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Glacier Bancorp, Inc. Announces Results for the Quarter Ended September 30, 2015

HIGHLIGHTS:

  • Net income of $29.6 million for the current quarter, an increase of 1 percent from the prior quarter $29.3 million net income and an increase of 1 percent from the prior year third quarter net income of $29.3 million.
  • Current quarter diluted earnings per share of $0.39, compared to the prior quarter diluted earnings per share of $0.39 and the prior year third quarter diluted earnings per share of $0.40.
  • The loan portfolio increased $69 million, or 6 percent annualized, during the current quarter.
  • Non-interest bearing deposits of $1.894 billion, increased $162.7 million, or 9 percent, during the current quarter.
  • Dividend declared of $0.19 per share. The dividend was the 122nd consecutive quarterly dividend declared by the Company.
  • The Company announced the definitive agreement to acquire Cañon National Bank, a community bank based in Cañon City, Colorado, with total assets of $260 million at September 30, 2015.

Results Summary

Three Months ended Nine Months ended
(Dollars in thousands, except per share data) Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Sep 30,
2014
Sep 30,
2015
Sep 30,
2014
Net income $29,614 29,335 27,670 29,294 86,619 84,701
Diluted earnings per share $0.39 0.39 0.37 0.40 1.15 1.14
Return on average assets (annualized) 1.36% 1.39% 1.36% 1.46% 1.37% 1.44%
Return on average equity (annualized) 10.93% 11.05% 10.72% 11.30% 10.90% 11.27%

KALISPELL, Mont., Oct. 22, 2015 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income of $29.6 million for the current quarter, an increase of $320 thousand, or 1 percent, from the $29.3 million of net income for the prior year third quarter. Diluted earnings per share for the current quarter was $0.39 per share, a decrease of $0.01, or 3 percent, from the prior year third quarter diluted earnings per share of $0.40. Included in the current quarter non-interest expense was $259 thousand of one-time acquisition and conversion related expenses. “Once again this quarter we delivered solid performance metrics similar to what we have achieved over the past nine quarters,” said Mick Blodnick, President and Chief Executive Officer. “Record top line revenues helped offset higher taxes in the third quarter and allowed us to generate another quarter of record earnings. The growth in revenues came primarily from increases in interest on our investment and commercial loan portfolios as well as greater service charge fee income on deposit accounts,” Blodnick said.

Net income for the nine months ended September 30, 2015 was $86.6 million, an increase of $1.9 million, or 2 percent, from the $84.7 million of net income for the same period in the prior year. Diluted earnings per share for the nine months ended September 30, 2015 was $1.15 per share, an increase of $0.01, or 1 percent, from the diluted earnings per share for the same period in the prior year.

On February 28, 2015, the Company completed the acquisition of Montana Community Banks, Inc. and its subsidiary, Community Bank, Inc. (collectively, “CB”). The Company incurred $1.5 million of legal and professional expenses in connection with the CB acquisition and conversion during the current year. Goodwill of $1.1 million 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 CB 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)February 28,
2015
Total assets$175,774
Investment securities 42,350
Loans receivable 84,689
Non-interest bearing deposits 41,779
Interest bearing deposits 105,041
Federal Home Loan Bank advances and other borrowed funds 3,292

Asset Summary

$ Change from
(Dollars in thousands)Sep 30,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Cash and cash equivalents $ 242,835 355,719 442,409 282,097 (112,884) (199,574) (39,262)
Investment securities, available-for-sale 2,530,994 2,361,830 2,387,428 2,398,196 169,164 143,566 132,798
Investment securities, held-to-maturity 651,822 593,314 520,997 482,757 58,508 130,825 169,065
Total investment securities 3,182,816 2,955,144 2,908,425 2,880,953 227,672 274,391 301,863
Loans receivable
Residential real estate 644,694 635,674 611,463 603,806 9,020 33,231 40,888
Commercial 3,581,667 3,529,274 3,263,448 3,248,529 52,393 318,219 333,138
Consumer and other 650,058 642,483 613,184 606,764 7,575 36,874 43,294
Loans receivable 4,876,419 4,807,431 4,488,095 4,459,099 68,988 388,324 417,320
Allowance for loan and lease losses (130,768) (130,519) (129,753) (130,632) (249) (1,015) (136)
Loans receivable, net 4,745,651 4,676,912 4,358,342 4,328,467 68,739 387,309 417,184
Other assets 592,997 602,035 597,331 618,293 (9,038) (4,334) (25,296)
Total assets $ 8,764,299 8,589,810 8,306,507 8,109,810 174,489 457,792 654,489

