
|
22,237 | 493 | - | 22,730 | ||||||||||||||||
Mortgage banking operations
|
7,282 | 1,476 | - | 8,758 | ||||||||||||||||
Other
|
12,823 | 2,397 | - | 15,220 | ||||||||||||||||
Total other operating income
|
42,342 | 4,366 | - | 46,708 | ||||||||||||||||
Other operating expense:
|
||||||||||||||||||||
Compensation
|
57,777 | 5,558 | - | 63,335 | ||||||||||||||||
Occupancy and equipment
|
17,055 | 684 | 150 | M | 17,889 | |||||||||||||||
Amortization of core deposit
intangibles
|
1,460 | - | 630 | N | 2,090 | |||||||||||||||
Other
|
36,220 | 4,196 | - | 40,416 | ||||||||||||||||
Total other operating expense
|
112,512 | 10,438 | 780 | 123,730 | ||||||||||||||||
Pre-tax income
|
63,041 | 3,360 | (927 | ) | 65,474 | |||||||||||||||
Provision for income taxes
|
20,620 | 277 | (324 | ) | O | 20,573 | ||||||||||||||
Net income
|
$ | 42,421 | $ | 3,083 | $ | (603 | ) | $ | 44,901 |
Pro Forma Consolidated Statement of Operations
|
||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2014
|
||||||||||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Starbuck
|
AmWest
|
|||||||||||||||||||||||||||||||
Bancshares
|
Pro Forma
|
Combined
|
||||||||||||||||||||||||||||||
SKBHC
|
Eliminations
|
Notes
|
(AmWest)
|
GSB
|
Adjustments
|
Notes
|
Pro Forma
|
|||||||||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||||||||||
Interest and fees on loans
|
$ | 96,110 | $ | - | $ | 96,110 | $ | 9,524 | $ | 437 | O | $ | 106,071 | |||||||||||||||||||
Interest on cash and securities
|
18,918 | - | 18,918 | 2,915 | 204 | P | 22,037 | |||||||||||||||||||||||||
Total interest income
|
115,028 | - | 115,028 | 12,439 | 641 | 128,108 | ||||||||||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||||||||||
Interest on deposits
|
4,430 | - | 4,430 | 917 | 21 | Q | 5,368 | |||||||||||||||||||||||||
Interest on borrowings
|
546 | - | 546 | 312 | 62 | R | 920 | |||||||||||||||||||||||||
Total interest expense
|
4,976 | - | 4,976 | 1,229 | 83 | 6,288 | ||||||||||||||||||||||||||
Net interest income before provision
|
110,052 | - | 110,052 | 11,210 | 558 | 121,820 | ||||||||||||||||||||||||||
Loan loss provision expense
|
1,714 | - | 1,714 | (400 | ) | - | 1,314 | |||||||||||||||||||||||||
Net interest income after
provision for loan losses
|
108,338 | - | 108,338 | 11,610 | 558 | 120,506 | ||||||||||||||||||||||||||
Other operating income:
|
||||||||||||||||||||||||||||||||
Deposit fees and charges
|
11,312 | - | 11,312 | 252 | - | 11,564 | ||||||||||||||||||||||||||
Mortgage banking operations
|
2,851 | - | 2,851 | - | - | 2,851 | ||||||||||||||||||||||||||
Other
|
19,727 | 387 | E | 20,114 | 288 | - | 20,402 | |||||||||||||||||||||||||
Total other operating income
|
33,890 | 387 | 34,277 | 540 | - | 34,817 | ||||||||||||||||||||||||||
Other operating expense:
|
||||||||||||||||||||||||||||||||
Compensation
|
60,725 | (1,054 | ) | F | 59,671 | 5,383 | - | 65,054 | ||||||||||||||||||||||||
Occupancy and equipment
|
17,362 | - | 17,362 | 1,100 | - | 18,462 | ||||||||||||||||||||||||||
Amortization of core deposit intangibles
|
2,598 | - | 2,598 | - | 48 | S | 2,646 | |||||||||||||||||||||||||
Other
|
31,953 | 134 | H | 32,087 | 2,451 | - | 34,538 | |||||||||||||||||||||||||
Total other operating expense
|
112,638 | (920 | ) | 111,718 | 8,934 | 48 | 120,700 | |||||||||||||||||||||||||
Pre-tax income
|
29,590 | 1,307 | 30,897 | 3,216 | 510 | 34,623 | ||||||||||||||||||||||||||
Provision for income taxes
|
12,604 | 457 | I | 13,061 | 1,010 | 179 | T | 14,250 | ||||||||||||||||||||||||
Net income
|
$ | 16,986 | $ | 850 | $ | 17,836 | $ | 2,206 | $ | 331 | $ | 20,373 |
Pro Forma Consolidated Statement of Operations
|
||||||||||||||||||||
Nine Months Ended September 30, 2014
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Banner &
|
||||||||||||||||||||
Siuslaw
|
AmWest
|
|||||||||||||||||||
Combined
|
Combined
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||
Pro Forma
|
Pro Forma
|
Adjustments
|
Notes
|
Totals
|
||||||||||||||||
Interest income:
|
||||||||||||||||||||
Interest and fees on loans
|
$ | 140,816 | $ | 106,071 | $ | 1,785 | J | $ | 248,672 | |||||||||||
Interest on cash and securities
|
10,418 | 22,037 | 584 | K | 33,039 | |||||||||||||||
Total interest income
|
151,234 | 128,108 | 2,369 | 281,711 | ||||||||||||||||
Interest expense:
|
||||||||||||||||||||
Interest on deposits
|
6,077 | 5,368 | - | 11,445 | ||||||||||||||||
Interest on borrowings
|
2,661 | 920 | - | 3,581 | ||||||||||||||||
Total interest expense
|
8,738 | 6,288 | - | 15,026 | ||||||||||||||||
Net interest income before
provision
|
142,496 | 121,820 | 2,369 | 266,685 | ||||||||||||||||
Loan loss provision expense
|
- | 1,314 | - | 1,314 | ||||||||||||||||
Net interest income after
provision for loan losses
|
142,496 | 120,506 | 2,369 | 265,371 | ||||||||||||||||
Other operating income:
|
||||||||||||||||||||
Deposit fees and charges
|
22,730 | 11,564 | - | 34,294 | ||||||||||||||||
Mortgage banking operations
|
8,758 | 2,851 | - | 11,609 | ||||||||||||||||
Other
|
15,220 | 20,402 | - | 35,622 | ||||||||||||||||
Total other operating income
|
46,708 | 34,817 | - | 81,525 | ||||||||||||||||
Other operating expense:
|
||||||||||||||||||||
Compensation
|
63,335 | 65,054 | - | 128,389 | ||||||||||||||||
Occupancy and equipment
|
17,889 | 18,462 | - | 36,351 | ||||||||||||||||
Amortization of core deposit intangibles
|
2,090 | 2,646 | 4,849 | L | 9,585 | |||||||||||||||
Other
|
40,416 | 34,538 | - | 74,954 | ||||||||||||||||
Total other operating expense
|
123,730 | 120,700 | 4,849 | 249,279 | ||||||||||||||||
Pre-tax income
|
65,474 | 34,623 | (2,480 | ) | 97,617 | |||||||||||||||
Provision for income taxes
|
20,573 | 14,250 | (868 | ) | M | 33,955 | ||||||||||||||
Net income
|
$ | 44,901 | $ | 20,373 | $ | (1,612 | ) | $ | 63,622 |
Pro Forma Consolidated Statement of Operations
|
||||||||||||||||||||
Twelve Months Ended December 31, 2013
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Banner &
|
||||||||||||||||||||
Siuslaw
|
||||||||||||||||||||
Pro Forma
|
Combined
|
|||||||||||||||||||
Banner
|
Siuslaw
|
Adjustments
|
Notes
|
Pro Forma
|
||||||||||||||||
Interest income:
|
||||||||||||||||||||
Interest and fees on loans
|
$ | 167,204 | $ | 11,923 | $ | - | $ | 179,127 | ||||||||||||
Interest on cash and securities
|
12,508 | 675 | (121 | ) | K | 13,062 | ||||||||||||||
Total interest income
|
179,712 | 12,598 | (121 | ) | 192,189 | |||||||||||||||
Interest expense:
|
||||||||||||||||||||
Interest on deposits
|
9,737 | 506 | - | 10,243 | ||||||||||||||||
Interest on borrowings
|
3,259 | 249 | 68 | L | 3,576 | |||||||||||||||
Total interest expense
|
12,996 | 755 | 68 | 13,819 | ||||||||||||||||
Net interest income before
Provision
|
166,716 | 11,843 | (189 | ) | 178,370 | |||||||||||||||
Loan loss provision expense
|
- | 550 | - | 550 | ||||||||||||||||
Net interest income after
provision for loan losses
|
166,716 | 11,293 | (189 | ) | 177,820 | |||||||||||||||
Other operating income:
|
||||||||||||||||||||
Deposit fees and charges
|
26,581 | 586 | - | 27,167 | ||||||||||||||||
Mortgage banking operations
|
11,170 | 2,814 | - | 13,984 | ||||||||||||||||
Other
|
5,591 | 3,352 | - | 8,943 | ||||||||||||||||
Total other operating income
|
43,342 | 6,752 | - | 50,094 | ||||||||||||||||
Other operating expense:
|
||||||||||||||||||||
Compensation
|
73,161 | 8,088 | - | 81,249 | ||||||||||||||||
Occupancy and equipment
|
21,423 | 861 | 200 | M | 22,484 | |||||||||||||||
Amortization of core deposit intangibles
|
1,941 | - | 896 | N | 2,837 | |||||||||||||||
Other
|
44,450 | 5,540 | - | 49,990 | ||||||||||||||||
Total other operating expense
|
140,975 | 14,489 | 1,096 | 156,560 | ||||||||||||||||
Pre-tax income
|
69,083 | 3,556 | (1,285 | ) | 71,354 | |||||||||||||||
Provision for income taxes
|
22,528 | 466 | (450 | ) | O | 22,544 | ||||||||||||||
Net income
|
$ | 46,555 | $ | 3,090 | $ | (835 | ) | $ | 48,810 |
Pro Forma Consolidated Statement of Operations
|
||||||||||||||||||||||||||||||||
Twelve Months Ended December 31, 2013
|
||||||||||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Starbuck
|
AmWest
|
|||||||||||||||||||||||||||||||
Bancshares
|
Pro Forma
|
Combined
|
||||||||||||||||||||||||||||||
SKBHC
|
Eliminations
|
Notes
