SCHEDULE A

ADDITIONAL TERMS AND CONDITIONS

Company Information:

Name of the Company: Banner Corporation
Corporate or other organizational form: Corporation
Jurisdiction of Organization: Washington
Appropriate Federal Banking Agency: Board of Governors of the Federal Reserve System
Notice Information:
D. Michael Jones Lloyd W. Baker
President and CEO Executive Vice President and CFO
Banner Corporation Banner Corporation
10 S. First Avenue 10S. First Avenue
P.O. Box 907 P.O. Box 907
Walla Walla, WA 99362 Walla Walla, WA 99362

Terms of the Purchase:

Series of Preferred Stock Purchased: Fixed Rate Cumulative Perpetual Preferred
Stock, Series A

Per Share Liquidation Preference of Preferred Stock: $1,000

Number of Shares of Preferred Stock Purchased: 124,000

Dividend Payment Dates on the Preferred Stock: February 15, May 15, August 15, November 15
Number of Initial Warrant Shares: 1,707,989

Exercise Price of the Warrant: $10.89

Purchase Price: $124,000,000

Location of Closing: Hughes Hubbard & Reed LLP

One Battery Park Plaza
New York, NY 10004

Time of Closing: 9:00 a.m. New York Time

Date of Closing: November 21, 2008

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SCHEDULE E

COMPLIANCE WITH LAWS

List any exceptions to the representation and warranty in the second sentence of Section 2.2(m)
of the Securities Purchase Agreement — Standard Terms.

If none, please so indicate by checking the box:

List any exceptions to the representation and warranty in the last sentence of Section 2.2(m) of
the Securities Purchase Agreement ~ Standard Terms.

If none, please so indicate by checking the box:

UST Seq. No. 63


SCHEDULE B

CAPITALIZATION
Capitalization Date: October 31, 2008
Common Stock
Par value: $0.01

Total Authorized:
Outstanding:

Subject to warrants, options, convertible
securities, etc.:

Reserved for benefit plans and other issuances:

Remaining authorized but unissued:
Shares issued after Capitalization Date
(other than pursuant to warrants, options,

convertible securities, etc. as set forth
above):

Preferred Stock

Par value:

Total Authorized:
Outstanding (by series):
Reserved for issuance:

Remaining authorized but unissued:

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25,000,000 shares

17,016,402

603,146 shares

Ungranted options 27,745

Reserved for Dividend Reinvestment and Stock
Purchase Plan (“DRIP”) 2,605,417

4,747,290

59,457 shares were issued under the DRIP on
November 10, 2008.

$0.01

500,000

500,000


SCHEDULE A

Wire Information for Closing:

09533 § 6002. 1003).N¥H2 26NY570 6


SCHEDULE D

LITIGATION

List any exceptions to the representation and warranty in Section 2.2(1) of the Securities
Purchase Agreement ~ Standard Terms.

If none, please so indicate by checking the box:

UST Seq, No. 63


UST

UNITED STATES DEPARTMENT OF THE TREASURY
1500 PENNSYLVANIA AVENUE, NW
WasuincTon, D.C. 20220

Dear Ladies and Gentlemen:

The company set forth on the signature page hereto (the “Company ”) intends to issue in a
private placement the number of shares of a series of its preferred stock set forth on Schedule A
hereto (the “Preferred Shares”) and a warrant to purchase the number of shares of its common
stock set forth on Schedule A hereto (the “Warrant” and, together with the Preferred Shares, the
“Purchased Securities”) and the United States Department of the Treasury (the “Jnvestor”)
intends to purchase from the Company the Purchased Securities.

The purpose of this letter agreement is to confirm the terms and conditions of the
purchase by the Investor of the Purchased Securities. Except to the extent supplemented or
superseded by the terms set forth herein or in the Schedules hereto, the provisions contained in
the Securities Purchase Agreement — Standard Terms attached hereto as Exhibit A (the
“Securities Purchase Agreement”) are incorporated by reference herein. Terms that are defined
in the Securities Purchase Agreement are used in this letter agreement as so defined. In the event
of any inconsistency between this letter agreement and the Securities Purchase Agreement, the

terms of this letter agreement shall govern.

Each of the Company and the Investor hereby confirms its agreement with the other party
with respect to the issuance by the Company of the Purchased Securities and the purchase by the
Investor of the Purchased Securities pursuant to this letter agreement and the Securities Purchase
Agreement on the terms specified on Schedule A hereto.

This letter agreement (including the Schedules hereto) and the Securities Purchase
Agreement (including the Annexes thereto) and the Warrant constitute the entire agreement, and
supersede al! other prior agreements, understandings, representations and warranties, both
written and oral, between the parties, with respect to the subject matter hereof. This letter
agreement constitutes the “Letter Agreement” referred to in the Securities Purchase Agreement.

This letter agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts will together
constitute the same agreement. Executed signature pages to this letter agreement may be
delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature

pages had been delivered.

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6%


SCHEDULE F

REGULATORY AGREEMENTS

List any exceptions to the representation and warranty in Section 2.2(s) of the Securities
Purchase Agreement — Standard Terms.

If none, please so indicate by checking the box: El

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SCHEDULE C

REQUIRED STOCKHOLDER APPROVALS

Required! % Vote Required

Warrants -- Common Stock Issuance

Charter Amendment

Stock Exchange Rules

If no stockholder approvals are required, please so indicate by checking the box

" If stockholder approval is required, indicate applicable class/series of capital stock that are required to vote

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EXHIBIT A

SECURITIES PURCHASE AGREEMENT

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In witness whereof, this letter agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date written below.

UNITED STATES DEPARTMENT OF THE
TREASURY

Date: November 21, 2008

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In witness whereof, this letter agreement has been duly executed and delivered by the duly
authorized representatives of the parties hereto as of the date written below.

UNITED STATES DEPARTMENT OF THE
TREASURY

By:

Name: Neel KASH Vari

Title: nim Assistant Seer efary
Granaal Stab h

COMPANY: Banner Corporation

By:

D. Michael Jones
President and Chief Executive Officer

Date. November 21, 2008

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