Banner Corporation · NASDAQ:BANR
Banner — Sandler O'Neill Partners Bank CEO Forum (February 2015)
27 slides from Banner's conference presentation, Feb 4, 2015
Slide 1: Building Value at Banner
NNER JCORPORATION Building Value at Banner KY ber LT FIG Partners iS Cr BANK CEO FORUM
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
WA Good Place to Be... Since 1890 Assets $4.78 Deposits 3.98 Loans 3.88 Offices 94 Employees 1,100
Slide 4: A Place to Grow
€- A Place to Grow Market — |Branches, Loans [Deposits Sh: ColumbiaBasin| 26 |$ 0.88|$ 1.3.8) 14% E, Washington | 18 _|$ 0.58|$ 0.68 Puget Sound | 30 |$1.68|$1.38) 1% W. Oregon 14 |$0.78|$0.58| 1%| Boise 34 new branches since 2005 Building Value at Banner
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 (' fel) amazon gavicron @Expedia Manutacturing 7) BOEING (intel) PACCAR Consumer | amazon COSTCO B dE NORDSTROM [rota WWE gece Cfstare T&M Expeditors: @ronr or ronr.ano Forest A prodaicts, Weyerhaeuser fishe
Slide 7: Economically Ideal Geography: Strong Population Growth
€- Economically Ideal Geography Strong population United States cab preted rowth forecast 2013 to 2030 2013 Estimate ee (Thousands) ~ cee: wie Siatees eae Washington 6,971) _— opie Oregon 3,930 Idaho 1,612 Region 12,513 | 0% 5% 10% 15% 20% 25% See Building Value at Banner ‘
Slide 8: Building on Improved Reputation
€- Building on Improved Reputation Included in Forbes 2014: “America’s 50 Most Trustworthy Financial Companies” Received highest rating: Bankrate.com SAFE & SOUND@ Star Ratings Named “Community Lender of the Year” for two most recent years: SBA Seattle/Spokane District - Small Business Awards Releas
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 Net Interest Income Grow core revenue Other Income Date | Amount | YoYA Quarter Ending 12/31/14| $ 59m | 14.2% 12/31/09| $ 45m | 5.8% 12/31/14| $ 224" [12/31/09 | $ 1774 Building Value at Banner F
Slide 11: Expanding Revenue Channels: Grow Deposit Fees
€- Expanding Revenue Channels oie : Deposit Fees Other Fees Grow deposit fees 3 | hotoave tins = Date | Amount | YoYA 10 8 6 Twelve Months Ending a‘ 12/31/14 | $ 30.6 14.9% 12/31/09| $ 21.4" 0.7% 2 ° $ 2 oe igh oh gl PF i Building Value at Banner a
Slide 12: Gaining Market Share
hee Gaining Market Share 3725 | Non-tnt Bearing Grow transaction ¥ 200 | Interest Bearing deposit accounts 8 Quarter Evs Phding | Number | YovA Non-Interest Bearing Accounts 12/31/14| 140,107 | _ 5.5%" 12/31/09| 71,178 | 8.0% Interest Bearing Accounts 12/31/14] 74,886 | 2.3% 12/31/09| 50,955 | 1.1%
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 Funding Costs Building Value at Banner Maintain solid net interest margin Date | Amount | Percent Quarter Ending 12/31/14] $ 47 | 4.08% 12/31/09 $ 38m | 3.49% Twelve Months Ending 12/31/14] $ 180m | 4.07% 12/31/09] $ 145m | 3.33% 13
Slide 15: Protecting Net Interest Margins: Reduce Deposit Costs
€- Protecting Net Interest Margins a gm |g Devonicorts ‘am spend Reduce deposit costs Date | Amount | Percent 6% Quarter Ending 5% 12/31/14| $ 1.8m 0.18% lane 12/31/09 | $ 17.7m | 1.83% ae Twelve Months Ending 12/31/14| $ 7.6m 0.20% 2% 12/31/09 § 83.2m | 2.21% Building Value at Banner a
Slide 16: Protecting Net Interest Margins: Core Deposits
€- Protecting Net Interest Margins Improve funding mix with lower cost core deposits Noncore Deposits Core Deposits oe oe SEPP PPS o FF FFF F 8 Billions . Quarter Bhaing | Balance | Percent [s2pie|¢ 3.1208] 12/31/09 | $ 1,924 | 50% o x Building Value at Banner is
