Banner Corporation · NASDAQ:BANR
Banner — Keefe, Bruyette & Woods Sixteenth Annual Community Bank Investor Conference 2015
29 slides from Banner's conference presentation, Jul 28, 2015
Slide 1: Building Value at Banner
NNER ICORPORATION Building Value at Banner KEEFE, BRUYETTE & WOODS SIXTEENTH ANNUAL COMMUNITY BANK INVESTOR CONFERENCE 2015 New York Crty..#, Ju 28.&29,.2045.
Slide 2: Disclosure Statement
Disclosure Statement Today’s presentation deals with 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 measure
Slide 3: A Good Place to Be... Since 1890
¥<: A Good Place to Be... Since 1890 Assets $5.2B Deposits 4.3B Loans 4.2B Offices 104 Employees 1,200
Slide 4: Markets, branches, loans and deposits
Market Branches) Loans |Deposits|/Share ColumbiaBasin) 26 |$0.88/$1.3B| 14% E. Washington 18 |$0.58/$0.68) 8%! Puget Sound 30 |$1.78/$1.48) 1% W. Oregon 24 |$1.0B/$0.8B/ 2% Boise $0.28/$0.28) 2% Building Value at Banner 44 new branches since 2005
Slide 5: Growing with Siusiaw Financial Group
Growing with ea SIUSLAW FINANCIAL GROUP —s e Adds over $300 million in low cost deposits Siusiaw@ | * Provides entry into attractive Willamette Valley I-5 corridor with ten branches and meaningful market oe share in Lane County ia bra = Complements existing Portland operations and six ts ra : branch
Slide 6: Transforming with AmericanWest
fe Transforming with AmericanWest — ae Adds over $3.6 billion in low cost deposits = Raises deposit market share among regional banks to 3" in Washington and 4" in Oregon = Extends footprint into California and Utah e Combines experienced integrators = Management teams have successfully executed 11
Slide 7: Building on Strengths
€- Building on Strengths Growing sustainable revenue: Geographic advantage Improved reputation Expanding revenue channels Gaining market share Building Value at Banner
Slide 8: Economically Ideal Geography
€- Economically Ideal Geography Powerful and diverse econ drivers Technology | Microsoft (intel) amazon gaicron @Expedia Manufacturing QseenNe (intel) PACCAR Consumer | amazon COSTCO ia. GE NORDSTROM Logistics Port Sa peg WE = 9 of Seattle. Tacoma Expeditors 2) PORT OF PORTLAND Forest A pros Weyerha
Slide 9: Economically Ideal Geography
€- Economically Ideal Geography United States Idaho Region 2004 to 20 14 2014 to 2030 Rank: 13th 0% 5% 10% 15% 20% 25% —— Building Value at Banner Strong population growth forecast 2014 Estimate (Thousands) United States | 318,857 Washington 7,062 Oregon 3,970 Idaho 1,634 Region | 12,666 Sources: U.
Slide 10: Building on Improved Reputation
€- Building on Improved Reputation Included in Forbes 2014: “America’s 50 Most Trustworthy Financial Companies” Received highest rating: Bankrate.com SAFE & SOUND @ Star Ratings Named SBA “Regional Lender of the Year” for Seattle/Spokane District following two years as “Community Lender of the Year”
Slide 11: Expanding Revenue Channels
€- Expanding Revenue Channels * Value proposition of “Super Community Bank” model: — Broad and appropriate product offerings to serve middle market, small business and consumer client base — Decision making as close to client as possible — Responsiveness through relationship banking — Alignment of d
Slide 12: Expanding Revenue Channels: Grow core revenue
Expanding Revenue Channels Net Interest Income 79 |_Other Income S a 2 Ss Ra PF Pe sth ow PP PP SP Grow core revenue Date Amount | YOYA Quarter Ending 06/30/15) $ 67M 22.4% 12/31/09} $¢ 45m 5.8% Twelve Months Ending 06/30/15) $ 244m 16.4% 12/31/09 | $ 177M -0.6% —— Building Value at Banner ————————
Slide 13: Expanding Revenue Channels: Grow deposit fees
« Expanding Revenue Channels » a ry B Deposit Fees Mortgage Bnkg Other Fees 12 10 | S a 2 Ss Ra 2 9 oS Nd Quarter Ending Grow deposit fees Date Amoun 06/30/15| $ 9.6m 12/31/09| $ 5.3m Twelve Months Ending 06/30/15 | $ 34.3m 24.3% 12/31/09| $ 21.4m -0.7% Rains —— Building Value at Banner 12
Slide 14: Gaining Market Share
INNER Gaining Market Share Non-Int Bearing Interest Bearing 4 si wv 100 - 75 50 25 oJ 2 arta yyy Grow transaction deposit accounts Quarter Ending Number yoy A Non-Interest Bearing Accounts 06/30/15 | 157,555 7.6%* 12/31/09| 71,178 8.0% Interest Bearing Accounts 06/30/15| 82,233 4.3%*! 12/31/09 50,95
Slide 15: Maintaining Earnings Momentum
€- Maintaining Earnings Momentum Enhancing Shareholder Value: * Protecting net interest margins ¢ Improving operating efficiency « Maintaining moderate credit risk * Retaining risk-appropriate capital — Building Value at Banner - 14
Slide 16: Protecting Net Interest Margins
€- Protecting Net Interest Margins Asset Yields Maintain solid Funding Costs — "ee net interest margin Date Amount | Percen' Quarter Ending 06/30/15] $ Sim | 4.19% | 12/31/09| $ 38m 3.49% Twelve Months Ending 06/30/15) $ 192m 4.11% 12/31/09 $ 145 3.33% —— Building Value at Banner 15
Slide 17: Protecting Net Interest Margins
€- Protecting Net Interest Margins Loan Yields Loan-Deposit __ Deposit Costs — Spread FP Sw os PP PP SK SK —— Building Value at Banner Reduce deposit costs Date Amount | Percent Quarter Ending 06/30/15] $ 1.8m 0.16% 12/31/09 | $ 17.7m 1.83% Twelve Months Ending 06/30/15} $ 7.2m 0.18% 12/31/09| $ 83.