|
(AmWest)
|
GSB
|
Adjustments
|
Notes
|
Pro Forma
|
|||||||||||||||||||||||||
Interest income:
|
||||||||||||||||||||||||||||||||
Interest and fees on loans
|
$ | 133,195 | $ | - | $ | 133,195 | $ | 12,779 | $ | 582 | O | $ | 146,556 | |||||||||||||||||||
Interest on cash and securities
|
16,103 | - | 16,103 | 3,458 | 268 | P | 19,829 | |||||||||||||||||||||||||
Total interest income
|
149,298 | - | 149,298 | 16,237 | 850 | 166,385 | ||||||||||||||||||||||||||
Interest expense:
|
||||||||||||||||||||||||||||||||
Interest on deposits
|
5,273 | - | 5,273 | 1,313 | 28 | Q | 6,614 | |||||||||||||||||||||||||
Interest on borrowings
|
466 | - | 466 | 320 | 79 | R | 865 | |||||||||||||||||||||||||
Total interest expense
|
5,739 | - | 5,739 | 1,633 | 107 | 7,479 | ||||||||||||||||||||||||||
Net interest income before
Provision
|
143,559 | - | 143,559 | 14,604 | 743 | 158,906 | ||||||||||||||||||||||||||
Loan loss provision expense
|
4,211 | - | 4,211 | - | - | 4,211 | ||||||||||||||||||||||||||
Net interest income after provision
for loan losses
|
139,348 | - | 139,348 | 14,604 | 743 | 154,695 | ||||||||||||||||||||||||||
Other operating income:
|
||||||||||||||||||||||||||||||||
Deposit fees and charges
|
13,999 | - | 13,999 | 684 | - | 14,683 | ||||||||||||||||||||||||||
Mortgage banking operations
|
6,846 | - | 6,846 | - | - | 6,846 | ||||||||||||||||||||||||||
Other
|
22,210 | 426 | E | 22,636 | 625 | - | 23,261 | |||||||||||||||||||||||||
Total other operating income
|
43,055 | 426 | 43,481 | 1,309 | - | 44,790 | ||||||||||||||||||||||||||
Other operating expense:
|
||||||||||||||||||||||||||||||||
Compensation
|
87,759 | (1,389 | ) | F | 86,370 | 6,805 | - | 93,175 | ||||||||||||||||||||||||
Occupancy and equipment
|
37,274 | (6 | ) | G | 37,268 | 1,480 | - | 38,748 | ||||||||||||||||||||||||
Amortization of core deposit intangibles
|
3,376 | - | 3,376 | - | 67 | S | 3,443 | |||||||||||||||||||||||||
Other
|
46,394 | (26 | ) | H | 46,368 | 3,656 | - | 50,024 | ||||||||||||||||||||||||
Total other operating expense
|
174,803 | (1,421 | ) | 173,382 | 11,941 | 67 | 185,390 | |||||||||||||||||||||||||
Pre-tax income
|
7,600 | 1,847 | 9,447 | 3,972 | 676 | 14,095 | ||||||||||||||||||||||||||
Provision for income taxes
|
579 | 646 | I | 1,225 | 1,036 | 237 | T | 2,498 | ||||||||||||||||||||||||
Net income
|
$ | 7,021 | $ | 1,201 | $ | 8,222 | $ | 2,936 | $ | 439 | $ | 11,597 |
Pro Forma Consolidated Statement of Operations
|
||||||||||
Twelve Months Ended December 31, 2013
|
||||||||||
(in thousands)
|
Banner &
|
||||||||||||||||||||
Siuslaw
|
AmWest
|
|||||||||||||||||||
Combined
|
Combined
|
Pro Forma
|
Pro Forma
|
|||||||||||||||||
Pro Forma
|
Pro Forma
|
Adjustments
|
Notes
|
Totals
|
||||||||||||||||
Interest income:
|
||||||||||||||||||||
Interest and fees on loans
|
$ | 179,127 | $ | 146,556 | $ | 2,512 | J | $ | 328,195 | |||||||||||
Interest on cash and securities
|
13,062 | 19,829 | 763 | K | 33,654 | |||||||||||||||
Total interest income
|
192,189 | 166,385 | 3,275 | 361,849 | ||||||||||||||||
Interest expense:
|
||||||||||||||||||||
Interest on deposits
|
10,243 | 6,614 | - | 16,857 | ||||||||||||||||
Interest on borrowings
|
3,576 | 865 | - | 4,441 | ||||||||||||||||
Total interest expense
|
13,819 | 7,479 | - | 21,298 | ||||||||||||||||
Net interest income before
provision
|
178,370 | 158,906 | 3,275 | 340,351 | ||||||||||||||||
Loan loss provision expense
|
550 | 4,211 | - | 4,761 | ||||||||||||||||
Net interest income after
provision for loan losses
|
177,820 | 154,695 | 3,275 | 335,790 | ||||||||||||||||
Other operating income:
|
||||||||||||||||||||
Deposit fees and charges
|
27,167 | 14,683 | - | 41,850 | ||||||||||||||||
Mortgage banking operations
|
13,984 | 6,846 | - | 20,830 | ||||||||||||||||
Other
|
8,943 | 23,261 | - | 32,204 | ||||||||||||||||
Total other operating income
|
50,094 | 44,790 | - | 94,884 | ||||||||||||||||
Other operating expense:
|
||||||||||||||||||||
Compensation
|
81,249 | 93,175 | - | 174,424 | ||||||||||||||||
Occupancy and equipment
|
22,484 | 38,748 | - | 61,232 | ||||||||||||||||
Amortization of core deposit intangibles
|
2,837 | 3,443 | 6,898 | L | 13,178 | |||||||||||||||
Other
|
49,990 | 50,024 | - | 100,014 | ||||||||||||||||
Total other operating expense
|
156,560 | 185,390 | 6,898 | 348,848 | ||||||||||||||||
Pre-tax income
|
71,354 | 14,095 | (3,623 | ) | 81,826 | |||||||||||||||
Provision for income taxes
|
22,544 | 2,498 | (1,268 | ) | M | 23,774 | ||||||||||||||
Net income
|
$ | 48,810 | $ | 11,597 | $ | (2,355 | ) | $ | 58,052 |
Siuslaw
|
Estimated
|
|||||||||||
Banner
|
Purchase Price
|
Goodwill
|
||||||||||
Price Sensitivity
|
Stock Price
|
(in thousands)
|
(in thousands)
|
|||||||||
Up 20%
|
$ | 48.600 | $ | 69,952 | $ | 24,500 | ||||||
Up 10%
|
$ | 44.550 | $ | 64,606 | $ | 19,154 | ||||||
Baseline presented in pro forma
|
$ | 40.500 | $ | 59,260 | $ | 13,808 | ||||||
Down 10%
|
$ | 36.450 | $ | 53,914 | $ | 8,462 | ||||||
Down 20%
|
$ | 32.400 | $ | 48,568 | $ | 3,116 |
September 30, 2014
|
||||||||
Pro forma purchase price of Siuslaw Bank
|
(in thousands)
|
|||||||
Fair value of Banner common stock at $40.50 per share
|
$ | 53,460 | ||||||
Cash to be paid
|
5,800 | |||||||
Total consideration paid
|
59,260 | |||||||
Fair value of assets acquired:
|
||||||||
Cash
|
$ | 113,344 | ||||||
Investment securities
|
13,178 | |||||||
Loans, net
|
245,111 | |||||||
OREO
|
3,172 | |||||||
Premises and equipment
|
7,769 | |||||||
Intangible assets
|
5,600 | |||||||
Other assets
|
14,949 | |||||||
Total assets acquired
|
403,123 | |||||||
Fair value of liabilities assumed:
|
||||||||
Deposits
|
347,312 | |||||||
Junior subordinated debentures
|
5,921 | |||||||
Accrued expenses and other liabilities
|
4,438 | |||||||
Total liabilities assumed
|
357,671 | |||||||
Fair value of net assets acquired
|
45,452 | |||||||
Excess of consideration paid over the net assets acquired (Goodwill)
|
$ | 13,808 |
September 30, 2014
|
||||||||
Pro forma purchase price of GSB
|
(in thousands)
|
|||||||
Cash to be paid
|
$ | 59,633 | ||||||
Total pro forma purchase price
|
59,633 | |||||||
Fair value of assets acquired:
|
||||||||
Cash
|
$ | 25,004 | ||||||
Investment securities
|
162,400 | |||||||
Loans, net
|
267,341 | |||||||
OREO
|
843 | |||||||
Premises and equipment
|
141 | |||||||
Intangible assets
|
423 | |||||||
Other assets
|
22,094 | |||||||
Total assets acquired
|
478,246 | |||||||
Fair value of liabilities assumed:
|
||||||||
Deposits
|
409,824 | |||||||
Borrowings
|
20,039 | |||||||
Junior subordinated debentures
|
5,838 | |||||||
Accrued expenses and other liabilities
|
4,527 | |||||||
Total liabilities assumed
|
440,228 | |||||||
Fair value of net assets acquired
|
38,018 | |||||||
Excess of consideration paid over the net assets acquired (Goodwill)
|
$ | 21,615 |
September 30, 2014
|
||||||||
Pro forma purchase price of AmericanWest
|
(in thousands)
|
|||||||
Fair value of Banner common stock at $40.50 per share
|
$ | 535,815 | ||||||
Cash to be paid
|
130,000 | |||||||
Total pro forma purchase price
|
665,815 | |||||||
Fair value of assets acquired:
|
||||||||
Cash
|
$ | 34,281 | ||||||
Investment securities
|
1,221,227 | |||||||
Loans
|
2,809,436 | |||||||
OREO
|
17,178 | |||||||
Premises and equipment
|
64,628 | |||||||
Intangible assets
|
43,107 | |||||||
Other assets
|
255,868 | |||||||
Total assets acquired
|
4,445,725 | |||||||
Fair value of liabilities assumed:
|
||||||||
Deposits
|
3,639,118 | |||||||
Borrowings
|
271,512 | |||||||
Junior subordinated debentures
|
5,838 | |||||||
Accrued expenses and other liabilities
|
57,682 | |||||||
Total liabilities assumed
|
3,974,150 | |||||||
Fair value of net assets acquired
|
471,575 | |||||||
Excess of consideration paid over the net assets acquired (Goodwill)
|
$ | 194,240 |
Notes to Pro Forma Adjustments for Siuslaw Merging Into Banner
|
|||||||||||
Statement of Financial Condition
|
|||||||||||
As of September 30, 2014
|
|||||||||||
(in thousands)
|
|||||||||||
A |
Adjustments to Cash and cash equivalents
|
$ | (7,691 | ) | |||||||
To reflect cash used to purchase Siuslaw Financial Group shares (4,095,421 common shares outstanding at September 30, 2014 at $1.41622 cash consideration per share).
