Glacier Bancorp, Inc. Announces Results for the Quarter Ended September 30, 2014

HIGHLIGHTS:

  • All time record net income of $29.3 million for the current quarter, an increase of 2 percent from the prior quarter net income of $28.7 million and an increase of 14 percent from the prior year third quarter net income of $25.6 million.
  • Current quarter diluted earnings per share of $0.40, an increase of 14 percent from the prior year third quarter diluted earnings per share of $0.35.
  • Excluding the acquisition, the loan portfolio increased $118 million, or 11 percent annualized, during the current quarter and increased $321 million, or 8 percent, from the prior year third quarter.
  • Excluding the acquisition, non-interest bearing deposits increased $51.0 million, or 3 percent, during the current quarter and increased $119 million, or 8 percent, from the prior year third quarter.
  • Current quarter net charged-off loans of $364 thousand for the current quarter decreased $1.7 million from the prior year third quarter net charged-off loans of $2.0 million. Net charged-off loans for the nine months of the current year was 0.03 percent of total loans.
  • Dividend declared of $0.17 per share during the current quarter. The dividend was the 118th consecutive quarterly dividend declared by the Company.
  • Completed the acquisition of FNBR Holding Corporation and its subsidiary, First National Bank of the Rockies, a community bank based in Grand Junction, Colorado.

Results Summary

Three Months ended Nine Months ended
(Dollars in thousands, except per share data) Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Sep 30,
2013
Sep 30,
2014
Sep 30,
2013
Net income $ 29,294 28,677 26,730 25,628 84,701 69,098
Diluted earnings per share $ 0.40 0.38 0.36 0.35 1.14 0.95
Return on average assets (annualized) 1.46% 1.47% 1.39% 1.27% 1.44% 1.19%
Return on average equity (annualized) 11.30% 11.45% 11.04% 10.85% 11.27% 9.96%

KALISPELL, Mont., Oct. 23, 2014 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income of $29.3 million for the current quarter, an increase of $3.7 million, or 14 percent, from the $25.6 million of net income for the prior year third quarter. Diluted earnings per share for the current quarter was $0.40 per share, an increase of $0.05, or 14 percent, from the prior year third quarter diluted earnings per share of $0.35. Included in the current quarter non-interest expense was $1.4 million of one-time expenses and included in the current quarter non-interest income was a one-time bargain purchase gain of $680 thousand from the FNBR Holding Corporation acquisition. "It was another strong quarter driven by a nice increase to top-line revenue," said Mick Blodnick, President and Chief Executive Officer. "As we continue to change the mix of our balance sheet by increasing loans and decreasing investments, revenue in the form of interest income has clearly improved. Hopefully this trend continues," Blodnick said.

Net income for the nine months ended September 30, 2014 was $84.7 million, an increase of $15.6 million, or 23 percent, from the $69.1 million of net income for the same period the prior year. Diluted earnings per share for the first nine months of the current year was $1.14 per share, an increase of $0.19, or 20 percent, from the diluted earnings per share in the prior year first nine months.

On August 31, 2014, the Company completed the acquisition of FNBR Holding Corporation, and its subsidiary, First National Bank of the Rockies ("FNBR"), which has ten community banking offices in Grand Junction, Steamboat Springs, Meeker, Rangely, Craig, Hayden, and Oak Creek, Colorado. The branches of FNBR have been combined with an existing division of Glacier Bank and operate under the name "Bank of the San Juans, division of Glacier Bank." Cash of $16.7 million was paid and 555,732 shares of the Company's common stock were issued in the acquisition. The Company incurred $525 thousand of legal and professional expenses in connection with the acquisition during 2014. A bargain purchase gain of $680 thousand resulted from the acquisition which was based on the estimated fair value of the assets acquired and liabilities assumed. The Company's results of operations and financial condition include the acquisition of FNBR from the acquisition date and the following table provides information on the fair value of selected classifications of assets and liabilities acquired:

(Dollars in thousands) August 31,
2014
Total assets $ 349,167
Investment securities 157,018
Loans receivable 137,488
Non-interest bearing deposits 80,037
Interest bearing deposits 229,604
Asset Summary
$ Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Cash and cash equivalents $ 282,097 202,358 155,657 254,684 79,739 126,440 27,413
Investment securities, available-for-sale 2,398,196 2,559,411 3,222,829 3,318,953 (161,215) (824,633) (920,757)
Investment securities, held-to-maturity 482,757 483,557 (800) 482,757 482,757
Total investment securities 2,880,953 3,042,968 3,222,829 3,318,953 (162,015) (341,876) (438,000)
Loans receivable
Residential real estate 603,806 587,340 577,589 583,817 16,466 26,217 19,989
Commercial 3,248,529 3,023,915 2,901,283 2,828,287 224,614 347,246 420,242
Consumer and other 606,764 592,024 583,966 588,995 14,740 22,798 17,769
Loans receivable 4,459,099 4,203,279 4,062,838 4,001,099 255,820 396,261 458,000
Allowance for loan and lease losses (130,632) (130,636) (130,351) (130,765) 4 (281) 133
Loans receivable, net 4,328,467 4,072,643 3,932,487 3,870,334 255,824 395,980 458,133
Other assets 618,293 572,125 573,377 603,959 46,168 44,916 14,334
Total assets $ 8,109,810 7,890,094 7,884,350 8,047,930 219,716 225,460 61,880

Total investment securities decreased $162 million, or 5 percent, during the current quarter and decreased $438 million, or 13 percent, from September 30, 2013 as the Company continued to reduce the overall size of the investment portfolio. At September 30, 2014, investment securities represented 36 percent of total assets, down from 39 percent at the previous quarter and 41 percent at September 30, 2013.