Total investment securities of $3.183 billion at September 30, 2015 increased $228 million, or 8 percent, during the current quarter and increased $302 million, or 10 percent, from September 30, 2014. The increase in the investment portfolio from the prior quarter and the prior year third quarter was the result of continuing to selectively purchase investment securities with the Company’s excess liquidity resulting from the sustained increase in deposits. Investment securities represented 36 percent of total assets at September 30, 2015 compared to 35 percent at December 31, 2014 and 36 percent at September 30, 2014.

The Company continues to experience growth in the loan portfolio which increased $69.0 million, or 1 percent, during the current quarter. The loan category with the largest dollar increase during the current quarter was commercial real estate loans which increased $46.6 million, or 2 percent. The loan category with the largest percentage increase was residential construction (i.e., regulatory classification) which increased 10 percent over the prior quarter. Excluding the CB acquisition, the loan portfolio increased $304 million, or 7 percent, since December 31, 2014 with $252 million of the increase coming from growth in commercial loans. “Our loan growth was a little softer than what we had hoped for this quarter as a couple of large credits paid off,” Blodnick said. “Loan production in the third quarter actually exceeded the first two quarters of the year, unfortunately so did pay offs. The good news is the loan pipeline still looks decent as we head into what traditionally is a slower time of the year for loan production. Hopefully, loan pay downs will slow down also,” Blodnick said.

Credit Quality Summary

At or for the
Nine Months
ended
At or for the
Six Months
ended
At or for the
Year ended
At or for the
Nine Months
ended
(Dollars in thousands)Sep 30,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Allowance for loan and lease losses
Balance at beginning of period$129,753 129,753 130,351 130,351
Provision for loan losses1,873 1,047 1,912 1,721
Charge-offs(4,671) (2,598) (7,603) (5,567)
Recoveries3,813 2,317 5,093 4,127
Balance at end of period$130,768 130,519 129,753 130,632
Other real estate owned$26,609 26,686 27,804 28,374
Accruing loans 90 days or more past due3,784 618 214 1,617
Non-accrual loans54,632 56,918 61,882 68,149
Total non-performing assets 1$85,025 84,222 89,900 98,140
Non-performing assets as a percentage of subsidiary assets0.97% 0.98% 1.08% 1.21%
Allowance for loan and lease losses as a percentage of non-performing loans224% 227% 209% 187%
Allowance for loan and lease losses as a percentage of total loans2.68% 2.71% 2.89% 2.93%
Net charge-offs as a percentage of total loans0.02% 0.01% 0.06% 0.03%
Accruing loans 30-89 days past due$17,822 28,474 25,904 17,570
Accruing troubled debt restructurings$63,638 64,336 69,129 74,376
Non-accrual troubled debt restructurings$27,442 32,664 33,714 37,482

__________
1 As of September 30, 2015, non-performing assets have not been reduced by U.S. government guarantees of $2.0 million.

Non-performing assets at September 30, 2015 were $85.0 million, an increase of $803 thousand, or less than 1 percent, during the current quarter. Non-performing assets at September 30, 2015 decreased $13.1 million, or 13 percent, from a year ago. Land, lot and other construction loans (i.e., regulatory classification) continues to be the largest category of non-performing assets with $38.6 million, or 45 percent, at September 30, 2015. The Company has continued to make progress by reducing this category the past few years and the category decreased $4.2 million, or 10 percent, from the prior quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $17.8 million at September 30, 2015 decreased $10.7 million from the prior quarter and increased $252 thousand from the prior year third quarter.

