Banner Corporation · NASDAQ:BANR
Banner — Investor Presentation (July 2014)
27 slides from Banner's investor presentation, Jul 28, 2014
Slide 1: Building Value at Banner
NNER CORPORATION Building Value at Banner FIFTEENT
Slide 2: Disclosure Statement
‘wes 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 me
Slide 3: A Good Place to Be ... Since 1890
A Good Place to Be ... Since 1890 Seattle ‘ Spokane Columbia Basin \ Assets Deposits Loans Offices $4.78 3.98 3.7B 94 Employees 1,100
Slide 4: Market branches, loans, deposits and share
Market Branches) Loans |Deposits|Share| ColumbiaBasin| 26 |$ 0.98/$ 1.38] 13% E. Washington | 18 |$0.58|$0.68| 8% Puget Sound 30 |$1.58/$1.38| 1% W. Oregon 14 |$0.78|$0.58| 1% Boise $0.26|$0.28| 2% since 2005 34 new branches —— Building Value at Banner
Slide 5: Building on Strengths
4- 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
4- Economically Ideal Geography Powerful and diverse economic drivers Technology | Microsoft (inte) amazon guicron @expedia Manufacturing 0) SOEINE (intel) PACCAR Consumer | amazon CosTco ER GE NORDSTROM = ~_ lectin Po tie Tacéma_Expeditors’ @Port or porriann Forest A products ‘Weyerhaeuser Fisherie
Slide 7: Economically Ideal Geography: Population Growth
4- Economically Ideal Geography | Strong population united States 2003 watts growth forecast 2013 to 2030 fl 2013 Estimate (Thousands) rank: 42th Washington ‘zu | (United States | 316,129 Washington 6,971 ‘Spi a Oregon | 3,930 | Idaho 1,612 Region | 12,513 ‘Wa offee of Financial Management 0% 5% 10%
Slide 8: Building on Improved Reputation
4- Building on Improved Reputation Included in Forbes 2014: “America’s 50 Most Trustworthy Financial Companies” Received highest rating: Bankrate.com SAFE & SOUND@ Star Ratings Named “Community Lender of the Year” for two most recent years: | SBA Seattle/Spokane District - Small Business Awards Rele
Slide 9: Expanding Revenue Channels
4- 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 Soy oe So oo PP PP Pg 2 —— Building Value at Banner Grow core revenue Date Amount Quarter Ending YoYA 06/30/14| $ 54m | 2.4% 12/31/09; $ 45m | 5.8% Twelve Months Ending 06/30/14] $ 210m | -1.4% 12/31/09 | $ 177m | -0.6%
Slide 11: Expanding Revenue Channels: Deposit Fees
4- Expanding Revenue Channels Deposit Fees Other Fees Grow deposit fees Mortgage Bnkg Millions Date | Amount | YoYA 10 Quarter Ending ‘ 06/30/14| $ 7.3m | 10.8% 12/31/09| $ 5.3m | 1.6% ‘6 Twelve Months Ending a ] 06/30/14| $ 27.6m | 6.0% 12/31/09 | $ 21.4m | -0.7% 2 oO PP PP of s yA vy ee —— Buildin
Slide 12: Gaining Market Share
4- Gaining Market Share Non-Int Bearing Interest Bearing —— Building Value at Banner Grow transaction deposi accounts Quarter Ending YovA Number Non-Interest Bearing Accounts 06/30/14 | 135,760 | 9.8%* 12/31/09| 71,178 | 8.0% Interest Bearing Accounts 06/30/14} 73,996 | 5.1% * 12/31/09| 50,955 | 1.1
Slide 13: Maintaining Earnings Momentum
nes 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
nes Protecting Net Interest Margins 8% + Asset Yields Maintain solid net interest margin Funding Costs —om Date Amount | Percent Quarter Ending 06/30/14 ¢ 44m | 4.06% 12/31/09| $ 38m | 3.49% Twelve Months Ending 06/30/14| ¢ 170m | 4.06% 12/31/09| $ 145m | 3.33% —— Building Value at Banner on
Slide 15: Protecting Net Interest Margins
Protecting Net Interest Margins Loan Yields Deposit Costs Loan-Deposit —— Building Value at Banner ——————_— Reduce deposit costs Date | Amount | Percent Quarter Ending 06/30/14] $ 1.9m | 0.21% 12/31/09| $17.7m | 1.83% Twelve Months Ending 06/30/14} $ 8.4m | 0.23% 12/31/09 | $ 83.2m | 2.21% 14