Excluding the loans receivable from the acquisition of FNBR, the loan portfolio increased by $118 million, or 11 percent annualized, during the current quarter with improvement in all loan categories. "For the second consecutive quarter we produced double digit loan growth on an annualized basis," Blodnick said. "Currently our loan growth has exceeded our expectations for the year, now we have to continue to work hard and try to maintain this trend through the rest of 2014," Blodnick said. Excluding the acquisition, the largest dollar and percentage increase was in commercial loans which increased $107 million, or 4 percent, during the current quarter which was attributable to increases in loan production and seasonal draws on construction lines. Excluding the loans receivable from the acquisition, the loan portfolio increased $258 million, or 6 percent, since December 31, 2013 of which $230 million came from growth in commercial loans.

Credit Quality Summary
(Dollars in thousands) At or for the
Nine Months
ended
September 30,
2014

At or for the Six
Months ended
June 30,
2014

At or for the
Year ended
December 31,
2013
At or for the
Nine Months
ended
September 30,
2013
Allowance for loan and lease losses
Balance at beginning of period $ 130,351 130,351 130,854 130,854
Provision for loan losses 1,721 1,361 6,887 5,085
Charge-offs (5,567) (3,324) (13,643) (8,962)
Recoveries 4,127 2,248 6,253 3,788
Balance at end of period $ 130,632 130,636 130,351 130,765
Other real estate owned $ 28,374 26,338 26,860 36,531
Accruing loans 90 days or more past due 1,617 980 604 174
Non-accrual loans 68,149 75,147 81,956 88,293
Total non-performing assets 1 $ 98,140 102,465 109,420 124,998
Non-performing assets as a percentage of subsidiary assets 1.21% 1.30% 1.39% 1.56%
Allowance for loan and lease losses as a percentage of non-performing loans 187% 172% 158% 148%
Allowance for loan and lease losses as a percentage of total loans 2.93% 3.11% 3.21% 3.27%
Net charge-offs as a percentage of total loans 0.03% 0.03% 0.18% 0.13%
Accruing loans 30-89 days past due $ 17,570 18,592 32,116 26,401
Accruing troubled debt restructurings $ 74,376 73,981 81,110 86,850
Non-accrual troubled debt restructurings $ 37,482 35,786 42,461 40,917
1 As of September 30, 2014, non-performing assets have not been reduced by U.S. government guarantees of $3.4 million.

Non-performing assets at September 30, 2014 were $98.1 million and included $5.7 million from the FNBR acquisition. Excluding the acquisition, non-performing assets at September 30, 2014 were $92.5 million, a decrease of $10.0 million, or 10 percent, during the current quarter and a decrease of $32.5 million, or 26 percent, from a year ago. Land, lot and other construction loans (i.e., regulatory classification) continues to be the largest category and, excluding the acquisition, was $47.5 million, or 51 percent, of the non-performing assets at September 30, 2014. The Company has continued to make progress by reducing this category the past few years and, excluding the acquisition, the category decreased $1.6 million, or 3 percent, from the prior quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $17.6 million at September 30, 2014 decreased $1.0 million, or 5 percent, from the prior quarter and decreased $8.8 million, or 33 percent, from the prior year third quarter.

The allowance for loan and lease losses ("allowance") was $131 million at September 30, 2014 and remained stable compared to the prior quarter and year ago periods. The allowance was 2.93 percent of total loans outstanding at September 30, 2014 compared to 3.11 percent at June 30, 2014 and 3.27 percent for the same quarter last year. Excluding the FNBR acquisition, the allowance was 3.02 percent of total loans outstanding at September 30, 2014, with the decrease from the prior quarter primarily reflecting the growth in the loan portfolio.

Credit Quality Trends and Provision for Loan Losses
(Dollars in thousands)

Provision
for Loan
Losses



Net
Charge-Offs


ALLL
as a Percent
of Loans
Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans

Non-Performing
Assets to
Total Subsidiary
Assets
Third quarter 2014 $ 360 $ 364 2.93% 0.39% 1.21%
Second quarter 2014 239 332 3.11% 0.44% 1.30%
First quarter 2014 1,122 744 3.20% 1.05% 1.37%
Fourth quarter 2013 1,802 2,216 3.21% 0.79% 1.39%
Third quarter 2013 1,907 2,025 3.27% 0.66% 1.56%
Second quarter 2013 1,078 1,030 3.56% 0.60% 1.64%
First quarter 2013 2,100 2,119 3.84% 0.95% 1.79%
Fourth quarter 2012 2,275 8,081 3.85% 0.80% 1.87%

Net charged-off loans for the current quarter remained stable from the prior quarter and decreased $1.7 million, or 82 percent, from the prior year third quarter. The current quarter provision for loan losses of $360 thousand increased $121 thousand from the prior quarter and decreased $1.5 million from the prior year third quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of provision for loan loss expense.

Supplemental information regarding credit quality and identification of the Company's loan portfolio based on regulatory classification is provided in the exhibits at the end of this press release. The regulatory classification of loans is based primarily on collateral type while the Company's loan segments presented herein are based on the purpose of the loan.

