×

Glacier Bancorp, Inc. Announces Results for the Quarter Ended December 31, 2014

HIGHLIGHTS:

  • Net income of $28.1 million for the current quarter, an increase of 6 percent from the prior year fourth quarter net income of $26.5 million.
  • Net income of $112.8 million for the current year, an increase of 18 percent from the prior year net income of $95.6 million.
  • Current quarter diluted earnings per share of $0.37, an increase of 3 percent from the prior year fourth quarter diluted earnings per share of $0.36.
  • The loan portfolio increased $29 million, or 3 percent annualized, during the current quarter.
  • Non-performing assets decreased $8.2 million, or 8 percent, during the current quarter.
  • Special dividend declared of $0.30 per share during the current quarter. This was the eleventh special dividend the Company has declared.
  • Regular dividend declared of $0.18 per share, an increase of $0.01 per share, or 6 percent, over the prior quarter.
  • Announced the definitive agreement to acquire Community Bank, Inc., a community bank based in Ronan, Montana, with total assets of $175 million at December 31, 2014.

Results Summary
Three Months ended Year ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31,
(Dollars in thousands, except per share data) 2014 2014 2014 2014 2013 2014 2013
Net income $ 28,054 29,294 28,677 26,730 26,546 112,755 95,644
Diluted earnings per share $ 0.37 0.40 0.38 0.36 0.36 1.51 1.31
Return on average assets (annualized) 1.37% 1.46% 1.47% 1.39% 1.33% 1.42% 1.23%
Return on average equity (annualized) 10.66% 11.30% 11.45% 11.04% 10.96% 11.11% 10.22%

KALISPELL, Mont, Jan. 29, 2015 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income of $28.1 million for the current quarter, an increase of $1.6 million, or 6 percent, from the $26.5 million of net income for the prior year fourth quarter. Diluted earnings per share for the current quarter was $0.37 per share, an increase of $0.01, or 3 percent, from the prior year fourth quarter diluted earnings per share of $0.36. Included in the current quarter non-interest expense was $1.4 million of one-time expenses primarily due to acquisition related expenses and included in the current quarter was non-interest income of $747 thousand from insurance proceeds on a bank owned life insurance policy. "We had another very solid quarter that helped achieve an all time record year for us," said Mick Blodnick, President and Chief Executive Officer. "As expected earnings were down from the previous two quarters as seasonal factors impacted our revenue stream, especially non interest income. In addition, interest expense was higher this quarter, the result of an interest rate swap we put in place three years ago to reduce our sensitivity to increases in interest rates in the future," Blodnick said. "The highlight for the quarter was the announcement of our plans to acquire Community Bank, Inc. with a timetable to hopefully have the transaction closed by the end of February," Blodnick said.

Net income for the year ended December 31, 2014 was $112.8 million, an increase of $17.2 million, or 18 percent, from the $95.6 million of net income for the same period the prior year. Diluted earnings per share for the current year was $1.51 per share, an increase of $0.20, or 15 percent, from the diluted earnings per share in the prior year.

On August 31, 2014, the Company completed the acquisition of FNBR Holding Corporation, and its subsidiary, First National Bank of the Rockies ("FNBR"). The Company incurred $552 thousand of legal and professional expenses in connection with the FNBR 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:

August 31,
(Dollars in thousands) 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
Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2013
Cash and cash equivalents $ 442,409 282,097 155,657 160,312 286,752
Investment securities, available-for-sale 2,387,428 2,398,196 3,222,829 (10,768) (835,401)
Investment securities, held-to-maturity 520,997 482,757 38,240 520,997
Total investment securities 2,908,425 2,880,953 3,222,829 27,472 (314,404)
Loans receivable
Residential real estate 611,463 603,806 577,589 7,657 33,874
Commercial 3,263,448 3,248,529 2,901,283 14,919 362,165
Consumer and other 613,184 606,764 583,966 6,420 29,218
Loans receivable 4,488,095 4,459,099 4,062,838 28,996 425,257
Allowance for loan and lease losses (129,753) (130,632) (130,351) 879 598
Loans receivable, net 4,358,342 4,328,467 3,932,487 29,875 425,855
Other assets 597,331 618,293 573,377 (20,962) 23,954
Total assets $ 8,306,507 8,109,810 7,884,350 196,697 422,157

Total investment securities increased $27 million, or 1 percent, during the current quarter and decreased $314 million, or 10 percent, from December 31, 2013. At December 31, 2014, investment securities represented 35 percent of total assets, compared to 41 percent at December 31, 2013.

The loan portfolio increased by $29 million, or 3 percent annualized, during the current quarter with improvement in all loan categories. Excluding the loans receivable from the FNBR acquisition, the loan portfolio increased $288 million, or 7 percent, since December 31, 2013 of which $245 million came from growth in commercial loans. "Better than expected loan growth in the fourth quarter led to overall organic loan growth in 2014 of 7 percent, which was 2 percent above our goal at the beginning of the year," Blodnick said. "If we include the acquisition of First National Bank of the Rockies, our loan portfolio grew in excess of 10 percent which is the second year in a row we have generated that level of production," Blodnick said.