Slide 17: Protecting Net Interest Margins: Loan to Deposit Ratio
€- Protecting Net Interest Margins 115% Loans L/D Ratio — Deposits 110% Quarter 105% Quarter | percent 00% a 12/31/14 | 98% 12/31/09 | 98% ome a Peak | 108% 90% 20 85% 1s Building Value at Banner %
Slide 18: Protecting Net Interest Margins: Peer Comparison
€- Protecting Net Interest Margins Net Interest Margin Peer 75" Percentile Maintain solid net interest margin Peer 75 Pet Quarter Ending 12/31/14 09/30/14 12/31/09 Banner 4.07% | 4.04% 3.53% | 3.99% Baik eldng Company Peromance tapert aco ee vy (8-H) Building Value at Banner -
Slide 19: Improving Operating Efficiency
€- Improving Operating Efficiency other Efficiency Ratio Control core Fancanel 95% operating expense Millions & Date | Amount | YoYA Quarter Ending 85% 1zysii4| $ 38m | 8.9% 12/31/09| $ 31m | -10.0% 75% | | Twelve Months Ending 12/31/14] $ 1494 | 6.9% | ese | [12/31/09] $ 132m | -2.6% 10 ° 55% ars °
Slide 20: Maintaining Moderate Credit Risk
twee Maintaining Moderate Credit Risk e Reduce nonperforming g ‘OREO 3 NPL's bmiciccms loans and OREO Quarter Ending Nonperforming Loans 17/31/14| $ 17m | 0.4% 12/31/09| $ 214m | 5.5% Balance | Percent Peak | $ 243m | 6.2% Other Real Estate Owned | 12/31/14] $ 3m | 0.1% 12/31/09| $ 78m | 2.0% Peak |
Slide 21: Maintaining Moderate Credit Risk: Improved Earning Asset Mix
€- Maintaining Moderate Credit Risk Improved Earning Asset Mix 12/31/2014 12/31/2009 Securities 14% Res Const/Dev Building Value at Banner a
Slide 22: Maintaining Moderate Credit Risk: Loan Loss Reserves
twee Maintaining Moderate Credit Risk Maintain appropriate loan loss reserves ALLL to Loans Peer 75° Percentile Quarter Peer Banner Ending 75 Pett ALLL to Loans [12/31/14] 1.98% | 09/30/14} 1.95% 1.56% 12/31/09 | 2.51% 2.66% Bonk eld Company Pecommance Rapet Sh ear are 2 (98-Fi08) Building Value at
Slide 23: Retaining Risk-Appropriate Capital
€- Retaining Risk-Appropriate Capital {20% ir Tier 1 Leverage Ratio Malntaln|colid TCE/Tongible Assets capital position Quarter | Tier 4 i 15% Ending | Leverage | TE/ TA 12/31/14| 13.41% | 12.30% 12/31/09| 9.62% | 5.87% ae ime: Low | 8.80% | 5.82% 5% 200 Building Value at Banner a
Slide 24: Retaining Risk-Appropriate Capital: Peer Comparison
€- Retaining Risk-Appropriate Capital Manage capital Peer 75" Percentile prudently Quarter Peer Banner Ending 75” Pett TCE to Tangible Assets [12/31/14| 12.30% | 09/30/14 | 12.00% | 10.38% 12/31/09| 5.87% | 8.28% Bonk eld Company Pecommance Rapet Sh ear are 2 (98-Fi08) Building Value at Banner di
Slide 25: Enhancing Shareholder Value
€- Enhancing Shareholder Value 50 TBV/ Share Stock Price 40 30 Pre capt ase ‘aaioee} 20 10 Building Value at Banner Attain premium to tangible book value Quarter Ending Stock Price* Per Share TEV 12/31/14 $ 40.88 | $ 29.68 06/30/10 $ 15.07 | $ 29.03 Stock Price/ TBV 12/31/14 138% 06/30/10 52% * Aver
Slide 26: Enhancing Shareholder Value: Multiple on Earnings
€- Enhancing Shareholder Value 4,00 2.00 1.00 Attain solid multiple on earnings Quarter Ending Stock | TT Price® | Earnings Per Share 12/31/14 $ 40.88 | $ 2.79 50 TBV/ Share aes Stock Price 40 30 Pr cant ate ies 20 10 ° ae POP Building Value at Banner 06/30/10 $ 15.07 | $ -8.06 ‘Stock Price/ TTM Ear
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 banking franchises based in Washington. + Banner has the management depth, organizational model and operational skill to sustain earnings
Banner — Sandler O'Neill Partners Bank CEO Forum (February 2015) on 6ix