Banner Corporation · NASDAQ:BANR
Banner — D.A. Davidson & Co. conference, May 8-9, 2013
27 slides from Banner's conference presentation, May 8, 2013
Slide 1: Building Value at Banner
NNER ICORPORATION Building Value at Banner My D.A. Davidson & Co. May 8-9, 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: Assets $4.2B
Assets $4.2B Deposits 3:53 Loans 3.2B Offices 88 Employees 1,050
Slide 4: A Place to Grow
A Place to Grow Market Branches! Loans |Deposits/Share| ColumbiaBasin| 26 /$0.9B/$1.3B| 17% E. Washington 18 |$0.5B/$0.68) 9% Puget Sound 30 ($1.1B/$1.2B; 2%| xs Portland 8 |$0.5B8/$0.3B) 1%) Boise 6 |$0.2B/$0.18) 2%) a 28 new branches = ie since 2005 - Bor an ress} NS Alot mnt om —— Building Value
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 economic drivers Technology | Microsoft’ (inteD amazon qguicron @Expedia Manufacturing Qecene (intel) PACCAR Consumer amazon €osrco ay GE NORDSTROM Logistic Port me pace Sa BR ‘iad toa | of Seattle Te Test Expeditors (RORTORRORTUAND Forest A produ
Slide 7: Economically Ideal Geography
€- Economically Ideal Geography 2002 to 2012 2012 to 203 0% 10% 20% 30% —— Building Value at Banner Strong population growth forecast 2012 Estimate (Millions) United States | 313,914 Washington 6,897 Oregon 3,899 Idaho 1,596 Region 12,392 Sources: U.S. Census Bureau WA Office of Financial Management
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 ° / | 2 J Ys Grow core revenue Date Amount | YOYA Quarter Ending 03/31/13} $ Sim 1.0% 12/31/09| $ 45m 5.8% Twelve Months Ending | 03/31/13| $ 212m | 6.2% | 12/31/09| $ 177M -0.6% cf ~ vs » vs ” —— Building Value at Banner
Slide 11: Expanding Revenue Channels
€- Expanding Revenue Channels Deposit Fees Other Fees Grow deposit fees Mortgage Bnkg Date Amount | YOYA 10 Quarter Ending 03/31/13| $ 6.3m | 7.4% 12/31/09; $ 5.3m | 1.6% 6 i Twelve Months Ending 03/31/13| $ 25.7 | 9.1% 4 12/31/09 | $ 21.4m -0.7% 2 oO js J 2 J Ap: “2 PP PPP —— Building Value at Bann
Slide 12: Gaining Market Share
Gaining Market Share Grow transaction deposit accounts Non-Int Bearing Interest Bearing Quarter Ending Non-Interest Bearing Accounts Number | yYoyA Thousands ” a ° 100 03/31/13} 111,383 | 12.6% a 12/31/09 71,178 8.0% Interest Bearing Accounts 50 03/31/13 65,514 5.6% os 12/31/09 50,955 1.1% P Exclude
Slide 13: Maintaining Earnings Momentum
twee 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 ——————_ RB
Slide 14: Protecting Net Interest Margins
Protecting Net Interest Margins 8% 7 Asset Vields — Maintain solid _ —s Funding Costs net interest margin Date | Amount | Percent 6% 3 Quarter Ending 5% , =n 03/31/13} $ 41M 4.16% Fanaa 12/31/09| $ 39m | 3.53% Twelve Months Ending 3% 03/31/13 | $ 169m 4.22% 2% 12/31/09 | $ 146m | 3.36% 1% - 0% a wa
Slide 15: Loan Yields and Loan-Deposit Spread
8% = Loan Yields Loan-Deposit = - enoalt Conta ‘— Spread Reduce deposit costs Date Amount | Percent 6% 3 Quarter Ending 5% 03/31/13| $ 2.7m 0.31% 4% 12/31/09 | $17.7m 1.83% Twelve Months Ending 3% 03/31/13 | $ 13.4m 0.39% 2% 12/31/09 | $ 83.2m 2.21% 1% 0% ry cf 2 ° ~ SP PP KP —— Building Value at Ba
Slide 16: Improve funding mix
Improve funding mix Conroe Reporte with lower cost core Ss Balance | Percent 1g 12/31/09 | $ —— Building Value at Banner ——————_ 15
Slide 17: Protecting Net Interest Margins