Liability Summary
$ Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Non-interest bearing deposits $ 1,595,971 1,464,938 1,374,419 1,397,401 131,033 221,552 198,570
Interest bearing deposits 4,510,840 4,280,898 4,205,548 4,215,479 229,942 305,292 295,361
Repurchase agreements 367,213 315,240 313,394 314,313 51,973 53,819 52,900
FHLB advances 366,866 607,305 840,182 967,382 (240,439) (473,316) (600,516)
Other borrowed funds 7,351 7,367 8,387 8,466 (16) (1,036) (1,115)
Subordinated debentures 125,669 125,633 125,562 125,526 36 107 143
Other liabilities 95,420 78,698 53,608 71,556 16,722 41,812 23,864
Total liabilities $ 7,069,330 6,880,079 6,921,100 7,100,123 189,251 148,230 (30,793)

Excluding the FNBR acquisition, non-interest bearing deposits at September 30, 2014 increased $51.0 million, or 3 percent, during the current quarter, and increased $119 million, or 8 percent, from September 30, 2013. Excluding the acquisition, interest bearing deposits were unchanged from the prior quarter and increased $65.8 million, or 2 percent, from the prior year. In addition to the increase in deposit balances, the Company has benefited from a higher than expected increase in the number of checking accounts during the current year. Interest bearing deposits of $4.511 billion at September 30, 2014 included $196 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Federal Home Loan Bank ("FHLB") advances of $367 million at September 30, 2014 decreased $240 million, or 40 percent, during the current quarter and decreased $601 million, or 62 percent, from September 30, 2013 as the need for borrowings continued to decrease concurrent with the increase in deposits.

Stockholders' Equity Summary
$ Change from
(Dollars in thousands, except per share data) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Common equity $ 1,017,805 985,809 953,605 937,824 31,996 64,200 79,981
Accumulated other comprehensive income 22,675 24,206 9,645 9,983 (1,531) 13,030 12,692
Total stockholders' equity 1,040,480 1,010,015 963,250 947,807 30,465 77,230 92,673
Goodwill and core deposit intangible, net (141,323) (137,815) (139,218) (139,934) (3,508) (2,105) (1,389)
Tangible stockholders' equity $ 899,157 872,200 824,032 807,873 26,957 75,125 91,284
Stockholders' equity to total assets 12.83% 12.80% 12.22% 11.78%
Tangible stockholders' equity to total tangible assets 11.28% 11.25% 10.64% 10.22%
Book value per common share $ 13.87 13.56 12.95 12.76 0.31 0.92 1.11
Tangible book value per common share $ 11.98 11.71 11.08 10.87 0.27 0.90 1.11
Market price per share at end of period $ 25.86 28.38 29.79 24.68 (2.52) (3.93) 1.18

Tangible stockholders' equity of $899 million at September 30, 2014 increased $27.0 million, or 3 percent, from the prior quarter as a result of $15.1 million of Company stock issued in connection with the acquisition of FNBR and earnings retention. Tangible stockholders' equity increased $91.3 million from a year ago as the result of earnings retention, stock issued in connection with the acquisition, and an increase in accumulated other comprehensive income. Tangible book value per common share of $11.98 increased $0.27 per share from the prior quarter and increased $1.11 per share from the prior year third quarter.

Cash Dividend

On September 25, 2014, the Company's Board of Directors declared a cash dividend of $0.17 per share during the current quarter. The dividend is payable October 16, 2014 to shareholders of record on October 7, 2014. The dividend was the 118th consecutive quarterly dividend declared by the Company and future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Operating Results for Three Months Ended September 30, 2014
Compared to June 30, 2014, March 31, 2014 and September 30, 2013
Revenue Summary
Three Months ended $ Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Sep 30,
2013
Jun 30,
2014
Mar 31,
2014
Sep 30,
2013
Net interest income
Interest income $ 75,690 73,963 74,087 69,531 1,727 1,603 6,159
Interest expense 6,430 6,528 6,640 7,186 (98) (210) (756)
Total net interest income 69,260 67,435 67,447 62,345 1,825 1,813 6,915
Non-interest income
Service charges, loan fees, and other fees 15,661 14,747 13,248 15,119 914 2,413 542
Gain on sale of loans 6,000 4,778 3,595 7,021 1,222 2,405 (1,021)
Loss on sale of investments (61) (48) (51) (403) (13) (10) 342
Other income 2,832 3,027 2,596 2,136 (195) 236 696
Total non-interest income 24,432 22,504 19,388 23,873 1,928 5,044 559
$ 93,692 89,939 86,835 86,218 3,753 6,857 7,474
Net interest margin (tax-equivalent) 3.99% 3.99% 4.02% 3.56%

Net Interest Income

Current quarter net interest income of $69.3 million increased $1.8 million during the current quarter. The current quarter interest income of $75.7 million increased $1.7 million, or 2 percent, from the prior quarter. The current quarter increase in interest income was primarily driven by a greater volume of commercial loans which more than offset the reduction in interest income from the investment portfolio.

The current quarter's interest income increased $6.2 million, or 9 percent, over the prior year third quarter and was primarily attributable to higher interest income on the investment portfolio and commercial loans. Interest income of $22.8 million on investment securities increased $3.3 million, or 17 percent, over the prior year third quarter as a result of a higher yielding mix of investment securities coupled with a reduction of premium amortization (net of discount accretion) on the investment portfolio ("premium amortization"). The current quarter interest income of $37.4 million on commercial loans increased $3.1 million, or 9 percent, over the prior year third quarter as a result of an increased volume of commercial loans.

The current quarter interest expense of $6.4 million decreased $98 thousand, or 2 percent, from the prior quarter and decreased $756 thousand, or 11 percent, from the prior year third quarter. The decrease in interest expense from the prior quarter and the prior year third quarter was the result of decreases in deposit interest rates and in the volume of borrowings. The cost of total funding (including non-interest bearing deposits) for the current quarter was 37 basis points compared to 39 basis points in the prior quarter and 41 basis points for the prior year third quarter.