Credit Quality Summary
At or for the Year At or for the Nine At or for the Year
ended Months ended ended
December 31, September 30, December 31,
(Dollars in thousands) 2014 2014 2013
Allowance for loan and lease losses
Balance at beginning of period $ 130,351 130,351 130,854
Provision for loan losses 1,912 1,721 6,887
Charge-offs (7,603) (5,567) (13,643)
Recoveries 5,093 4,127 6,253
Balance at end of period $ 129,753 130,632 130,351
Other real estate owned $ 27,804 28,374 26,860
Accruing loans 90 days or more past due 214 1,617 604
Non-accrual loans 61,882 68,149 81,956
Total non-performing assets 1 $ 89,900 98,140 109,420
Non-performing assets as a percentage of subsidiary assets 1.08% 1.21% 1.39%
Allowance for loan and lease losses as a percentage of non-performing loans 209% 187% 158%
Allowance for loan and lease losses as a percentage of total loans 2.89% 2.93% 3.21%
Net charge-offs as a percentage of total loans 0.06% 0.03% 0.18%
Accruing loans 30-89 days past due $ 25,904 17,570 32,116
Accruing troubled debt restructurings $ 69,129 74,376 81,110
Non-accrual troubled debt restructurings $ 33,714 37,482 42,461
__________
1 As of December 31, 2014, non-performing assets have not been reduced by U.S. government guarantees of $3.6 million.

Non-performing assets at December 31, 2014 were $89.9 million, a decrease of $8.2 million, or 8 percent, during the current quarter and a decrease of $19.5 million, or 18 percent, from a year ago. Land, lot and other construction loans (i.e., regulatory classification) continues to be the largest category and was $47.7 million, or 53 percent, of the non-performing assets at December 31, 2014. The Company has continued to make progress by reducing this category the past few years and the category decreased $3.7 million, or 7 percent, from the prior quarter. "2014 was another really good year of reducing problem assets, topped off by a strong final quarter," Blodnick said. "Every credit quality metric improved during the current year and as we enter 2015, there is hope that we can make additional strides further lowering our level of troubled assets," Blodnick said. Early stage delinquencies (accruing loans 30-89 days past due) of $25.9 million at December 31, 2014 increased $8.3 million from the prior quarter as a result of seasonal increases which are common in the fourth quarter. Early stage delinquencies for the current quarter decreased $6.2 million, or 19 percent, from the prior year fourth quarter.

The allowance for loan and lease losses ("allowance") was $130 million at December 31, 2014 and remained stable compared to the prior quarter and year ago periods. The allowance was 2.89 percent of total loans outstanding at December 31, 2014 compared to 2.93 percent at September 30, 2014 and 3.21 percent for the same quarter last year.

Credit Quality Trends and Provision for Loan Losses
Accruing
Loans 30-89 Non-Performing
Provision ALLL Days Past Due Assets to
for Loan Net as a Percent as a Percent of Total Subsidiary
(Dollars in thousands) Losses Charge-Offs of Loans Loans Assets
Fourth quarter 2014 $ 191 $ 1,070 2.89% 0.58% 1.08%
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%

Net charged-off loans for the current quarter were $1.1 million, an increase of $706 thousand from the prior quarter and a decrease of $1.1 million from the prior year fourth quarter. The current quarter provision for loan losses of $191 thousand decreased $169 thousand from the prior quarter and decreased $1.6 million from the prior year fourth 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
Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2013
Non-interest bearing deposits $ 1,632,403 1,595,971 1,374,419 36,432 257,984
Interest bearing deposits 4,712,809 4,510,840 4,205,548 201,969 507,261
Repurchase agreements 397,107 367,213 313,394 29,894 83,713
FHLB advances 296,944 366,866 840,182 (69,922) (543,238)
Other borrowed funds 7,311 7,351 8,387 (40) (1,076)
Subordinated debentures 125,705 125,669 125,562 36 143
Other liabilities 106,181 95,420 53,608 10,761 52,573
Total liabilities $ 7,278,460 7,069,330 6,921,100 209,130 357,360

Non-interest bearing deposits at December 31, 2014 increased $36.4 million, or 2 percent, during the current quarter. Excluding the FNBR acquisition, non-interest bearing deposits increased $178 million, or 13 percent, from December 31, 2013. Interest bearing deposits of $4.713 billion at December 31, 2014 included $249 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Excluding an increase of $53.1 million in wholesale deposits, interest bearing deposits at December 31, 2014 increased $149 million, or 3 percent, during the current quarter. Excluding the acquisition and an increase of $44.1 million in wholesale deposits, interest bearing deposits at December 31, 2014 increased $234 million, or 6 percent, from a year ago. 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. Federal Home Loan Bank ("FHLB") advances of $297 million at December 31, 2014 decreased $70 million, or 19 percent, during the current quarter and decreased $543 million, or 65 percent, from December 31, 2013 as the need for borrowings continued to decrease.

