Slide 1: Fourth Quarter 2019
NNER ‘CORPORATION Fourth Quarter 2019
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: 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 im Assets $12.68 Recent Additions Deposits $10.08 2018 4 201504 2015 G1 2014 G2 Loans S$ 9.58
Slide 4: Building value at Banner: Core banking competency
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 reputati
Slide 5: Growing revenue ... in a good place since 1890
INNER Growing revenue ... in a good place since 1890 — CANADA ~ Popullation Estimate tmitions) 2017 2030 Growth in ‘° ( Nashington 74 8. 16% i ‘Spokane, \ Oregon TAR TAB Te * All4Banner states on XM Oregon % 7 Sisson BAB re among the fastest O2% = Idaho 7 15% growing in the US California 398 17% + R
Slide 6: Growing revenue ... in an ideal geography
INNER Growing revenue ... in an ideal geography aa Powerful and diverse economic drivers From Banner's Pacific Northwest base to ... California From Apple 4 to @ zoomerang, Technology Microsoft (ed amazon a#icron Gexpedia from Silicon Valley to Manufacturing Qscenc (inteD PACCAR = the Central Valley
Slide 7: Offer super community bank value proposition
Growing revenue Offer 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
Slide 8: Guard and improve reputation
Growing revenue Guard and improve reputation Ranked highest in Northwest (3'4 consecutive year): eS J.D. Power 2019 U.S. Retail Banking Satisfaction Study Ranked best bank in the Pacific region (2"¢ consecutive year): Money 2019-2020 “America’s Best Banks” = Ranked in top 100 (34 consecutive year):
Slide 9: Grow transaction deposit accounts
Growing revenue Grow transaction deposit accounts Non-interest interest Bearing Bearing Quarter —_—————_— Ending Number YOYA Number YOYA 12R119 304,231 3.2% 150,475 0.2%! 12/31/09 71178 8.0% 50.955 11% + Excluding all acquisitions, the number of trans- action deposit accounts has grown ~110% since 2
Slide 10: Grow core revenue
G rowing revenue INNER Grow core revenue Grow deposit fees! ouariee Quarter Lm ‘oiiarixe Quarter LM Ending Amount YOYA Amount YOY Ending Amount YOYA Amount YOY wi3v19§ 140m 0.4% SS1M 7.6% wi3V19 $ 96m -231% —§ 466m —-3.0% wisvoo $ 45m 5.8% 8 IM -0.6% soo § 53m 16% $ 2tam —-0.7% 150 Other Income Othe
Slide 11: Building value at Banner: Spending carefully section
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: Improve Earning Asset Mix and Funding Mix
INNER Protecting net interest margin aaa Improve Earning Asset Mix 12/31/2009 12/31/2019 Securities Securities Coml & Ag Coml § Ag SBilions 12/09 12/19 summer Secuities 0.6 19 _ ComloAg 0.9 21 consumer CREOwner 0.516 CREInvestor 0.952 Res Mortgage “ResConst/Dev_0.5 0.7 ResMortgage 0.7 0.9 Res Consti
Slide 13: Grow core deposits; Reduce deposit costs
INNER Protecting net interest margin aa Grow core deposits Reduce deposit costs Quarter Quarter ———Guarter__ Lo Ending Balance YOY Ending Amount Rate Amount Rate 12/31) $992em 9.5% 12/3/19 $ 100m 0.40% 08 12/3 $1924 16.8% aisvoo $ 177m 1 221% 100% 8% Noncore Deposits Loan Yield Core Deposits 90% Dep
Slide 14: Maintain 90-95% loan-to-deposit ratio
Protecting net interest margin Maintain 90-95% loan-to-depositratio Quarter Ending __ Ratio 12B1IN9 95% 12/31/09 98% 50% Net Noncore Funding Dependence — Banner 40% 30% 20% Peer Median 10% Peer source: Group 1 (S108 and over), Bank Holding Company Performance Report (BHCPR] Nationalinformation Cente
Slide 15: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin ‘ausiter Quarter LT Ending Amount Rate Amount _ Rate 12/31/19 $119M 4.20% $469m 4.30% 12/31/09 _$ 39m 3.53% $146m_ 3.36% Net Interest Margin — Banner 45% 4.0% Peer Top Quartile Peer Median LIDDY DH MOOI HO SF 998 P95 2s FLL LPL
Slide 16: 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 15
Slide 17: Control core operating expense
Spending carefully Control core operating expense auarter Quarter LTM Ending Amount YOYA Amount YOYA 12/3119 $ 89M 14% $350M 4.5% 12/31/09 § 31M -10.1% $132Mm_—-2.5% Efficiency Ratio = Banner Peer Top Quartile Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport (BHCPR] Nation
Slide 18: 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 19: Minimize nonperforming assets
Maintaining a moderate risk profile Minimize nonperforming assets quarter NPLs OREO Ending Amount %ofTA Amount _% of TA 12/319 $ 40m 0.42% $ 1M 0.01% 12/31/09 $214m 553% $ 78M 2.01% ALLL to Total Loans — Banner Peer Top Quartile Peer Median * When aduustedfor purchaseaccounting the allowanceto total
Slide 20: Maintain appropriate risk capital
Maintaining a moderate risk profile Maintain appropriate risk capital Quarter Tier1 Ending Leverage "CE/TA 12B119 10.71% 9.77% 1231/09 9.62% 5.87% 18% Tier 1 Leverage — Banner 16% 14% 12% Peer Top Quartile 10% Peer Median 8% Peer source: Group 1 ($108 and oven) Bank Holding Company PerformanceReport
Slide 21: 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 22: Maintain premium to tangible book value
. : . . NNER Maintain premium to tangible book value aaa Maintain favorable stock price to TBV andEPS $5.00 $75 ‘GurEy | SEEK a Earnings per Share LTM Ending Price + TBY TBV. LT™M Ratio. 12/3/19 $55.01 $33.33 165% $ 419 1B.1x “™ Banner Stock Price O6/30/10 $15.07 $29.03 52% $-806 nim § 4.99 $60 Tang
Slide 23: Building value for shareholders, clients, employees, communities
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 22