Ladies and gentlemen, thank you for standing by. Welcome to the Banner Corporation Fourth Quarter 2013 Conference Call and Webcast. At this time all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session and instructions will be provided at that time. (Operator Instructions) I would now like to turn the conference over to Mr. Grescovich, President and Chief Executive Officer of Banner Corporation. Please go ahead.

Thank you Luke, and good morning everyone. I would also like to welcome you to the full year 2013 and fourth quarter earnings call for Banner Corporation. As is customary, joining me on the call today is Rich Barton, our Chief Credit Officer; Lloyd Baker, our Chief Financial Officer and Albert Marshall, the Secretary of the Corporation. Albert, would you please read our forward-looking Safe Harbor Statement.

Certainly, good morning. Our presentation today discusses Banner’s business outlook and will include forward-looking statements. Those statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook for economic and other conditions. We also may make other forward-looking statements in the question-and-answer period following management’s discussion. These forward-looking statements are subject to a number of risks and uncertainties and actual results may differ materially from those discussed today. Information on the risk factors that could cause actual results to differ are available from the earnings press release that was released yesterday and a recently filed Form 10-Q for the quarter ended September ended 30, 2013. Forward-looking statements are effective only as of the date they are made and Banner assumes no obligation to update information concerning its expectations. Thank you.

Thank you Robert. As announced, Banner Corporation had another strong quarter of performance. Reporting a net profit available to common shareholders of $11.6 million or $0.60 per share for the period ended December 31, 2013. This compared to a net profit to common shareholders of $0.60 per share for the third quarter of 2013 and $0.69 per share in the fourth quarter of 2012. As you know, the fourth quarter of 2012 had extraordinarily strong mortgage banking revenue as a result of significant refinance activity. For the full year ended December 31, 2013, Banner Corporation reported net income available to common shareholders of $2.40 per share, compared to $3.17 per share for the full year 2012. The full year 2012 performance was augmented by a deferred tax asset valuation reversal and exceptionally strong mortgage banking revenue. When looking at earnings before tax changes in fair value, securities gains and the termination fee, Banner earned $3.45 per share for the full year of 2013, versus $3.05 per share in 2012. The fourth quarter and full year performance continued our positive momentum and demonstrated that through the hard work of our employees throughout the company, we continue the successful execution of our strategies and priorities to deliver sustainable profitability to Banner and expand our balance sheet with strong organic loan and deposit growth. Our return to profitability for the last 11 quarters further demonstrates that our strategic plan is effective and we continue building shareholder value. Our operating performance again this quarter was very solid when analyzing our core key metrics. Our fourth quarter of 2013 core revenue was a strong $51.6 million, despite slowing mortgage banking revenue due to a reduction in refinance activity. Our net interest margin remained above 4% and was 4.01% in the fourth quarter of 2013, and…

Thanks Mark. As Mark noted in his opening remarks, we believe that our credit work over the past several years has resulted in a moderate risk profile for the Banner loan portfolio. We feel that our portfolio metrics clearly support this view. My remaining remarks this morning will briefly recap changes in key portfolio metrics during 2013. Net charge-offs were $2.5 million, down from $18.4 million a year earlier, or a decrease of 86%. The modest increase in the fourth quarter charge-offs was driven by a non-correlated transactions not portfolio trends. The construction and land loss was on a pre-recession loan that became impaired as a result of an unfavorable public vote on land annexation. Total non-performing assets declined from $50 million to $29 million, a reduction of 42%. Stated as a percentage of total assets non-performing assets went from 1.18% to 0.66%. One-to-four family loans now make up over 50% of non-performing assets, a statistic driven by the reality that the recovery of home values has not been equal in all markets. Non-performing loans decreased from $34 million to $25 million during the year, an improvement of 26%. The fourth quarter increase in non-performing loans was driven by a single commercial real estate loan and migration to non-accrual status in one-to-four family portfolio. REO fell from $16 million to $4 million during 2013, this was a decline of 75%. For the past eight quarters, Banner has recorded a net gain on the sale of REO assets. Altogether a very modest $3,000 in the fourth quarter. For the first time in six quarters the net gain did not exceed valuation adjustments. However, for all of 2013 gain on sale of REO significantly exceeded valuation adjustments. Classified loans in Banner’s portfolio were $91 million versus $131 million at year end 2012,…