Stockholders' Equity Summary
$ Change from
Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands, except per share data) 2014 2014 2013 2014 2013
Common equity $ 1,010,303 1,017,805 953,605 (7,502) 56,698
Accumulated other comprehensive income 17,744 22,675 9,645 (4,931) 8,099
Total stockholders' equity 1,028,047 1,040,480 963,250 (12,433) 64,797
Goodwill and core deposit intangible, net (140,606) (141,323) (139,218) 717 (1,388)
Tangible stockholders' equity $ 887,441 899,157 824,032 (11,716) 63,409
Stockholders' equity to total assets 12.38% 12.83% 12.22%
Tangible stockholders' equity to total tangible assets 10.87% 11.28% 10.64%
Book value per common share $ 13.70 13.87 12.95 (0.17) 0.75
Tangible book value per common share $ 11.83 11.98 11.08 (0.15) 0.75
Market price per share at end of period $ 27.77 25.86 29.79 1.91 (2.02)

Tangible stockholders' equity of $887 million at December 31, 2014 decreased $11.7 million, or 1 percent, from the prior quarter which was primarily the result of the $0.30 per share special dividend declared. Tangible stockholders' equity increased $63.4 million from a year ago as the result of earnings retention, stock issued in connection with the FNBR acquisition, and an increase in accumulated other comprehensive income. Tangible book value per common share of $11.83 decreased $0.15 per share from the prior quarter and increased $0.75 per share from the prior year fourth quarter.

Cash Dividend

On December 30, 2014, the Company's Board of Directors declared a special cash dividend of $0.30 per share, which was the eleventh special dividend the Company has declared. The dividend is payable on January 22, 2015 to shareholders of record on January 13, 2015. On November 25, 2014, the Company's Board of Directors declared a regular cash dividend of $0.18 per share during the current quarter, an increase of $0.01 per share, or 6 percent, from the prior quarter. The dividend was payable December 18, 2014 to shareholders of record on December 9, 2014. 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 December 31, 2014
Compared to September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013
Revenue Summary
Three Months ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Net interest income
Interest income $ 76,179 75,690 73,963 74,087 73,939
Interest expense 7,368 6,430 6,528 6,640 6,929
Total net interest income 68,811 69,260 67,435 67,447 67,010
Non-interest income
Service charges, loan fees, and other fees 15,129 15,661 14,747 13,248 14,695
Gain on sale of loans 5,424 6,000 4,778 3,595 4,935
Loss on sale of investments (28) (61) (48) (51)
Other income 3,453 2,832 3,027 2,596 3,372
Total non-interest income 23,978 24,432 22,504 19,388 23,002
$ 92,789 93,692 89,939 86,835 90,012
Net interest margin (tax-equivalent) 3.92% 3.99% 3.99% 4.02% 3.88%
$ Change from
Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2013
Net interest income
Interest income $ 489 2,216 2,092 2,240
Interest expense 938 840 728 439
Total net interest income (449) 1,376 1,364 1,801
Non-interest income
Service charges, loan fees, and other fees (532) 382 1,881 434
Gain on sale of loans (576) 646 1,829 489
Loss on sale of investments 33 20 23 (28)
Other income 621 426 857 81
Total non-interest income (454) 1,474 4,590 976
$ (903) 2,850 5,954 2,777

Net Interest Income

The current quarter interest income of $76.2 million increased $489 thousand, or 1 percent, from the prior quarter. The current quarter increase in interest income was primarily driven by increases in interest income on residential real estate loans and commercial loans which more than offset the reduction in interest income from the investment securities portfolio. The current quarter's interest income increased $2.2 million, or 3 percent, over the prior year fourth quarter and was primarily attributable to higher interest income on commercial loans. The current quarter interest income of $37.9 million on commercial loans increased $3.2 million, or 9 percent, over the prior year fourth quarter as a result of an increased volume of commercial loans. Current quarter interest income of $22.1 million on investment securities decreased $1.4 million, or 6 percent, over the prior year fourth quarter as a result of a decrease volume in investment securities.

The current quarter interest expense of $7.4 million increased $938 thousand from the prior quarter, primarily the result of interest expense associated with an interest rate swap undertaken to reduce the Company's sensitivity to rising interest rates. The interest rate swap with a notional amount of $160 million had a three year deferred start with the interest expense accrual period beginning in October 2014 and scheduled to end in October 2021. The current quarter interest expense increased $439 thousand from the prior year fourth quarter, such increase attributed to the interest expense associated with the interest rate swap which was partially offset by the decrease in deposit interest expense. The total cost of funding (including non-interest bearing deposits) for the current quarter was 42 basis points compared to 37 basis points in the prior quarter and 40 basis points in the prior year fourth quarter.