The Company's net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current and prior quarter was 3.99 percent. The 2 basis points decrease in the current quarter yield on earning assets was offset by a 2 basis points decrease in cost of funds.

The Company's current quarter net interest margin increased 43 basis points from the prior year third quarter net interest margin of 3.56 percent, such increase was primarily driven by the increased yield on the investment portfolio combined with a significant shift in earning assets to the higher yielding loan portfolio. "The Bank divisions continued focus on increasing the number of checking accounts along with growth in deposit balances at reduced rates has helped maintain the net interest margin at 4.00 percent for the first nine months of the year," said Ron Copher, Chief Financial Officer.

Non-interest Income

Non-interest income for the current quarter totaled $24.4 million, an increase of $1.9 million over the prior quarter and an increase of $559 thousand over the same quarter last year. The Company continued to benefit from the increased number of deposit accounts which was reflected in the $914 thousand, or 6 percent, increase in service charge fee income from the prior quarter and the $542 thousand, or 4 percent, increase from the prior year third quarter, respectively. Gain of $6.0 million on the sale of residential loans in the current quarter was an increase of $1.2 million, or 26 percent, from the prior quarter. Gain on the sale of the residential loans in the current quarter decreased $1.0 million, or 15 percent, from the prior year third quarter as a result of the reduction in refinance activity. Included in other income was operating revenue of $38 thousand from other real estate owned ("OREO") and gain of $368 thousand from the sale of OREO, a combined total of $406 thousand for the current quarter compared to $615 thousand for the prior quarter and $433 thousand for the prior year third quarter.

Non-interest Expense Summary
Three Months ended $ Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Mar 31,
2014
Sep 30,
2013
Jun 30,
2014
Mar 31,
2014
Sep 30,
2013
Compensation and employee benefits $ 30,142 28,988 28,634 27,469 1,154 1,508 2,673
Occupancy and equipment 6,961 6,733 6,613 6,421 228 348 540
Advertising and promotions 2,141 1,948 1,777 1,897 193 364 244
Outsourced data processing 1,472 2,032 1,288 1,232 (560) 184 240
Other real estate owned 602 566 507 1,049 36 95 (447)
Regulatory assessments and insurance 1,435 1,028 1,592 1,677 407 (157) (242)
Core deposit intangibles amortization 692 693 710 693 (1) (18) (1)
Other expense 10,793 10,685 8,949 9,930 108 1,844 863
Total non-interest expense $ 54,238 52,673 50,070 50,368 1,565 4,168 3,870

Compensation and employee benefits increased by $1.2 million, or 4 percent, from the prior quarter due to the increased number of employees from the FNBR acquisition and additional benefit costs. Compensation and employee benefits increased by $2.7 million from the prior year third quarter because of the increased number of employees from the FNBR acquisition and the North Cascades Bank acquisition at July 31, 2013 along with additional benefit costs and salary increases. Occupancy and equipment expense increased $540 thousand, or 8 percent, from the prior year third quarter as a result of increases in equipment expense related to the Company's expansion of information and technology infrastructure. Advertising and promotion expense increased $193 thousand, or 10 percent, compared to the prior quarter and increased $244 thousand, or 13 percent, from the prior year third quarter primarily from the FNBR acquisition and recent marketing promotions at a number of the Bank divisions. Outsourced data processing expense decreased $560 thousand, or 28 percent, from the prior quarter as a result of conversion related expenses in the second quarter of 2014. Outsourced data processing expense increased $240 thousand, or 19 percent, from the prior year third quarter because of the acquired banks' outsourced data processing expense and from an increase in technology infrastructure. The current quarter OREO expense of $602 thousand included $362 thousand of operating expense, $65 thousand of fair value write-downs, and $175 thousand of loss on sale of OREO. OREO expense may fluctuate as the Company continues to work through non-performing assets and dispose of foreclosed properties.

Efficiency Ratio

The efficiency ratio for the current quarter and the prior year third quarter was 54 percent. The increases in non-interest expense were more than offset by the increases in net interest income resulting in a comparable efficiency ratio.

Operating Results for Nine Months ended September 30, 2014
Compared to September 30, 2013
Revenue Summary
Nine Months ended
(Dollars in thousands) September 30,
2014
September 30,
2013

$ Change

% Change
Net interest income
Interest income $ 223,740 $ 189,637 $ 34,103 18%
Interest expense 19,598 21,829 (2,231) (10)%
Total net interest income 204,142 167,808 36,334 22%
Non-interest income
Service charges, loan fees, and other fees 43,656 39,765 3,891 10%
Gain on sale of loans 14,373 23,582 (9,209) (39)%
Loss on sale of investments (160) (299) 139 (46)%
Other income 8,455 6,997 1,458 21%
Total non-interest income 66,324 70,045 (3,721) (5)%
$ 270,466 $ 237,853 $ 32,613 14%
Net interest margin (tax-equivalent) 4.00% 3.34%

Net Interest Income

Net interest income for the first nine months of the current year was $204 million, an increase of $36.3 million, or 22 percent, over the same period last year. Interest income for the first nine months of the current year increased $34.1 million, or 18 percent, from the prior year first nine months and was principally due to the decrease in premium amortization on investment securities and increased income from commercial loans. Interest income benefited from a reduction by $33.8 million in premium amortization on investment securities during the first nine months of the current year compared the same period last year. Current year interest income on commercial loans increased $14.9 million, or 16 percent, from the first nine months of the prior year and was primarily the result of an increased volume of commercial loans.