|
$ | (5,800 | ) | ||||||||
Payment of after-tax merger costs
|
$ | (1,891 | ) | ||||||||
B |
Adjustments to Loans receivable, excluding allowance for loan losses
|
$ | (5,000 | ) | |||||||
A total discount of 2% was estimated to reflect the fair value of loans at merger date. This discount represents the expected credit losses. The net interest rate adjustments and resulting accretable yield are estimated to be immaterial.
|
|||||||||||
C |
Adjustments to Allowance for loan losses
|
$ | 4,070 | ||||||||
To remove the Siuslaw allowance for loan losses at period end as the credit risk is accounted for in the fair value adjustment for the loans receivable.
|
|||||||||||
D |
Adjustments to Premises and equipment
|
$ | 2,000 | ||||||||
To reflect the estimated fair value of premises and equipment.
|
|||||||||||
E |
Adjustments to Intangibles/CDI
|
$ | 5,600 | ||||||||
To record the estimated fair value of the core deposit intangible (CDI).
|
|||||||||||
F |
Adjustment to Goodwill
|
$ | 13,808 | ||||||||
To record the difference between the consideration paid and the estimated fair value of assets acquired and liabilities assumed in the merger.
|
|||||||||||
G |
Adjustments to Deferred taxes
|
$ | (1,520 | ) | |||||||
To reflect the deferred taxes related to the net fair value adjustments of $4.3
million at Banner’s estimated statutory rate of 35%.
|
|||||||||||
H |
Adjustments to Junior subordinated debentures
|
$ | (2,327 | ) | |||||||
To reflect the fair value of Siuslaw's junior subordinated debentures.
|
|||||||||||
I |
Adjustments to Equity-Banner
|
$ | 53,076 | ||||||||
To record the issuance of Banner common stock as purchase price consideration (1,319,995 shares at $40.50 per share).
|
$ | 53,460 | |||||||||
Payment of after-tax merger costs by Banner
|
$ | (384 | ) | ||||||||
J |
Adjustments to Equity-Siuslaw
|
$ | (39,482 | ) |
Notes to Pro Forma Adjustments for Siuslaw Merging Into Banner
|
|||||||||||
Statement of Operations
|
|||||||||||
(in thousands)
|
|||||||||||
For the Nine Months Ended
Sep. 30, 2014
|
For the Twelve Months Ended
Dec. 31, 2013
|
||||||||||
K |
Adjustments to Interest on cash and securities
|
$ | (93 | ) | $ | (121 | ) | ||||
AFS securities’ mark-to market balance sheet adjustments are reclassified on the balance sheet as a net premium and are being amortized against income over the weighted average life of 5.1 years.
|
|||||||||||
L |
Adjustments to Interest expense on borrowings
|
$ | 54 | $ | 68 | ||||||
To reflect the amortitization of the discount resulting from the pro forma junior subordinated debenture fair value adjustment using the effective yield method over the remiaing 20 year life of the debentures.
|
|||||||||||
M |
Adjustments to Occupancy and equipment expense
|
$ | 150 | $ | 200 | ||||||
To reflect the increase of the estimated depreciation expense on the premises and equipment resulting from the pro forma fair value adjustment using straight line method over the estimated weighted average life of 10 years.
|
|||||||||||
N |
Adjustments to Amortization of core deposit intangibles
|
$ | 630 | $ | 896 | ||||||
To reflect the amortization of the core deposit intangible asset based on an amortization period of eight years and using an accelerated amortization method.
|
|||||||||||
O |
Adjustments to Provision for income taxes
|
$ | (324 | ) | $ | (450 | ) | ||||
To reflect the income tax effect of the pro forma adjustments above at the statutory rate of 35%.
|
Notes to Pro Forma Adjustments to Segregate Starbuck Bancshares from SKBHC
|
|||||||||||
Statement of Financial Condition
|
|||||||||||
As of September 30, 2014
|
|||||||||||
(in thousands)
|
|||||||||||
A |
Other assets
|
$ | (2 | ) | |||||||
To eliminate parent company other assets.
|
|||||||||||
B |
Non-interest bearing deposits
|
$ | 519 | ||||||||
To recognize parent company deposits at AmericanWest Bank.
|
|||||||||||
C |
Other liabilities
|
$ | (67 | ) | |||||||
To eliminate parent company other liabilities.
|
|||||||||||
D |
Equity
|
$ | (454 | ) | |||||||
To eliminate parent company impact on equity.
|
|||||||||||
Statement of Operations
|
|||||||||||
(in thousands)
|
|||||||||||
For the Nine
Months Ended
Sep. 30, 2014
|
For the Twelve
Months Ended
Dec. 31, 2013
|
||||||||||
E |
Other operating income
|
$ | 387 | $ | 426 | ||||||
To eliminate management fee income recorded at Starbuck
Bancshares for services provided to and paid for by the SKBHC stand-alone entity.
|
|||||||||||
F |
Compensation expense
|
$ | (1,054 | ) | $ | (1,389 | ) | ||||
To eliminate management unit compensation expense recorded by
the SKBHC stand-alone entity as required by the LLC operating agreement.
|
|||||||||||
G |
Occupancy and equipment expense
|
$ | - | $ | (6 | ) | |||||
To eliminate occupancy and equipment expense attributed to the
SKBHC stand-alone entity.
|
|||||||||||
H |
Other operating expense
|
$ | 134 | $ | (26 | ) | |||||
To eliminate other operating expense attributed to the SKBHC stand-alone entity.
|
|||||||||||
I |
Adjustments to Provision for income taxes
|
$ | 457 | $ | 646 | ||||||
To reflect the income tax effect of the pro forma adjustments above at the statutory rate of 35%.
|
Notes to Pro Forma Adjustments for Greater Sacramento Bancorp Merging Into AmericanWest Bank
|
|||||||||||
Statement of Financial Condition
|
|||||||||||
As of September 30, 2014
|
|||||||||||
(in thousands)
|
|||||||||||
A |
Adjustments to Cash and cash equivalents
|
$ | (60,319 | ) | |||||||
To reflect cash used to purchase GSB shares and payout options ($57.7 million for 2,617,347 shares outstanding, plus $1.9 million for 179,024 options outstanding).
|
$ | (59,633 | ) | ||||||||
Payment of after-tax merger costs
|
$ | (686 | ) | ||||||||
B |
Adjustments to Investment securities
|
$ | 1,504 | ||||||||
To reflect the estimated fair value of acquired held to maturity securities.
|
|||||||||||
C |
Adjustments to Loans receivable
|
$ | (5,938 | ) | |||||||
A total discount of 2.2% was estimated to adjust loans to fair value at merger date, including 2.4% for credit losses and (0.2%) for accretable yield.
|
|||||||||||
D |
Adjustments to Allowance for loan losses
|
$ | 3,717 | ||||||||
To eliminate the allowance for loan losses at period end as the credit risk is accounted for in the fair value adjustment for the loans receivable.
|
|||||||||||
E |
Adjustments to OREO
|
$ | (1,619 | ) | |||||||
To reflect the estimated fair value of other real estate owned.
|
|||||||||||
F |
Adjustments to Premises and equipment
|
$ | (31 | ) | |||||||
To reflect the estimated fair value of premises and equipment.
|
|||||||||||
G |
Adjustments to Intangibles/CDI
|
$ | 423 | ||||||||
To record the estimated fair value of the CDI.
|
|||||||||||
H |
Adjustments to Goodwill
|
$ | 21,615 | ||||||||
To record the difference between the consideration paid and the estimated fair value of assets acquired and liabilities assumed in the merger.
|
|||||||||||
I |
Adjustments to Deferred taxes
|
$ | 76 | ||||||||
To reflect the deferred taxes related to the net fair value adjustments of ($217,000) at Banner’s estimated statutory rate 35%
|
|||||||||||
J |
Adjustments to Other assets
|
$ | (74 | ) | |||||||
Write-off CD placement costs and debt issuance costs.
|
|||||||||||
K |
Adjustments to Interest bearing deposits
|
$ | 73 | ||||||||
To record time deposit premium of 0.06% based on estimated fair value
|
|||||||||||
L |
Adjustments to Junior subordinated debentures
|
$ | (2,410 | ) | |||||||
To reflect the fair value of junior subordinated debentures.
|
|||||||||||
M |
Adjustments to Other liabilities
|
$ | 536 | ||||||||
To mark to fair value certain employee benefit liabilities, write off deferred rent, and record leasehold intangible liability.
|
|||||||||||
N |
Adjustments to Equity
|
$ | (38,845 | ) | |||||||
To eliminate the equity of GSB.
|
Notes to Pro Forma Adjustments for Greater Sacramento Bancorp Merging Into AmericanWest Bank
|
|||||||||||
Statement of Operations
|
|||||||||||
(in thousands)
|
|||||||||||
For the Nine
Months Ended
Sep. 30, 2014
|
For the Twelve
Months Ended
Dec. 31, 2013
|
||||||||||
O |
Adjustments to Interest and fee income on loans
|
$ | 437 | $ | 582 | ||||||
To reflect accretion of interest income for acquired impaired and non-impaired loans, using the effective interest method of amortization over the estimated lives of the acquired loan portfolio of approximately five years, as adjusted for expected prepayments.
|
|||||||||||
P |
Adjustments to Interest on cash and securities
|
||||||||||
To reflect the amortization of the estimated fair value adjustment
|
$ | (131 | ) | $ | (167 | ) | |||||
of held-to-maturity securities using the effective interest method
of amortization over the estimated lives of the portfolio of
approximately eight years.