The Company's net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 3.92 percent compared to 3.99 in the prior quarter. The 7 basis points decrease in the current quarter net interest margin was primarily driven by the 5 basis point increase in the total funding cost due to the increase in the interest expense associated with the interest rate swap. The yield in earning assets decreased 2 basis points and resulted from a decrease in yields on the loan and investment securities portfolios. The Company's current quarter net interest margin increased 4 basis points from the prior year fourth quarter net interest margin of 3.88 percent, such increase primarily driven by the increased yield on the investment securities combined with a significant shift in earning assets to the higher yielding loan portfolio. The total cost of funding increased 2 basis points over the prior year fourth quarter, such increase from the interest rate swap which was partially offset by a reduction in deposit interest rates.

Non-interest Income

Non-interest income for the current quarter totaled $24.0 million, a decrease of $454 thousand over the prior quarter and an increase of $976 thousand over the same quarter last year. Service fee income of $15.1 million, decreased $532 thousand, or 3 percent, from the prior quarter as a result of seasonal activity and increased $434 thousand, or 3 percent, from the prior year fourth quarter as a result of the increased number of deposit accounts. Gain of $5.4 million on the sale of residential loans in the current quarter was a decrease of $576 thousand, or 10 percent, from the prior quarter again because of seasonal activity. Gain on the sale of the residential loans in the current quarter increased $489 thousand, or 10 percent, from the prior year fourth quarter as a result of an increase in mortgage lending activity during the last half of 2014 as interest rates decreased. Other non-interest income for the current quarter of $3.5 million, increased $621 thousand, or 22 percent, over the prior quarter and was due to $747 thousand of insurance proceeds recognized in the current quarter from a bank owned life insurance policy. Included in other income was operating revenue of $67 thousand from other real estate owned ("OREO") and gain of $374 thousand from the sale of OREO, a combined total of $441 thousand for the current quarter compared to $406 thousand for the prior quarter and $1.6 million for the prior year fourth quarter.

Non-interest Expense Summary
Three Months ended
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2014 2013
Compensation and employee benefits $ 30,807 30,142 28,988 28,634 27,258
Occupancy and equipment 7,191 6,961 6,733 6,613 6,723
Advertising and promotions 2,046 2,141 1,948 1,777 1,847
Data processing 1,815 1,472 2,032 1,288 1,623
Other real estate owned 893 602 566 507 2,295
Regulatory assessments and insurance 1,009 1,435 1,028 1,592 1,519
Core deposit intangibles amortization 716 692 693 710 717
Other expense 11,221 10,793 10,685 8,949 11,052
Total non-interest expense $ 55,698 54,238 52,673 50,070 53,034
$ Change from
Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2014 2014 2014 2013
Compensation and employee benefits $ 665 1,819 2,173 3,549
Occupancy and equipment 230 458 578 468
Advertising and promotions (95) 98 269 199
Data processing 343 (217) 527 192
Other real estate owned 291 327 386 (1,402)
Regulatory assessments and insurance (426) (19) (583) (510)
Core deposit intangibles amortization 24 23 6 (1)
Other expense 428 536 2,272 169
Total non-interest expense $ 1,460 3,025 5,628 2,664

Compensation and employee benefits for the current quarter increased by $665 thousand, or 2 percent, from the prior quarter due to the increased number of employees from the FNBR acquisition. Compensation and employee benefits increased by $3.5 million from the prior year fourth quarter also due to the increased number of employees from the FNBR acquisition, along with additional benefit costs and salary increases. Current quarter occupancy and equipment expense increased $230 thousand, or 3 percent, from the prior quarter and increased $468 thousand, or 7 percent, from the prior year fourth quarter as a result of added costs associated with the FNBR acquisition. Advertising and promotion expense in the current quarter increased $199 thousand, or 11 percent, compared to the prior year fourth quarter primarily from the FNBR acquisition and recent marketing promotions at a number of the Bank divisions. The current quarter data processing expense increased $343 thousand, or 23 percent, from the prior quarter and increased $192 thousand, or 12 percent, as a result of conversion related expenses in the fourth quarter of 2014. The current quarter OREO expense of $893 thousand included $360 thousand of operating expense, $474 thousand of fair value write-downs, and $59 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 was 55 percent and the prior year fourth quarter was 54 percent. The 1 percent increase in efficiency ratio resulted from increases in non-interest expense primarily the result of increased operational expense associated with recent acquisitions, which exceeded the increases in net interest income from higher yielding earning assets and increases in non-interest income from greater mortgage activity and higher number of deposit accounts.

