Banner Corporation · NASDAQ:BANR
Banner — Keefe, Bruyette & Woods Fourteenth Annual Community Bank Investor Conference 2013
27 slides from Banner's conference presentation, Jul 30, 2013
Slide 1: Building Value at Banner
NNER ICORPORATION Building Value at Banner KEEFE, BRUYETT FOURTEENTH ANNUAL COMMUNI INVESTOR CONFERENCE 201 New York Ciry..¢ JuLy 30 & 31,2013.
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
¥<: A Good Place to Be... Since 1890 Assets $4.2B Deposits 3.58 Loans 3.3B Offices 88 Employees 1,050
Slide 4: Market branches, loans, deposits and share
Market Branches) Loans |Deposits|/Share ColumbiaBasin| 26 /|$0.9B/$ 1.38) 17% E. Washington | 18 |$0.58|/$0.68| 9% Puget Sound 30 |$1.18/$1.28) 2% .| Portland 8 |$0.5B/$0.3B) 1% Boise 6 |$0.2B/$0.1B| 2% ww 28 new branches = “i \|__ since 2005 ee Fa 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 econ drivers Technology | Microsoft (intel) amazon gaicron @Expedia Manufacturing QseenNe (intel) PACCAR Consumer | amazon COSTCO ia. GE NORDSTROM Logistics Port Sa peg WE = 9 of Seattle. Tacoma Expeditors 2) PORT OF PORTLAND Forest A pros Weyerha
Slide 7: Economically Ideal Geography
€- Economically Ideal Geography Idaho 2002 to 2012 2012 to 2030 20% Rank: 12th agth gt 5th gth 30% —— Building Value at Banner Strong population growth forecast 2012 Estimate ( ns) United States | 313,914 Washington 6,897 Oregon 3,899 Idaho 1,596 Region 12,392 Sources: U.S. Census Bureau WA Office o
Slide 8: Building on Improved Reputation
€- Building on Improved Reputation 6.0, Received highest ranking: = = Retail banking customer satisfaction, Northwest Region J.D. Power and Associates’ 2012 and 2013 Retail Banking Satisfaction StudySM Received highest rating: Bankrate.com SAFE & SOUND® Star Ratings Released from enhanced regulatory
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
Expanding Revenue Channels Net Interest Income Other Income —— Building Value at Banner Grow core revenue Date Quarter Ending Amount YoYyA 06/30/13} $ 53M 1.6% 12/31/09| $ 45m 5.8% Twelve Months Ending 06/30/13] $ 213M 4.7% 12/31/09 | $ 177m -0.6%
Slide 11: Expanding Revenue Channels
« * Expanding Revenue Channels ry B Deposit Fees Other Fees Mortgage Bnkg » N 10 Quarter Ending Grow deposit fees Date Amoun 06/30/13| $ 6.6m | 5.5% 12/31/09} $ 5.3m 1.6% Twelve Months Ending 06/30/13} $ 26.0mM 7.9% 12/31/09 | $21.4m | -0.7% —— Building Value at Banner 10
Slide 12: Gaining Market Share
€- Gaining Market Share Thousands Non-Int Bearing Interest Bearing 125 2 sx PP —— Building Value at Banner Grow transaction deposit accounts Quarter Ending Number yoy A Non-Interest Bearing Accounts 06/30/13 | 114,004 | 12.1% 12/31/09| 71,178 8.0% Interest Bearing Accounts 06/30/13| 65,958 6.8% 12/3
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 Maintain solid Funding Costs — "ee net interest margin Date Amount | Percen' Quarter Ending 06/30/13} $ 42m 4.20% 12/31/09| $ 38m 3.49% Twelve Months Ending 06/30/13] $ 168m 4.19% 12/31/09| $ 145m 3.33% —— Building Value at Banner B
Slide 15: Protecting Net Interest Margins
€- Protecting Net Interest Margins Loan Yields Loan-Deposit Deposit Costs = Spread Reduce deposit costs Date Amount | Percent Quarter Ending 06/30/13} $ 2.5m 0.29% 12/31/09 | $17.7m 1.83% Twelve Months Ending 06/30/13} $11.8m 0.34% 12/31/09} $ 83.2m 2.21% — Building Value at Banner ———————— 4
Slide 16: Protecting Net Interest Margins
€- Protecting Net Interest Margins Improve funding mix nomcare Dapoete: with lower cost core Core Deposits deposits Quarter Ending 06/30/13| $ 2,516m| 73% 12/31/09 |$ 1,924m| 50% Balance | Percent —— Building Value at Banner ———————— 15