|
|||||||||||
Accumulated other comprehensive income on GSB’s books at acquisition is
|
$ | 335 | $ | 435 | |||||||
considered the mark to fair value and no additional balance sheet adjustment
is needed. The AOCI of $2.8 million is amortized against interest income over
the weighted average life of 6.0 years.
|
|||||||||||
Q |
Adjustments to Interest expense on deposits
|
$ | 21 | $ | 28 | ||||||
To reflect the amortization of deposit premium resulting from time deposit fair value adjustments based on a weighted average life of time deposits of approximately one year using contractual time deposit maturities.
|
|||||||||||
R |
Adjustments to Interest expense on borrowings
|
$ | 62 | $ | 79 | ||||||
To reflect the amortization of the discount resulting from the pro forma junior subordinated debenture fair value adjustment using the effective yield method over the remaining 20 year life of the debentures.
|
|||||||||||
S |
Adjustments to Other operating expense
|
$ | 48 | $ | 67 | ||||||
To reflect the amortization of the core deposit intangible asset based on an amortization period of eight years and using an accelerated amortization method.
|
|||||||||||
T |
Adjustments to Provision for income taxes
|
$ | 179 | $ | 237 | ||||||
To reflect the income tax effect of the pro forma adjustments above at the statutory rate of 35%.
|
Statement of Financial Condition
|
|||||||||||
As of September 30, 2014
|
|||||||||||
(in thousands)
|
|||||||||||
A |
Adjustments to Cash and cash equivalents
|
$ | (149,712 | ) | |||||||
To reflect cash used to purchase AmericanWest.
|
$ | (130,000 | ) | ||||||||
Payment of after-tax merger costs
|
$ | (19,712 | ) | ||||||||
B |
Adjustments to Loans receivable, excluding allowance for loan losses
|
$ | (16,098 | ) | |||||||
To eliminate AmericanWest prior loan discount.
|
$ | 55,938 | |||||||||
A total discount of 2.5% was estimated to reflect the fair value of loans at merger date, including 2.0% for credit losses and 0.5% for accretable
yield.
|
$ | (72,036 | ) | ||||||||
C |
Adjustments to Allowance for loans
|
$ | 15,159 | ||||||||
To eliminate the allowance for loan losses at period end as the credit risk is accounted for in the fair value adjustment for the loans receivable.
|
|||||||||||
D |
Adjustments to Premises and equipment
|
$ | (8,000 | ) | |||||||
To reflect the estimated fair value of premises and equipment.
|
|||||||||||
E |
Adjustments to Intangibles/CDI
|
$ | 17,971 | ||||||||
To eliminate AmericanWest prior CDI.
|
$ | (25,136 | ) | ||||||||
To record the estimated fair value of the CDI.
|
$ | 43,107 | |||||||||
F |
Adjustment to Goodwill
|
$ | 115,406 | ||||||||
To eliminate AmericanWest prior goodwill.
|
$ | (78,834 | ) | ||||||||
To record the difference between the consideration paid and the estimated fair value of assets acquired and liabilities assumed in the merger.
|
$ | 194,240 | |||||||||
G |
Adjustments to Deferred taxes
|
$ | (3,161 | ) | |||||||
To reflect the deferred taxes related to the net fair value adjustments of $9.0
million at Banner’s estimated statutory rate of 35%.
|
|||||||||||
H |
Adjustments to Equity-Banner
|
$ | 532,423 | ||||||||
To record the issuance of Banner common stock as purchase price
consideration (13,230,000 shares at $40.50 per share).
|
$ | 535,815 | |||||||||
Payment of after-tax merger costs by Banner
|
$ | (3,392 | ) | ||||||||
I |
Adjustments to Equity-AmericanWest
|
$ | (560,858 | ) | |||||||
To eliminate the equity of AmericanWest.
|
Notes to Pro Forma Adjustments for AmericanWest Merging Into Banner
|
|||||||||||
Statement of Operations
|
|||||||||||
(in thousands)
|
|||||||||||
For the Nine
Months Ended
Sep. 30, 2014
|
For the Twelve
Months Ended
Dec. 31, 2013
|
||||||||||
J |
Adjustments to Interest and fees on loans
|
$ | 1,785 | $ | 2,512 | ||||||
To reflect accretion of interest income for acquired impaired and
non-impaired loans, using the effective interest method of amortization over the estimated lives of the acquired loan portfolio of approximately nine years, as adjusted for expected prepayments.
|
|||||||||||
K |
Adjustments to interest on cash and securities
|
$ | 584 | $ | 763 | ||||||
AFS securities’ mark-to-market balance sheet adjustments are reclassified on the balance sheet as a net discount and are being accreted into income over the weighted average life of 4.9 years
|
|||||||||||
L |
Adjustments to Noninterest expense
|
$ | 4,849 | $ | 6,898 | ||||||
To reflect the amortization of the core deposit intangible asset based on an amortization period of eight years and using an accelerated amortization method.
|
|||||||||||
M |
Adjustments to income tax expense (benefit)
|
$ | (868 | ) | $ | 1,268 | |||||
To reflect the income tax effect of the pro forma adjustments above at the statutory rate of 35%.
|
Name
|
Title
|
Amount of
Beneficial
Ownership
|
Percentage of
Outstanding
Shares of
Common Stock
Beneficially
Owned(1)
|
||
Director and Executive Officers
|
|||||
Lonnie Iholts
|
Director and Corporate Secretary of Siuslaw, and Director, President and Chief Executive Officer of Siuslaw Bank
|
128,746
|
3.14%
|
||
Carl Hultenberg
|
Executive Vice President and Chief Financial Officer of Siuslaw Bank
|
3,600 | * | ||
Directors
|
|||||
F. David Crowell
|
Director
|
29,000 | * | ||
Ivan Ellingson
|
Director
|
69,870 | 1.71 | ||
C.W. (Wilbur) Heath
|
Director
|
51,292 | 1.25 | ||
Johan Mehlum
|
Chairman and Chief Executive Officer of Siuslaw and Chairman of Siuslaw Bank
|
701,482 | 17.13 | ||
Casey Woodward
|
Director
|
-- | -- | ||
All executive officers and directors as a group (9 persons)
|
985,000 | 24.67% | |||
____________
|
|||||
*
|
Does not exceed 1% of the class
|
||||
(1)
|
Based on 3,992,937 shares of Siuslaw common stock that were issued and outstanding as of September 30, 2014.
|
·
|
200,000,000 shares of common stock, $0.01 par value per share; and
|
·
|
500,000 shares of preferred stock, $0.01 par value per share.
|
Banner
|
Siuslaw
|
|
Authorized Capital Stock
|
||
The authorized capital stock of Banner currently consists of 200,500,000 shares of capital stock, presently classified as follows:
· 200,000,000 shares of common stock, par value $.01 per share; and
· 500,000 shares of preferred stock, par value $.01 per share.
Banner is authorized under its articles of incorporation to issue additional shares of capital stock, up to the amount authorized, generally without shareholders approval. Banner’s board of directors also has sole authority to determine the terms of any one or more series of preferred stock, including the number of shares and determine such voting rights, designations, powers, preferences and relative, participating, optional or other rights, and such qualifications, limitations or restrictions thereof. Currently, no Banner preferred stock is issued or outstanding.
|
The authorized capital stock of Siuslaw currently consists of 10,200,000 shares of common stock presently classified as follows:
· 10,000,000 shares of common stock, par value $1.00 per share; and
· 200,000 shares of Series A preferred stock, par value $1.00 per share.
Siuslaw is authorized under its articles of incorporation to issue additional shares of common stock, up to the amount authorized, generally without shareholders approval.
Siuslaw’s preferred stock, with respect to dividend rights, ranks senior to the common stock and like the common stock, junior to indebtedness issued by Siuslaw. Holders of preferred stock are entitled to a 5% preference in the distribution of dividends, when and if declared and paid by Siuslaw, so that holders of the preferred shares are entitled to receive dividends in amount not less than 105% of that paid on common shares prior to the receipt of dividends by the holders of common stock.
|
Banner
|
Siuslaw
|
|
Authorized Capital Stock (continued)
|
||
Unlike the common stock, the preferred stock has no voting rights except may vote one vote for each share as required by law, and otherwise only upon proposals for (i) a merger, share exchange, consolidation or other business combination of Siuslaw (a “Change in Control”) that would result in the outstanding common stock of Siuslaw representing less than fifty percent (50%) of the outstanding common stock at the time the transaction is completed or (ii) an agreement for the sale or disposition of all or substantially all of Siuslaw’s assets, in which case, the holders of preferred stock will vote together with the holders of common stock and not as a separate class. The shares of preferred stock convert automatically to shares of common stock immediately prior to the consummation of a Change in Control, with each share of preferred stock convertible into one share of common stock, subject to standard anti-dilution adjustments. Holders of preferred stock are not entitled to a preference in the distribution of assets of Siuslaw in the event of any liquidation, dissolution or winding-up of Siuslaw and are treated in the same manner as common stock under such circumstances. Holders of preferred stock do not have any preemptive rights to purchase any additional shares of preferred stock or shares of any other class of capital stock of Siuslaw that may be issued in the future. The preferred stock may be transferred only if the transfer does not result in a net increase in the number of holders of record of the preferred stock. Upon the death of a shareholder, Siuslaw has the right to repurchase all of the preferred shares from the shareholder's estate unless the bequests do not result in a net increase in the number of holders of record of the preferred stock.
|
Dividends
|
|||
Under the WBCA, Banner is prohibited from paying a dividend if, after making such dividend payment, it would be unable to pay its debts as they become due in the usual course of business, or if its total liabilities, plus the amount that would be needed, in the event Banner were to be dissolved at the time of the dividend payment, to satisfy preferential rights on dissolution of holders of preferred stock ranking senior in right of payment to the capital stock on which the applicable distribution is to be made, exceed its total assets.
|
Under Oregon law, Siuslaw is permitted to pay dividends or make other distributions so long as the board of directors determines after the distribution: (1) Siuslaw would be able to pay its debts as they become due in the usual course of business; or (2) Siuslaw’s total assets would be at least equal to the sum of its total liabilities, plus, unless Siuslaw’s articles of incorporation permits otherwise, the amount that would be needed, if Siuslaw were dissolved at the time of the distribution, to satisfy preferential rights of shareholders whose preferential rights are superior to those receiving the distribution.
