Banner Corporation · NASDAQ:BANR
Banner — Q3 2022 Earnings Presentation
27 slides from Banner's earnings presentation, Oct 19, 2022
Slide 1: Third Quarter 2022
NNER ‘CORPORATION Third 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: Third quarter 2022 highlights
Third quarter 2022 highlights Loan growth of 3.9% (15.5% annualized) Total loan originations (excluding HFS) were $989 million Core deposits grew 1.7% annualized, and represent 95% of total deposits Net interest margin (tax equivalent) increased 41 basis points to 3.85% Efficiency ratio (adjusted, n
Slide 4: Banner Forward progress update
INNER Banner Forward progress update Operating Leverage Trend! a4 21 re Expense im re Revenue FTE Banner Forward Program Initiative implem 82% 50% + Core Expense reflects non-core expense adjustments including restructuring costs and legal settlernents: Core Revenue excludes residential mortgage gai
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 $14.28 Loans S$ 9.98 ey Offices 137 $048 Employees 900 50. 3B $0.28 10
Slide 6: Environmental, Social & Governance
INNER Environmental, Social & Governance iauag 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 Provided
Slide 7: 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 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: 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 pr Core revenue? Noninterest income? uarter Quarter um uarter Quarter um Ending Amount Amount Ending ‘Amount ‘Amount 09/30/22 $ 161m $ 591m 09/30/22 $ 15.0m $75.1 12/31/09 S45 $i77m 12/34/09 S$ 66m $ 311m 2 | other income Bo) ctnertees Deposit rasa 3 150 | Wet imerestincome Mon
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 FHLB, Sub - Debt ® ther_ 9/30/2022 9/30/2022 Interest-bearing Deposits Loans millions ‘int curities Non-Interest 0 interest Bearing 9 San Interest Bearing CDs 2 _Sxilions Balin bps) and Savings: Subtotal Deposits ? stoens, __ 3.72
Slide 15: Protecting net interest margin: Grow core deposits
Protecting net interest margin Grow core deposits Redluce deposit costs Quarter Quaiter Quarter Lm Ending Balance Ending Amount ‘Amount 09/30/22 § 24m S 89m 12/31/09 $77 3 832m Noncore Deposits Core Deposits — Core Deposit % Loan Yield Deposit Cost — Loan-Deposit Spread 14
Slide 16: Protecting net interest margin
INNER Protecting net interest margin = sox Deposits 2 Loans 43 100% a 40% Net Noncore Funding Dependence 12 pe Banner: = Loan-to-Deposit Ratio 30% Box 10 20% 7 Peer Median 60% 5 10% é 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 (S10
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 09/30/22 $146m 3.78% $516m 3.34% 12/31/09 $ 39M 3.53% $146m 3.36% Net Interest Margin — Banner 45% 4.0% Peer Top Quartile 3.0% Peer Median Peer source: Group 1 ($108 and oven)
Slide 18: Well positioned for rising rates and conservative investment portfolio
Well positioned for rising rates and conservative investment portfolio INNER Investment Portfolio Composition ($4.16 billion} 2 Month Net Interest Income Shock ($MM), % Change eas 790 «10% ines, $5 Agere, 5187 81% of investments are Agency MBS/CMO or AAA rated 3.4% non-rated investments, principally
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: Control core operating expense
INNER Spending carefully Control core operating expense a 100 other 100% Quarter ___Quarter_ Guu) & Info Services Ending Amount Amount = Occupancy _ 09/30/22 $ 92M $351M 80 Companstion 12/31/09 $ 31m $132M we 8 70% Efficiency Ratio — Banner Efficiency Ratio 40 20 Peer Top Quartile 20% Peer source: G
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 (Change lessessment $150.3 mm Portola $1434 gy _-= $286 Economictacters pa Changes to all € 5149 sis.2 3 8 I Net charge-offs F 45 561 Pi 06 mmm Provision “g a “$9,341 368.6 2979 $Milions ACL-Loans 128.7 63/1359 PF FF FSH SF SO SF SF ACL-Un
Slide 23: Maintaining a moderate risk profile
Maintaining a moderate risk profile Minimize nonperforming assets ‘Quarter NPAs REO Ending Amount %ofTA Amount % of TA 09/30/22 $ 16M 010% $ OM 0.00% 12/31/09 $292M 611% —§ 78M 2.01% ACLL to Total Loans Banner Peer Top Quartile Peer Median Peer source: Group 1 ($108 and oven) Bank Holding Company Pe
Slide 24: Reconciliation of non-GAAP measures
INNER Reconciliation of non-GAAP measures = $ Thousands Quarters Ended PRE-TAX PRE-PROVISION EARNINGS Sep 30, 2022 Jun 30, 2022 Sep 30,2021 Income before provision for income taxes (GAAP) $ 60,907 $ 59,597 $ 61,973 (Recapture)/Provision for credit losses 6,087 4,534 (8,638) Pretax pre provision earn
Slide 25: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands REVENUE FROM CORE OPERATIONS Net interest income before provision for loan losses Total non-interest income Total GAAP revenue Exclude net (gain) loss on sale of securities Exclude change in valuation of financial instruments carried at fair value Excl
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