Banner Corporation · NASDAQ:BANR
Banner — D.A. Davidson Conference 2010
25 slides from Banner's conference presentation, May 17, 2010
Slide 1: Banner Corporation – D.A. Davidson Conference
Ba NNER CORPORATION Better ideas. Better banking. D.A. Davidson Conference May 13, 2010
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 measur
Slide 3: A Growing Northwest Franchise
Banner Corporation A Growing Northwest Franchise $4.6 Billion in Assets 89 Branches Three States BANNER BANK
Slide 4: Loans and Deposits
Banner Corporation Loans and Deposits (8 in millions) Total Loans $ 3,689 Total Deposits $ 3,850 BANNER BANK
Slide 5: A Large Diversified Regional Community Banking Institution
Banner Corporation A Large Diversified Regional Community Banking Institution + Third largest Washington based bank ¢ Community banking focus ¢ Long history dating back to 1890 * Strong brand recognition + Improving deposit mix + Diversified loan mix « Strong management team €- NNER BANK
Slide 6: A Scalable & Diverse Delivery Platform
Banner Corporation A Scalable & Diverse Delivery Platform + Serving the right Northwest markets * 55% of deposit customers based in stable Columbia Basin & Eastern Washington markets ¢ 40% of loans in Columbia Basin & Easter Washington markets « Expanded branch delivery platform in high growth Washi
Slide 7: What we said a year ago ...
Banner Corporation What we said a year ago ... Long Term Opportunities * Strong economic region * Great Northwest footprint * Proven loan, deposit and revenue growth . still applies. INNER BANK
Slide 8: Financial Performance
Ba NNER CORPORATION Better ideas. Better banking. Financial Performance
Slide 9: Total Loans, Net
Banner Corporation Total Loans, Net ($ in millions) The economic reality .... times changed $3,764 $3,886 $3,836 $3,593 12/05 12/06 12/07 12/08 03/09 03/10
Slide 10: Credit Quality
Banner Corporation Credit Quality Non Performing Assets have plateaued ... 6% 5% 4% 3% 2% 1% 0% ..and the mix is changing as resolutions are progressing Mmmm NPLs/Assets C5 REO/Assets ——ALLL/Loans 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
Slide 11: Credit Costs
Banner Corporation Credit Costs (Sin millions) 45 40 @ Loss Provision Bo 35 Net Charge Offs Too high ... ... but now declining 30 25 20 15 10 cht 0 T T T T T T T T 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
Slide 12: Loan Mix
Banner Corporation Loan Mix [a 3/31/2008 0 3/31/2009 3/31/2010 Millions $ 08 +159 Construction/Land ($524) 2 504 Concentration reduced from 32% to 18% 1,000 Last 12 Months ($297) 800 +241 “119 600 400 200 0 ele ele ele elo ele 3 i) i“ % cy 2» 8 N s é Ss & SS Ss oe Ss s - s ‘ Y s
Slide 13: Total Deposits
Banner Corporation Total Deposits ($ in millions) A much better story here... . ... where the franchise value exists $3,849 $3,621 S5.778 $3,628 12/05 12/06 12/07 12/08 03/09 03/10 Acquisitions and new branches ... ... maturing branches & mix changes
Slide 14: Deposit Mix
Banner Corporation Deposit Mix Solid performance & improving mix from expanded and maturing branch network Millions $ 2,500 [a 3/31/2008 0 3/31/2009 Mi 3/31/2010 2,000 +4 Retail Deposit Growth $299 Million Public Funds ($242) Million Transaction & Savings Acts $170 Million -1% 1,500 1,000 500 5 Non-
Slide 15: Net Interest Margin
Banner Corporation Net Interest Margin Stabilized Loan Yields & Sharply Declining Deposit Costs Leading to recently improving margin [Loan Yields HB Cost of Deposits TY + —Net Interest Margin 8% 7 6% + 5% + 4% + 3% + 2% 7 1% + 0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 Declining deposit costs c
Slide 16: Net Interest Margin
Banner Corporation Net Interest Margin 1Q 2010 4Q 2008 10 2009 Yield on Investments 2.31% 247% 4.00 % Interest-Earning Assets 5.29 % 5.31 % 5.63 Yo Cost of Borrowings 2.20 % 2.42 % 2.22 % Interest-Bearing Liabilities 1.73 % 1.88 % 2.50 %
Slide 17: Net Income
Banner Corporation Net Income ($ In Thousands) 10 2010 4Q 2009 10 2009 Net Int Inc After Provision 24,150 21,337 12,959 Non-interest Income 7,047 7,023 7,901 Fair Value Adjustments 677 (1,411) (3,253) Non-interest Expense 35,415 34,767 33,793 Net Income Before Taxes (3,541) (7,818) (16,186) Income T
Slide 18: Ratio Analysis
Banner Corporation Ratio Analysis Key Operating Ratios Net Interest Margin Non Interest Income/Avg. Assets* Non Interest Expenses/Avg. Assets Net Charge Offs/Avg. Loans Allowance For Loan Losses/Loans *Excluding fair value adjustments 10 2010 4Q 2008 1Q 2009 3.61% 3.49% 3.26% 0.63% 0.61% 0.71% 3.16%
Slide 19: Regulatory Capital
Banner Corporation Regulatory Capital March 31, 2010 Actual Well Capitalized Amount Ratio Amount Ratio Total Capital to Risk-weighted Assets $ 491,175 12.93% $379,980 10.00% Tier 1 Capital to Risk-weighted Assets $ 443,082 11.66% $227,988 6.00% Tier 1 Leverage Ratio $ 443,082 9.76% $226,990 5.00% Ta
Slide 20: Looking Forward: The Banner Opportunity
Ba NNER CORPORATION Better ideas. Better banking. Looking Forward The Banner Opportunity
Slide 21: Demographics By Region
Banner Corporation Demographics By Region + Banner operates in attractive regions with higher projected population growth rates than the national average Population Avg. Population Avg. Projected Total Population Change Pop. Change 2009 (actual) 2000 - 2009 2009 - 2014 Columbia Basin 783,768 Puget S
Slide 22: Demographics By Region
Banner Corporation Demographics By Region + These high growth markets also have higher projected income growth rates than the national average Income Avg. Projected Avg. Median HH Avg. HH Inc. Change HH Inc. Change Income 2009 2000 - 2009 2009 - 2014 Columbia Basin $47,146 Puget Sound 60,253 Eastern
Slide 23: Deposit Market Share By State & MSA
Banner Corporation Deposit Market Share By State & MSA Regional Deposit Market Share Number of Total Total BANR BANR Total BANR Deposits in Deposits Regional Branches Branches Region in Region Market in Region in Region ($000) ($000) Share Columbia Basin 25 $9,102,925 $1,590,208 17.5% Puget Sound 29
Slide 24: Performance Initiatives to Bolster Core Earnings
Banner Corporation Performance Initiatives to Bolster Core Earnings * Comprehensive Risk and Portfolio Management. . . . Continue portfolio review process to quickly detect and react to any deteriorating trends Aggressively manage criticized and classified relationships Aggressively manage NPAs and
Slide 25: Ba NNER
Ba NNER CORPORATION Better ideas. Better banking.