FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * LARSEN MICHAEL K   2. Issuer Name and Ticker or Trading Symbol BANNER CORP [BANR] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) _____ Director _____ 10% Owner __X__ Officer (give title below) _____ Other (specify below) Executive VP, Banner Bank (Last) (First) (Middle) C/O BANNER CORP, PO BOX 907 3. Date of Earliest Transaction (Month/Day/Year) 12/27/2004 (Street) WALLA WALLA, WA 99362 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common stock, $.01 par value per share 12/27/2004   F   23,872 D $ 31.48 (1) 79,402 (2) D   Common stock, $.01 par value per share 12/27/2004   M   35,907 A $ 12.2934 115,309 (3) D

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

Option to buy Common Stock

$ 12.2934

12/27/2004

M

59,779

07/26/1997(4)

07/26/2006

Common stock

59,779

$ 31.48 (1)

33,017

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
LARSEN MICHAEL K C/O BANNER CORP PO BOX 907 WALLA WALLA, WA 99362			Executive VP, Banner Bank

Signatures

/s/Michael K. Larsen		12/27/2004
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	Market price on December 27, 2004.
(2)	Includes direct ownership of 3,228 shares through IRA, 1,525 shares through Deferred Compensation Plan and 10,984 shares through Employee Stock Ownership Plan. Also includes indirect ownership of 2,752 shares through spouse's IRA.
(3)	Includes direct ownership of 37,432 shares through Deferred Compensation Plan as a result of surrender of 35,907 options into the Plan.
(4)	Options vest at rate of 20% per year from date of grant on 7/26/96.

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