Teresa Banks is a 17 year old prostitute and cocaine addict. Her murder in Deer Meadow, Washington, precedes that of Laura Palmer. Banks lived at the Fat Trout Trailer Park for a month, where Mrs. Chalfont and her grandson also lived until they moved away following Teresa's murder. She worked the night shift as a waitress at Hap's Diner.
Her body was found, wrapped in plastic, in Wind River. She died from "repeated blows to the back of the head by a blunt obtuse-angled object," according to FBI Special Agent Sam Stanley. The murderer took her ring, which was adorned with a symbol used late in the series in conjunction with the Black Lodge. Stanley also discovered a small piece of white paper imprinted with the letter "T" beneath the nail of her left ring finger, what would become the calling card of the serial killer who later murdered Laura Palmer and attacked Ronette Pulaski. Stanley and Special Agent Chester Desmond investigated her murder on the orders of FBI Chief Gordon Cole. No one claimed her body after her murder, and she had no known next of kin.
Like Laura and Ronette, Teresa placed personal ads in Flesh World, a swingers magazine known to be read and utilized by Twin Peaks drug dealer Jacques Renault, who also ran a sort of low-key prostitution ring on the side. It was through such an advertisement that she became acquainted with Laura's father, Leland Palmer, who muses "you look just like my Laura" (a later murder, Laura's cousin Maddy Ferguson, is also said to have been chosen because she resembled Laura).
One day, Palmer arrives at a motel room having pre-arranged a rendezvous with Banks and "some of [her] girlfriends" and, to his surprise, discovers one of these to be his daughter. Palmer ducks out before Laura sees him, but Banks becomes suspicious of his sudden change of heart. Eventually, she discovers Leland's identity and attempts to blackmail him but is subsequently murdered before she can collect.