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Banner | Siuslaw | ||
Advance Notice Requirement for Shareholders Nominations and Other Proposals
|
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Banner’s articles of incorporation provide that in order for business to be brought before an annual or special meeting of shareholders, a shareholders must deliver notice to Banner not less than 30 nor more than 60 days prior to the date of the meeting; provided that if less than 31 days’ notice of the meeting is given to shareholders, such notice must be delivered not later than the close of the tenth day following the day on which notice of the meeting was mailed to shareholders.
Any notice nominating a director must set forth (1) the name, age, business address and, if known, residence address of each nominee for election as a director, (2) the principal occupation or employment of each nominee, (3) the number of shares of Banner common stock which are beneficially owned by each such nominee, (4) such other information as would be required to be included pursuant to the Securities Exchange Act in a proxy statement soliciting proxies for the election of the proposed nominee, including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected, and (5) as to the shareholders giving such notice (a) his or her name and address as they appear on Banner’s books and (b) the class and number of Banner shares which are beneficially owned by such shareholders.
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Siuslaw’s articles of incorporation provide that Siuslaw must receive written notice of any stockholder proposal for business at an annual meeting of shareholders not later than the tenth (10th) day of January of the year in which the annual meeting is to be held. In the case of a special meeting, a shareholders' written notice must be received by Siuslaw not later than the close of business on the tenth (10th) calendar day following the day on which notice or disclosure of the date of the special meeting is given or made to shareholders.
A shareholders' notice shall set forth (1) a brief description of each matter desired to be brought before the meeting and the reason for conducting such business at the meeting, (2) the name and address of the proposing shareholder, (3) the class and number of shares of stock of Siuslaw which are beneficially owned by the proposing shareholder, (4) any material interest of the shareholder in the business proposed, and (5) as for each person whom the shareholder proposes to nominate for election as a director (a) the name, age, business address, and residence address of such person, (b) the principal occupation or employment of such person, (c) the class and number or shares of stock, if any, of Siuslaw which are beneficially owned by such person, (d) the proposed nominee’s written consent, and (e) any other information relating to such person that is required to be disclosed or is otherwise required by any applicable law.
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Voting Limitations
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Articles Provision. Banner’s articles of incorporation provide for restrictions on voting rights of shares owned in excess of 10% of any class of its equity security. Specifically, the articles of incorporation provide that if any person or group acting in concert acquires the beneficial ownership of more than 10% of any class of its equity security without the prior approval by a two-thirds vote of its “Continuing Directors,” (as defined therein) then, with respect to each vote in excess of 10% of the voting power of its outstanding shares of voting stock which such person would otherwise have been entitled to cast, such person shall be entitled to cast only one-hundredth of one vote per share. Exceptions from
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Articles Provision. Siuslaw’s articles of incorporation provide that Siuslaw has incorporated the Oregon Control Share Act, described below, into the articles of incorporation, in its entirety.
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Banner | Siuslaw | |
Voting Limitations (continued) | ||
this limitation are provided for, among other things, any proxy granted to one or more of its “Continuing Directors” and for Banner’s employee benefit plans. Under the articles of incorporation, the restriction on voting shares beneficially owned in violation of the foregoing limitations is imposed automatically, and the articles of incorporation provide that a majority of Banner’s Continuing Directors have the power to construe the forgoing restrictions and to make all determinations necessary or desirable to implement these restrictions.
State Law. Washington law does not contain a control share acquisition statute.
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State Law. The Oregon Control Share Act, codified at Sections 60.801 through 60.816 of the OBCA, restricts a shareholder's ability to vote shares of stock acquired in certain transactions not approved by the board that cause the acquiring person to gain control of a voting position exceeding one-fifth, one-third, or one-half of the votes entitled to be cast in an election of directors. Shares acquired in a control share acquisition have no voting rights except as authorized by a vote of the shareholders. If the acquiror's control shares are allowed to have voting rights and represent a majority or more of all voting power, shareholders who do not vote in favor of voting rights for the control shares will have the right to receive the appraised fair value of their shares, which may not be less than the highest price paid per share by the acquiror for the control shares.
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Quorum Requirement for Shareholder Meetings
|
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Banner’s bylaws provide that, at any meeting of shareholders, the holders of a majority of all the shares of stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum.
|
Siuslaw’s bylaws provide that, at any meeting of shareholders, the holders of a majority of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute on quorum but shareholders representing less than a quorum may adjourn such meeting from time to time.
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Banner | Siuslaw | ||
Number of Directors and Director Terms
|
|||
Banner’s articles of incorporation provide that the size of the board of directors shall be not less than five or more than 25 as set in accordance with the bylaws. In accordance with the bylaws, the number of directors is currently set at 12. Upon the anticipated closing of the business combination with AmericanWest, Banner’s board of directors will be expanded to 17 as five representatives of AmericanWest will be appointed to Banner’s board of directors. Banner’s board of directors is divided into three classes, each of which contains one-third of the members of the board. The members of each class are elected for a term of three years, with the terms of office of all members of one class expiring each year so that one-third of the total number of directors is elected each year. Each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such director’s death, resignation or removal.
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Siuslaw’s articles of incorporation provide that the number of directors will be fixed by the board of directors at not less than six and not more than 15 members. Siuslaw currently has six directors. Siuslaw’s articles of incorporation provides that the board of directors is divided into three classes, with the members of each class of directors serving staggered three-year terms and approximately one-third of the directors elected annually. Each director holds office for the term for which he or she is elected and until his or her successor is elected and qualified, subject to such director’s death, resignation or removal.
|
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Removal of Directors
|
|||
Banner’s articles of incorporation provide that a director may be removed from the board of directors prior to the expiration of his term only for cause and only upon the vote of the holders of 80% of the total votes eligible to vote thereon. This provision does not apply to any director elected by one or more series of preferred stock holders voting separately as a class.
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Siuslaw’s articles of incorporation provides that directors may be removed from office by shareholders only for cause and only by the vote of the holders of at least two-thirds of the voting power of the outstanding shares of capital stock entitled to vote on the matter. The directors of Siuslaw may also remove one or more directors with or without cause by a two-thirds vote of the directors in office at the time of the vote.
|
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Filling Vacancies on the Board of Directors
|
|||
Banner’s articles of incorporation provide that any vacancy occurring in the Board, including a vacancy created by an increase in the number of directors, shall be filled by a vote of two-thirds of the directors then in office and any director so chosen shall hold office for a term expiring at the annual meeting of shareholders at which the term of the class to which the director has been chosen expires.
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Siuslaw’s articles of incorporation provide that any vacancies in the board of directors resulting from an increase in the size of the board or from the resignation of a director or any other cause may be filled only by a majority vote of the directors then in office and any director so chosen will hold office for the remainder of the full term of the class of directors in which the vacancy occurred.
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Amendment of Articles of Incorporation and Bylaws
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Amendment of Articles of Incorporation. Amendments to Banner’s articles of incorporation must be approved by its board of directors by a majority vote of the Board and by its shareholders by a majority of the voting group comprising all the votes entitled to be cast on the proposed amendment, and a majority of each other voting group entitled to vote separately on the proposed amendment; provided, however, that the affirmative vote of the holders of at least 80% of
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Amendment of Articles of Incorporation. Under Oregon law, an amendment is generally approved if, upon approval by the board of directors and referral to the shareholders, a quorum exists and the votes cast favoring the amendment exceed the votes cast opposing the amendment, unless the amendment would create dissenters’ rights, in which case a majority of the votes entitled to be cast is required for approval. The amendment of certain provisions of Siuslaw’s articles of
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Banner | Siuslaw | |
Amendment of Articles of Incorporation and Bylaws (continued) | ||
votes entitled to be cast by each separate voting group entitled to vote thereon (after giving effect to the 10% voting limitation in Banner’s articles of incorporation as described above under “-Voting Limitations”) is required to amend or repeal certain provisions of the articles of incorporation, including the provision limiting voting rights, the provisions relating to the removal of directors, shareholder nominations and proposals, the approval of certain business combinations, evaluation of business combinations, limitation of directors’ liability, director and officer indemnification, calling special meetings and amendments to the articles of incorporation and bylaws. | incorporation, however, requires the vote of the holders of at least two-thirds of the outstanding shares of common stock entitled to vote. These include provisions relating to: the number, classification, election and removal of directors; the Oregon Control Share Act; business combinations; indemnification of directors; and advance notice requirements for shareholders nominations and other proposals. | |
Amendment of Bylaws. Banner’s bylaws may be amended either by the board of directors, by a vote of a majority of the whole board, or by Banner’s shareholders, by the vote of the holders of 80% of the total votes entitled to vote generally in the election of directors at a duly constituted meeting of shareholders.
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Amendment of Bylaws. Siuslaw’s bylaws may be amended either by a vote of a majority of the board of directors, or by Siuslaw’s shareholders, if a quorum exists and the votes cast for the amendment exceed the votes opposing the amendment.
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Business Combinations With Certain Persons
|
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Articles Provision. Banner’s articles of incorporation require the approval of the holders of at least 80% of each class of Banner’s outstanding shares of each class of voting stock and a majority of the outstanding shares of each class of voting stock excluding all shares owned by a “related person” to approve certain business combinations" (for example, mergers, share exchanges, significant asset sales and significant stock issuances) involving a "related person" except in cases where the proposed transaction has been approved in advance by two-thirds of those members of Banner’s board of directors who are unaffiliated with the related person and were directors prior to the time when the related person became a related person. The term "related person" is defined to include any individual, corporation, partnership or other entity (other than Banner’s tax-qualified benefit plans) which owns beneficially or controls, directly or indirectly, 10% or more of the outstanding shares of common stock of Banner or an affiliate of such person or entity.
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Articles Provision. Siuslaw’s articles of incorporation provides that any offer, proposal or plan to merge, consolidate, or combine Siuslaw and/or any of its subsidiaries or to sell all or substantially all of Siuslaw and/or any of its subsidiaries or assets not approved by a majority of the board of directors must otherwise be approved by the affirmative vote of two-thirds of the shares of each class of stock of Siuslaw entitled to vote on the proposal.
