Slide 1: First Quarter 2020
NNER ‘CORPORATION First Quarter 2020
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: Pandemic response at Banner
Pandemic response at Banner Clients Reduced branch lobby access; drive-up facilities and ATMs remain accessible to serve clients Received approval for 1,345 SBA Payroll Protection Program loans totaling $448 as of April 16" Deferred payments or waived interest on 2,415 loans with $751M™ in balances
Slide 4: Pandemic risk: Early impact exposure
(NNER Pandemic risk: Early impact exposure sae Total loan portfolio at 03/31/20: $ 9,286 (millions) Early Impact eae Health Care Facilities 9% Health Care by Indust iE Practioners ) Hotel & by State Accomodation Restaurants & Food Services Recreation & Leisure
Slide 5: Pandemic risk: Investment properties
Pandemic risk: Investment properties €- Total loan portfolio at 03/31/20: $ 9,286 (millions) Secured by investment properties: $ 2,008 investment Properties Retail $2,008 ate Office — by Collateral => Industrial Medical/Assisted Living Hotel/Motel Mini Storage Other Recreational Facility Restaurant
Slide 6: Pandemic risk: Loan pool by industry
INNER Pandemic risk: Loan pool by industry aa $ millions Health Gare Health Core Hotel Restaurants 2 Reaeation& | Early Future) Industry: Facilities Practiones Accomodation FandServices Leisure Impact Impact Total Commercial real estate: Owneraccupied 295 153 2a 246 610 1325 as16 19242, Inves tment
Slide 7: CECL impact and Allowance for Credit Losses
CECL impact and Allowance for Credit Losses § Millions Allowance for Credit Losses Build 12/31/2019 ovro1/2020 42019 Daytimpact Day1 Balance Forecast 2020 Sheet Adjustment, Growth Other Allowance for Credit Losses 142.0 118.2 ot 103.5 ey - ™ 0431/2020 INNER + Day 1 CECL adoption impact of $14.9mm™ +
Slide 8: Building value at Banner
Building value at Banner Building value for stakeholders ... by focusing on core banking competency ... that is sustainable through change events ... and scalable with acquisition growth sail a oa Banner Corporation Assets $12.88 Recent Additions Deposits $10.48 2019 G4 2018 G4 20154 2015 G1 2014 a2
Slide 9: Building value at Banner: Growing revenue
Building value at Banner €- Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Growing revenue Take advantage of ideal geography Offer super community bank value proposition Guard and improve reputati
Slide 10: Growing revenue ... in a good place since 1890
INNER Growing revenue ... in a good place since 1890 ca Population Estimate tition 2020 2030. Growth Washington 7787 12% + Banner's 3northern Gregan TE a doe ates are among the Oregon ASAT 10% fastest greming in the idaho ig 23 country. California 39.6 413 Region 534 568 United Stotes 330.0 349.8 St
Slide 11: Growing revenue ... in an ideal geography
Growing revenue ... in an ideal geography Powerful and diverse economic drivers From Banner's Pacific Northwest base to ... California From Apple 4 to @ zoomerang, Technology Microsoft. (te!) amazon qaicron Géxpedia from Silicon Valley to Manufacturing 75 geenver (intel) PACCAR o ce the Central Vall
Slide 12: Growing revenue: super community bank value proposition
Growing revenue Offer super community bank value proposition Broad product offerings serving middle market, small business and consumer client base Decision making as close to client as possible Delivery channels aligned to maximize tactical execution of strategic plan Community investment ut
Slide 13: Growing revenue: Guard and improve reputation
Growing revenue Guard and improve reputation Ranked highest in Northwest (3'¢ consecutive year): J.D. Power 2019 U.S. Retail Banking Satisfaction Studys™ Ranked best bank in the Pacific region (2"¢ consecutive year): Money 2019-2020 “America’s Best Banks” Ranked in top 100 (3'¢ consecutive year): Fo
Slide 14: Growing revenue: Grow transaction deposit accounts
INNER Growing revenue ae Grow transaction deposit accounts 500 Non-Interest Interest Bearing “pearing. Non-Interest Bearing Bearing Quarter. Beating __ Ending Number YOYA Number YOYA Interest Bearing AltaPacific Bank», Skagit Bank —>| Thousands 03/31/20 305,537 2.9% 150,834 -0.196" 12/31/09 71478 8.