Interest expense for the first nine months of the current year decreased $2.2 million, or 10 percent, from the prior year first nine months and was primarily attributable to the decreases in interest rates on certificate of deposits and lower volume of borrowings. The funding cost (including non-interest bearing deposits) for the first nine months of 2014 was 39 basis points compared to 43 basis points for the first nine months of 2013.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first nine months of 2014 was 4.00 percent, a 66 basis points increase from the net interest margin of 3.34 percent for the first nine months of 2013. The increase in the net interest margin was due to the increased yield on the investment portfolio combined with the shift in earning assets to the higher yielding loan portfolio. The premium amortization for the first nine months of 2014 accounted for a 42 basis points reduction in the net interest margin, which was a decrease of 61 basis points compared to the 103 basis points reduction in the net interest margin for the same period last year.

Non-interest Income

Non-interest income of $66.3 million for the first nine months of 2014 decreased $3.7 million, or 5 percent, over the same period last year. Gain of $14.4 million on the sale of residential loans for the first nine months of 2014 decreased $9.2 million, or 39 percent, from the first nine months of 2013 as a consequence of the slowdown in refinance activity. Service charges and other fees of $43.7 million for the first nine months of 2014 increased $3.9 million, or 10 percent, from the same period last year. Included in other income was operating revenue of $136 thousand from OREO and gain of $1.7 million from the sale of OREO, which combined totaled $1.8 million for the first nine months of 2014 compared to $1.9 million for the same period in the prior year.

Non-interest Expense Summary
Nine Months ended
(Dollars in thousands) September 30,
2014
September 30,
2013

$ Change

% Change
Compensation and employee benefits $ 87,764 $ 76,963 $ 10,801 14%
Occupancy and equipment 20,307 18,152 2,155 12%
Advertising and promotions 5,866 5,066 800 16%
Outsourced data processing 4,792 2,870 1,922 67%
Other real estate owned 1,675 4,901 (3,226) (66)%
Regulatory assessments and insurance 4,055 4,843 (788) (16)%
Core deposit intangibles amortization 2,095 1,684 411 24%
Other expense 30,427 27,804 2,623 9%
Total non-interest expense $ 156,981 $ 142,283 $ 14,698 10%

Compensation and employee benefits for the first nine months of 2014 increased $10.8 million, or 14 percent, from the same period last year due to the increased number of employees from the acquired banks, additional benefit costs and annual salary increases. Occupancy and equipment expense increased $2.2 million, or 12 percent, as a result of the acquisitions and increases in equipment expense related to additional information and technology infrastructure. Outsourced data processing expense increased $1.9 million, or 67 percent, from the prior year first nine months as a result of the acquired banks outsourced data processing expense, conversion related expenses and general increases in data processing expense. OREO expense of $1.7 million in the first nine months of 2014 decreased $3.2 million, or 66 percent, from the same period last year. OREO expense for the first nine months of 2014 included $1.1 million of operating expenses, $217 thousand of fair value write-downs, and $383 thousand of loss on sale of OREO. Other expense for the first nine months of 2014 increased by $2.6 million, or 9 percent, from the first nine months of the prior year primarily from debit card expenses and other deposit account related charges.

Provision for loan losses

The provision for loan losses was $1.7 million for the first nine months of 2014, a decrease of $3.4 million, or 66 percent, from the same period in the prior year. Net charged-off loans during the first nine months of 2014 was $1.4 million, a decrease of $3.7 million from the first nine months of 2013.

Efficiency Ratio

The efficiency ratio was 54 percent for the first nine months of 2014 and 55 percent for the first nine months of 2013. The improvement in the efficiency ratio resulted from net interest income outpacing the increase in non-interest expense and the decrease in non-interest income.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 79 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and is the parent company for Glacier Bank, Kalispell and Bank divisions First Security Bank of Missoula; Valley Bank of Helena; Big Sky Western Bank, Bozeman; Western Security Bank, Billings; and First Bank of Montana, Lewistown, all operating in Montana; as well as Mountain West Bank, Coeur d'Alene operating in Idaho, Utah and Washington; Citizens Community Bank, Pocatello, operating in Idaho; 1st Bank, Evanston, operating in Wyoming and Utah; First Bank of Wyoming, Powell and First State Bank, Wheatland, each operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and Bank of the San Juans, Durango, operating in Colorado.

Forward-Looking Statements

This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about management's plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "should," "projects," "seeks," "estimates" or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:

  • the risks associated with lending and potential adverse changes of the credit quality of loans in the Company's portfolio, including as a result of a slow recovery in the housing and real estate markets in its geographic areas;
  • increased loan delinquency rates;
  • the risks presented by a slow economic recovery which could adversely affect credit quality, loan collateral values, OREO values, investment values, liquidity and capital levels, dividends and loan originations;
  • changes in market interest rates, which could adversely affect the Company's net interest income and profitability;
  • legislative or regulatory changes that adversely affect the Company's business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;
  • costs or difficulties related to the completion and integration of acquisitions;
  • the goodwill the Company has recorded in connection with acquisitions could become additionally impaired, which may have an adverse impact on earnings and capital;
  • reduced demand for banking products and services;
  • the risks presented by public stock market volatility, which could adversely affect the market price of the Company's common stock and the ability to raise additional capital in the future;
  • consolidation in the financial services industry in the Company's markets resulting in the creation of larger financial institutions which may have greater resources could change the competitive landscape;
  • dependence on the CEO, the senior management team and the Presidents of the Bank divisions;
  • potential interruption or breach in security of the Company's systems; and
  • the Company's success in managing risks involved in the foregoing.