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Banner | Siuslaw | |
Business Combinations With Certain Persons (continued) | ||
State Law. Washington law imposes restrictions on certain transactions between a corporation and certain significant shareholders. Chapter 23B.19 of the Washington Business Corporation Act prohibits a "target corporation," with certain exceptions, from engaging in certain "significant business transactions" with an "acquiring person" who acquires 10% or more of the voting securities of a target corporation for a period of five years after such acquisition, unless the transaction or acquisition of shares is approved by a majority of the members of the target corporation's board of directors prior to the date of the acquisition or, at or subsequent to the date of the acquisition, the transaction is approved by a majority of the members of the target corporation’s board of directors and authorized at a shareholders’ meeting by the vote of at least two-thirds of the outstanding voting shares of the target corporation, excluding shares owned or controlled by the acquiring person. The prohibited transactions include, among others, a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person, termination of 5% or more of the employees of the target corporation as a result of the acquiring person's acquisition of 10% or more of the shares, or allowing the acquiring person to receive any disproportionate benefit as a shareholder. After the five-year period during which significant business transactions are prohibited, certain significant business transactions may occur if certain "fair price" criteria or shareholder approval requirements are met. Target corporations include all publicly-traded corporations incorporated under Washington law, as well as publicly traded foreign corporations that meet certain requirements.
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State Law. Oregon law prohibits, except under certain circumstances, a "business combination" (defined broadly to include mergers or consolidations, certain sales, sales of assets, liquidation or dissolution, and other specified transactions) between a corporation and an "interested shareholder" (defined generally as a person or group that directly or indirectly controls, or has the right to control, the voting or disposition of 15% or more of outstanding voting stock) within three years of the shareholder becoming an interested shareholder.
A business combination between a corporation and an interested shareholder is prohibited unless (1) prior to the date the person became an interested shareholder, the board of directors approved either the business combination or the transaction which resulted in the person becoming an interested shareholder, (2) upon consummation of the transaction that resulted in the person becoming an interested shareholder, that person owns at least 85% of the corporation's voting stock outstanding at the time the transaction is commenced (excluding shares owned by persons who are both directors and officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer), or (3) the business combination is approved by the board of directors and authorized by the affirmative vote (at an annual or special meeting and not by written consent) of at least 66 2/3 % of the outstanding voting stock not owned by the interested shareholder.
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Banner
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Siuslaw
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Non-Shareholders Constituency Provision
|
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Banner’s articles of incorporation provides that in evaluating a business combination, as defined above, or a tender or exchange offer, Banner’s board of directors shall in exercising its business judgment as to what is in the best interests of Banner and its shareholders, consider all of the following factors and any other factors which it deems relevant. The factors include:
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Siuslaw’s articles of incorporation provide that when evaluating any offer, proposal or plan to merge, consolidate or combine Siuslaw and/or any of its subsidiaries or to sell all or substantially all of Siuslaw and/or any of its subsidiaries or assets, the board of directors may, in determining what it believes to be in the best interests of Siuslaw, give due consideration to:
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● | the social and economic effects on Banner’s employees, depositors, loan and other customers, creditors and other elements of the communities in which Banner does business; | ● | the social, legal and economic effects of the offer, proposal or plan on employees, customers and suppliers of Siuslaw and on the communities and geographical areas in which Siuslaw and its subsidiaries operate; | |
● | the business and financial condition and earnings prospects or operating results of the acquiring person or entity, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the acquisition, and other likely financial obligations of the acquiring person or entity and the possible effect of such |
●
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the present state of and the possible future prospects for the economy of the state and the nation;
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obligations upon Banner and the other elements of the communities in which Banner does business; and | ● |
the long-term as well as the short-term interests of Siuslaw and its shareholders, including the possibility that these interests may best be served by the continued independence of Siuslaw; and
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● | the competence, experience and integrity of the acquiring person or entity and its management. | ● | other relevant factors. | |
Action By Shareholders Without a Meeting
|
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Banner’s bylaws provide that any action required or permitted to be taken at a meeting of shareholders may instead be taken without a meeting if a unanimous written consent which sets forth the action is given in writing or by electronic transmission by each shareholders entitled to vote on the matter.
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Siuslaw’s articles of incorporation does not provide that any action required or permitted to be taken at a meeting of shareholders may instead be taken without a meeting by written consent.
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Banner | Siuslaw | ||
Special Meetings of Shareholders
|
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Banner’s articles of incorporation provide that special meetings of shareholders may be called by only by Banner’s board of directors or by an authorized committee of the board of directors.
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Siuslaw’s bylaws provide that special meetings of shareholders may be called by either the President, by a majority vote of the board of directors, or on the request of not less than three shareholders who represent in the aggregate not less than one-third of the capital stock of Siuslaw.
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Limitation on Directors’ and Officers’ Liability
|
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Consistent with Washington law, Banner’s articles of incorporation provides that a director of Banner may not be personally liable to Banner or its shareholders for money damages for conduct as a director, except for liability for:
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Consistent with Oregon law, Siuslaw’s articles of incorporation provides that a director of Siuslaw may not be liable to Siuslaw or its shareholders for money damages, except for liability for:
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● | intentional misconduct; | ● | any breach of a director’s duty of loyalty to Siuslaw or its shareholders; | |
● | a knowing violation of law; | ● | acts or omissions of a director which are not in good faith or which involve intentional misconduct or a knowing violation of the law; | |
● | a violation of Washington law relating to unlawful distributions by Banner; or | ● | any distribution to a director which is unlawful under Oregon law; | |
● | any transaction from which the director will personally receive a benefit in money, property or services to which the director is not legally entitled. | ● | any transaction with Siuslaw from which the director derived an improper or illegal personal benefit; or | |
● | any act or omission for which such elimination of liability is not permitted under Oregon law. |
Indemnification
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Banner’s articles of incorporation provide that Banner will indemnify and advance expenses to its directors, officers, employees and agents, and persons serving as a director, officer, partner, trustee, employee or agent of another entity at the request of Banner to the fullest extent permitted by the WBCA, against expenses, judgments, fines and settlements actually and reasonably incurred by the person in connection with an action, suit or proceeding, unless resulting from:
· acts or omissions finally adjudged to violate the law (including
Washington state law regarding unlawful distributions); or
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Siuslaw’s articles of incorporation provide that Siuslaw shall indemnify any current or former director of Siuslaw to the fullest extent not prohibited by Oregon law in connection with any action, suit or proceeding, by reason of the fact that such person was or is a director, employee, trustee or agent of Siuslaw or any of its subsidiaries employee benefit plans, or serves or served at the request of Siuslaw as a director, officer, employee, trustee or agent, of another entity.
Siuslaw's articles of incorporation also provide that the company may advance expenses to such person prior to the final disposition of the proceeding
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Banner
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Siuslaw
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Indemnification (continued)
|
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● transactions with respect to which it is finally adjudged that such person
received a benefit in money, property or services to which the person
was not legally entitled.
Under the WBCA, a corporation may indemnify a director for (i) actions taken in good faith; and (ii) when acting in the director’s capacity as a director, actions that the individual reasonably believed to be in the best interests of the corporation, and in all other cases, actions that the director reasonably believed were at least not opposed to the corporation’s best interests. In the case of a criminal proceeding, the individual must not have had any reasonable cause to believe the conduct was unlawful. A director may not be indemnified in connection with a proceeding by or in the right of the corporation in which the director was found liable to the corporation, or a proceeding in which the director was found to have improperly received a personal benefit. Washington law provides for mandatory indemnification of directors for reasonable expenses incurred when the indemnified party is wholly successful in the defense of the proceeding. A corporation may indemnify officers, employees and agents of the corporation to the same extent as directors.
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upon receipt of an undertaking stating that: (i) the director’s good faith belief of entitlement to indemnification, and (ii) the director’s agreement to repay all advances if it is ultimately determined that the director is not entitled to indemnification.
The OBCA permits a corporation to indemnify a director for actions taken in good faith and which the individual reasonably believed to be in the best interests of the corporation. In the case of a criminal proceeding, the individual must not have had any reasonable cause to believe the conduct was unlawful. A director may not be indemnified in connection with a proceeding by or in the right of the corporation in which the director was found liable to the corporation, or a proceeding in which the director was found to have improperly received a personal benefit. The OBCA provides for mandatory indemnification of officers and directors for reasonable expenses incurred when the indemnified party is wholly successful in the defense of the proceeding. A corporation may indemnify officers to the same extent as directors.
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The WBCA also provides that reasonable expenses incurred by a director, officer, employee or agent who is a party to a proceeding may be paid by the corporation in advance of the final disposition of the proceeding if the corporation receives a written affirmation from the person to receive the advancement of that person’s good faith belief that he or she has met the standard of conduct necessary for indemnification and a written undertaking by the person to repay the advance amount if it is ultimately determined that he or she has not met the standard of conduct.
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The OBCA also provides that reasonable expenses incurred by a director, officer, employee or agent who is a party to a proceeding may be paid by the corporation in advance of the final disposition of the proceeding if the corporation receives a written affirmation from the person to receive the advancement of that person’s good faith belief that he or she has met the standard of conduct necessary for indemnification and a written undertaking by the person to repay the advanced amount if it is ultimately determined that he or she has not met the standard of conduct.
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Banner’s articles of incorporation further provide that the rights to indemnification and to the advancement of expenses conferred by Banner’s articles of incorporation are not exclusive of any other right which a person may have under any bylaws, agreement, vote of shareholders or disinterested directors or otherwise.
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Siuslaw’s articles of incorporation provides that the rights to indemnification and to the advancement of expenses conferred by Siuslaw’s articles of incorporation are not exclusive of any other right which a directors, officers, employees, agents and fiduciaries may have under any statute, the bylaws, any agreement, any vote of shareholders or the board of directors, or otherwise.
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Banner | Siuslaw | ||
Dissenters’ Rights
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Under the WBCA, a shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder’s shares only in the event of, any of the following corporate acts: (i) consummation of a plan of merger to which the corporation is a party if shareholder approval is required and the shareholder is entitled to vote on the merger or if the corporation is a subsidiary that is merged with its parent; (ii) consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan; (iii) consummation of a sale or exchange of all or substantially all of the property of the corporation other than in the usual and regular course of business if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, unless the sale is pursuant to a court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds will be distributed to shareholders within one year; (iv) an amendment of the articles of incorporation if the amendment effects the redemption or cancellation of all of the shareholder’s shares in exchange for cash or other consideration other than shares of the corporation; or (v) any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares.
