Slide 1: Second Quarter 2021
NNER ‘CORPORATION Second Quarter 2021
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: Second quarter 2021 highlights
Second quarter 2021 highlights Loan growth of 2.3% (9.2% annualized), not including PPP Total loan originations (excluding HFS and PPP loans) were $1.0 billion Core deposits grew 1.0% (4.0% annualized), and represent 94% of total deposits Net interest margin (tax equivalent basis) expanded by 8 basi
Slide 4: Building value at Banner
Building value at Banner Building value for stakeholders . INNER by focusing on core banking competency that is sustainable through change events and scalable with acquisition growth NA Banner Corporation Recent Additions Assets $16.28 Deposits $13.68 Loans $ 9.78 Offices 155 Employees 000 @ Banner
Slide 5: Community, Diversity & Sustainability
Community, Diversity & Sustainability aa Community Meeting the needs of low and moderate income businesses and consumersin our footprint + Provided financial literacy through first time home buyer education classes (over 3,500 attendees since 2019) + During the first six months of 2021, Banner inves
Slide 6: Building value at Banner
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 7: Growing revenue ... in a good place since 1890
Growing revenue ... in a good place since 1890 pase Population Estimate tmittions) 2020 2030" Growth shington 77 8 + Banner's 3 northern states are among the Dreaen As) 6 fastest growing in the Tdaho 1824 country. California 39.6 407 Region 53.4 55.9 United States 329.5 3461 Strong Population Growth
Slide 8: Growing revenue ... in an ideal geography
Growing revenue ... in an ideal geography Powerful and diverse economic drivers From Banner's Pacific Northwest base to ... Technology Microsoft (ted amazon a#icron Géxpedia Manufacturing 75 gamer (intel) PACCAR Consumer amazon €OsTcO ® BE norvstrom Natural A — Resources Weyerhaeuser a = Agriculture
Slide 9: Growing revenue: super community bank value proposition
Growing revenue Offer 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 10: Growing revenue: guard and improve reputation
Growing revenue Guard and improve reputation Residential Diversity and Inclusion Leadership Award Mortgage Bankers Association 2020 Recognized by Forbes (5'" consecutive year) 2017-2021 "America’s 100 Best Banks" and 2020 & 2021 "World's Best Banks” Best Regional Bank in the Pacific Region of the U.
Slide 11: Grow transaction deposit accounts
Growing revenue Grow transaction deposit accounts Non-Interest interest Bearing Quarter ___Bearing Ending Number Number 06/30/21 319,805 159,387 12/31/09 71178 50,955 + Excluding all acquisitions, the number of trans- action deposit accounts has grown ~120% since 2009, about a 7.5% compound annual g
Slide 12: Grow core revenue and noninterest income
INNER Growing revenue ae Grow core revenue Grow noninterest income! uarter Quarter um uarter Quarter um Ending Amount ‘Amount Ending Amount Amount 06/30/21 $150 $583 06/30/21 $ 222m 9.1m 12/31/09 $450 sim 12/34/09 S$ 66m $34.1m 150 230 28% 2 Other income z other Fees q Net Interest Income Mortgage B
Slide 13: 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-deposit r
Slide 14: Improve earning asset mix and funding mix
Protecting net interest margin Improve Earning Asset Mix 12/31/2009 06/30/2021 Securities, Securities & Other Com! 8 Ag Investments Com 8 Ag Consumer Res Mortgage CRE CRE Investor nstiDev CRE Investor Res Mortgage ‘onstiDev Improve Funding Mix 12/31/2009 06/30/2021 Non-Interest e Beating FHLB, Sub D
Slide 15: Grow core deposits, reduce deposit costs
Protecting net interest margin Grow core deposits Redluce deposit costs Quarter Quarter —__Guarter__ ETM Ending Balance Ending Amount Rate Amount ‘Rate oa/z0/21 S12.764 oe/z0/21§ 3.0m 12/34/09 $1924 42/309 177m 16 100% 8% g Noncore Deposits Loan Yield s Core Deposits 90% Deposit Cost Bia % aux (Core
Slide 16: Loan-to-deposit ratio and noncore funding dependence
Protecting net interest margin 50% 100% 40% — Loan-to-Deposit Ratio 80% 30% Net Noncore Funding Dependence = Banner 60% 20% Peer Median 40% 10% Peer Top Quartile 20% 0% 0% s SEPP PPO 2 FFP ss PPO PIE Soe ws Peer source: Group 1 (S108 and over), Bank Holding Company Performance Report (BHCPR] Nationa
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 06/30/21 $128M 3.45% $488m 3.55% 12/31/09 $ 39M 3.53% $146m 3.36% Net Interest Margin — Banner Peer Top Quartile Peer Median Peer source: Group 1 ($108 and oven) Bank Holding C
Slide 18: Conservative investment portfolio
Conservative investment portfolio INNER Investment Portfolio Composition ($3.76 billion} Quarterly New Purchases: Yields (As of 6/30/21, SMM} agerey, 595 sur 3% ines, $5 im 78% of investiments are Agency MBS/CMO or AAA rated rapa 350 Less than 3% non-rated investments, principally CRA investments We
Slide 19: 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: Control core operating expense
Spending carefully Control core operating expense quieter Quarter LT. Ending “Amount “Amount 060/21 $ 92m $371m 12/31/09 $ 31m $132 100% Efficiency Ratio — Banner 80% 70% 60% Peer Top Quartile Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport (BHCPR] Nationalinformation Cen
Slide 21: 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 appr
Slide 22: Minimize nonperforming assets
Maintaining a moderate risk profile aa INNER Minimize nonperforming assets ‘Quarter NPLs REO Ending Amount %ofTA Amount % of TA 06/30/21 $ 31M 0.32% $§ 1M 0.01% 12/31/09 $214mM 5.53% § 78M 2.01% ACLL to Total Loans Banner Peer Top Quartile Peer Median Peer source: Group 1 ($108 and oven) Bank Holdin
Slide 23: Pandemic risk: PPP response
Pandemic risk: PPP response pos (Program through 6/30/21) PPP Loans by Industry Wholesale Other SBA Paycheck Protection Program Wade: 10% Cons ants ent onde Initially funded 9,103 applications and $1.158 in loans % Admin Sr Funded 4,819 applications and $463.7MM in second round 90% existing Banner c
Slide 24: Allowance for credit losses
Allowance for credit losses Fisses Day 1 CECI adjustments Change assessment: lm Portfolio Economic factors Changes to allowance I Net charge-offs ACL-Loans excluding PRP 1-90% @ Provision 1.81% cL: Loans ros 78 @o| 669) Ga) oa) 1673, (7 G5) G2) @o)1sa 36 aie) 01) (ex) 1480 AGL- Unfunded Commitments
Slide 25: Maintain appropriate risk capital
Maintaining a moderate risk profile Maintain appropriate risk capital Total Quarter Capital = TCE/TA Ending Ratio 06/30/21 14.62% 8.09% 121/09 9.62% 5.87% 18% Tier 1 Leverage 16% — Banner 14% 12% 10% 8% Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport (BHCPR] Nationalinfor
Slide 26: 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: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands Income before pro (Recapture)/Provi Pretax pre provision eart ion for income taxes (GAAP) ion for credit losses ings (non-GAAP) Exclude net gain on sale of securities Exclude net change in valua carried at f Exclude acqui: value n for finan: jon-relate
Slide 28: 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 27