Thank you Rich. And good morning everyone. As Mark and Rich have already indicated and as reported in our press release, we are pleased with Banner 2013 performance and operating results and the successful execution of our strategies which produced those results. I think it’s appropriate to celebrate that success and remind ourselves that those solid 2013 results followed a very successful 2012 as well. Further I think it’s important to note that those views results reflects the strength of the Banner franchise and our balance sheet. However as I noted on last quarter’s call our past success is making comparison to prior periods challenging. And our fourth quarter results clearly reflects the difficult operating environment, presented by the prolonged period of very low interest rates and slow economic growth which again pressured our net interest margin and reduced mortgage banking revenues. While our successful client acquisition strategies we offered in significant core deposit and loan growth for both fourth quarter and the year, which offset much of this pressure, it is clear that the margin pressure in particular will be challenging going forward. And as Rich as noted, is also clear that further improvement in our credit quality metrics is unlikely to provide incremental revenue impact in future periods. As reported our net income – available with the common shareholders with a $11.6 million, those $0.60 per diluted share in the fourth quarter of 2013 compared to a $11.7 million also $0.60 per diluted share in the immediately preceding quarter and $13.3 million or $0.69 per diluted share in the same period a year ago. For the year ended December 31, our net income was $46.6 million, a $2.40 per diluted share compared with $3.17 per diluted share in 2012. It is important to note that the current quarter’s…

Thank you Lloyd and thank you Rich. That concludes our prepared remarks. And Luke will now open the call and welcome your questions.

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. (Operator Instructions) One moment please for you first question. Your first question for today will come from the line of Jeff Rulis of D.A. Davidson. Please go ahead. Jeff Rulis – D.A. Davidson & Co.: Good morning, thanks.

Good morning Jeff. Jeff Rulis – D.A. Davidson & Co.: The question on the loan production, I guess was that fairly uniformed throughout the quarter or is it front or back-end loaded? How about the timing of it and perhaps kind of the expectations on the pipeline going forward it sound like the release that was fairly positive?

Yes, Jeff this is Mark. It has been fairly universal increase throughout the quarter as we’ve indicated in past calls specifically in the third quarter that our pipelines were built in and in a commercial banking pipeline it takes a few months to get the actual loan production to closure. So it was fairly universal throughout the fourth quarter. And our pipelines and production remained strong going into the first quarter of 2014 as well. Jeff Rulis – D.A. Davidson & Co.: Okay. And I guess may be for Lloyd, on the – I guess the impact on margin if that is pretty uniform throughout the quarter. I guess that the message you guys were sending is that margin level still a battle, but more specifically I guess with growth you guys still are more positive on may be growing the top one in terms of spread income dollars versus so much concerned on the margin level?

That’s generally correct Jeff, and good morning by the way. You know me I’m always concerned about the margin, but you’re exactly right the net interest income is the more important number, and we – recognized that in this interest rate environment our margin pressure is going to be constant so you need to grow the balance sheet to offset that. We had good success in the fourth quarter doing that as I noted net interest income was essentially unchanged despite the margin dropping 8 basis points. So that is the challenge, this is a very unfriendly interest rate environment for lending in terms of margin. Jeff Rulis – D.A. Davidson & Co.: Got you. And then just a follow-up on the expenses. You outlined the kind of the increase in the marketing advertising and then if you strip out the Home Federal costs been sort of some lumpiness in the OREO line, I guess the question goes into the compensation. Was a portion of that due to sort of the increase in loan production I think you’ve also detailed some another cost in there and in the compensation line?

Well, that as you’d expect, commission and expense relative to mortgage was up a little bit, but as Mark has indicated we continue invest in people and that is somewhat reflected in the expense line there as well. I think the other thing that you might note the capitalized loan costs was down a little bit, part of the balance expansion was larger loans we have in the construction portfolio that brought down to recurring and the weighted [ph] capitalized expense may have occurred in the second or third quarters of the year. And then you’ve got your finger on an important issue which is the lumpiness in the OREO portfolio which we can’t, certainly we can’t expect to sell property to gain forever we have fewer and fewer properties to sell in those market where see as Rich indicated. The advertising is really just kind of, at some of our direct marketing campaigns giving us back on schedule after having slowed it down. I think if you look at the full year expense in the advertising and marketing it probably gives you the better indication of run rates. Jeff Rulis – D.A. Davidson & Co.: Okay. So, you guys – seed the circle back on the kind of the year-over-year you kept expenses well actually down a bit going forward and just trying to hold the line but may be modest increases, is that sort of the read through?

Well that would certainly be the case if we continue to be successful in growing the balance sheet. To the extent, we aren’t successful in growing the balance sheet, we’ll have to take a look at some of the expense categories that will on more credit line. Jeff Rulis – D.A. Davidson & Co.: Okay, that’s helpful. Thanks guys.

Thanks Jeff.

Your next question today will come from the line of Tim Coffey of FIG Partners. Please go ahead. Timothy Coffey – FIG Partners: Hey, good morning gentlemen.

