Banner Corporation · NASDAQ:BANR
Banner — IPO Roadshow (December 2009)
26 slides from Banner's IPO roadshow presentation, Dec 7, 2009
Slide 1: Issuer Free Writing Prospectus
Filed Pursuant to Rule 433 Issuer Free Writing Prospectus dated December 7, 2009 Relating to Preliminary Prospectus Supplement dated December 7, 2009 Registration No. 333-139520
Slide 2: Common Equity Offering December 2009
Better ideas. Better banking. Common Equity Offering December 2009
Slide 3: Disclosure Statement
Disclosure Statement The Company proposes to issue the common shares pursuant to a prospectus supplement that will be filed as part of an existing shelf registration statement previously filed with the Securities and Exchange Commission on Form S-3. The offering may be made only by means of a prospe
Slide 4: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures Tangible equity, tangible common equity and tangible common equity to tangible assets are non- GAAP financial measures. We calculate tangible equity by excluding the balance of goodwill and other intangible assets from shareholders’ equity. We calculate tangible co
Slide 5: Transaction Overview
Transaction Overview Issuer: Banner Corporation Ticker / Exchange: BANR / NASDAQ GSM Type of Offering: Follow-on Public Offering Type of Security: Common Stock Transaction Size: $75 million Over-Allotment Option: 15% Use of Proceeds: Provide capital to Banner Bank to support growth and for general w
Slide 6: Presenting Today
Presenting Today D. Michael Jones, President and Chief Executive Officer Mr. Jones joined Banner Corporation in 2002 as President and Chief Executive Officer. Mr. Jones is a Certified Public Accountant (Inactive) and served as President and Chief Executive Officer from 1996 to 2001 for Source Capita
Slide 7: Offering Objectives
Offering Objectives Strengthens our capital position Pro forma TCE/TA of 7.2%¹ Pro forma Tier 1 leverage ratio of 11.0%¹ Pro forma Total risk based capital ratio of 14.3%¹ Allows for continued execution of our problem loan resolution process Better positions us to capture business opportunities resu
Slide 8: Investment Summary
Investment Summary Strategically-located Pacific Northwest branch network Solid and growing deposit base Loan portfolio with diversification in geographic and loan type Diversified economic drivers across markets Thorough and conservative approach to credit risk management has led to flattening cred
Slide 9: Company Overview
Company Overview Founded in 1890 Spokane Branch Loan Center 89 branches and 8 loan production Seattle Islanders Bank offices focused on complementary mix of urban and middle markets: Seattle Spokane Portland Portland Boise Boise Columbia Basin Focused on serving small-to- midsize businesses and indi
Slide 10: Loan Portfolio Composition
Loan Portfolio Composition Diversified lending by both collateral type and geography Minimal out-of-market lending Banner’s strategic plan is aimed at changing the loan category mix by increasing commercial and consumer lending activity Loan Category Breakdown Geographic Breakdown $800 Other $43 $67
Slide 11: Loan and Credit Quality Comparison
Loan and Credit Quality Comparison Proactive credit management and problem recognition Commercial real estate portfolios are being proactively managed including loan by loan stress testing to identify potential problem assets 90% of past due loans are on nonaccrual Credit issues remain concentrated
Slide 12: Loan Portfolio: Construction
Loan Portfolio: Construction The commercial construction portfolio is less than 4% of the total loan portfolio and has no non- performing loans There are no past due, classified or non-performing multifamily construction loans The residential construction portfolio is largely in the Seattle and Port
Slide 13: Loan Portfolio: Land and Land Development
Loan Portfolio: Land and Land Development Total land and land development portfolio of $369 million at September 30, 2009 Land and land development balances have decreased over 23% since September 30, 2008 Concentration has fallen from 12% to 10% of total loans As of September 30, 2009, non-performi
Slide 14: Loan Portfolio: CRE – Owner Occupied
