Banner Corporation · NASDAQ:BANR
Banner — Sandler O'Neill + Partners conference, November 5-7, 2013
27 slides from Banner's conference presentation, Nov 5, 2013
Slide 1: Building Value at Banner
NNER ICORPORATION Building Value at Banner SANDLER O’NEILL + PARTNERS November 5 — 7, 2013
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: Banner at a glance: assets, deposits, loans, offices, employees
Assets $4.3B Deposits 3.5B Loans 3.38 Offices 88 Employees 1,050
Slide 4: A Place to Grow
nee Al Place to Grow Til Market _|Branches| Loans |Deposits|Share wot Cy , i ‘olumbiaBasin| 26 |$0.98/$1.3B| 17% igton E. Washington 18 |$0.58\/$0.6B8) 9% Puget Sound 30 |$1.28/$1.28) 2% .|Portland 8 |$0.58/$0.3B| 1% Boise 6 |$0.28/$0.1B; 2% 28 new branches since 2005 {womans Bige se ~ os pene NE me
Slide 5: Building on Strengths
€- Building on Strengths Growing sustainable revenue: * Geographic advantage * Improved reputation * Expanding revenue channels * Gaining market share — Building Value at Banner
Slide 6: Economically Ideal Geography
€- Economically Ideal Geography Powerful and diverse economic drivers Technology | Microsoft’ (in nteD amazon gvicron GExpedia Manufacturing QsaENG (intel) PACCAR Consumer amazon Cosrco cia GE NORDSTROM sranovexs Logistics Port seme port ¥ & “ of Seattle Te ucatt Expeditors Ss PORT OF PORTLAND Fores
Slide 7: Economically Ideal Geography: population growth
see Economically Ideal Geography I Strong population United States 200202012 growth forecast 2012 to 2030 a 2012 Estimate Rank: 12th (Millions) Washington — 6th United States | 313,914 | Washington 6,897 Oregon 3,899 Idaho 1,596 Region 12,392 Sources: U.S. Census Bureau WA Office of Financial Manage
Slide 8: Building on Improved Reputation
€- Building on Improved Reputation 2 ° Qs Received highest ranking: Retail banking customer satisfaction, Northwest == J.D. Power and Associates’ 2012 and 2013 Retail Banking Satisfaction StudySM Received highest rating: Bankrate.com SAFE & SOUND® Star Ratings Released from enhanced regulatory overs
Slide 9: 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 10: Expanding Revenue Channels: Grow core revenue
Expanding Revenue Channels 2 oo) iguinikerestineonie Grow core revenue = Other Income = 20 Date Amou A 40 Quarter Ending 09/30/13| $ 52m | -3.5% 30 12/31/09| $ 45m | 5.8% Twelve Months Ending 20 09/30/13 | $ 211M 1.6% 12/31/09 | $ 177M -0.6% 10 . a e e e PP r —— Building Value at Banner ———————— 9
Slide 11: Expanding Revenue Channels: Grow deposit fees
€- Expanding Revenue Channels » a Millions e N 10 Deposit Fees Mortgage Bnkg Other Fees Grow deposit fees Quarter Ending 09/30/13] $ 7.0m 4.5% 12/31/09| $ 5.3m 1.6% Twelve Months Ending 09/30/13 | $ 26.3M 6.5% 12/31/09 | $ 21.4 -0.7% — Building Value at Banner 10
Slide 12: Grow transaction deposit accounts
Thousands Non-Int Bearing 175 Interest Bearing : 150 = 125 ; 100 -- : 75 L 50 > 25 oO ' ' 1 of 7 a . a x S »~ nod + yyy wv ” _ — Building Value at Banner Grow transaction deposit accounts YoYyA Non-Interest Bearing Accounts 09/30/13 | 117,152 | 12.0% 12/31/09 71,178 8.0% Interest Bearing Accounts 09
Slide 13: 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 12
Slide 14: Protecting Net Interest Margins
Protecting Net Interest Margins Asset Yields Maintain solid net interest margin Funding Costs — NIM Quarter Ending 09/30/13) $ 42m | 4.09% 12/31/09] $ 38m 3.49% Twelve Months Ending 09/30/13| $ 167M 4.14% 12/31/09 | $ 145 3.33% —— Building Value at Banner 3
Slide 15: Protecting Net Interest Margins: Reduce deposit costs
€- Protecting Net Interest Margins Loan Yields Loan-Deposit Deposit Costs =—_—= Spread — Building Value at Banner Reduce deposit costs Date | Amount Percent Quarter Ending 09/30/13] $ 2.3m | 0.26% 12/31/09| $17.7m | 1.83% Twelve Months Ending 09/30/13} $ 10.6m 0.30% 12/31/09 | $ 83.2 2.21% 14
