Banner Corporation · NASDAQ:BANR
Banner — Q2 2022 Earnings Presentation
27 slides from Banner's earnings presentation, Jul 21, 2022
Slide 1: Second Quarter 2022
NNER ‘CORPORATION Second Quarter 2022
Slide 2: Disclosure Statement
Disclosure Statement This 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 measures a
Slide 3: Second quarter 2022 highlights
Second quarter 2022 highlights + Loan growth of 3.7% (14.9% annualized), not including PPP + Total loan commitment originations (excluding HFS) were $14 billion + Core deposits declined 0.7% excluding branch sales and 1.9% including $170 million impact from the branch sales, and represent 95% of tot
Slide 4: Banner Forward progress update
INNER Banner Forward progress update Operating Leverage Trend! 21 —rE re Expense Forward am Initiative ntation Status? + Core Expense reflects non-core expense adjustments including restructuring costs and legal settlernents: Core Revenue excludes residential mortgage gain on sale and SBA PPP Loan i
Slide 5: 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 Banner Corporation Assets $16.48 Deposits $14.28 Loans S 9.58 ey Offices 137 $048 Employees 900 50. 3B $0.28 10 6
Slide 6: Environmental, Social & Governance
Environmental, Social & Governance Program highlights and overview With Board of Directors’ oversight, Banner's Executive Management and its ESG Working Group are committed to providing transparency in our efforts and achievements in ESG matters. Environmental Social Governance AA, Proviced and part
Slide 7: Building value at Banner: Core banking competency
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 8: Growing revenue ... in a good place since 1890
Growing revenue ... in a good place since 1890 Population Estimate imitions) Growth Washington 77-86 11% ‘Oregon 43 46 Taho 18 24 39.6 407 53.4 * Among the fastest “United States 329.5 346.1 growing in the country Strong Population Growth Forecast 2010to 2020, United States pice een wan Rank: 9 Jash
Slide 9: 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 Technology i . Microsoft (is) amazon qaicron’ @éxpedia wapieensile, from Silicon Valley to Manufacturing 79 gerenver (intel) PACCAR & ce the Central Val
Slide 10: Growing revenue: Our super community bank value proposition
Growing revenue Our 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
Slide 11: Growing revenue: Guard and improve reputation
Growing revenue Guard and improve reputation Outstanding CRA Rating FDIC 2021, most recent 3 year examination cycle Best in Customer Satisfaction for Retail Banking in the Northwest* J.D. Power 2022 Consistent recipient of highest rating BauerFinancial 5-Star Rating™ A Top 50 U.S. Public Bank (with
Slide 12: Growing revenue
INNER Growing revenue et = 2 ouaner Ouarter ia a Quarter uM Ending Amount ‘Amount Ending Amount “Amount 06/30/22 $ 148M $ 583m 06/30/22 $ 193M $ 83.6m 12/3/09 Ss 45M $ 177M 12/31/09 S$ 66m $ 311m 30 20x 2 Other Income é Other Fees iBeposlf Beane S150 | Net imterest income Mortgage Bnkg or Pere hnenu
Slide 13: 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-deposi
Slide 14: Protecting net interest margin
Protecting net interest margin Low Cost Funding Mix Earning Asset Mix Certificates 06/30/2022 6/30/2022 of Deposit ~ FHLB, Sub Debt 6 Other Interest-bearing Deposits Non-1 Bearing Loans srities $ Millions Non-Interest 64565 0 $ Million: Interest Bearing ized ri 7 ela ees interest Bearing 7.197 Loans
Slide 15: Protecting net interest margin: Grow core deposits
Protecting net interest margin Grow core deposits Reduce deposit costs Quarter Quarter —__Guarter__ ETM Ending Balance Ending Amount Rate Amount ‘Rate oai0/22 _§ 15.456m os/30/22 $ 20m 0.06% § 9.2m 12/34/09 $1924 12/309 $177 183% —§ 832m 16 100% % g Noncore Deposits Loan Yield s Core Deposits 90% De
Slide 16: Protecting net interest margin
INNER Protecting net interest margin = Deposits 2 50% Loans 14 5 100% a 40% 12 Net Noncore Funding Dependence = Banner ox Loan-to-Deposit Ratio 30% 6 10 20% Peer Median, 60% 8 10% 6 i ¥ 40% Peer Top Ouse ox | 4 20% =10% 2 0% ie) FPF SS SF SS AP a roe SISK KS SK IKK SIPS SK Peer source: Group 1 (S108
Slide 17: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin Quaner Quarter L™ Ending Amount Rate Amount _ Rate 06/30/22 $129M 3.37% $499M 3.25% 12/31/09 $ 39M 3.53% $146m 3.36% Net Interest Margin — Banner Peer Top Quartile Peer Median Peer source: Group 1 ($108 and oven) Bank Holding C
Slide 18: Well positioned for rising rates and conservative investment portfolio
Well positioned for rising rates and conservative investment portfolio INNER Investment Portfolio Composition ($4.27 billion} 12 Month Net Interest Income Shock ($MM), % Change 629. 15% comm S155, omen $3 agerey, Sisk, 38% a 82% of investments are Agency MBS/CMO or AAA rated 3.1% non-rated investmen
Slide 19: 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 18
Slide 20: Spending carefully
Spending carefully Control core operating expense quieter Quarter LT™ Ending “Amount “Amount 06/30/22 $ 88m $347 12/31/09 $ 31m $132 100% Efficiency Ratio — Banner Peer Top Quartile Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport (BHCPR] Nationalinformation Center, Federa
Slide 21: 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 a
Slide 22: Allowance for credit losses
INNER Allowance for credit losses Snes ACL Provision/Release henge sessment $138.8 pao $143.4 $28.6 Economictactars aaa Che to alle au aa anges to allowance: (MEE Net charge-offs = i $06 pa eam Provision * i=. SALBRAR “$9 8g49 3886 970 SMillions e $ @ ACL-Loans ass) 47| (a) oa) 34/1287 PF FF FH SP I
Slide 23: Maintaining a moderate risk profile
Maintaining a moderate risk profile Minimize nonperforming assets Quarter, ___NPAs _ REQ Ending Amount %ofTA Amount % of TA 06/30/22 $ 19M 012% $ OM 0.00% 12/31/09 $292M 611% —§ 78M 2.01% ACL-Loans to Total Loans Banner Peer Top Quartile Peer Median Peer source: Group 1 ($108 and oven) Bank Holding
Slide 24: Reconciliation of non-GAAP measures
INNER Reconciliation of non-GAAP measures = $ Thousands Quarters Ended Jun 30,2022 Mar 31,2022 Jun 30,2021 Income before provision for income taxes (GAAP) $ 59,597 $ 53,847 $ 67,522 (Recapture)/Provision for creditlosses 4534 (6,961) (10,256) Pretax pre provision earnings (non-GAAP) 64,131 46,886 57
Slide 25: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands Quarters Ended 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 REVENUE FROM CORE OPERATIONS Net interest income before provision for loan losses $129,011 $ 118,654 $ 121,530 $130,146 $127,554 $117,661 $ 121,437 Total non-interes
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: 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 26