Slide 16: Protecting Net Interest Margins
nes Protecting Net Interest Margins Noncore Deposits Core Deposits Billions . 3 2 aul °o s 9 i Poe : 2 Improve funding mix with lower cost core deposits Quarter | Balance | Percent Ending 06/30/14 | $ 2,982} 76% 12/31/09 |$ 1,924m | 50% —— Building Value at Banner 15
Slide 17: Protecting Net Interest Margins
* Protecting Net Interest Margins [115% 45 110% ola Deposits 4.0 105% 3.5 100% 3.0 95% 25 90% 2.0 85% 15 80% 1.0 oe of PM Maintain loan-to- EE deposit ratio of FF 90-95% Quarter Ending Percent 06/30/14 96% 12/31/09 98% Peak 108% —— Building Value at Banner 16
Slide 18: Protecting Net Interest Margins
Protecting Net Interest Margins 5.0% 4.5% 4.0% — 3.5% 3.0% Net Interest Margin Peer 75° Percentile —— Building Value at Banner Maintain solid net interest margin Quarter Peer Ending | B8MMEr | 755 peti 06/30/14 | 4.06% 03/31/14] 4.07% | 4.02% 12/31/09| 3.53% | 3.99% source: ‘Bank Holding Company Per
Slide 19: Improving Operating Efficiency
4- Improving Operating Efficiency Other Efficiency Ratio Control core Personnel 95% operating expense Millions & Date | Amount | YoYA Quarter Ending 06/30/14| $ 36m | 2.3% 12/31/09| $ 31m | -10.0% 75% | | Twelve Months Ending 06/30/14} $ 141m | 3.0% 65% | | 12/31/09| $ 132m | -2.6% 85% 55% —— Buildi
Slide 20: Maintaining Moderate Credit Risk
nes Maintaining Moderate Credit Risk —— Building Value at Banner ——————_— Reduce nonperforming loans and OREO Quarter Ending Balance | Percent ‘Nonperforming Loans 06/30/14} $ 20m | 0.5% 12/31/09 $ 214m | 5.5% Peak | $ 243m | 6.2% Other Real Estate Owned 06/30/14 $ 4m | 0.1% 12/31/09 $ 78M | 2.0% Pe
Slide 21: Maintaining Moderate Credit Risk
nes Maintaining Moderate Credit Risk Improved Earning Asset Mix 06/30/2014 12/31/2009 Securities 17% Const/Dev Building Value at Banner = i
Slide 22: Maintaining Moderate Credit Risk
Maintaining Moderate Credit Risk 3.5% 3.0% 2.5% 2.0% ALLL to Loans Peer 75° Percentile Maintain appropriate loan loss reserves Suey | pene | soca ALLL to Loans 06/30/14 1.97% 03/31/14 | 2.11% 1.79% 12/31/09 2.51% 2.66% 1.5% —— Building Value at Banner source Bank Holding Company Performance Report T
Slide 23: Retaining Risk-Appropriate Capital
ns Retaining Risk-Appropriate Capital 20% 800 » ii il Tier 1Leverage Ratio ‘Total 2 Malntela’y Tce/Tangble Assets Capital g capital position =| res 15% 600 Ending | Leverage | TCE/TA 06/30/14 | 13.65% | 11.79% 12/31/09| 9.62% | 5.87% mail| age Low 8.80% | 5.82% 5% 200 ° —— Building Value at Banner —
Slide 24: Retaining Risk-Appropriate Capital
Retaining Risk-Appropriate Capital 20% TCE to Tangible Assets Peer 75" Percentile Manage capital prudently Seyee | Banner | Eee TCE to Tangible Assets 06/30/14 | 11.79% 03/31/14 | 12.16% | 10.22% 12/31/09 5.87% 8.28% source Bank Holding Company Performance Report TBHCPR — Peer Group 2 ($38-$108) ——
Slide 25: Enhancing Shareholder Value
4- Enhancing Shareholder Value TBV/ Share Stock Price —— Building Value at Banner ——————_—_ Attain premium to tang Quarter Ending le book value Stock Prices | TBV Per Share 06/30/14 $ 38.741] $ 28.57 06/30/10 $ 15.07 | $ 29.03 Stock Price/ TBV 06/30/14 136% 06/30/10 * Average 52% closing price for t
Slide 26: Enhancing Shareholder Value
4- Enhancing Shareholder Value 4.00 2.00 1.00 TBV/ Share Tees Stock Price ‘Pre capital Raise (201002). 20 10 Building Value at Banner Attain solid multiple on earnings Quarter Stock Ending | Price* | Earnings Per Share | 06/30/14 | $ 38.74t| $ 2.62 | 06/30/10 | $ 15.07 | $ -8,06 Stock Price/ TTM Ear
Slide 27: Increasing Return to Shareholders
4- 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