4 Protecting Net Interest Margins 115% _ iLp Ratio— Depraiee 105% 100% 3.0 95% — 25 90% 2.0 85% 15 80% 1.0 S Ss Ss s » a PP PP —— Building Value at Banner Maintain loan-to- deposit ratio of 90-95% Quarter Ending Percent 03/31/13 92% 12/31/09 98% Peak 108% 16
Slide 18: Protecting Net Interest Margins
“er Protecting Net Interest Margins 5.0% — nea F Net Interest Margin Maintain solid Peer 75* Percentile net interest margin 4.5% | am Quarter Peer Ending | B@9Mer | 75% pou 03/31/13| 4.16% 0% 12/31/12] 4.13% | 4.01% 12/31/09 | 3.53% | 3.99% 3.5% 3.0% Bank Holding Company Performance Report zee : SHc
Slide 19: Improving Operating Efficiency
Improving Operating Efficiency Other Efficiency Ratio Personnel 95% 85% 75% 55% —— Building Value at Banner ———————_ Control core operating expense Date Amount | YOYA Quarter Ending 03/31/13} $ 34m -1.9% 12/31/09| $ 31M | -10.0% Twelve Months Ending 03/31/13 | $ 135M -0.1% 12/31/09| $ 132M -2.6% 18
Slide 20: Maintaining Moderate Credit Risk
: Maintaining Moderate Credit Risk OREO me ALtt Reduce nonperforming loans and OREO Quarter Ending Balance Percent Nonperforming Loans —— Building Value at Banner 03/31/13} $ 33M 1.0% 12/31/09 | $ 214m 5.5% Peak $ 243M 6.2% Other Real Estate Owned 03/31/13| $ lim 0.4% 12/31/09| $ 78m 2.0% Peak $ 107
Slide 21: Maintaining Moderate Credit Risk
tex Maintaining Moderate Credit Risk Improved Earning Asset Mix 03/31/2013 12/31/2009 Securities Securities 14% 19% Res Const/ Dev —— Building Value at Banner ——————_ 20
Slide 22: Maintaining Moderate Credit Risk
tex Maintaining Moderate Credit Risk 250% > = 5 ALLLto NPLs Maintain appropriate Peer 75% Percentile loan loss reserves { 200% ——/ \— Quarter Peer oN Ending | B@9Mer | 75% pc ALLL to NPLs en 03/31/13 | 231% 12/31/12 225% 141% pooae 12/31/09 45% 93% 50% Source: Bank Holding Company Performance Report
Slide 23: Retaining Risk-Appropriate Capital
Retaining Risk-Appropriate Capital 20% — = 800 intai i Tier 1 Leverage Ratio Total Capital 2 Maintain solid TCE/Tangible Assets s capital position FMM Quarter | Tier i 15% 600 = Ending | Leverage | TCE/ TA 03/31/13 | 13.28%| 12.10% 12/31/09| 9.62% | 5.87% pane 400 Low 8.80%| 5.82% 5% —- 200 0% ° KY
Slide 24: Retaining Risk-Appropriate Capital
fuer Retaining Risk-Appropriate Capital 20% 15% TCE to Tangible Assets Peer 75" Percentile 10% 5% Manage capital prudently Quarter Peer Ending | B@9Mer | 75% pot 03/31/13 | 12.10% 12/31/12 | 11.80% | 10.06% 12/31/09| 5.87% 8.28% Source: ‘Bank Holding Company Performance Report BHCPR — Peer Group 2 (
Slide 25: Enhancing Shareholder Value
Enhancing Shareholder Value a0 Attain premium to ee Stock Price tangible book value Quarter | Stock 30 Ending | Prices | "8V Per Share 25 - Pre Capital Raise (2010 Q2) 03/31/13 | $ 30.83 | $ 26.37 20 06/30/10 | $ 15.07 | $ 29.03 15 Stock Price/ TBV 9 10 03/31/13 117% 06/30/10 52% si U * Average clos
Slide 26: Enhancing Shareholder Value
€- Enhancing Shareholder Value 2.50 ] TBV/Share | 7° Attain solid multiple TTM EPS Stock Price ae on earnings Quarter | Stock T™ 30 Ending Price* | Earnings \ ae Per Share Bs oe ee 03/31/13 | $ 30.83 | $ 3.35 20 | | 06/30/10 | $ 15.07 | $ -8.06 15 Stock Price/ TTM Earnings 10 03/31/13 9.2x 06/30/10
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 — D.A. Davidson & Co. conference, May 8-9, 2013 on 6ix