Walla Walla – Banner Corp., the parent of Banner Bank, has reached a merger agreement with NCW Community Bank of Wenatchee, Wash.

The stock and cash transaction is valued at about $18.5 million. NCW Community Bank will merge into Banner Bank, which will expand Banner’s presence in north central Washington area.

Founded in 1999, NCW Community Bank is a state-chartered commercial community bank with $90 million in assets, $81 million in loans, $78 million in deposits and shareholders’ equity of $9 million as of March 31. With one branch in Wenatchee and one under construction in East Wenatchee, the bank specializes in serving individuals and small and mid-sized businesses.

“The officers, employees and board members of NCW Community Bank have created a vibrant community bank with a reputation for high-quality service and strong community involvement in its market area,” said D. Michael Jones, president and chief executive officer of Banner Corp. “The Wenatchee area has experienced robust economic growth over the last several years with strong population growth and increasing median household income.

Banner Bank has two branches in the Wenatchee area. Combined, NCW Community Bank and Banner Bank will hold the No. 2 market share position in the greater Wenatchee area, Jones said.

Melvin J. Hansen, president and chief executive officer of NCW Community Bank, said his organization was pleased to join the Banner team.

“We look forward to offering a broader range of services to our customers, increased lending limits, and expanded branch and ATM networks,” he said. “Partnering with Banner Bank provides us with the resources for further growth and diversification ….”

Subject to agreement and assuming all outstanding NCW Community Bank options are exercised, NCW Community Bank shareholders would receive .7425 shares of Banner Corp. common stock and $14.19 in cash for each NCW Community Bank share. The acquisition, which has been approved by directors of both companies, is subject to approval by regulators and NCW Community Bank shareholders. The transaction is expected to close during the fourth quarter of 2007.

Banner Corp., with $4.2 billion in assets, is the parent company of Banner Bank, a commercial bank that operates 77 branch offices and 13 loan offices in 27 counties in Washington, Oregon and Idaho. It is also the parent of Islanders Bank, which operates three branch offices in Washington’s San Juan Islands.