Banner Corporation · NASDAQ:BANR
Banner — FIG Partners' 4th Annual West Coast Bank CEO Forum (February 2013)
31 slides from Banner's conference presentation, Feb 7, 2013
Slide 1: Building Value at Banner
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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: A Good Place to Be... Since 1890
@<: | Good Place to Be... Since 1890 Assets $4.3B Deposits 3.5B Loans 3.2B Offices 88 Employees 1,050
Slide 4: Market Branches, Loans, Deposits and Share
Market Branches| Loans |Deposits|/Share| Columbia Basin} 26 |$0.9B/$ 1.38) 17% E. Washington 18 |$0.58/$0.6B) 9% Puget Sound 30 |$1.1B/$1.2B) 2% a Portland 8 |$0.5B/$0.3B; 1% Boise 6 |$0.2B/$0.1B; 2% ‘A 27 new branches baa dl since 2005 eo f a Sy - » em rRNA Ml jou oo Mafia orm rs oan | dees SPP ——
Slide 5: Building on the Turnaround
€- Building on the Turnaround Building value at Banner: * Growing sustainable revenue ¢ Enhancing shareholder value —— Building Value at Banner
Slide 6: Building on Strengths
€- Building on Strengths Growing sustainable revenue: * Geographic advantage * Improved reputation * Expanding revenue channels ¢ Gaining market share —— Building Value at Banner
Slide 7: Economically Ideal Geography
Economically Ideal Geography yo Powerful and diverse economic drivers Technology | Microsoft (int tel) amazon d@icron @Expedia Manufacturing Q2aeING (intel) PACCAR consumer | amazon ©OsSTcO ® GE NORDSTROM Logistics Port seme __ porto W 6% PORT OF PORTLAND ‘“ of Seattle we weet Expeditors oi Forest A
Slide 8: Strong population growth forecast
Idaho Region / I 2002 to 2012 2012 to 2030 Rank: 12th 1 a. Laren 6th gth gth 5th gth 10% 20% 30% —— Building Value at Banner ———————_- Strong population growth forecast 2012 Estimate (Millions) United States | 313,914 Washington | 6,897 Oregon | 3,899 Idaho | 1,596 Region | 12,392 Sources: U.S. Cens
Slide 9: Strong income growth
+ Real GDP United States Personal Income Idaho Region 0% 10% 20% 30% 40% 50% —— Building Value at Banner Strong income growth 2001-2011 Per Capita Personal 2011 Income United States 42,070} 41,560 Washington 45,520) 43,878 Oregon 48,098| 47,527 Idaho 32,469| 32,881 Region 44,649| 40,458 Source: U.S.
Slide 10: Building on Improved Reputation
yo Building on Improved Reputation Received highest ranking: S 1 Retail banking customer satisfaction, Northwest necion J.D. Power and Associates’ 2012 Retail Banking Satisfaction StudySM Received highest rating: Bankrate.com SAFE & SOUND® Star Ratings Released from enhanced regulatory oversight (Ap
Slide 11: 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 12: Net Interest Income and Other Income
Net Interest Income Other Income Date Amount Quarter Ending 12/31/12) $ 54m 7.8% 12/31/09} $ 45m 5.8% Twelve Months Ending 12/31/12) $ 211M 7.8% 12/31/09} $ 177M -0.6% — Building Value at Banner ———————_ i
Slide 13: Deposit Fees, Mortgage Banking and Other Fees
Deposit Fees Mortgage Bnkg Other Fees Date Amoun Quarter Ending 12/31/12) $ 6.4m 9.1% 12/31/09) $ 5.3m 1.6% Twelve Months Ending 12/31/12 | $ 25.3M 10.0% 12/31/09 | $ 21.4 -0.7% —— Building Value at Banner ———————_- 12
Slide 14: Grow transaction deposit accounts
Non-Int Bearing Grow transaction Interest Bearing deposit accounts Quarter Ending Non-Interest Bearing Accounts umber | YOYA Thousands 12/31/12 | 107,445 12.8% 12/31/09 71,178 8.0% Interest Bearing Accounts 12/31/12} 64,045 5.5% 12/31/09 50,955 1.1% Excludes CD’s —— Building Value at Banner B
Slide 15: Maintaining Earnings Momentum
ies 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 ——————_ 14
Slide 16: Asset Yields, Funding Costs and NIM
Asset Yields Funding Costs =— NIM —— Building Value at Banner ———————_- Maintain solid net interest margin Date Amount | Perce Quarter Ending 12/31/12) $ 42m 4.09% 12/31/09} $ 38m 3.49% Twelve Months Ending 12/31/12] $ 168m 4.17% 12/31/09| $ 145m 3.33% 15
Slide 17: Loan Yields and Deposit Costs
Loan Yields Deposit Costs —— Building Value at Banner ———————_- Reduce deposit costs Date Amount | Perce Quarter Ending 12/31/12) $ 3.1 0.35% 12/31/09 | $17.7 1.83% Twelve Months Ending 12/31/12} $15.1 0.44% 12/31/09 | $ 83.2 2.21% 16
