Banner Corporation · NASDAQ:BANR
Banner — Q1 2023 Earnings Presentation
26 slides from Banner's earnings presentation, Apr 19, 2023
Slide 1: First Quarter 2023
NNER . CORPORATION First Quarter 2023
Slide 2: Disclosure Statement
Disclosure Statement This 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 measures a
Slide 3: First quarter 2023 highlights
First quarter 2023 highlights * Loan growth of $14 million (1% annualized) * Total loan originations (excluding HFS) were $609 million * Core deposits declined by $692 million (5.4%), and represent 93% of total deposits; Loan-to-deposit ratio increased from 74% to 77% * Net interest margin (tax equi
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 Assets $15.58 } Acquisition History Deposits $13.2B 20194 2018Q4 2015Q4 2015Q1 20142 s Si swor
Slide 5: Environmental, Social & Governance
Environmental, Social & Governance Program highlights and overview Our inaugural ESG Highlights Report is available at: www.bannerbank.com/esg Environmental Soci al Governance te & Provided and participated in construction loans for clients developing green and zero-energy building projects. Provide
Slide 6: 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 7: Growing revenue in a good place since 1890
Growing revenue ... ina good place since 1890 pS Population Estimate (mitions) 2020 2030 Growth Washington 77 8.6 11%* Oregon 43 46 8%* Idaho 18 21 16%* California 39.6 40.7 3% Region pS, 3512) __2% * Among the fastest United States 329.5 346.1 5% growing in the country Strong Population Growth Fore
Slide 8: 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 From Apple é Technology < ‘ Microsoft: (inte) amazon (4icron GExpedia iG: @ zoomerang., from Silicon Valley to Manufacturing intel) CCA Qeccwe ae ™ R the Central Val
Slide 9: Our 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
Slide 10: 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 5-Star rating™ (highest category) BauerFinancial; 40 consecutive quarters Top 50 U.S. Public Banks (assets of $10B+) S&P Global Mark
Slide 11: Growing revenue: core revenue
Growing revenue Core revenue * é Quarter LT™ luarter Ending Amount Amount 03/31/23 $ 170M $ 656m 12/31/09 S$ 45M $ 177M 200 5 Other Income Net Interest Income 175 $ Millions 150 125 100 7S 50 25 1 Excludes net gain/loss on sale of securities, change in valuation of financial instruments carried at f
Slide 12: 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
Slide 13: Protecting net interest margin
Protecting net interest margin Low Cost Funding Mix FHLB, Sub Debt & Other _ 3/31/2023 Earning Asset Mix INNER 3/31/2023 Certificat Securities & at ica’ . Non-Interest Int-bearing of Deposi Bearing Deposits Loans $ Millions Non-Interest Interest Bearing Interest Bearing CDs and Savings s Subtotal De
Slide 14: Diversified loan portfolio
INNER Diversified loan portfolio pas Loan Composition Loan Originations (commitments, SMM) 3/31/2023 $1,400 rary 8% Consumer i i 5 7% CRE Breakout $1,200 6.42% 7% Investment Properties 1520 __ 5.64% 5 Small Balance CRE 1,180 $1,000 6% Total Comm CRE 3,566 35% & $800 o% Agricultural origi ay $600 3%
Slide 15: Protecting net interest margin: core deposits
Protecting net interest margin Grow core deposits Quarter Ending Balance % of Total Deposits 03/31/23 $ 12,204 93% 12/31/09 $ 1924m 50% Noncore Deposits Core Deposits — Core Deposit % Reduce deposit costs Quarter Quarter LTM Ending Amount Rate Amount Rate 03/31/23 $ 9.2m 0.28% $ 173m 0.12% 12/31/09
Slide 16: Protecting net interest margin: funding dependence
Protecting net interest margin 50% 40% Net Noncore Funding Dependence — Banner 30% 20% Peer Median 10% Peer Top Quartile -10% -20% SPP Py 2 ee I? PY OW SP GY SY oY SY PY VY SLL LMS HS os Peer source: Group 1 (S10B and over), Bank Holding Company Performance Report (BHCPR), National Information Cente
Slide 17: Maintain top quartile net interest margin
INNER Protecting net interest margin pees Maintain top quartile net interest margin 6% 5 ; LTM 9 Earning Asset Yield Quarter Marsh Funding Cost = . Ending Amount Rate Amount Rate Net Interest Margin 03/31/23 $153m 4.22% $588m 3.88% 12/31/09 $ 39m 3.53% $146mM 3.36% Net Interest Margin — Banner 4.0%
Slide 18: Conservative investment portfolio
Conservative investment portfolio oa 12 Month Net Interest Income Shock (SMM), % Change Investment Portfolio Composition ($3.79 billion) 800 Agency, $53, other, $3. corp, st46.3.9% *4% O1% 595 600 569 ABS Szis 81% of investments are Agency 400 MBS/CMO or AAA rated 6.4% non-rated investments, 200 pri
Slide 19: 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 18
Slide 20: Spending carefully
Spending carefully Control core operating expense Quarter Quarter LTM Ending Amount Amount 03/31/23 $ 92M $368M 12/31/09 $ 31M $132M 100% 90% Efficiency Ratio — Banner 80% 60% Peer Top Quartile Peer source: Group 1 ($108 and over), Bank Holding Company Performance Report (BHCPR), National Informatio
Slide 21: 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 22: Allowance for credit losses roll-forward
ACL - Loans 141.5 0.2 (0.2) (0.8) 0.8 141.5 ACL - Unfunded Commitments 14.7 (0.3) (1.0) 0.0 (1.3) 13.4 ACL - HTM Securities 0.4 (0.0) (0.0) 0.0 (0.0) 0.4 Total ACL 156.6 (0.0) (1.3) (0.8) (0.5) 155.3 $156.6 $155.3
Slide 23: Maintaining a moderate risk profile
Maintaining a moderate risk profile Minimize nonperforming assets Quarter NPAs REO Ending Amount %of TA Amount % of TA 03/31/23 $§ 27m 017% $ Om 0.00% 12/31/09 $292m 611% $ 78m 2.01% ACLL to Total Loans 3.5% — Banner 3.0% Peer Top Quartile Peer Median Peer source: Group 1 ($108 and over), Bank Holdi
Slide 24: Pre-tax pre-provision earnings
PRE-TAX PRE-PROVISION EARNINGS Mar 31, 2023 Dec 31, 2022 Mar 31, 2022 Income before provision for income taxes (GAAP) 68,492$ 66,424$ 53,847$ (Recapture)/Provision for credit losses (524) 6,704 (6,961) Pretax pre provision earnings (non-GAAP) 67,968 73,128 46,886 Exclude net loss (gain) on sale of s
Slide 25: 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 26: Building value for stakeholders
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 25