The allowance for loan and lease losses (“allowance”) was $131 million at September 30, 2015 and continued to remain stable compared to the prior periods. The allowance was 2.68 percent of total loans outstanding at September 30, 2015 compared to 2.89 percent at December 31, 2014 and 2.93 percent for the same quarter last year. The reduction in the allowance as a percentage of total loans was driven primarily by loan growth, stabilizing credit quality, and no allowance carried over from bank acquisitions as a result of the acquired loans recorded at fair value.

Credit Quality Trends and Provision for Loan Losses

(Dollars in thousands) Provision
for Loan
Losses
Net
Charge-Offs
(Recoveries)
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 2015 $826 $577 2.68% 0.37% 0.97%
Second quarter 2015 282 (381) 2.71% 0.59% 0.98%
First quarter 2015 765 662 2.77% 0.71% 1.07%
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%

Net charge-offs of loans for the current quarter were $577 thousand compared to net recoveries of $381 thousand for the prior quarter and net charge-offs of $364 thousand from the same quarter last year. The current quarter provision for loan losses of $826 thousand increased $544 thousand from the prior quarter and increased $466 thousand 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 the loan loss provision.

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,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Non-interest bearing deposits$1,893,723 1,731,015 1,632,403 1,595,971 162,708 261,320 297,752
Interest bearing deposits4,779,456 4,827,642 4,712,809 4,510,840 (48,186) 66,647 268,616
Repurchase agreements441,041 408,935 397,107 367,213 32,106 43,934 73,828
Federal Home Loan Bank advances329,299 329,470 296,944 366,866 (171) 32,355 (37,567)
Other borrowed funds6,619 6,665 7,311 7,351 (46) (692) (732)
Subordinated debentures125,812 125,776 125,705 125,669 36 107 143
Other liabilities113,541 103,856 106,181 95,420 9,685 7,360 18,121
Total liabilities$7,689,491 7,533,359 7,278,460 7,069,330 156,132 411,031 620,161

The Company continues to generate strong increases in non-interest bearing deposits. Non-interest bearing deposits of $1.894 billion at September 30, 2015, increased $163 million, or 9 percent, from the prior quarter. Excluding the CB acquisition, non-interest bearing deposits increased $256 million, or 16 percent, from September 30, 2014. Interest bearing deposits of $4.779 billion at September 30, 2015 included $190 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Excluding the decrease of $7.5 million in wholesale deposits, interest bearing deposits at September 30, 2015 decreased $40.6 million, or 1 percent, during the current quarter. Excluding the CB acquisition, interest bearing deposits at September 30, 2015 increased $164 million, or 4 percent, from September 30, 2014. “We continue to drive significant organic growth in non-interest bearing deposits, ” Blodnick said. “The current quarter was by far the largest increase we have generated in this deposit category and even exceeds those quarters where we acquired a new bank. It’s a testament to the great work done by all of our banks in adding to and maintaining their market share. This large low cost deposit base will serve us well when interest rates begin to rise,” Blodnick said.

Securities sold under agreements to repurchase (“repurchase agreements”) of $441 million at September 30, 2015 increased $32.1 million, or 8 percent, from the prior quarter and was primarily the result of additions to existing repurchase agreements. Federal Home Loan Bank (“FHLB”) advances of $329 million at September 30, 2015 were unchanged for the current quarter and increased $32.4 million, or 11 percent, since December 31, 2014 as the Company took advantage of attractive term borrowings that were available from the FHLB of Seattle prior to the merger with FHLB of Des Moines during the second quarter of 2015. FHLB advances decreased $37.6 million, or 10 percent, from September 30, 2014 as growth in deposits and continued balance sheet changes reduced the need for additional borrowings.