The Company does not undertake any obligation to publicly correct or update any forward-looking statement if it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition
(Dollars in thousands, except per share data) September 30,
2014
June 30,
2014
December 31,
2013
September 30,
2013
Assets
Cash on hand and in banks $ 109,947 130,114 109,995 130,285
Federal funds sold 488 2,852 10,527 23,135
Interest bearing cash deposits 171,662 69,392 35,135 101,264
Cash and cash equivalents 282,097 202,358 155,657 254,684
Investment securities, available-for-sale 2,398,196 2,559,411 3,222,829 3,318,953
Investment securities, held-to-maturity 482,757 483,557
Total investment securities 2,880,953 3,042,968 3,222,829 3,318,953
Loans held for sale 65,598 56,021 46,738 61,505
Loans receivable 4,459,099 4,203,279 4,062,838 4,001,099
Allowance for loan and lease losses (130,632) (130,636) (130,351) (130,765)
Loans receivable, net 4,328,467 4,072,643 3,932,487 3,870,334
Premises and equipment, net 178,509 167,741 167,671 168,633
Other real estate owned 28,374 26,338 26,860 36,531
Accrued interest receivable 42,981 41,765 41,898 44,261
Deferred tax asset 44,452 34,505 43,549 47,957
Core deposit intangible, net 11,617 8,109 9,512 10,228
Goodwill 129,706 129,706 129,706 129,706
Non-marketable equity securities 52,868 52,715 52,192 52,192
Other assets 64,188 55,225 55,251 52,946
Total assets $ 8,109,810 7,890,094 7,884,350 8,047,930
Liabilities
Non-interest bearing deposits $ 1,595,971 1,464,938 1,374,419 1,397,401
Interest bearing deposits 4,510,840 4,280,898 4,205,548 4,215,479
Securities sold under agreements to repurchase 367,213 315,240 313,394 314,313
Federal Home Loan Bank advances 366,866 607,305 840,182 967,382
Other borrowed funds 7,351 7,367 8,387 8,466
Subordinated debentures 125,669 125,633 125,562 125,526
Accrued interest payable 3,058 3,163 3,505 3,568
Other liabilities 92,362 75,535 50,103 67,988
Total liabilities 7,069,330 6,880,079 6,921,100 7,100,123
Stockholders' Equity
Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding
Common stock, $0.01 par value per share, 117,187,500 shares authorized 750 745 744 743
Paid-in capital 707,821 692,343 690,918 689,751
Retained earnings - substantially restricted 309,234 292,721 261,943 247,330
Accumulated other comprehensive income 22,675 24,206 9,645 9,983
Total stockholders' equity 1,040,480 1,010,015 963,250 947,807
Total liabilities and stockholders' equity $ 8,109,810 7,890,094 7,884,350 8,047,930
Number of common stock shares issued and outstanding 75,024,092 74,467,908 74,373,296 74,307,951
Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months ended Nine Months ended
(Dollars in thousands, except per share data) September 30,
2014
June 30,
2014
September 30,
2013
September 30,
2014
September 30,
2013
Interest Income
Residential real estate loans $ 7,950 7,220 7,320 22,257 21,606
Commercial loans 37,387 35,267 34,291 107,696 92,788
Consumer and other loans 7,559 7,583 8,447 22,785 24,220
Investment securities 22,794 23,893 19,473 71,002 51,023
Total interest income 75,690 73,963 69,531 223,740 189,637
Interest Expense
Deposits 3,027 3,061 3,398 9,177 10,584
Securities sold under agreements to repurchase 225 192 209 627 646
Federal Home Loan Bank advances 2,356 2,447 2,730 7,317 8,029
Federal funds purchased and other borrowed funds 34 48 54 135 160
Subordinated debentures 788 780 795 2,342 2,410
Total interest expense 6,430 6,528 7,186 19,598 21,829
Net Interest Income 69,260 67,435 62,345 204,142 167,808
Provision for loan losses 360 239 1,907 1,721 5,085
Net interest income after provision for loan losses 68,900 67,196 60,438 202,421 162,723
Non-Interest Income
Service charges and other fees 14,319 13,547 13,711 40,085 36,115
Miscellaneous loan fees and charges 1,342 1,200 1,408 3,571 3,650
Gain on sale of loans 6,000 4,778 7,021 14,373 23,582
Loss on sale of investments (61) (48) (403) (160) (299)
Other income 2,832 3,027 2,136 8,455 6,997
Total non-interest income 24,432 22,504 23,873 66,324 70,045
Non-Interest Expense
Compensation and employee benefits 30,142 28,988 27,469 87,764 76,963
Occupancy and equipment 6,961 6,733 6,421 20,307 18,152
Advertising and promotions 2,141 1,948 1,897 5,866 5,066
Outsourced data processing 1,472 2,032 1,232 4,792 2,870
Other real estate owned 602 566 1,049 1,675 4,901
Regulatory assessments and insurance 1,435 1,028 1,677 4,055 4,843
Core deposit intangibles amortization 692 693 693 2,095 1,684
Other expense 10,793 10,685 9,930 30,427 27,804
Total non-interest expense 54,238 52,673 50,368 156,981 142,283
Income Before Income Taxes 39,094 37,027 33,943 111,764 90,485
Federal and state income tax expense 9,800 8,350 8,315 27,063 21,387
