Bank Directors Seminar, Coeur d'Alene, ID

Active Acquirors in the Pacific Northwest – Whole Bank and Branch Transactions

ƒ Buyers that have a public currency, transaction history and that trade at premium multiples continue to outcompete other potential buyers

PNW M&A Transactions*

Assets / Deposits Acquired ($MM)

Mkt. Cap. ($MM)

# of Transactions (Bank / Branch)

HQ State

Assets ($MM)

Price / TBV

Price / 2018 EPS

Name

Ticker

4

$5,592

Banner Corporation

BANR

WA

$10,379 $2,084 210.5%

15.5x

3

$2,616

Heritage Financial Corp.

HFWA

WA

$4,789

$1,336 283.1%

16.7x

2

$4,002

First Interstate Banc.

FIBK

MT

$12,236 $2,637 272.6%

14.2x

2

$3,462

Columbia Banking System COLB

WA

$12,629 $3,096 269.8%

15.5x

2

$742

FS Bancorp, Inc.

FSBW

WA

$1,133

$201

171.8%

10.8x

2

$80

HomeStreet, Inc.

HMST

WA

$7,164

$795

117.3%

13.6x

2

$42

Sound Financial Bancorp

SFBC

WA

$686

$100

149.7%

NA

*Includes whole bank and branch transactions announced over the last 5 year in WA,OR and ID Source: S&P Global Market Intelligence as of the most recent quarter end, market data as of 8/31/2018. EPS estimates based on Street average estimates Note: Operating data does not include impact from acquisitions pending as of or completed after the most recent quarter Note: Excludes banks that have been acquired

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Recent Trends in the Pacific Northwest

ƒ Recently added a new publicly traded bank in the region with Coastal Community Bank’s (NASDAQ: CCB) IPO in July 2018

ƒ Seattle and Portland are two of the hottest markets in the U.S. and continue to generate significant interest from investors looking to enter the market ƒ Acquirors in slower growth markets looking for foothold in higher growth markets (i.e. Midwest banks looking at growing presence in Western US)

ƒ Buyer consolidation continues – In the Western U.S., several acquirors have gone away recently (Guaranty Bancorp, Pacific Continental, Cascade, Puget Sound, Inland Northwest, etc.)

ƒ Regulatory issues causing delays or termination for several M&A transactions

ƒ Credit unions evaluating strategic alternatives – options include merging with another credit union or acquiring assets of a bank

ƒ Discussions with investor groups looking to obtain a bank charter – fin tech, cannabis banking, etc..

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