Operating Results for Year ended December 31, 2014
Compared to December 31, 2013
Revenue Summary
Year ended
December 31, December 31,
(Dollars in thousands) 2014 2013 $ Change % Change
Net interest income
Interest income $ 299,919 $ 263,576 $ 36,343 14%
Interest expense 26,966 28,758 (1,792) (6)%
Total net interest income 272,953 234,818 38,135 16%
Non-interest income
Service charges, loan fees, and other fees 58,785 54,460 4,325 8%
Gain on sale of loans 19,797 28,517 (8,720) (31)%
Loss on sale of investments (188) (299) 111 (37)%
Other income 11,908 10,369 1,539 15%
Total non-interest income 90,302 93,047 (2,745) (3)%
$ 363,255 $ 327,865 $ 35,390 11%
Net interest margin (tax-equivalent) 3.98% 3.48%

Net Interest Income

Interest income for 2014 increased $36.3 million, or 14 percent, from the prior year and was principally due to the decrease in premium amortization on investment securities and increased income from commercial loans. Interest income on investment securities benefited from a reduction of $36.6 million in premium amortization (net of discount accretion) on the investment portfolio ("premium amortization") during the current year compared to the prior year. Current year interest income on commercial loans increased $18.2 million, or 14 percent, from the prior year and was primarily the result of an increase in volume of commercial loans.

Interest expense for the current year decreased $1.8 million, or 6 percent, from the prior year and was primarily attributable to the decreases in interest rates on certificate of deposits and lower volume of borrowings, such benefit was partially offset by the increased costs associated with the interest rate swap in the final quarter of the year. The total funding cost (including non-interest bearing deposits) for the current year was 39 basis points compared to 42 basis points for the prior year.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for 2014 was 3.98 percent, a 50 basis points increase from the net interest margin of 3.48 percent for 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 2014 accounted for a 40 basis points reduction in the net interest margin, compared to an 89 basis points reduction in the net interest margin for the same period last year. "The Bank divisions were very much focused on growing their loan portfolios throughout the year," said Ron Copher, Chief Financial Officer. "Funding this loan growth with cash flow from the lower yielding investment securities portfolio combined with increased deposit balances at reduced rates enabled the net interest margin to improve by 50 basis points over the net interest margin for the prior year."

Non-interest Income

Non-interest income of $90.3 million for 2014 decreased $2.7 million, or 3 percent, over last year. Service charges and other fees of $58.8 million for the current year increased $4.3 million, or 8 percent, from the prior year and was primarily the result of an increase in the number of deposit accounts. Gain of $19.8 million on the sale of residential loans for 2014 decreased $8.7 million, or 31 percent, from 2013 as a consequence of the slowdown in refinance activity. Current year other income of $11.9 million, increased $1.5 million, or 15 percent, from the prior year as a result of a current year bargain purchase gain, proceeds from bank owned life insurance policy, and other income which was partially offset by the decreases in OREO income. Included in other income was operating revenue of $204 thousand from OREO and gain of $2.1 million from the sale of OREO, which combined totaled $2.3 million for the current year compared to $3.5 million for the same period in the prior year.

Non-interest Expense Summary
Year ended
December 31, December 31,
(Dollars in thousands) 2014 2013 $ Change % Change
Compensation and employee benefits $ 118,571 $ 104,221 $ 14,350 14%
Occupancy and equipment 27,498 24,875 2,623 11%
Advertising and promotions 7,912 6,913 999 14%
Data processing 6,607 4,493 2,114 47%
Other real estate owned 2,568 7,196 (4,628) (64)%
Regulatory assessments and insurance 5,064 6,362 (1,298) (20)%
Core deposit intangibles amortization 2,811 2,401 410 17%
Other expense 41,648 38,856 2,792 7%
Total non-interest expense $ 212,679 $ 195,317 $ 17,362 9%

Compensation and employee benefits for 2014 increased $14.4 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 for 2014 increased $2.6 million, or 11 percent, over the prior year as a result of recent bank acquisitions and increases in equipment expense related to additional information and technology infrastructure. Current year advertising and promotions increased $999 thousand from the prior year primarily from the FNBR acquisition and recent marketing promotions at a number of the Bank divisions. Data processing expense for 2014 increased $2.1 million, or 47 percent, from the prior year as a result of the acquired banks outsourced data processing expense, conversion related expenses and general increases in data processing expense. OREO expense of $2.6 million in 2014 decreased $4.6 million, or 64 percent, from the same period last year. OREO expense for the 2014 included $1.4 million of operating expenses, $691 thousand of fair value write-downs, and $442 thousand of loss on sale of OREO. Other expense for the current year increased by $2.8 million, or 7 percent, from the prior year primarily from increases in employee expenses from acquired banks and increase in consulting and advisory services.

Provision for loan losses

The provision for loan losses was $1.9 million for 2014, a decrease of $5.0 million, or 72 percent, from the same period in the prior year. Net charged-off loans during 2014 was $2.5 million, a decrease of $4.9 million from 2013.

