Slide 1: Third Quarter 2021
NNER ‘CORPORATION Third Quarter 2021
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: Third quarter 2021 highlights
Third quarter 2021 highlights + Loan growth of 0.9% (3.6% annualized), not including PPP + Total loan originations (excluding HFS and PPP loans) were $1.1 billion + Core deposits grew 4.3% (17.2% annualized), and represent 94% of total deposits * Cash & cash equivalents increased $733 million or 50%
Slide 4: Banner Forward: Accelerating Banner Bank's strategic plan
Banner Forward: Accelerating Banner Bank's strategic plan Earlier this year we launched a comprehensive review of strategy and performance with the goal of identifying revenue growth and cost saving efficiencies across the bank, as we continue to accelerate ‘our strategic plan This fall we finished
Slide 5: Banner Forward: Financial benefits
Banner Forward: Financial benefits (in SMM) Ast half Q3'21 Q4'21 2022 FY 2022 FY 2023 $25 $15 Restructuring Costs “ ($2) ($4) Cost savings relative to consensus ($8) Estimated composition of cost savings Compensation Occupancy 9 20% 60% Full earn back by end of 2022, not including the expected reven
Slide 6: Building value at Banner
INNER 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 Recent Additions __ Assets $16.68 Deposits $14.28 2019 a4 2018 04 4 2015 1 Loans S 9.
Slide 7: Community, Diversity & Sustainability
INNER Community, Diversity & Sustainability — Community Banner Bank received an Outstanding Rating on its most recent Community Reinvestment Act Performance Evaluation by the FDIC in which the following were highlighted: + Agood distribution among retail customers of various sizes and income levels
Slide 8: 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 9: Growing revenue ... in a good place since 1890
Growing revenue ... in a good place since 1890 es Population Estimate tmitlions) sth Washington 77 86 + Banner's 3 northern states are among the Seton, BS) 66 fastest growing in the Idaho 1824 country. California 39.6 407 Region 53.4 55.9 United States 329.5 346.1 Strong Population Growth Forecast 2
Slide 10: Growing revenue ... in an ideal geography
Growing revenue ... in an ideal geography Powerful and diverse economic drivers From Banner's Pacific Northwest base to ... Technology Micresoft (tel) amazon (“icron Gexpedia Manufacturing Qsceme (inte PACCAR c ri costco US ME soxosivom Porta _ au PORT OF SY 6 cy SS POBTst Logistics ome TE WY PORTLA
Slide 11: 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 10
Slide 12: Guard and improve reputation
INNER Growing revenue anes Guard and improve reputation Outstanding CRA Rating FDIC 2021, most recent 3 year examination cycle Best Regional Bank in the Pacific Region of the U.S. Money 2018 & 2019* Residential Diversity and Inclusion Leadership Award Mortgage Bankers Association 2020 2020 A+ Health
Slide 13: Grow transaction deposit accounts
Growing revenue Grow transaction deposit accounts Non-Interest interest Bearing Quarter ___Bearing___ Ending Number Number 09/30/21 318,911 159,335 12/31/09 71178 50,955 * Excluding all acquisitions, the number of trans- action deposit accounts has grown ~120% since 2009, about a 744% cornpound annu
Slide 14: Grow core revenue and noninterest income
Growing revenue ss Millions Grow core revenue Grow noninterest income! ouarter Quarter i) uarter Quarter umm Ending Amount Amount Ending Amount Amount 09/30/24 $ 154m 3 588m 09/30/21 $ 235m $91L0m 12/34 S454 $7 12/34iC S$ 66m $ 311m 230 2% 159 | Other Income zg >ther Fees Net Interest Income Mortgag
Slide 15: 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 16: Protecting net interest margin: funding and earning asset mix