Slide 16: Protecting Net Interest Margins: Improve funding mix
€- Protecting Net Interest Margins = Improve funding ua | | | | | | | Hones Deposits mix with lower cost Core Deposits bs core deposits Quarter Ending 09/30/13} $ 2,635m| 75% 12/31/09 | $ 1,924m| 50% —— Building Value at Banner ———————— 15
Slide 17: Loans and Deposits: loan-to-deposit ratio
4.5 ry Loans L/D Ratio— Deposits - 4.0 Maintain loan-to- deposit ratio of 90-95% Quarter Ending Percent 09/30/13 93% 12/31/09 98% Peak 108% — Building Value at Banner 16
Slide 18: Protecting Net Interest Margins: peer comparison
mex Protecting Net Interest Margins 5.0% » . ~ = Net Interest Margin pease eid Peer 75 Percentile ISS WML LIE | 4.5% Quarter Peer Ending Banner 75% Pctl 09/30/13 4.09% )O/ 8.0% 06/30/13} 4.20% | 4.02% 12/31/09 | 3.53% 3.99% 3.5% 3.0% Source: Bank Holding Company Performance Report 2.5% - . . BHCPR —
Slide 19: Improving Operating Efficiency
~ Improving Operating Efficiency Other Personnel Efficiency Ratio Millions b °o 20 - 10 95% 85% - 75% 65% 55% — Building Value at Banner Control core operating expense Quarter Ending 09/30/13| $ 34m 3.4% 12/31/09 | $ 31M | -10.0% Twelve Months Ending 09/30/13 | $ 138M 2.3% 12/31/09 | $ 132 -2.6% 18
Slide 20: Maintaining Moderate Credit Risk
sues Maintaining Moderate Credit Risk Reduce nonperforming loans and OREO Nonperforming Loans — Building Value at Banner 09/30/13| $ 25m 0.8% 12/31/09 | $ 214m 5.5% Peak $ 243M 6.2% Other Real Estate Owned 09/30/13 | $ SM 0.2% 12/31/09] $ 78m 2.0% Peak $ 107M 3.0% 19
Slide 21: Maintaining Moderate Credit Risk: Improved Earning Asset Mix
€- Maintaining Moderate Credit Risk Improved Earning Asset Mix 09/30/2013 12/31/2009 Securities Securities aeatiey, 19% ns Const/Dev Const/Dev —— Building Value at Banner ———————— 20
Slide 22: Maintaining Moderate Credit Risk: loan loss reserves
wes Maintaining Moderate Credit Risk 3.5% | aera z AULLee Loans Maintain appropriate Peer 75 Percentile loan loss reserves 3.0% Quarter Peer Ending Banner 75% Pctl ALLL to Loans aoe 09/30/13| 2.34% 06/30/13 | 2.34% 1.97% 22056 12/31/09 | 2.51% | 2.66% 1.5% Source: Bank Holding Company Performance Re
Slide 23: Retaining Risk-Appropriate Capital
Retaining Risk-Appropriate Capital 20% 800 Aan 5 - Tier 1 Leverage Ratio Total Capital 2 Maintain solid TCE/Tangible Assets ° capital position = Quarter Tier 1 15% | = 600 = Ending | Leverage CEA 09/30/13 | 13.63% | 12.32% 12/31/09 9.62%| 5.87% 10%. + 400 Low 8.80%| 5.82% 5% ~ —, 200 0% - ¥ oO Se MP
Slide 24: Retaining Risk-Appropriate Capital: TCE vs peers
€- Retaining Risk-Appropriate Capital 20% 4 TCE to Tangible Assets Bonade Sapital Peer 75¢ Percentile prudently Quarter Peer 15% Banner 75¢ Pctl 09/30/13 | 12.32% 06/30/13 | 12.22% | 10.22% 12/31/09 | 5.87% 8.28% 10% 5% = Source: Bank Holding Company Performance Report 0% . BHCPR — Peer Group 2 ($38
Slide 25: Enhancing Shareholder Value: TBV per Share
Enhancing Shareholder Value 48 TBV/ Share Attain premium to ee Stock Price tangible book value Quarter Stock 30 Ending Price * pay ae | Per Share OS Sage 09/30/13 | $ 37.91 | $ 27.02 20 06/30/10 | $ 15.07 | $ 29.03 15 - Stock Price/ TBV io 09/30/13 140% 06/30/10 52% 5 * Average closing price for the
Slide 26: Enhancing Shareholder Value: Stock price to earnings
wee Enhancing Shareholder Value 4.00 fe} TBV/ Share TTM EPS Stock Price, 3.50 5 3.00 30 2.50 25 Pre Capital Raise (2010 Q2) 2.00 20 1.50 15 1.00 10 0.50 5 0.00 +~—— — oO a) & av Attain solid multiple on earnings Stock Price* | Per Share T Earnings 09/30/13 | $ 37.91 $ 2.50 06/30/10 | $ 15.07 $ -8.06
Slide 27: 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 franchises based in Washington. * Banner has the management depth, organizational model and operational skill to sustain earnings momentum
Banner — Sandler O'Neill + Partners conference, November 5-7, 2013 on 6ix