Efficiency Ratio

The efficiency ratio was 54 percent for 2014 and 55 percent for 2013. The improvement in the efficiency ratio was the result of the increase in net interest income from the shift in earning assets from investment securities to the higher yielding loans and decreases in premium amortization on the investment security portfolio. Such increases in net interest income outpaced the increase in non-interest expense from compensation expense and the decrease in non-interest income driven by decrease in refinance activity.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 80 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;
  • increased loan delinquency rates;
  • the risks presented by the lingering 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 or grow the Company through acquisitions;
  • consolidation in the financial services industry in the Company's markets resulting in the creation of larger financial institutions who 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
December 31, September 30, December 31,
(Dollars in thousands, except per share data) 2014 2014 2013
Assets
Cash on hand and in banks $ 122,834 109,947 109,995
Federal funds sold 1,025 488 10,527
Interest bearing cash deposits 318,550 171,662 35,135
Cash and cash equivalents 442,409 282,097 155,657
Investment securities, available-for-sale 2,387,428 2,398,196 3,222,829
Investment securities, held-to-maturity 520,997 482,757
Total investment securities 2,908,425 2,880,953 3,222,829
Loans held for sale 46,726 65,598 46,738
Loans receivable 4,488,095 4,459,099 4,062,838
Allowance for loan and lease losses (129,753) (130,632) (130,351)
Loans receivable, net 4,358,342 4,328,467 3,932,487
Premises and equipment, net 179,175 178,509 167,671
Other real estate owned 27,804 28,374 26,860
Accrued interest receivable 40,587 42,981 41,898
Deferred tax asset 41,737 44,452 43,549
Core deposit intangible, net 10,900 11,617 9,512
Goodwill 129,706 129,706 129,706
Non-marketable equity securities 52,868 52,868 52,192
Other assets 67,828 64,188 55,251
Total assets $ 8,306,507 8,109,810 7,884,350
Liabilities
Non-interest bearing deposits $ 1,632,403 1,595,971 1,374,419
Interest bearing deposits 4,712,809 4,510,840 4,205,548
Securities sold under agreements to repurchase 397,107 367,213 313,394
Federal Home Loan Bank advances 296,944 366,866 840,182
Other borrowed funds 7,311 7,351 8,387
Subordinated debentures 125,705 125,669 125,562
Accrued interest payable 4,155 3,058 3,505
Other liabilities 102,026 92,362 50,103
Total liabilities 7,278,460 7,069,330 6,921,100
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 750 750 744
Paid-in capital 708,356 707,821 690,918
Retained earnings - substantially restricted 301,197 309,234 261,943
Accumulated other comprehensive income 17,744 22,675 9,645
Total stockholders' equity 1,028,047 1,040,480 963,250
Total liabilities and stockholders' equity $ 8,306,507 8,109,810 7,884,350
Number of common stock shares issued and outstanding 75,026,092 75,024,092 74,373,296
Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months ended Year ended
December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands, except per share data) 2014 2014 2013 2014 2013
Interest Income
Residential real estate loans $ 8,464 7,950 7,919 30,721 29,525
Commercial loans 37,935 37,387 34,662 145,631 127,450
Consumer and other loans 7,730 7,559 7,869 30,515 32,089
Investment securities 22,050 22,794 23,489 93,052 74,512
Total interest income 76,179 75,690 73,939 299,919 263,576
Interest Expense
Deposits 4,018 3,027 3,286 13,195 13,870
Securities sold under agreements to repurchase 238 225 221 865 867
Federal Home Loan Bank advances 2,253 2,356 2,581 9,570 10,610
Federal funds purchased and other borrowed funds 64 34 46 199 206
Subordinated debentures 795 788 795 3,137 3,205
Total interest expense 7,368 6,430 6,929 26,966 28,758
Net Interest Income 68,811 69,260 67,010 272,953 234,818
Provision for loan losses 191 360 1,802 1,912 6,887
Net interest income after provision for loan losses 68,620 68,900 65,208 271,041 227,931
Non-Interest Income
Service charges and other fees 14,004 14,319 13,363 54,089 49,478
Miscellaneous loan fees and charges 1,125 1,342 1,332 4,696 4,982
Gain on sale of loans 5,424 6,000 4,935 19,797 28,517
Loss on sale of investments (28) (61) (188) (299)
Other income 3,453 2,832 3,372 11,908 10,369
Total non-interest income 23,978 24,432 23,002 90,302 93,047
Non-Interest Expense