Net Income $ 29,294 28,677 25,628 84,701 69,098
Basic earnings per share $ 0.40 0.38 0.35 1.14 0.95
Diluted earnings per share $ 0.40 0.38 0.35 1.14 0.95
Dividends declared per share $ 0.17 0.17 0.15 0.50 0.44
Average outstanding shares - basic 74,631,317 74,467,576 73,945,523 74,512,806 72,804,321
Average outstanding shares - diluted 74,676,124 74,499,660 74,021,871 74,554,263 72,869,475
Glacier Bancorp, Inc.
Average Balance Sheet
Three Months ended Nine Months ended
September 30, 2014 September 30, 2014
(Dollars in thousands) Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Assets
Residential real estate loans $ 653,633 $ 7,950 4.87% $ 627,790 $ 22,257 4.73%
Commercial loans 3,087,020 37,387 4.80% 2,968,681 107,696 4.85%
Consumer and other loans 592,904 7,559 5.06% 583,279 22,785 5.22%
Total loans 1 4,333,557 52,896 4.84% 4,179,750 152,738 4.89%
Tax-exempt investment securities 2 1,203,419 16,920 5.62% 1,197,604 50,577 5.63%
Taxable investment securities 3 1,910,212 11,438 2.40% 2,002,557 37,061 2.47%
Total earning assets 7,447,188 81,254 4.33% 7,379,911 240,376 4.35%
Goodwill and intangibles 137,605 138,226
Non-earning assets 352,991 335,064
Total assets $ 7,937,784 $ 7,853,201
Liabilities
Non-interest bearing deposits $ 1,506,748 —% $ 1,408,661 —%
NOW accounts 1,131,401 264 0.09% 1,107,643 868 0.10%
Savings accounts 673,823 89 0.05% 645,990 250 0.05%
Money market deposit accounts 1,221,917 593 0.19% 1,200,899 1,813 0.20%
Certificate accounts 1,137,852 1,948 0.68% 1,136,490 5,903 0.69%
Wholesale deposits 4 222,603 133 0.24% 191,228 343 0.24%
FHLB advances 488,487 2,356 1.89% 659,141 7,317 1.46%
Repurchase agreements, federal funds purchased and other borrowed funds 459,299 1,047 0.90% 442,507 3,104 0.94%
Total funding liabilities 6,842,130 6,430 0.37% 6,792,559 19,598 0.39%
Other liabilities 66,960 55,382
Total liabilities 6,909,090 6,847,941
Stockholders' Equity
Common stock 746 745
Paid-in capital 697,407 693,751
Retained earnings 306,200 290,464
Accumulated other comprehensive income 24,341 20,300
Total stockholders' equity 1,028,694 1,005,260
Total liabilities and stockholders' equity $ 7,937,784 $ 7,853,201
Net interest income (tax-equivalent) $ 74,824 $ 220,778
Net interest spread (tax-equivalent) 3.96% 3.96%
Net interest margin (tax-equivalent) 3.99% 4.00%
1 Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
2 Includes tax effect of $5.2 million and $15.5 million on tax-exempt investment security income for the three and nine months ended September 30, 2014.
3 Includes tax effect of $372 thousand and $1.1 million on investment security tax credits for the three and nine months ended September 30, 2014.
4 Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts.
Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification
Loans Receivable, by Loan Type % Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Custom and owner occupied construction $ 59,121 $ 51,497 $ 50,352 $ 40,187 15% 17% 47%
Pre-sold and spec construction 44,085 34,114 34,217 38,702 29% 29% 14%
Total residential construction 103,206 85,611 84,569 78,889 21% 22% 31%
Land development 88,507 81,589 73,132 75,282 8% 21% 18%
Consumer land or lots 99,003 101,042 109,175 111,331 (2)% (9)% (11)%
Unimproved land 66,684 51,457 50,422 51,986 30% 32% 28%
Developed lots for operative builders 15,471 15,123 15,951 15,082 2% (3)% 3%
Commercial lots 16,050 17,238 12,585 15,707 (7)% 28% 2%
Other construction 149,207 112,081 103,807 99,868 33% 44% 49%
Total land, lot, and other construction 434,922 378,530 365,072 369,256 15% 19% 18%
Owner occupied 834,742 816,859 811,479 815,401 2% 3% 2%
Non-owner occupied 658,429 617,693 588,114 541,688 7% 12% 22%
Total commercial real estate 1,493,171 1,434,552 1,399,593 1,357,089 4% 7% 10%
Commercial and industrial 573,617 549,143 523,354 528,792 4% 10% 8%
Agriculture 317,506 288,555 279,959 283,801 10% 13% 12%
1st lien 782,116 757,954 733,406 738,842 3% 7% 6%
Junior lien 71,678 73,130 73,348 76,277 (2)% (2)% (6)%
Total 1-4 family 853,794 831,084 806,754 815,119 3% 6% 5%
Multifamily residential 168,760 152,169 123,154 113,880 11% 37% 48%
Home equity lines of credit 322,442 309,282 298,119 298,935 4% 8% 8%
Other consumer 139,045 134,414 130,758 128,374 3% 6% 8%
Total consumer 461,487 443,696 428,877 427,309 4% 8% 8%
Other 118,234 95,960 98,244 88,469 23% 20% 34%
Total loans receivable, including loans held for sale 4,524,697 4,259,300 4,109,576 4,062,604 6% 10% 11%
Less loans held for sale 1 (65,598) (56,021) (46,738) (61,505) 17% 40% 7%
Total loans receivable $ 4,459,099 $ 4,203,279 $ 4,062,838 $ 4,001,099 6% 10% 11%
1 Loans held for sale are primarily 1st lien 1-4 family loans.
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification




