Slide 1: Third Quarter 2020
NNER ‘CORPORATION Third Quarter 2020
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: Community, Diversity & Sustainability
INNER Community, Diversity & Sustainability aa Community Meetingthe needs of low and moderate income businesses and consumers in our footprint + Provided financial literacy through first time home buyer education classes (120 classes in 2019 with over 980 attendees, and over 1,600 online attendees t
Slide 4: Pandemic risk: Industry by loan pool
Pandemic risk: Industry by loan pool INNER $ Millions TainGw AaihGe Howie Avmuana wondor8] fay Nun cucon) “Pelee eters one ees ane || mee tee || an re ss a2 as ea | tas aca |g Inesiment prope ties m3 0s mons, ns ea | arta 45202 | ages soul balance CRE mss, ge 3 zo | tana as | 880 Mutya exe 03 oo 0s
Slide 5: CECL impact and Allowance for Credit Losses
CECL impact and Allowance for Credit Losses $ Millions Allowance for Credit Losses Build Loans l Unfunded Loan Commitments HTM Securties = 180.2 ‘increases 167.0 Decreases 142.0 : a | 1 ‘| Forecast OL 2020 Forecast 022020 Forecast® 22020 Losses Losses Losses 18.2 = - BE o42n9 Dayt = Day Impact Allow
Slide 6: Pandemic risk: PPP response
Pandemic risk: PPP response {As of 9/30/20, $ in millions) SBA Paycheck Protection Program Funded 9,103 applications through September Funded $1.18 of loans through September 90% existing Banner clients; 10% new clients PPP Loans by Geography Up to $50K $50K to $350K $350K to $2MM. Over $2MM Total 1
Slide 7: Pandemic risk: Deferrals and modifications
INNER Pandemic risk: Deferrals and modifications ia Active deferred payments or waived interest on 379 loans with $239.6MM in balances through September 30t Active Commercial deferrals on 239 loans with $203.0MM in balances Active Mortgage forbearance on 124 loans with $35.8Mm in balances Active Con
Slide 8: Merging Islanders Bank into Banner Bank
Merging Islanders Bank into Banner Bank Combining to ... Expand offerings to Islanders’ clients Leverage growing presence of Banner name in the North Sound Improve corporate operating efficiencies | S | an ders Expect 1-year payback on $2M merger costs BANK Islanders Bank Assets $ 0.38 Deposits S$ 0
Slide 9: 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 x im Assets $14.68 Recent Additions Deposits $12.28 2018 G4 201504 20151 2014 a2 Loans $10.38
Slide 10: 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 11: Growing revenue
Growing revenue shington Oregon Teaho country. California Region United States 330.0 3498 6% Strong Population Growth Forecast 2010to 2020 2020 to 2030 United States Rank: 9'h Washingt /ashington a ath Oregon Aa ae ae Idaho zon 26m California 0% 5% 10% 15% 20% 25% Source: U.S. Census Bureau Moody's
Slide 12: Growing revenue ... in an ideal geography
INNER Growing revenue ... in an ideal geography aa Powerful and diverse economic drivers From Banner's Pacific Northwest base to ... California From Apple 4 to @ zoomerang, Technology Microsoft (ed amazon a#icron Gexpedia from Silicon Valley to Manufacturing Qscenc (inteD PACCAR = the Central Valley
Slide 13: 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 12
Slide 14: Growing revenue: Guard and improve reputation
INNER Growing revenue ae Guard and improve reputation Residential Diversity and Inclusion Leadership Award Mortgage Bankers Association 2020 fy WORLD'S BEST. Recognized by Forbes (4* consecutive year) Forbes 2020 "World's Best Banks" and 2017-2019 "Top 100 US Banks” Highest Retail Banking Client Sat
Slide 15: Grow transaction deposit accounts
