Banner Corporation (BANR), the holding company for Banner Bank and Islanders Bank, and Home Federal Bancorp (HOME), the holding company for Home Federal Bank, announced the signing of a definitive merger agreement pursuant to which Banner will acquire Home. The combined company will have approximately $5.2B in assets and will be the fourth largest Pacific Northwest headquartered bank as ranked by assets. It also will have a top 10 deposit market share position in Washington, Idaho and Oregon with an established platform for growth and continued operational improvement throughout the Pacific Northwest. The boards of Banner and Home unanimously approved the transaction, which is subject to regulatory approval, approval by the stockholders of Home, and other customary conditions of closing. The transaction provides for the payment to Home stockholders and option holders of $87.6M in cash and to Home stockholders 2,904,000 shares of Banner common stock, subject to price collars. Based on the closing price of $37.66 for Banner shares on September 24, the transaction would have an aggregate value of $197M. As of June 30, Home Federal Bancorp had tangible common equity of $168.1M. Banner expects the transaction to be immediately accretive to earnings per share, excluding one-time transaction expenses. Upon closing of the transaction, which is anticipated to take place in the first quarter of 2014, Home will be merged into Banner and Home Federal Bank will be merged into Banner Bank.