Holders of Banner common stock are not entitled to dissenters’ rights in connection with the merger.
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Under the OBCA, unless the articles of incorporation provide otherwise (and Siuslaw’s articles do not so provide otherwise), dissenters' rights do not apply to the holders of shares of any class or series if the shares were registered on a national securities exchange on the record date for the meeting of shareholders at which the corporate action giving rise to dissenters' rights is to be approved or, in certain cases, on the effective date of the merger. Subject to the foregoing, in the event dissenters' rights were to apply, a shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder's shares only in the event of, any of the following corporate acts: (1) consummation of a plan of merger to which the corporation is a party if shareholder approval is required and the shareholder is entitled to vote on the merger or if the corporation is a subsidiary that is merged with its parent; (2) consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan; (3) consummation of a sale or exchange of all or substantially all of the property of the corporation other than in the usual and regular course of business if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, unless the sale is pursuant to a court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds will be distributed to shareholders within one year; (4) an amendment of the articles of incorporation that materially and adversely affects rights in respect of a dissenter's shares because it (a) alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities or (b) reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under Oregon law; (5) any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares, or (6) conversion to a noncorporate business entity.
Holders of Siuslaw common stock are entitled to dissenters’ rights in connection with the merger.
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·
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Annual Report on Form 10-K for the year ended December 31, 2013, including the portions of Banner’s definitive proxy statement on Schedule 14A filed on March 24, 2014 and incorporated into that Form 10-K by reference.
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·
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Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014, June 30, 2014 and September 30, 2014.
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·
|
Current Reports on Form 8-K filed on April 23, 2014, April 25, 2014, June 30, 2014, August 8, 2014, October 23, 2014, November 3, 2014, November 5, 2014 as amended, and December 4, 2014.
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·
|
The description of Banner’s common stock, $0.01 par value per share, contained in Banner’s Registration Statement on Form 8-A (No. 0-26584) filed on August 8, 1995, and all amendments or reports filed for the purpose of updating such description.
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Banner Corporation
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10 South First Avenue
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Walla Walla, Washington 99362
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Attention: Albert H. Marshall,
Senior Vice President and Corporate Secretary
(509) 527-3636
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Page | ||
PREAMBLE | 1 | |
RECITALS
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1 | |
ARTICLE I - THE MERGER
|
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1.1 | The Merger | 2 |
1.2 | Effective Time | 2 |
1.3 | Effects of the Merger | 2 |
1.4 | Conversion of Stock | 2 |
1.5 | Incorporation Documents and By-Laws of the Surviving Company | 4 |
1.6 | Directors and Officers | 4 |
1.7 | The Bank Merger | 4 |
1.8 | Additional Actions | 4 |
ARTICLE II - DELIVERY OF MERGER CONSIDERATION | ||
2.1 | Exchange Agent | 5 |
2.2 | Deposit of Merger Consideration | 5 |
2.3 | Delivery of Merger Consideration | 5 |
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SIUSLAW | ||
3.1 | Corporate Organization | 8 |
3.2 | Capitalization | 9 |
3.3 | Authority; No Violation | 10 |
3.4 | Consents and Approvals | 10 |
3.5 | Reports | 11 |
3.6 | Financial Statements, Accounting and Internal Controls | 12 |
3.7 | Broker’s Fees | 13 |
3.8 | Absence of Certain Changes or Events | 13 |
3.9 | Legal Proceedings | 13 |
3.10 | Taxes and Tax Returns | 14 |
3.11 | Employees | 15 |
3.12 | Compliance with Applicable Law | 17 |
3.13 | Certain Contracts | 18 |
3.14 | Agreements with Regulatory Agencies | 19 |
3.15 | Risk Management Instruments | 19 |
3.16 | Environmental Matters | 20 |
3.17 | Investment Securities, Commodities and BOLI | 20 |
3.18 | Real Property | 20 |
3.19 | Intellectual Property | 21 |
3.20 | Related Party Transactions | 21 |
3.21 | State Takeover Laws | 21 |
3.22 | Reorganization | 21 |
3.23 | Opinion of Financial Advisor | 22 |
3.24 | Siuslaw Information | 22 |
3.25 | Loans | 22 |
3.26 | Insurance | 23 |
3.27 | Fiduciary Business | 24 |
3.28 | Books and Records | 24 |
3.29 | Indemnification | 24 |
3.30 | Representations Not Misleading | 24 |
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BANNER | ||
4.1 | Corporate Organization | 24 |
4.2 | Capitalization | 25 |
4.3 | Authority; No Violation | 26 |
4.4 | Consents and Approvals | 27 |
4.5 | Reports | 27 |
4.6 | Financial Statements, Accounting and Internal Controls | 27 |
4.7 | Broker’s Fees | 28 |
4.8 | Absence of Certain Changes or Events | 29 |
4.9 | Legal Proceedings | 29 |
4.10 | Taxes and Tax Returns | 29 |
4.11 | Employees | 30 |
4.12 | SEC Reports | 32 |
4.13 | Compliance with Applicable Law | 32 |
4.14 | Agreements with Regulatory Agencies | 33 |
4.15 | Risk Management Instruments | 33 |
4.16 | Environmental Matters | 34 |
4.17 | Investment Securities and Commodities | 34 |
4.18 | Real Property | 34 |
4.19 | Intellectual Property | 34 |
4.20 | Reorganization | 35 |
4.21 | Opinion of Financial Advisor | 35 |
4.22 | Banner Information | 35 |
4.23 | Loans | 35 |
4.24 | Insurance | 36 |
4.25 | Ownership of Siuslaw Common Stock | 36 |
4.26 | Representations Not Misleading | 36 |
ARTICLE V - COVENANTS RELATING TO CONDUCT OF BUSINESS | ||
5.1 | Siuslaw Conduct of Businesses Prior to the Effective Time | 36 |
5.2 | Siuslaw Forbearances | 36 |
5.3 | Banner Conduct of Business Prior to the Effective Time | 40 |
5.4 | Banner Forbearances | 40 |
ARTICLE VI - ADDITIONAL AGREEMENTS | ||
6.1 | Regulatory Matters | 41 |
6.2 | Access to Information; Current Information | 42 |
6.3 | Shareholder Meeting | 44 |
6.4 | Reservation of Banner Common Stock; Nasdaq Listing | 44 |
6.5 | Employee Matters | 44 |
6.6 | Officers’ and Directors’ Insurance; Indemnification | 46 |
6.7 | No Solicitation | 47 |
6.8 | Notification of Certain Matters | 49 |
6.9 | Correction of Information | 49 |
6.10 | System Integration | 49 |
6.11 | Coordination; Integration | 49 |
6.12 | Trust Preferred Securities | 49 |
6.13 | Delivery of Agreements | 50 |
ARTICLE VII - CONDITIONS PRECEDENT | ||
7.1 | Conditions to Each Party's Obligations | 50 |
7.2 | Conditions to Obligations of Banner | 50 |
7.3 | Conditions to Obligations of Siuslaw | 51 |
ARTICLE VIII - TERMINATION AND AMENDMENT | ||
8.1 | Termination | 52 |
8.2 | Effect of Termination | 53 |
8.3 | Fees and Expenses | 53 |
8.4 | Termination Fee | 54 |
8.5 | Amendment | 54 |
8.6 | Extension; Waiver | 54 |
ARTICLE IX - GENERAL PROVISIONS
|
||
9.1 | Closing | 55 |
9.2 | Nonsurvival of Representations, Warranties and Agreements | 55 |
9.3 | Notices | 55 |
9.4 | Interpretation | 56 |
9.5 | Counterparts | 56 |
9.6 | Entire Agreement | 56 |
9.7 | Governing Law | 56 |
9.8 | Publicity | 57 |
9.9 | Assignment; Third Party Beneficiaries | 57 |
9.10 | Specific Performance; Time of the Essence | 57 |
SIGNATURES | 58 | |
EXHIBITS |
Exhibit A | Form of Voting Agreement | |
Exhibit B | Form of Non Solicitation Agreement | |
Exhibit C | Form of Plan of Bank Merger |
Definition
|
Page |
Acceptable Confidentiality Agreement
|
48 |
Acquisition Proposal
|
48 |
Agreement
|
1 |
Articles of Merger
|
2 |
Bank Merger
|
4 |
Bank Merger Certificates
|
4 |
Bank Plan of Merger
|
4 |
Banner
|
1 |
Banner Average Closing Price
|
7 |
Banner Benefit Plans
|
30 |
Banner Bylaws
|
25 |
Banner Charter
|
25 |
Banner Common Stock
|
2 |
Banner Disclosure Schedule
|
24 |
Banner ERISA Affiliate
|
30 |
Banner Leased Properties
|
34 |
Banner Owned Properties
|
34 |
Banner Qualified Plans
|
30 |
Banner Real Property
|
34 |
Banner Regulatory Agreement
|
33 |
Banner Reports
|
32 |
Banner Restricted Stock Award
|
25 |
Banner Stock Options
|
25 |
Banner Stock Plans
|
25 |
Banner Subsidiary
|
25 |
BHC Act
|
8 |
BOLI
|
20 |
Cancelled Shares
|
3 |
Certificate
|
3 |
Change in Recommendation
|
48 |
Claim
|
47 |
Closing
|
55 |
Closing Date
|
55 |
Code
|
1 |
Confidentiality Agreement
|
44 |
Covered Employees
|
44 |
DFI
|
10 |
Dissenting Shares
|
3 |
DPC Common Shares
|
3 |
Effective Time
|
2 |
Enforceability Exception
|
10 |
Environmental Laws
|
20 |
ERISA
|
15 |
Exchange Act
|
11 |
Exchange Agent
|
5 |
Exchange Agent Agreement
|
5 |
Exchange Fund
|
5 |
Exchange Ratio
|
3 |
FDIC
|
9 |
Federal Reserve Board
|
10 |
FHLB
|
9 |
Form S-4
|
11 |
GAAP
|
8 |
Governmental Entity
|
11 |
Insurance Amount
|
46 |
Intellectual Property
|
21 |
IRS
|
14 |
Letter of Transmittal
|
5 |
Liens
|
9 |
Loans
|
22 |
Material Adverse Effect
|
8 |
Merger
|
1 |
Merger Consideration
|
3 |
Multiemployer Plan
|
16 |
Multiple Employer Plan
|
16 |
Nasdaq
|
7 |
Non-Solicitation Agreement
|
1 |
OBCA
|
2 |
Oregon Division
|
11 |
Oregon Secretary
|
2 |
ORS
|
3 |
Parties
|
1 |
Permitted Encumbrances
|
21 |
Proxy Statement
|
11 |
Regulatory Agencies
|
11 |
Requisite Regulatory Approvals
|
51 |
SEC
|
11 |
Securities Act
|
11 |
Siuslaw
|
1 |
Siuslaw Bank Call Reports
|
12 |
Siuslaw Bank General Severance Plan
|
46 |
Siuslaw Benefit Plans
|
15 |
Siuslaw Board Recommendation
|
44 |
Siuslaw Bylaws
|
8 |
Siuslaw Charter
|
8 |
Siuslaw Common Stock
|
2 |
Siuslaw Confidential Information
|
47 |
Siuslaw Contract
|
19 |
Siuslaw Disclosure Schedule
|
7 |
Siuslaw ERISA Affiliate
|
15 |
Suislaw Financial Statements
|
12 |
Siuslaw Indemnified Party
|
47 |
Siuslaw Individuals
|
47 |
Siuslaw Leased Properties
|
21 |
Siuslaw Owned Properties
|
20 |
Siuslaw Preferred Stock
|
9 |
Siuslaw Qualified Plans
|
15 |
Siuslaw Real Property
|
21 |
Siuslaw Regulatory Agreement
|
19 |
Siuslaw Representatives
|
47 |
Siuslaw Shareholder Approval
|
10 |
Siuslaw Shareholder Meeting
|
44 |
Siuslaw Subsidiary
|
8 |
SRO
|
11 |
Subsidiary
|
8 |
Superior Proposal
|
49 |
Surviving Bank
|
4 |
Surviving Company
|
1 |
Takeover Statutes
|
22 |
TARP Warrant
|
25 |
Tax
|
14 |
Tax Return
|
15 |
Taxes
|
14 |
Termination Fee
|
54 |
Treasury
|
1 |
Trust Account Common Shares
|
3 |
Trust Preferred Securities
|
49 |
Unduly Burdensome Condition
|
51 |
Voting Agreement
|
1 |
Washington Secretary
|
2 |
WBCA
|
2 |
3.11
|
Employees.