Slide 18: Protecting Net Interest Margins: Improve funding mix
Protecting Net Interest Margins 5 Improve funding mix Noncore Deposits a Core Deposits with lower cost core deposits 12/31/12|$ 2,529m| 71% 12/31/09|$ 1,924m| 50% — Building Value at Banner ———————_ v
Slide 19: Loan to Deposit Ratio
4.5 L/D Ratio— panne Maintain loan-to- deposit ratio of 90-95% 12/31/12 91% 12/31/09 98% Peak 108% —— Building Value at Banner 18
Slide 20: Net Interest Margin vs Peers
5.0% Maintain solid Net Interest Margin tint t z Peer 75‘ Percentile het interest margin 4.5% Peer 75% Pctl 12/31/12} 4.09% 4.0% 09/30/12] 4.22% | 4.08% 12/31/09| 3.49% | 3.99% 3.5% 3.0% Source: Bank Holding Company Performance Report ey BHCPR — Peer Group 2 ($38-$108) 2.5% q y H National Informatio
Slide 21: Improving Operating Efficiency
€- Improving Operating Efficiency Other Efficiency Ratio Personnel 95% operating expense Millions bh () Date Amount | YOYA Quarter Ending 85% 12/31/12} $ 34m 1.4% 12/31/09) $ 31M | -10.0% Twelve Months Ending 12/31/12) $ 136m 2.0% | 65% | | 12/31/09] $ 132m | -2.6% — Building Value at Banner ———————
Slide 22: Maintaining Moderate Credit Risk
Maintaining Moderate Credit Risk OREO = NPL’s ae Reduce nonperforming —— Building Value at Banner loans and OREO eee Balance | Percent nding Nonperforming Loans 12/31/12) $ 34m 1.1% 12/31/09) $ 214m 5.5% Peak $ 243M 6.2% Other Real Estate Owned 12/31/12) $ 16m 0.5% 12/31/09) $ 78M 2.0% Peak $ 107M 3
Slide 23: Maintaining Moderate Credit Risk: Earning Asset Mix
€- Maintaining Moderate Credit Risk Improved Earning Asset Mix 12/31/2012 12/31/2009 Securities Securities aos 19% Const/Dev Const/ Dev —— Building Value at Banner ——————_ 2
Slide 24: ALLL to Loans
3.5% ALLL to Loans Peer 75 Percentile 3.0% Maintain appropriate loan loss reserves Quarter Peer Ending 75% Pctl ALLL to Loans Banner | 2.5% 12/31/12} 2.39% 09/30/12 2.45% 2.33% 2.0% 12/31/09 | 2.51% 2.66% 1.5% —— Building Value at Banner Source: Bank Holding Company Performance Report BHCPR — Peer G
Slide 25: ALLL to NPLs
250% 200% 150% 100% 50% —— Building Value at Banner Maintain appropriate loan loss reserves Peer 75% Pctl ALLL to NPLs Quarter Ending Banner | 12/31/12 225% 09/30/12 204% 131% 12/31/09 45% 93% Source: Bank Holding Company Performance Report BHCPR — Peer Group 2 ($3B-$108) 24
Slide 26: Retaining Risk-Appropriate Capital
Retaining Risk-Appropriate Capital 20% a ° ° Maintain solid capital position Tier 1 Leverage Ratio Total Capital TCE/Tangible Assets Tier 1 Leverage 12/31/12} 12.74%| 11.80% 12/31/09 9.62%] 5.87% Low 8.80%] 5.82% Millions —_ TCE/TA 600 10% 400 5% 200 —— Building Value at Banner 25
Slide 27: Retaining Risk-Appropriate Capital: Tier 1 Leverage
Retaining Risk-Appropriate Capital 20% 15% 10% 5% Tier 1 Leverage Ratio Peer 75¢ Percentile —— Building Value at Banner Manage capital prudently Quarter Peer Ending 75% Pctl 12/31/12 | 12.74% 09/30/12 | 14.29% | 11.39% 12/31/09 9.62% | 10.17% Retired Perpetual Preferred Stock during 2” half of 2012
Slide 28: Retaining Risk-Appropriate Capital: TCE to Tangible Assets
Retaining Risk-Appropriate Capital 20% 15% 10% 5% TCE to Tangible Assets Peer 75 Percentile —— Building Value at Banner Manage capital prudently Quarter Peer Ending 75% Pctl 12/31/12 | 11.80% 09/30/12 | 11.47% | 10.50% 12/31/09 5.87% 8.28% Source: Bank Holding Company Performance Report BHCPR — Peer
Slide 29: TBV / Share and Stock Price
TBV/ Share Stock Price Per Share Pre Capital Raise (2010 Q2) 12/31/12 | $ 30.84 | $ 25.88 06/30/10 | $ 15.07 | $ 29.03 Stock Price/ TBV 12/31/12 119% 06/30/10 52% —— Building Value at Banner * Average closing price for the month following quarter-end. 28
Slide 30: TBV/Share, Stock Price and Price to Earnings
4.00 RERE TBV/Share | 7° Attain solid multiple 450 Stock Price 35 on earnings 3.00 + 30 Per Share 2.50 25 Pre Capital Rais ne eee eae 12/31/12) $ 30.84 | $ 3.15 2.00 ; 20 | | 06/30/10| $ 15.07 | $ -8.06 1.50 15 Stock Price/ TTM Earnings 12/31/12 9.8x 1.00 10 06/30/10 n/m 0.50 5 * Average closing pri
Slide 31: 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 — FIG Partners' 4th Annual West Coast Bank CEO Forum (February 2013) on 6ix