INNER Growing revenue ae Grow transaction deposit accounts 500 of Interest Bearing Non-InterestBearing __ Interest Bearing g Quarter NOb-Inverest Bearing Interest Peerng eanch Non-Interest Bearing AltaPacific Bank Ending Number YOYA Number YOYA Count 3 7 7 3 Skagit Bank —> 09/30/20 310,871 3.0% 1511
Slide 16: Grow core revenue
Growing revenue INNER Grow core revenue Grow deposit fees! Quarter ™ Quarter nuts GL Ending Amount YOYA Amount YOY a ‘oiiarixe Quarter LT Ending Amount YOYA Amount YOYA 09/30/20 $ 149m 80% § S7ém —-AT% 09/30/20 § 87m -15.4% 357m -27.9% 12/309 § 45m 5.8% SAM -0.6% 12/31/09 «§ «53m 16% S$ 2am -0.7% 15
Slide 17: 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 18: Protecting net interest margin: earning asset and funding mix
INNER Protecting net interest margin aa Improve Earning Asset Mix 12/31/2009 09/30/2020 Securities Securities & Other Coml & Ag Com 8 Ag Investments _SBillions 12/09 09/20 Securities 0.68 34 consumer Securities __0.6__ 3 Comibagq 0.9 34 7 CREOwner 0.514 CRE Owner snomtea consumer “REInvestor0.9 353
Slide 19: Grow core deposits; reduce deposit costs
INNER Protecting net interest margin aa Grow core deposits Redluce deposit costs Quarter Quarter —__Suarter_ Lis Ending Balance YOYA _%of Total Ending Amount Rate Amount 09/30/20 $113000 09/30/20 § 52m 0.17% — $ 30.6m 12/3 S1924m 16.8% 50% 8% Sam 4 Loan Yield 0% Deposit Cost Noncore Deposits Core De
Slide 20: Maintain 90-95% loan-to-deposit ratio
Protecting net interest margin Maintain 90-95% loan-to-depositratio Quarter Ending __ Ratio 09/30/20 85% 12/31/09 98% 50% Net Noncore Funding Dependence — Banner 40% 30% 20% Peer Median 10% 0% “10% Peer source: Group 1 (S108 and over), Bank Holding Company Performance Report (BHCPR] Nationalinformat
Slide 21: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin iuiarter Quarter LTM Ending Amount Rate Amount _ Rate 09/30/20 $121Mm 3.72% $479m 4.01% 12/31/09 $ 39M 3.53% $146m 3.36% Net Interest Margin — Banner Peer Top Quartile Peer Median SOLS SO PhP PS HO cf PLL LLL LY Peer source: Gr
Slide 22: 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 21
Slide 23: Control core operating expense
Spending carefully Control core operating expense auarter Quarter LTM Ending Amount YOYA Amount YOYA 09/30/20 § 91M 5.0% $361M 2.8% 12/31/09 § 31M -10.1% $132Mm_—-2.5% Efficiency Ratio = Banner 80% yoy | PeerMedian Peer Top Quartile Peer source: Group 1 ($108 and oven) Bank Holding Company Performan
Slide 24: 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 25: Minimize nonperforming assets
Maintaining a moderate risk profile INNER Minimize nonperforming assets y 350 NEE OREO é Other Real Estate Owned Gianer_—_ “a= __,._Ske _. Q Nonperforming Loans Ending Amount %ofTA Amount % of TA 5 500 09/30/20 $ 35m 0.34% § 2m 0.02% 12/31/09 $214m 553% § 78M 2.01% 250 ACLL to Total Loans 35% — Bann
Slide 26: Maintain appropriate risk capital
Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport (BHCPR] Nationalinformation Center, Federal Reserve System, Division of Banking Supervisionand Regulation 25 i ini i 1 (NNER Maintaining a moderate risk profile pas oo ae - 20% ts Maintain ssi risk capital preter 2 _Ending L
Slide 27: 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 28: Maintain premium to tangible book value
Maintain premium to tangible book value aa Maintain favorable stock price to TBV andEPS $5.00 $75 ‘GurEy | SEEK a Earnings per Share LTM Ending Price! = TRV. Ty) OLTM.— patio 09/30/20 $35.49 $3556 100% $ 313 13x Tangible BV per Share O6/30/10 $15.07 $29.03 52% $-806 nim § 4.99 $60 “Banner Stock Pric
Slide 29: Building value for shareholders, clients, employees and communities
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 28