Good morning, Tim. Tim Coffey – FIG Partners: Hey Mark I wondered, your possibilities of the opportunities for improving the deposit mix can you see big opportunities or you see really kind of incremental changes going forward?

Good morning Tim, thank you for that question. I think we’ve been very successful year-over-year remixing our deposits. And on the fourth quarter of 2012 about 71% of our deposits were core we’re now up to 76% that’s coming through client acquisition, our current client acquisition run rate on a net basis annualized is running about 12.5%. So we do see that continuing into 2014. As you know there has been a significant amount of market disruption that’s occurring in many of our core markets through acquisition, M&A and change of hands between some branches. That’s provided us an opportunity to execute effectively with our direct sales model, but also increased advertising that increased advertising expense is directly related to what we see as an opportunity to take advantage of that disruption and remix our deposits. Our goal clearly is to get that number north of 85% and that’s going to take a little time, but we see that as an achievable goal. Timothy Coffey – FIG Partners: Okay. And this kind of a feedback on Jeff’s question about expenses, but on a bigger picture perspective Mark, do you feel good about the number of footings that you have right now, number of branches, or do you feel like that number moving up or down in the next year or two?

I feel very good about the number of branches we have, we like to obviously take advantage of opportunistically in some markets where we think we can expand our market share we may do that, but right now it would not be any type of wholesale, the de novo operation these would be changing branches out. So I feel pretty good about the core number of branches we have, we simply still have an opportunity to get them more productive. Timothy Coffey – FIG Partners: Okay, great. Thanks, those were all my questions.

Thanks Tim.

(Operator Instructions) Your next question will come from the line of Jackie Chimera of KBW. Please go ahead. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: Hi good morning everyone.

Good morning Jackie. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: Mark, I’m going to pull the dead horse out of the closet here, ask you about the M&A and just kind of how thoughts are going, what your thoughts are oppose to be experienced with the Home deal and just what you’re seeing in the market?

Sure, thank you for the question Jackie. The M&A market is as you know there’s quite a bit of conversations most occurring. When you take a look at the margin compression that we see, the challenge is in a low interest rate environment. Banner has been very successful at executing on a business model to expand our balance sheet, grow client relationships and really have a super community bank model as a value proposition that’s reflective of the marketplace and what the marketplace wants. Institutions of smaller size are struggling with that, they are kind of continuing clause which is causing them to cut back on service and/or products and they’re experiencing this significant amount of compression as well. So, clearly the M&A activity for as it relates to smaller institutions is going to continue and I think Banner will be an active part of that. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: Is the level of conversations picking up from where it was last quarter or we are about at the same par?

I would say it’s probably a little bit more aggressive from our vantage point. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: So, when these – I know a lot of us have had the theory about as these deals continue to go banks take a look around, realize what you are describing, look at themselves and realize that may be going on is that still a low, entity isn’t really what they are looking to do. Are you seeing more of a resignation where banks that perhaps didn’t want to sell before or now realizing that’s their only avenue of asset to give the shareholders correct?

I think it’s the combination of a couple of things. I think they’re exploring alternatives to better service their clients, to better their communities to do the right thing for their employees and all other state as well as shareholders obviously but I think it’s a broader play than just saying we keep it or return or going to sell. What most organizations really want to do is make sure their partnering with somebody that can perpetuate a business model but their model were very successful and can serve their clients in their community. That’s the type of partners that Banner is looking for. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: Okay. So there is more that they’ll get now on customers and clients?

Yes and making sure that you’re serving the communities. And, it is very difficult for smaller institutions to get a return. So, at a 1.06% are away I would say that Banner is doing a very nice job. Jacquelynne Lair Chimera – Keefe, Bruyette & Woods, Inc.: Yes now, I would agree with you very much. So, that was all I had. Everyone else has already asked everything else. Thank you.

Thank you Jackie.

And, there are no further questions at this time. I will turn the call back to management for any closing remarks.

Thank you, Luke. As I stated, we are pleased with our strong full year 2013 and fourth quarter performance and the reinforcing evidence that we are making substantial and sustainable progress on our disciplined strategic plan to build shareholder value by executing on our super community bank model, by growing market share, which is evidenced by the expansion of our balance sheet, strengthening our deposit franchise, improving our core operating performance and maintaining a moderate risk profile. I would like to thank all my colleagues who are driving this solid performance for our company. Thank you for your interest in Banner, and for joining our call today. We look forward to reporting our results to you again in the future. Have a great day, everyone.

Thank you. Ladies and gentlemen, I would like to let you know, that this conference will be readily available for replay. And you can connect to that replay at www.bannerinc.com. Again that’s www.bannerinc.com for the replay. And again ladies and gentlemen, we thank you for your participation. And you may now disconnect your lines.