Slide 18: Protecting Net Interest Margins: Core Deposits
Protecting Net Interest Margins hd N D. it Improve funding < loncore Deposits - - 2 Core Deposits mix with lower cost = core deposits Quarter Ending 06/30/15|$ 3,53i1m| 82% Balance | Percent 12/31/09 | $ 1,924m 50% —— Building Value at Banner ———————— v
Slide 19: Loan to Deposit Ratio
115% 7 = L/DRatiom pepczits 105% 100% 3.0 95% 25 90% 2.0 85% 1.5 80% 1.0 Maintain loan-to- deposit ratio of 90-95% Quarter Ending Percent 06/30/15 99% 12/31/09 98% Peak 108% —— Building Value at Banner ————————— 18
Slide 20: Protecting Net Interest Margins
ies Protecting Net Interest Margins 5.0% + . . 5 Net Interest Margin paintaln sot Peer 75* Percentile net interest margin 4.5% Quarter Ending 06/30/15 | 4.19% 4.0% 03/31/15| 4.09% | 3.83% 12/31/09 3.53% | 3.99% 3.5% 3.0% — Source: Bank Holding Company Performance Report 2.5% ae Ss Federal Reserve Sy
Slide 21: Improving Operating Efficiency
4- Improving Operating Efficiency Other | Personnel Efficiency Ratio Millions b ) 205 10 ° 3S x8 1S we kel PP PP 95% 85% 75% 65% 55% —— Building Value at Banner ————————— Control core operating expense Date Amount | YOYA Quarter Ending 06/30/15) $ 44m 20.7% 12/31/09} $ 31m | -10.0% Twelve Months End
Slide 22: Reduce nonperforming loans and OREO
Millions Reduce nonperforming loans and OREO Quarter ing Balance Nonperforming Loans reent 06/30/15) $ 23M 0.5% 12/31/09 | $ 214m 5.5% Peak $ 243M 6.2% Other Real Estate Owned 06/30/15 | $ 6m 0.1% 12/31/09} $ 78m 2.0% Peak $ 107M 3.0% Ff of of —— Building Value at Banner ————————— 21
Slide 23: Maintaining Moderate Credit Risk
nvee Maintaining Moderate Credit Risk Improved Earning Asset Mix 06/30/2015 12/31/2009 Securities 13% Const/Dev Building Value at Banner »
Slide 24: Maintaining Moderate Credit Risk
INNER Maintaining Moderate Credit Risk 3.5% + ALLL to Loans Peer 75" Percentile 3.0% 2.5% 2.0% — 1.5% 1.0% T r r r + + A & @ 2 a? ah PoP —— Building Value at Banner Maintain appropriate loan loss reserves Quarter r Ending | Banner | 75% pet ALLL to Loans 06/30/15| 1.82% | 03/31/15| 1.83% | 1.51% 12/
Slide 25: Maintain solid capital position
20% 800 w Tier 1 Leverage Ratio Total 5 TCE/Tangible Assets Capital = = 15% ~ 600 10% | 400 5% 200 0% o A SP VP SP wy st wow re ev YY OY Maintain solid capital position Quarter Tier 1 Ending | Leverage | TCE/TA 06/30/15 | 13.89% | 12.26% 12/31/09| 9.62% | 5.87% Low 8.80% | 5.82% —— Building Value at
Slide 26: Retaining Risk-Appropriate Capital
met Retaining Risk-Appropriate Capital 20% = Tier 1 Leverage Ratio panags viral Peer 75% Percentile prudently Peer 15% Banner | J55 pat 06/30/15 | 13.89% 03/31/15 | 14.50% | 11.73% 12/31/09| 9.62% | 10.17% 10% Retired Perpetual Preferred Stock during 2™ half of 2012 5% ie Source: Bank Holding Compan
Slide 27: Enhancing Shareholder Value
INNER Enhancing Shareholder Value 50 TBV/ Share Stock Price 40 30 Pre Copital Raise (201092) 20 | F 10 oO Sg OS By Dh Dm Ss Fr SP SP ow sw wow weve we MY YY —— Building Value at Banner Attain premium to tangible book value Ending | Prices | TBV Per Share 06/30/15| $ 47.87 | $ 30.22 06/30/10 | $ 15.0
Slide 28: Enhancing Shareholder Value
INE * Enhancing Shareholder Value 5.00 4,00 TBV/ Share THAERS Stock Price 3.00 + 2.00 1.00 Pre Capital Raise (2010 Q2) 0.00 4 S a ~ ss Ny Ly PP os Building Value at Banner Attain solid multiple on earnings Quarter Stock TT™M Ending | Price* | Earnings Per Share 06/30/15 | $ 47.87 | $ 2.61 06/30/10 |
Slide 29: Increasing Return to Shareholders
€- Increasing Return to Shareholders ¢ Banner has a scalable franchise with a long history in robust, desirable markets. ¢ Banner is one of the largest remaining banking franchises based in Washington. * Banner has the management depth, organizational model and operational skill to sustain earnings
Banner — Keefe, Bruyette & Woods Sixteenth Annual Community Bank Investor Conference 2015 on 6ix