Slide 1: Second Quarter 2023
Second Quarter 2023 Photo by Photo by Photo by Photo by Siti Alimah Yvonne McDonald Maria DeVecchio Salvador Saldana
Slide 2: Disclosure Statement
Disclosure Statement This presentation includes forward-looking statements. These statements include descriptions of management’s plans, objectives or goals for future operations, products or services, forecast of financial or other performance measures and statements about Banner’s general outlook
Slide 3: Second quarter 2023 highlights
Second quarter 2023 highlights • Loan growth of $312 million (12% annualized) • Total loan originations (excluding HFS) were $909 million • Total deposits declined by $55 million (0.4%); core deposits declined by $462 million (3.8%), and represent 90% of total deposits; loan-to-deposit ratio increas
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 $ 15.6 B Acquisition History Deposits $ 13.1 B 2019 Q4 2018 Q4 2015 Q4 2015 Q1 2014 Q2 AltaPa
Slide 5: 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 6: Growing revenue … in a good place since 1890
Growing revenue … in a good place since 1890 Population Estimate (millions) 2020 2030 Growth Washington 7.7 8.4 9%* Oregon 4.2 4.5 5% Idaho 1.8 2.2 20%* California 39.5 39.5 0% Region 53.3 54.6 2% * Among the fastest United States 331.4 344.6 4% growing in the country Strong Population Growth Foreca
Slide 7: 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 Technology to , Manufacturing from Silicon Valley to the Central Valley … Consumer the world’s 6th largest economy Logistics Natural Resources Agriculture Tra
Slide 8: Growing revenue: 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 7
Slide 9: Growing revenue: 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 10: Growing revenue: core revenue and noninterest income
Growing revenue Core revenue 1 Noninterest income Quarter Last 12 Months Quarter Last 12 Months Quarter Quarter Ending Amount Amount Ending Amount Amount 06/30/23 $ 159 M $ 666 M 06/30/23 $ 16.1 M $ 64.9 M 12/31/09 $ 45 M $ 177 M 12/31/09 $ 6.6 M $ 31.1 M 200 30 28% — Deposit Fees as % $ Millions $
Slide 11: 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 r
Slide 12: Protecting net interest margin
Protecting net interest margin Low Cost Funding Mix Earning Asset Mix FHLB, Sub 6/30/2023 6/30/2023 Debt & Other Securities & Certificates 6% Non-Interest Int-bearing of Deposit 8% Bearing Deposits Loans 29% 40% Avg Cost $ Millions Bal (in bps) 71% Non-Interest 5,446 0 Interest Bearing 6,365 83 Avg
Slide 13: Protecting net interest margin: focus on core deposits
Protecting net interest margin Focus on core deposits Reduce deposit costs Quarter Last 12 Months Quarter Quarter Ending Balance % of Total Deposits Ending Amount Rate Amount Rate 06/30/23 $ 11,742 M 90% 06/30/23 $ 20.5 M 0.64% $ 35.8 M 0.26% 12/31/09 $ 1,924 M 50% 12/31/09 $ 17.7 M 1.83% $ 83.2 M 2
Slide 14: Protecting net interest margin: deposits and loans
Protecting net interest margin Deposits $ Billions 50% Loans 14 100% 40% 12 Net Noncore Funding Dependence — Banner — Loan-to-Deposit Ratio 30% 80% 10 20% Peer Median 60% 8 10% 6 40% Peer Top Quartile 0% 4 20% -10% 2 -20% 0% 0 Peer source: Group 1 ($10B and over), Bank Holding Company Performance Re
Slide 15: Maintain top quartile net interest margin
Protecting net interest margin Maintain top quartile net interest margin 6% Earning Asset Yield Quarter Quarter Last 12 Months Funding Cost Ending Amount Rate Amount Rate — Net Interest Margin 06/30/23 $ 143 M 3.92% $ 601 M 4.02% 5% 12/31/09 $ 39 M 3.53% $ 146 M 3.36% 5.0% 4% Net Interest Margin — B
Slide 16: Conservative investment portfolio
Conservative investment portfolio 12 Month Net Interest Income Shock ($MM), % Change Investment Portfolio Composition ($3.59 billion) 800 5% Agency, $49 , 575 597 600 593 576 1.4% Other, $3 , 600 553 Corp, $125 , 3.5% 0.1% 0% 0.0% 0.5% ABS, $215 , -0.6% 6.0% 80% of investments are Agency 400 -3.6% -
Slide 17: 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 16
Slide 18: Spending carefully: control core operating expense
Spending carefully Control core operating expense 100 100% Other $ Millions Quarter Quarter Last 12 Months Info Services Ending Amount Amount Occupancy 90% Compensation 06/30/23 $ 93 M $ 373 M 80 12/31/09 $ 31 M $ 132 M 80% 100% 70% 60 Efficiency Ratio 90% — Banner 60% — Efficiency Ratio 80% 40 50%
Slide 19: 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 20: Diversified loan portfolio
Diversified loan portfolio Loan Composition Loan Originations (commitments, $MM) 6/30/2023 $1,400 9% Average Yield Consumer 7.69% CRE Breakout $MM % 7.41% 8% 6% OO CRE 895 9% $1,200 Investment Properties 1,558 15% 6.42% 7% Small Balance CRE 1,173 11% $1,000 5.64% Total Comm CRE 3,626 35% 6% Commerci
Slide 21: Characteristics of highlighted loan segments
Characteristics of highlighted loan segments Office 1 Retail 2 Healthcare 3 Balances ($MM) $681.1 Balances ($MM) $1,238.4 Balances ($MM) $427.4 Percent of Total Loans 6.5% Percent of Total Loans 11.8% Percent of Total Loans 4.1% Balance of Retail Loans Balance of Healthcare Services Total Investor O
Slide 22: Allowance for credit losses
Allowance for credit losses Change assessment: $161.7 ACL Provision/Release $155.3 Portfolio $28.6 Economic factors $23.5 Changes to allowance: $ Millions $14.9 $15.2 Net charge-offs $6.7 $6.8 $4.5 $6.1 $0.6 Provision -$0.5 $ Millions -$5.2-$7.0 -$8.6 -$9.3-$10.3 ACL - Loans 141.5 4.4 (1.1) (0.3) 3.
Slide 23: Maintaining a moderate risk profile: minimize nonperforming assets
Maintaining a moderate risk profile Minimize nonperforming assets 350 $ Millions Quarter NPAs REO Ending Amount % of TA Amount % of TA 300 06/30/23 $ 29 M 0.18% $ 1M 0.01% Real Estate Owned 12/31/09 $ 292 M 6.11% $ 78 M 2.01% Nonperforming Loans 250 4.0% ACLL to Total Loans 3.5% — Banner 200 3.0% Pe
Slide 24: Building value at Banner: 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 25: Reconciliation of non-GAAP measures
Reconciliation of non-GAAP measures $ Thousands Quarters Ended PRE-TAX PRE-PROVISION EARNINGS Jun 30, 2023 Mar 31, 2023 Jun 30, 2022 Income before provision for income taxes (GAAP) $ 48,771 $ 68,492 $ 59,597 Provision/(Recapture) for credit losses 6,764 (524) 4,534 Pretax pre provision earnings (non
Slide 26: Building value at Banner
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