|
3.13
|
Certain Contracts.
|
3.25
|
Loans.
|
|
(A)
|
the representations and warranties in Sections 3.2 (Capitalization) (other than inaccuracies that are de minimis in amount and effect), 3.7 (Broker’s Fees), 3.8 (Absence of Certain Changes or Events), 3.23 (Opinion of Financial Advisor), and 3.24 (Siuslaw Information) shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time;
|
|
(B)
|
the representations and warranties in Section 3.3 (Authority; No Violation) shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time; and
|
|
(C)
|
no other representation or warranty of Siuslaw shall be deemed untrue or incorrect as of the Effective Time as a consequence of events or circumstances arising after the date hereof that were not voluntary or intentional acts by or omissions of Siuslaw or any of its Subsidiaries, unless such event or circumstance, individually or taken together with other facts, events or circumstances inconsistent with any representation or warranty of Siuslaw has had or would reasonably be expected to result in a Material Adverse Effect on Siuslaw;
|
|
(A)
|
the representations and warranties in Sections 4.2 (Capitalization) (other than inaccuracies that are de minimis in amount and effect), 4.8 (Absence of Certain Changes or Events) and 4.22 (Banner Information) shall be true and correct in all respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time;
|
|
(B)
|
the representations and warranties in Section 4.3 (Authority; No Violation) shall be true and correct in all material respects as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time; and
|
|
(C)
|
no other representation or warranty of Banner shall be deemed untrue or incorrect as of the Effective Time as a consequence of events or circumstances arising after the date hereof that were not voluntary or intentional acts by or omissions of Banner or any of its Subsidiaries, unless such event or circumstance, individually or taken together with other facts, events or circumstances inconsistent with any representation or warranty of Banner has had or would reasonably be expected to result in a Material Adverse Effect on Banner;
|
Number of Shares: _______________ (1)
|
Very truly yours, |
_____________________________________ | |
(Signature)
|
|
_____________________________________ | |
(Print Name of Shareholder)
|
|
_____________________________________ | |
(Print Name of Trust, if applicable)
|
_________________________________ | |
(Signature)
|
|
_________________________________ | |
(Print Name)
|
|
Date Signed:________________________
|
___________________________________
|
|
By: Mark J. Grescovich
|
|
Its: President and Chief Executive Officer
|
|
Director and/or Executive Officer
|
|
___________________________________
|
|
[Name]
|
A.
|
Banner Bank, a wholly owned subsidiary of Banner Corporation ("Banner"), is a state-chartered commercial bank duly organized, validly existing and in good standing under the laws of the State of Washington. Banner Bank also is qualified to do business in Oregon as a foreign corporation. Banner Bank has authorized capital stock of 5,000,000 shares of common stock, par value $1.00 per share, and all of its issued and outstanding shares are owned by Banner.
|
B.
|
Siuslaw Bank, a wholly owned subsidiary of Siuslaw Financial Group, Inc. (“Siuslaw”), is a state-chartered commercial bank duly organized, validly existing and in good standing under the laws of the State of Oregon. Siuslaw Bank has authorized capital stock of ______ shares of common stock, $______ par value per share, and all of its issued and outstanding shares are owned by Siuslaw.
|
C.
|
Pursuant to an Agreement and Plan of Merger, dated ____________ __, 2014, (the "Agreement and Plan of Merger”), Siuslaw and Banner have agreed to merge Siuslaw Bank into Banner Bank (the "Bank Merger"), with Banner Bank being the resulting bank (the “Resulting Bank”), immediately following the merger of Siuslaw with and into Banner. The Board of Directors of Siuslaw Bank and the Board of Directors of Siuslaw, on behalf of Siuslaw as the sole shareholder of Siuslaw Bank, and the Board of Directors of Banner Bank and the Board of Directors of Banner, on behalf of Banner as the sole shareholder of Banner Bank, have approved the Bank Merger and this Plan of Bank Merger and have authorized its execution and delivery.
|
SIUSLAW BANK
|
BANNER BANK
|
|
By: ____________________________________ | |
Name: Mark J. Grescovich
|
|
Title: President and Chief Executive Officer
|
|
SIUSLAW BANK
|
|
By: ____________________________________ | |
Name: Johan Mehlum
|
|
Title: Chairman and Chief Executive Officer
|
Very truly yours,
|
|
/s/Sandler O’Neill & Partners, L.P.
|
|
(a)
|
Exhibits. See Exhibit Index
|
||
(b)
|
Financial Statement Schedules. Not applicable.
|
||
(c)
|
Reports, Opinions or Appraisals.
|
||
(i)
|
Opinion of Sandler O’Neill & Partners, L.P. (included as Appendix B to the proxy statement/prospectus contained in this Registration Statement).
|
BANNER CORPORATION
|
||
/s/ Mark J. Grescovich
|
||
By:
|
Mark J. Grescovich
|
|
President and Chief Executive Officer
|
||
/s/ Mark J. Grescovich
|
/s/ Lloyd W. Baker
|
|
Mark J. Grescovich
|
Lloyd W. Baker
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
|
/s/ Robert D. Adams*
|
/s/ Connie R. Collingsworth*
|
|
Robert D. Adams
|
Connie R. Collingsworth
|
|
Director
|
Director
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
|
/s/ Jesse G. Foster*
|
/s/ Gary Sirmon*
|
|
Jesse G. Foster
|
Gary Sirmon
|
|
Director
|
Director
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
|
/s/ D. Michael Jones*
|
/s/ Brent A. Orrico*
|
|
D. Michael Jones
|
Brent A. Orrico
|
|
Director
|
Director
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
/s/ Gordon E. Budke*
|
/s/ Michael M. Smith*
|
|
Gordon E. Budke
|
Michael M. Smith
|
|
Director
|
Director
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
|
/s/ David A. Klaue*
|
/s/ Constance H. Kravas*
|
|
David A. Klaue
|
Constance H. Kravas
|
|
Director
|
Director
|
|
Date: January 6, 2015
|
Date: January 6, 2015
|
|
/s/ John R. Layman*
|
||
John R. Layman
|
||
Director
|
||
Date: January 6, 2015
|
||
Exhibit
Number
|
Description
|
2.1
|
Agreement and Plan of Merger, dated as of August 7, 2014, by and between Banner Corporation (“Banner”) and Siuslaw Financial Group, Inc. (included as Appendix A to the accompanying proxy statement-prospectus and incorporated herein by reference)
|
3.1(a)
|
Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 included in Banner’s Current Report on Form 8-K filed with the SEC on April 29, 2010)
|
3.1(b)
|
Articles of Amendment to Registrant’s Amended and Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1 attached to Banner’s Current Report on Form 8-K filed with the SEC on June 1, 2011)
|
3.2
|
Bylaws of Banner, as amended (incorporated by reference to Exhibit 3.1 attached to the Current Report on Form 8-K filed with the SEC on April 1, 2011)
|
4.1
|
Certificate of Banner’s common stock (incorporated herein by reference to Exhibit 4.0 to Banner’s Registration Statement on Form S-1 (File No. 33-93386.))
|
5.1
|
Opinion of Breyer & Associates PC as to the legality of the securities being registered*
|
8.1
|
Opinion of Silver, Freedman, Taff & Tiernan, L.L.P. as to certain federal income tax matters*
|
10.1 |
Employment agreement between Banner and Johan Mehlum*
|
10.2 |
Employment agreement between Banner and Lonnie Iholts*
|
23.1
|
Consent of Moss Adams LLP for the Banner consolidated financial statements
|
23.2 |
Consent of Moss Adams LLP for the SKBHC Holdings LLC financial statements
|
23.3
|
Consent of Breyer & Associates PC (included in opinion filed as Exhibit 5.1)*
|
23.4
|
Consent of Silver, Freedman, Taff & Tiernan, L.L.P. (included in opinion filed as Exhibit 8.1)*
|
24.1
|
Powers of Attorney (included as part of signature page)*
|
99.1
|
Form of proxy card of Siuslaw Financial Group, Inc.*
|
99.2
|
Consent of Sandler O’Neill & Partners, L.P.*
|