Non-performing Assets, by Loan Type


Non-
Accrual
Loans
Accruing
Loans 90
Days or
More Past
Due


Other
Real Estate
Owned
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Sep 30,
2014
Sep 30,
2014
Sep 30,
2014
Custom and owner occupied construction $ 1,164 1,196 1,248 1,270 1,164
Pre-sold and spec construction 222 609 828 1,157 222
Total residential construction 1,386 1,805 2,076 2,427 1,386
Land development 24,803 23,718 25,062 25,834 16,037 8,766
Consumer land or lots 3,451 2,804 2,588 3,500 2,008 1,443
Unimproved land 13,659 12,421 13,630 14,977 11,233 2,426
Developed lots for operative builders 1,672 2,186 2,215 2,284 988 684
Commercial lots 2,697 2,787 2,899 2,978 271 2,426
Other construction 5,154 5,156 5,167 5,776 165 4,989
Total land, lot and other construction 51,436 49,072 51,561 55,349 30,702 20,734
Owner occupied 14,913 14,595 14,270 19,224 13,044 95 1,774
Non-owner occupied 3,768 3,956 4,301 5,453 1,790 272 1,706
Total commercial real estate 18,681 18,551 18,571 24,677 14,834 367 3,480
Commercial and industrial 4,833 5,850 6,400 7,452 4,307 320 206
Agriculture 3,430 3,506 3,529 2,488 2,491 11 928
1st lien 13,236 17,240 17,630 20,959 10,441 787 2,008
Junior lien 481 1,146 4,767 5,648 389 92
Total 1-4 family 13,717 18,386 22,397 26,607 10,830 879 2,008
Multifamily residential 450 729 450
Home equity lines of credit 3,985 4,289 4,544 5,599 3,400 17 568
Other consumer 222 277 342 399 199 23
Total consumer 4,207 4,566 4,886 5,998 3,599 40 568
Total $ 98,140 102,465 109,420 124,998 68,149 1,617 28,374
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
Accruing 30-89 Days Delinquent Loans, by Loan Type % Change from
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Custom and owner occupied construction $— $— $ 202 $— n/m (100)% n/m
Pre-sold and spec construction 179 144 772 24% n/m (77)%
Total residential construction 179 144 202 772 24% (11)% (77)%
Land development 917 n/m n/m (100)%
Consumer land or lots 62 267 1,716 504 (77)% (96)% (88)%
Unimproved land 1,177 899 615 311 31% 91% 278%
Developed lots for operative builders 21 8 9 n/m 163% 133%
Commercial lots 106 68 n/m n/m 56%
Other construction 660 n/m n/m n/m
Total land, lot and other construction 2,026 1,166 2,339 1,809 74% (13)% 12%
Owner occupied 4,341 6,125 5,321 7,261 (29)% (18)% (40)%
Non-owner occupied 266 1,665 2,338 2,509 (84)% (89)% (89)%
Total commercial real estate 4,607 7,790 7,659 9,770 (41)% (40)% (53)%
Commercial and industrial 3,376 2,528 3,542 4,176 34% (5)% (19)%
Agriculture 152 497 1,366 725 (69)% (89)% (79)%
1st lien 3,738 2,408 12,386 5,142 55% (70)% (27)%
Junior lien 275 536 482 881 (49)% (43)% (69)%
Total 1-4 family 4,013 2,944 12,868 6,023 36% (69)% (33)%
Multifamily Residential 684 689 1,075 226 (1)% (36)% 203%
Home equity lines of credit 1,725 1,839 1,999 1,770 (6)% (14)% (3)%
Other consumer 789 938 1,066 1,130 (16)% (26)% (30)%
Total consumer 2,514 2,777 3,065 2,900 (9)% (18)% (13)%
Other 19 57 (67)% n/m n/m
Total $ 17,570 $ 18,592 $ 32,116 $ 26,401 (5)% (45)% (33)%
n/m - not measurable
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
Net Charge-Offs (Recoveries), Year-to-Date
Period Ending, By Loan Type

Charge-Offs

Recoveries
(Dollars in thousands) Sep 30,
2014
Jun 30,
2014
Dec 31,
2013
Sep 30,
2013
Sep 30,
2014
Sep 30,
2014
Custom and owner occupied construction $— (51) (1)
Pre-sold and spec construction (58) (39) (10) 128 58
Total residential construction (58) (39) (61) 127 58
Land development (319) (333) (383) (97) 148 467
Consumer land or lots 69 97 843 486 325 256
Unimproved land (186) (126) 715 435 25 211
Developed lots for operative builders (125) (117) (81) (36) 13 138
Commercial lots (5) (3) 248 250 5
Other construction (473) (130)
Total land, lot and other construction (566) (482) 869 908 511 1,077
Owner occupied 201 (7) 350 271 487 286
Non-owner occupied (44) (184) 397 375 201 245
Total commercial real estate 157 (191) 747 646 688 531
Commercial and industrial 932 1,343 3,096 1,382 2,146 1,214
Agriculture (1) 53 21 1
1st lien 207 298 681 347 698 491
Junior lien 199 91 106 145 491 292
Total 1-4 family 406 389 787 492 1,189 783
Multifamily residential 138 1 (39) (31) 160 22
Home equity lines of credit 222 (120) 1,606 1,516 500 278
Other consumer 210 175 324 109 373 163
Total consumer 432 55 1,930 1,625 873 441
Other 8 4
Total $ 1,440 1,076 7,390 5,174 5,567 4,127

Visit our website at www.glacierbancorp.com

CONTACT: Michael J. Blodnick (406) 751-4701 Ron J. Copher (406) 751-7706Source:Glacier Bancorp, Inc.