Slide 15: Growing revenue: Grow core revenue
INNER Growing revenue ae Grow core revenue Grow deposit fees* cuarter Ouarter uM Guarter Ouarter uM Ending Amount ‘YOY Amount YOY Ending Amount ‘YOY Amount YOY 03/320 $ 143m 65% $ 560m 5.8% O3/3U20 $ 98m -22.3% $ 438m -113% 1309 $ 45m 5.8% $ im -0.6% 1zsyo9 $ 5.3m 16% $ 214m 0.7% |, 150 2d 20% 2 Oth
Slide 16: Building value at Banner: Protecting net interest margin
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Protecting net interest margin Improve earning asset mix Improve funding mix Reduce deposit costs Maintain loan-to-deposit r
Slide 17: Protecting net interest margin: earning asset and funding mix
INNER Protecting net interest margin aa Improve Earning Asset Mix 12/31/2009 03/31/2020 Comt 8 Ag Securities Comt 8 Ag Securities ottone tas o30 en Seourities 06-22 Comlsag 0928 Consumer “CREGwner 0513 CRE Owner CREInvestor 09 32 Res Mortgage “ResConst/Dev 0.5 0.7 ResMortgage 0.7 0.9 Res ConstiDey _
Slide 18: Protecting net interest margin: Grow core deposits
Protecting net interest margin INNER Grow core deposits Reduce deposit costs Quarter Quarter Quarter LIM Ending Balance YOYA tof Total Ending Amount Rate Amount ‘Rote O3/3U20 $9,283 13.0% 890% 03/320 $ 88m 0.35% $ 77m 0.39% 12/3109 $ 19240 16.8% 50% 1zsyoo $ 177m 1.83% $ 83.2 2.21% 100% 8% 210 | Non
Slide 19: Protecting net interest margin: loan-to-deposit ratio
Protecting net interest margin Maintain 90-95% loan-to-deposit ratio Quarter Ending Ratio 03/31/20 91% 12/31/09 98% 50% Net Noncore Funding Dependence — Banner 40% 50% 20% 10% Peer source: Group 1 ($108 ancover!, Bank Holding Company Performance Report (BHCPR), Nationalinformation Center, Federal Re
Slide 20: Protecting net interest margin: top quartile NIM
Protecting net interest margin Maintain top quartile net interest margin Giuiarter Quarter UTM Ending Amount Rate Amount Rate 03/31/20 $119M 4.19% $472m 4.2596 12/31/09 $ 39M 3.53% $146M 3.369% 5.0% Net Interest Margin — Banner 45% 4.0% Peer Top Guartite 38% 5.0% Peer source: Group 1 ($108 andover),
Slide 21: Building value at Banner: Spending carefully
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Spending carefully Benefit from scale Control core operating expense 20
Slide 22: Spending carefully: Control core operating expense
Spending carefully Control core operating expense ouster Quarter LT Ending Amount YOYA Amount YOYA 03/31/20 $ 94M 6.5% $356m 4.1% 12/31/09 $ 31M -101% $132M_—_-2.5% 100% Efficiency Ratio — Banner 90% 80% 70% 60% Peer Top Guartite SP PO 1 9 he © SSO PELL PLL LP Pray Peer source: Group 1 ($108 andover
Slide 23: Building value at Banner: Maintaining a moderate risk profile
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Maintaining a moderate risk profile Embrace effective enterprise risk management Minimize nonperforming assets Maintain appr
Slide 24: Minimize nonperforming assets
INNER Maintaining a moderate risk profile aa Minimize nonperforming assets ouster NPLs OREO Ending Amount %of TA Amount _% of TA 03/31/20 $ 44m 0.46% $ 2m 0.03% 12/31/09 $214m 5.53% § 78M 2.019% 4.0% ALLL to Total Loans 58% — Banner Peer Top Guartite 5.0% 28% 2.0% 18% 1.0% 08% Peer source: Group 1 (
Slide 25: Maintain appropriate risk capital
Maintaining a moderate risk profile Maintain appropriate risk capital Quarter Tier 1 Ending Leverage TCE TA 03/31/20 10.45% 9.70% 12/31/09 9.62% 5.87% 18% Tier 1 Leverage — Banner 16% 14% 12% Peer Top Guartite 10% 8% Peer source: Group 1 ($108 andover), Bank Holaing Company Performance Report (BHCPR
Slide 26: Building value at Banner: Employing capital wisely
Building value at Banner Core banking competency Growing revenue Protecting net interest margin Spending carefully Maintaining a moderate risk profile Employing capital wisely Employing capital wisely Maintain premium to tangible book value Pay appropriate dividends Prepare for future opportunities
Slide 27: Maintain premium to tangible book value
Maintain premium to tangible book value Maintain favorable stock price to TEV and EPS. Quarter Stock Price) EPS PIE Ending Price? TEV Tey LTM__ Ratio 08/320 $3263 $3423 95% $ BTL BBx 06/30/10 $15.07 $29.03 52% $-8.06 nim 2.0% Return on Aferage Assets — Banner 18% 1.0% 05% $5.00 Earnings per Share LT
Slide 28: Building value at Banner
Building value at Banner Building value for ... Shareholders by delivering top quartile financial performance Clients by delivering super community bank service and products Employees by offering opportunity and reward Communities by providing capital and staying involved 27