Slide 1: Fourth Quarter 2023
Fourth Quarter 2023 Photo by Photo by Photo by Photo by Siti Alimah Yvonne McDonald Maria DeVecchio Salvador Saldana
Slide 2: Disclosure Statement
Disclosure Statement This presentation includes forward-looking statements. These statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook
Slide 3: Fourth quarter 2023 highlights
Fourth quarter 2023 highlights • Net income of $42.6 million, compared to $45.9 million for the third quarter of 2023 • Loan growth of $156 million (6% annualized) • Total loan originations (excluding HFS) were $741 million • Total deposits declined by $145 million (1.1%); retail deposits declined b
Slide 4: 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 Acquisition History Assets $15.7B 2019 Q4 2018 Q4 2015 Q4 2015 Q1 2014 Q2 Deposits $13.0B AltaPacifi
Slide 5: 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 reputation
Slide 6: Growing revenue … in a good place since 1890
Growing revenue … in a good place since 1890 Population Estimate (millions) 2020 2030 Growth Washington 7.7 8.4 9%* Oregon 4.2 4.5 5% Idaho 1.8 2.2 20%* California 39.5 39.5 0% Region 53.3 54.6 2% * Among the fastest United States 331.4 344.6 4% growing in the country Source: U.S. Census Bureau Mood
Slide 7: 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 Technology From Apple to Manufacturing from Silicon Valley to the Central Valley … Consumer the world’s 6th largest economy Logistics Natural Resources Agriculture Tradi
Slide 8: 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 8
Slide 9: Growing revenue: guard and improve reputation
Growing revenue Guard and improve reputation Outstanding CRA Rating FDIC 2021, most recent 3-year examination cycle Most Trustworthy Companies in America Newsweek 2023 World’s Most Trustworthy Companies Newsweek 2023 America’s Best Regional Banks *NEW* Newsweek 2024 Excellence Award for Bank of the
Slide 10: Growing revenue
Growing revenue Core revenue1 Noninterest income Quarter Last 12 Months Quarter Last 12 Months Quarter Quarter Ending Amount Amount Ending Amount Amount 12/31/23 $157M $644M 12/31/23 $18.7M $67.9M 12/31/09 $45M $177M 12/31/09 $6.6M $31.1M Other Fees Deposit Fees as % of Core Other Income Mortgage Ba
Slide 11: 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-deposit r
Slide 12: Protecting net interest margin
Protecting net interest margin Low Cost Funding Mix Earning Asset Mix FHLB, Sub Debt & Other 12/31/2023 12/31/2023 Certificates of Securities & Deposit Int-bearing Loans Non-Interest Deposits Bearing Cost $ Millions Avg Bal (in bps) Interest Bearing and Non-Interest 5,037 0 Savings Interest Bearing
Slide 13: Protecting net interest margin: core deposits and deposit costs
Protecting net interest margin Focus on core deposits Manage deposit costs Quarter Last 12 Months Quarter Quarter Ending Balance % of Total Deposits Ending Amount Rate Amount Rate 12/31/23 $11,552M 89% 12/31/23 $39.3M 1.18% $100.1M 0.76% 12/31/09 $1,924M 50% 12/31/09 $17.7M 1.83% $83.2M 2.21% Noncor
Slide 14: Protecting net interest margin: loan-to-deposit ratio
Protecting net interest margin Deposits Loans Net Noncore Funding Dependence Banner Loan-to-Deposit Ratio Peer Median Peer Top Quartile Peer source: Group 1 ($10B and over), Bank Holding Company Performance Report (BHCPR), National Information Center, Federal Reserve System, Division of Banking Supe
Slide 15: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin Earning Asset Yield Quarter Last 12 Months Quarter Funding Cost Net Interest Margin Ending Amount Rate Amount Rate 12/31/23 $138M 3.75% $576M 3.93% 12/31/09 $39M 3.53% $146M 3.36% Net Interest Margin Banner Peer Top Quartile Pe
Slide 16: Conservative investment portfolio
Conservative investment portfolio 12 Month Net Interest Income Shock ($MM), % Change Investment Portfolio Composition ($3.43 billion) $ Millions 79% of investments are Agency MBS/CMO or AAA rated 7.4% non-rated investments, principally CRA investments Portfolio is a diversified mix of asset types an
Slide 17: 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 17
Slide 18: Spending carefully
Spending carefully Control core operating expense Other Quarter Last 12 Months Quarter Info Services Ending Amount Amount Occupancy 12/31/23 $94M $373M Compensation 12/31/09 $31M $132M Efficiency Ratio Banner Efficiency Ratio Peer Median Peer Top Quartile Peer source: Group 1 ($10B and over), Bank H
Slide 19: 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 appr
Slide 20: Diversified loan portfolio
Diversified loan portfolio Loan Composition Loan Originations (commitments, $MM) 12/31/2023 CRE Breakout $MM % OO CRE 916 8 % Investment Properties 1,541 14 % Small Balance CRE 1,179 11 % Total Comm CRE 3,636 34 % Construction Breakout $MM % Commercial 170 2 % Multifamily 504 5 % 1-4 Family 526 5 %
Slide 21: Characteristics of highlighted loan segments
Characteristics of highlighted loan segments Office 1 Retail 2 Healthcare 3 Balances ($MM) $660.8 Balances ($MM) $1,284.1 Balances ($MM) $408.5 Percent of Total Loans 6.1% Percent of Total Loans 11.9% Percent of Total Loans 3.8% Balance of Retail Loans Secured $1,145.0 Balance of Healthcare Services
Slide 22: Allowance for credit losses
Allowance for credit losses Change assessment: Portfolio Economic factors Changes to allowance: Net charge-offs Provision $ Millions ACL - Loans 147.0 2.8 (0.1) (1.1) 3.8 149.6 ACL - Unfunded Commitments 15.0 (0.3) (0.2) — (0.5) 14.5 ACL - HTM Securities 0.3 — — — — 0.3 ACL - AFS Securities 0.8 — (0
Slide 23: Maintaining a moderate risk profile
Maintaining a moderate risk profile Minimize nonperforming assets NPAs REO Quarter Ending Amount % of TA Amount % of TA 12/31/23 $30M 0.19% $0.5M 0.00% 12/31/09 $292M 6.11% $78M 2.01% Real Estate Owned Nonperforming Loans ACLL to Total Loans Banner Peer Top Quartile ACLL Peer Median Peer source: Gro
Slide 24: 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 25: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands Quarters Ended Years Ended PRE-TAX PRE-PROVISION EARNINGS Dec 31, 2023 Sep 30, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022 Income before provision for income taxes (GAAP) $ 53,318 $ 56,506 $ 66,424 $ 227,087 $ 240,775 Provision for credit losses 2,522
Slide 26: 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