Compensation and employee benefits 30,807 30,142 27,258 118,571 104,221
Occupancy and equipment 7,191 6,961 6,723 27,498 24,875
Advertising and promotions 2,046 2,141 1,847 7,912 6,913
Data processing 1,815 1,472 1,623 6,607 4,493
Other real estate owned 893 602 2,295 2,568 7,196
Regulatory assessments and insurance 1,009 1,435 1,519 5,064 6,362
Core deposit intangibles amortization 716 692 717 2,811 2,401
Other expense 11,221 10,793 11,052 41,648 38,856
Total non-interest expense 55,698 54,238 53,034 212,679 195,317
Income Before Income Taxes 36,900 39,094 35,176 148,664 125,661
Federal and state income tax expense 8,846 9,800 8,630 35,909 30,017
Net Income $ 28,054 29,294 26,546 112,755 95,644
Basic earnings per share $ 0.37 0.40 0.36 1.51 1.31
Diluted earnings per share $ 0.37 0.40 0.36 1.51 1.31
Dividends declared per share $ 0.48 0.17 0.16 0.98 0.60
Average outstanding shares - basic 75,025,201 74,631,317 74,341,256 74,641,957 73,191,713
Average outstanding shares - diluted 75,082,566 74,676,124 74,417,361 74,687,315 73,260,278
Glacier Bancorp, Inc.
Average Balance Sheet
Three Months ended Year ended
December 31, 2014 December 31, 2014
Average Average
Average Interest & Yield/ Average Interest & Yield/
(Dollars in thousands) Balance Dividends Rate Balance Dividends Rate
Assets
Residential real estate loans $ 657,412 $ 8,464 5.15% $ 635,256 $ 30,721 4.84%
Commercial loans 3,210,898 37,935 4.69% 3,029,733 145,631 4.81%
Consumer and other loans 603,803 7,730 5.08% 588,452 30,515 5.19%
Total loans 1 4,472,113 54,129 4.80% 4,253,441 206,867 4.86%
Tax-exempt investment securities 2 1,242,696 18,066 5.82% 1,208,970 68,643 5.68%
Taxable investment securities 3 1,889,454 10,346 2.19% 1,974,049 47,407 2.40%
Total earning assets 7,604,263 82,541 4.31% 7,436,460 322,917 4.34%
Goodwill and intangibles 141,009 138,928
Non-earning assets 382,970 347,138
Total assets $ 8,128,242 $ 7,922,526
Liabilities
Non-interest bearing deposits $ 1,626,978 $ — —% $ 1,463,689 $ — —%
NOW accounts 1,241,667 280 0.09% 1,141,424 1,148 0.10%
Savings accounts 703,418 90 0.05% 660,465 340 0.05%
Money market deposit accounts 1,257,492 569 0.18% 1,215,163 2,382 0.20%
Certificate accounts 1,168,210 1,956 0.66% 1,144,485 7,858 0.69%
Wholesale deposits 4 200,296 1,123 2.23% 193,514 1,467 0.76%
FHLB advances 319,797 2,253 2.76% 573,607 9,570 1.65%
Repurchase agreements, federal funds purchased and other borrowed funds 478,017 1,097 0.91% 451,458 4,201 0.93%
Total funding liabilities 6,995,875 7,368 0.42% 6,843,805 26,966 0.39%
Other liabilities 88,104 63,630
Total liabilities 7,083,979 6,907,435
Stockholders' Equity
Common stock 750 746
Paid-in capital 708,006 697,344
Retained earnings 317,597 297,303
Accumulated other comprehensive income 17,910 19,698
Total stockholders' equity 1,044,263 1,015,091
Total liabilities and stockholders' equity $ 8,128,242 $ 7,922,526
Net interest income (tax-equivalent) $ 75,173 $ 295,951
Net interest spread (tax-equivalent) 3.89% 3.95%
Net interest margin (tax-equivalent) 3.92% 3.98%
__________
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 $6.0 million and $21.5 million on tax-exempt investment security income for the three months and year ended December 31, 2014, respectively.
3 Includes tax effect of $372 thousand and $1.5 million on investment security tax credits for the three months and year ended December 31, 2014, respectively.
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
Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2013
Custom and owner occupied construction $ 56,689 $ 59,121 $ 50,352 (4)% 13%
Pre-sold and spec construction 47,406 44,085 34,217 8% 39%
Total residential construction 104,095 103,206 84,569 1% 23%
Land development 82,829 88,507 73,132 (6)% 13%
Consumer land or lots 101,818 99,003 109,175 3% (7)%
Unimproved land 86,116 66,684 50,422 29% 71%
Developed lots for operative builders 14,126 15,471 15,951 (9)% (11)%
Commercial lots 16,205 16,050 12,585 1% 29%
Other construction 150,075 149,207 103,807 1% 45%
Total land, lot, and other construction 451,169 434,922 365,072 4% 24%
Owner occupied 849,148 834,742 811,479 2% 5%
Non-owner occupied 674,381 658,429 588,114 2% 15%
Total commercial real estate 1,523,529 1,493,171 1,399,593 2% 9%
Commercial and industrial 547,910 573,617 523,354 (4)% 5%
Agriculture 310,785 317,506 279,959 (2)% 11%
1st lien 775,785 782,116 733,406 (1)% 6%
Junior lien 68,358 71,678 73,348 (5)% (7)%