INNER Protecting net interest margin a Low Cost Funding Mix Earning Asset Mix 09/30/2021 9/30/2021 Interest-bearing Deposits Loans Securities, avg Yield $ Millions S$ Millions Bal (int Non-Interest a a Loans Interest Bearing eee Shd Saungss Interest Bearing 6.8158 PPP Leans CDs 86362 = Securities FH
Slide 17: Grow core deposits, reduce deposit costs
INNER Protecting net interest margin na Grow core deposits Redluce deposit costs Quarter Quarter —__Guarter__ SIM Ending Balance Ending Amount Rate Amount o9/z0/2i Si 314m os/so/a1§ 27m 008% 8 138m 12/31/09 $1924 1isiios§ T7m 188% _*§ 832m 100% 8% 2, | Noncore Deposits Loan Yield s Core Deposits 7 D
Slide 18: Protecting net interest margin
Protecting net interest margin 50% 40% Soe Net Noncore Funding Dependence — Banner 20% \ Peer Median 10% Peer Top Quartile ad doh ch ch Pod d ch do oh oh LISI I OS ISS SILO Peer source: Group 1 (S108 and over) Bank Holding Company Performance Report (BHCPR] Nationalinformation Center, Federal Reserv
Slide 19: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin ‘Quarter Quarter L™ Ending Amount Rate Amount Rate 09/30/21 $130M 3.41% $497M 3.48% 12/31/09 $ 39M 3.53% $146m 3.36% Net Interest Margin — Banner 45% 4.0% Peer Top Quartile Peer Median Peer source: Group 1 ($10Bandover} Bank Ho
Slide 20: Well positioned for rising rates and conservative investment portfolio
Well positioned for rising rates and conservative investment portfolio prssss 12 Month Net Interest Income Shock ($MM), % Change Investment Portfolio Composition ($3.92 billion) comp su46 77% of investments are Agency MBS/CMO or AAA rated 10% 3% non-rated investments. Bog ABS S207. 5 principally CRA
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: Control core operating expense
INNER Spending carefully — Control core operating expense yy 100 100% erating, &xpel 2 Other Quarter __Quarter__ Ett g Information Ending Amount Amount = Occupancy oo 09/30/21 $ 94m $372M 80 Companion 12/31/09 $ 31m $132 im 70% Efficiency Ratio 60 — Banner Peer source: Group 1 ($108 andover Bank Hol
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 a
Slide 24: Minimize nonperforming assets
INNER Maintaining a moderate risk profile aa en . 350 Minimize nonperforming assets a orale Heer Quarter ___NPls____REO Ending Amount %ofTA Amount % of TA Nonperforming Loans = 300 90/21 § 29M 018% § Im - 12/31/09 $214m 5.53% § 78M 2.01% 250 40% ACLL to Total Loans % = Banner 200 3 PeerTop Ouattile
Slide 25: Pandemic risk: PPP response
Pandemic risk: PPP response (Program through 9/30/21) SBA Paycheck Protection Program Funded 13,293 applications for $1.61Bin loans 90% existing Banner clients; 10% new clients Forgiveness processed for 10,548 loans for $1. 238 in balances PPP Loans by Geography ID Other Evaetd As of 9/30/21 Up to $
Slide 26: Allowance for credit losses
INNER Allowance for credit losses nse Day 1 CECL adjustments Change assessment: IEE Portfolio Economic factors Changes to allowance IB Net charge-offs "= Provision +++Q22021--- =+-Q32021--- 25
Slide 27: Maintain appropriate risk capital
Maintaining a moderate Maintain appropriate risk capital 20% Total Quarter Capital TCE/TA Ending _ Ratio 09/80/21 14.57% 7.86% 16% 12/31/09 9.62% 5.87% 18% Tier 1 Leverage — Banner 12% 18% 14% 8% 12% 10% 4% Peer source: Group 1 ($108 andover Bank Holding Company PerformanceReport (BHCPR] Nationalinf
Slide 28: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands Income before provision for income taxes (GAAP) (Recapture)/Provision for credit losses Pretax pre provision earnings (non-GAAP) Exclude net gain on sale of securities Exclude net change in valuation for financial instruments carried at fair value Excl
Slide 29: 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 30: 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 29