Slide 17: Loan-to-deposit ratio
115% ioms. | = Maintain loan-to- L/D Ratio— Deposits deposit ratio of 4. 90-95% Quarter Ending 06/30/13 12/31/09 98% Peak 108% Percent —— Building Value at Banner ——————_— 16
Slide 18: Protecting Net Interest Margins
INNER Protecting Net Interest Margins 5.0% + 4.5% 4.0% 3.5% 3.0% — Net Interest Margin Peer 75" Percentile ji Sa 2 J ag x s s » » » PP PP —— Building Value at Banner Maintain solid net interest margin Quarter Ending 06/30/13| 4.20% 03/31/13| 4.16% | 3.98% 12/31/09| 3.53% | 3.99% Source: Bank Holding
Slide 19: Improving Operating Efficiency
4- Improving Operating Efficiency Millions b ) 20 — 10 Other Efficiency Ratio Personnel 95% — 85% 75% 65% + 55% SJ 2 Ss y a Ss F - » os PP PP —— Building Value at Banner ————————— Control core operating expense Date Amount | YOYA Quarter Ending 06/30/13} $ 35m 6.6% 12/31/09} $ 31M | -10.0% Twelve Mo
Slide 20: Maintaining Moderate Credit Risk
Maintaining Moderate Credit Risk 350 Reduce nonperforming OREO ALLL NPL’s —_ loans and OREO 300 Quarter Balance recent 250 nding Nonperforming Loans 200 06/30/13| $ 26m 0.8% 12/31/09] $ 214M 5.5% 150 Peak $ 243M 6.2% 100 Other Real Estate Owned 06/30/13| $ 7m 0.2% 50 ln 12/31/09| $ 78m | 2.0% ou ¥ P
Slide 21: Maintaining Moderate Credit Risk
nvee Maintaining Moderate Credit Risk Improved Earning Asset Mix 06/30/2013 12/31/2009 Securities 18% Const/Dev Const/Dev Building Value at Banner 20
Slide 22: Maintaining Moderate Credit Risk
INNER Maintaining Moderate Credit Risk 300% 250% 200% 150% 100% 50% 0% ~ + 1 + S J 2 S Sp: “2 s Ss s » » » PP PP ALLL to NPLs Peer 75" Percentile A ‘ x ‘ \ ‘ \ iN ‘ Maintain appropriate loan loss reserves naa Banners iss Petl ALLL to NPLs 06/30/13| 294% 03/31/13| 231% | 144% 12/31/09| 45% 93% —— Bui
Slide 23: Retaining Risk-Appropriate Capital
4 Retaining Risk-Appropriate Capital 20% (Tier 1 Leverage Ratio Total Capital TCE/Tangible Assets 10% | a 5% 15% | | ey oS oe PP PP SP a ° ° Millions a ° ° 400 200 Maintain solid capital position Ending | Leverage | TCE/ TA 06/30/13| 13.26%| 12.22% 12/31/09| 9.62%| 5.87% Low 8.80%| 5.82% —— Building
Slide 24: Retaining Risk-Appropriate Capital
€- Retaining Risk-Appropriate Capital 20% — i TCE to Tangible Assets Managejcapital Peer 75' Percentile prudently Peer 15% 75" Pctl 06/30/13 | 12.22% 03/31/13 | 12.10% | 10.45% 12/31/09| 5.87% 8.28% 10% 5% - Source: Bank Holding Company Performance Report 0% : ‘ BHCPR — Peer Group 2 ($38-$108) —— Bu
Slide 25: Enhancing Shareholder Value
€- Enhancing Shareholder Value a0 TBV/ Share Attain premium to on Stock Price tangible book value 30 Per Share 25 - u Pre Capital Raise Gane 06/30/13 | $ 35.54 | $ 26.49 06/30/10 | $ 15.07 | $ 29.03 - Stock Price/ TBV 06/30/13 134% 06/30/10 52% * Average closing price for the month following quarter
Slide 26: Enhancing Shareholder Value
INNER Enhancing Shareholder Value 4.00 y 40 TBV/ Share TTM EPS Stock Price 3.50 35 3.00 30 2.50 a <7 25 Pre Capital Raise (2010 Q2) 2.00 ~———— 20 1.50 15 1.00 10 0.50 5 0.00 oO sy 2 2 s » ss PP og Building Value at Banner Attain solid multiple on earnings Per Share 06/30/13 | $ 35.54 | $ 2.68 06/30/
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 franchises based in Washington. * Banner has the management depth, organizational model and operational skill to sustain earnings momentum
Banner — Keefe, Bruyette & Woods Fourteenth Annual Community Bank Investor Conference 2013 on 6ix