Total 1-4 family 844,143 853,794 806,754 (1)% 5%
Multifamily residential 160,426 168,760 123,154 (5)% 30%
Home equity lines of credit 334,788 322,442 298,119 4% 12%
Other consumer 133,773 139,045 130,758 (4)% 2%
Total consumer 468,561 461,487 428,877 2% 9%
Other 124,203 118,234 98,244 5% 26%
Total loans receivable, including loans held for sale 4,534,821 4,524,697 4,109,576 —% 10%
Less loans held for sale 1 (46,726) (65,598) (46,738) (29)% —%
Total loans receivable $ 4,488,095 $ 4,459,099 $ 4,062,838 1% 10%
_______
1 Loans held for sale are primarily 1st lien 1-4 family loans.
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification
Accruing
Loans 90
Non- Days or Other
Accrual More Past Real Estate
Non-performing Assets, by Loan Type Loans Due Owned
Dec 31, Sep 30, Dec 31, Dec 31, Dec 31, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2014 2014
Custom and owner occupied construction $ 1,132 1,164 1,248 1,132
Pre-sold and spec construction 218 222 828 218
Total residential construction 1,350 1,386 2,076 1,350
Land development 20,842 24,803 25,062 11,066 9,776
Consumer land or lots 3,581 3,451 2,588 2,019 1,562
Unimproved land 14,170 13,659 13,630 10,946 3,224
Developed lots for operative builders 1,318 1,672 2,215 983 335
Commercial lots 2,660 2,697 2,899 260 2,400
Other construction 5,151 5,154 5,167 162 4,989
Total land, lot and other construction 47,722 51,436 51,561 25,436 22,286
Owner occupied 13,574 14,913 14,270 12,494 31 1,049
Non-owner occupied 3,013 3,768 4,301 1,799 1,214
Total commercial real estate 16,587 18,681 18,571 14,293 31 2,263
Commercial and industrial 4,375 4,833 6,400 4,292 74 9
Agriculture 3,074 3,430 3,529 2,607 467
1st lien 9,580 13,236 17,630 7,866 35 1,679
Junior lien 442 481 4,767 442
Total 1-4 family 10,022 13,717 22,397 8,308 35 1,679
Multifamily residential 440 450 440
Home equity lines of credit 6,099 3,985 4,544 5,439 17 643
Other consumer 231 222 342 157 57 17
Total consumer 6,330 4,207 4,886 5,596 74 660
Total $ 89,900 98,140 109,420 61,882 214 27,804
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
Accruing 30-89 Days Delinquent Loans,
by Loan Type % Change from
Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2013
Custom and owner occupied construction $ — $ — $ 202 n/m (100)%
Pre-sold and spec construction 869 179 385% n/m
Total residential construction 869 179 202 385% 330%
Consumer land or lots 391 62 1,716 531% (77)%
Unimproved land 267 1,177 615 (77)% (57)%
Developed lots for operative builders 21 8 (100)% (100)%
Commercial lots 21 106 (80)% n/m
Other construction 660 (100)% n/m
Total land, lot and other construction 679 2,026 2,339 (66)% (71)%
Owner occupied 5,971 4,341 5,321 38% 12%
Non-owner occupied 3,131 266 2,338 1,077% 34%
Total commercial real estate 9,102 4,607 7,659 98% 19%
Commercial and industrial 2,915 3,376 3,542 (14)% (18)%
Agriculture 994 152 1,366 554% (27)%
1st lien 6,804 3,738 12,386 82% (45)%
Junior lien 491 275 482 79% 2%
Total 1-4 family 7,295 4,013 12,868 82% (43)%
Multifamily Residential 684 1,075 (100)% (100)%
Home equity lines of credit 1,288 1,725 1,999 (25)% (36)%
Other consumer 928 789 1,066 18% (13)%
Total consumer 2,216 2,514 3,065 (12)% (28)%
Other 1,834 19 9,553% n/m
Total $ 25,904 $ 17,570 $ 32,116 47% (19)%
_______
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
Dec 31, Sep 30, Dec 31, Dec 31, Dec 31,
(Dollars in thousands) 2014 2014 2013 2014 2014
Custom and owner occupied construction $ — (51)
Pre-sold and spec construction (94) (58) (10) 94
Total residential construction (94) (58) (61) 94
Land development (390) (319) (383) 147 537
Consumer land or lots 375 69 843 718 343
Unimproved land 52 (186) 715 365 313
Developed lots for operative builders (140) (125) (81) 13 153
Commercial lots (6) (5) 248 6
Other construction (473)
Total land, lot and other construction (109) (566) 869 1,243 1,352
Owner occupied 669 201 350 993 324
Non-owner occupied (162) (44) 397 257 419
Total commercial real estate 507 157 747 1,250 743
Commercial and industrial 1,069 932 3,096 2,457 1,388
Agriculture 28 (1) 53 32 4
1st lien 372 207 681 915 543
Junior lien 183 199 106 491 308
Total 1-4 family 555 406 787 1,406 851
Multifamily residential 138 138 (39) 160 22
Home equity lines of credit 190 222 1,606 601 411
Other consumer 226 210 324 454 228
Total consumer 416 432 1,930 1,055 639
Other 8
Total $ 2,510 1,440 7,390 7,603 5,093

Visit our website at www.glacierbancorp.com

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