Loan Portfolio: CRE – Owner Occupied Total CRE-owner occupied portfolio of $482 million at September 30, 2009 Average portfolio loan size of $536 thousand As of September 30, 2009, non-performing loans in this segment were $3 million, or approximately 1% of total non-performing loans Delinquency rat
Slide 15: Loan Portfolio: CRE – Income Property and Multifamily Loans
Loan Portfolio: CRE – Income Property and Multifamily Loans Total CRE income property and multifamily portfolio of $738 million at September 30, 2009 Average portfolio loan size of $682 thousand At September 30, 2009, non-performing loans were $4.2 million, or approximately 2% of total non- performi
Slide 16: Credit Philosophy Is Yielding Results
Credit Philosophy Is Yielding Results Banner’s goal is to identify and resolve problems early instead of waiting for problems to mature before taking action No single template that fits all problem credits The actions below are a representative cross sample of Banner’s credit risk management in acti
Slide 17: Charge-offs and Reserves
Charge-offs and Reserves Charge offs have been concentrated in the residential construction and land portfolio with the majority of the losses coming from the land portion of the portfolio 90% of non-performing loans have had detailed individual SFAS 114 specific impairment analysis at September 30,
Slide 18: Illustrative SCAP Analysis
Illustrative SCAP Analysis Balance as of 12/31/08 Loss Severity ¹ (%) Total Loss ($000s) Loan Type ($000s) (%) Baseline More Adverse Baseline More Adverse First Lien Mortgages $612,692 15.5% 2.00% 3.50% $12,254 $21,444 Closed-end Junior Lien Mortgages 50,669 1.3% 19.00% 23.50% 9,627 11,907 HELOCs 15
Slide 19: Pro Forma Capital Position
Pro Forma Capital Position As of September 30, 2009 Projected September 30, 2011³ Actual Pro Forma¹ Baseline¹ More Adverse¹ SCAP Projected Loan Losses (Less YTD 2009 NCO's) -- -- $149,261 $307,235 Common Equity / Assets 6.05% 7.41% 7.75% 4.65% Equity / Assets 8.49% 9.82% 10.19% 7.17% Tangible Common
Slide 20: Geographic Deposit Composition and Market Share
Geographic Deposit Composition and Market Share Deposit growth opportunity in key Northwest metropolitan markets complemented by our historically strong market position in the Columbia Basin June 30, 2009 Market Deposits Share Admin MSA Rank Branches ($000) (%) $250 6% Seattle-Tacoma-Bellevue, WA 14
Slide 21: Deposit Franchise Highlights
Deposit Franchise Highlights Retail deposits have increased $361 million (over 11%) year-to-date Significant opportunity exists to further lower our cost of deposits as higher cost deposits re-price in the near term Deposit Composition Historical Deposit Cost Non-int.-bearing $547 4.00% 3.88% CDs >$
Slide 22: Core Operating Results
Core Operating Results (Dollars in Thousands) Q4 2008 Q1 2009 Q2 2009 Q3 2009 Income (Loss) Before Provision For Income Taxes ($83,473) ($16,186) ($26,989) ($11,824) ADD: Provision For Loan Losses 33,000 22,000 45,000 25,000 LESS: Net Change In Valuation Of Financial Instruments Carried At Fair Valu
Slide 23: Investment Portfolio
Investment Portfolio As of September 30, 2009, the securities portfolio had a carrying value of $319 million The portfolio primarily serves as collateral for public funds deposits and retail repo/sweep accounts The corporate bonds segment (primarily Trust Preferred securities and CDOs) has had signi
Slide 24: Attractive Market Demographics
Attractive Market Demographics Our markets demonstrate both strong past and projected growth trends Five-Year Population Proj. Deposits Percent of Change Population Proj. Market in Market Franchise 2000-2009 Change HHI Change MSA Rank Branches ($000) (%) (%) (%) (%) Seattle-Tacoma-Bellevue, WA 14 17
Slide 25: Investment Summary
Investment Summary Strategically-located Pacific Northwest branch network Solid and growing deposit base Loan portfolio with diversification in geographic and loan type Diversified economic drivers across markets Thorough and conservative approach to credit risk management has led to flattening cred
Slide 26: Appendix A: Reconciliation of Non-GAAP Measures
Appendix A: Reconciliation of Non-GAAP Measures (Dollars in Thousands) As of September 30, 2009 Projected September 30, 2011³ Actual Pro Forma¹ Baseline¹ More Adverse¹ Stockholders’ equity $406,723 $477,111 $488,961 $332,962 Goodwill 0 0 0 0 Other intangible assets, net 11,718 11,718 8,483 8,483 Tan