Stockholders’ Equity Summary

$ Change from
(Dollars in thousands, except per share data) Sep 30, Jun 30, Dec 31, Sep 30, Jun 30, Dec 31, Sep 30,
2015 2015 2014 2014 2015 2014 2014
Common equity $ 1,066,801 1,051,011 1,010,303 1,017,805 15,790 56,498 48,996
Accumulated other comprehensive income 8,007 5,440 17,744 22,675 2,567 (9,737) (14,668)
Total stockholders’ equity 1,074,808 1,056,451 1,028,047 1,040,480 18,357 46,761 34,328
Goodwill and core deposit intangible, net (141,624) (142,344) (140,606) (141,323) 720 (1,018) (301)
Tangible stockholders’ equity $ 933,184 914,107 887,441 899,157 19,077 45,743 34,027
Stockholders’ equity to total assets 12.26% 12.30% 12.38% 12.83%
Tangible stockholders’ equity to total tangible assets 10.82% 10.82% 10.87% 11.28%
Book value per common share $ 14.23 13.99 13.70 13.87 0.24 0.53 0.36
Tangible book value per common share $ 12.35 12.10 11.83 11.98 0.25 0.52 0.37
Market price per share at end of period $ 26.39 29.42 27.77 25.86 (3.03) (1.38) 0.53

Tangible stockholders’ equity of $933 million at September 30, 2015 increased $19.1 million, or 2 percent, from the prior quarter due primarily to earnings retention and an increase in accumulated other comprehensive income. Tangible stockholders’ equity increased $34.0 million, or 4 percent, from a year ago the result of earnings retention and Company stock issued in connection with the CB acquisitions, both of which offset the decrease in accumulated other comprehensive income. Tangible book value per common share of $12.35 increased $0.25 per share from the prior quarter and increased $0.37 per share from the prior year third quarter.

Cash Dividend

On September 30, 2015, the Company’s Board of Directors declared a cash dividend of $0.19 per share. The dividend was payable October 22, 2015 to shareholders of record on October 13, 2015. 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, 2015
Compared to June 30, 2015 and September 30, 2014

Income Summary

Three Months ended $ Change from
(Dollars in thousands)Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Sep 30,
2014
Jun 30,
2015
Mar 31,
2015
Sep 30,
2014
Net interest income
Interest income$80,367 78,617 77,486 75,690 1,750 2,881 4,677
Interest expense7,309 7,369 7,382 6,430 (60) (73) 879
Total net interest income73,058 71,248 70,104 69,260 1,810 2,954 3,798
Non-interest income
Service charges, loan fees, and other fees16,030 15,445 14,156 15,661 585 1,874 369
Gain on sale of loans7,326 7,600 5,430 6,000 (274) 1,896 1,326
(Loss) gain on sale of investments(31) (98) 5 (61) 67 (36) 30
Other income2,474 2,855 3,102 2,832 (381) (628) (358)
Total non-interest income25,799 25,802 22,693 24,432 (3) 3,106 1,367
$98,857 97,050 92,797 93,692 1,807 6,060 5,165
Net interest margin (tax-equivalent)3.96% 3.98% 4.03% 3.99%

Net Interest Income

In the current quarter, interest income of $80.4 million increased $1.8 million, or 2 percent from the prior quarter, such increase attributable to increases in interest income on commercial loans. Income of $42.1 million on commercial loans increased $1.4 million, or 4 percent, from the prior quarter and was driven primarily by loan volume increases. Interest income during the current quarter increased $4.7 million, or 6 percent, over the prior year third quarter and was also due to higher interest income on commercial loans. The current quarter interest income on commercial loans increased $14.2 million, or 13 percent, over the prior year third quarter primarily the result of an increased volume in commercial loans. Interest income of $22.4 million on investment securities increased $478 thousand, or 2 percent, over the prior quarter and decreased $357 thousand, or 2 percent, over the prior year third quarter.

The current quarter interest expense of $7.3 million decreased $60 thousand, or 1 percent, from the prior quarter. The current quarter interest expense increased $879 thousand from the prior year third quarter, such increase attributed to the interest expense associated with the interest rate swap which started interest expense accruals in the fourth quarter of 2014. The total cost of funding (including non-interest bearing deposits) for the current quarter was 39 basis points compared to 40 basis points for the prior quarter and 37 basis points in 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 quarter was 3.96 percent compared to 3.98 percent in the prior quarter. The 2 basis point decrease in the current quarter net interest margin was primarily driven by a 3 basis point reduction in the acquired loan fair value discount accretion. Included in the current quarter net interest margin was 4 basis points related to the recovery of interest on loans previously placed on non-accrual compared to 1 basis point in the prior quarter. The Company’s current quarter net interest margin decreased 3 basis points from the prior year third quarter net interest margin of 3.99 percent. The reduction in the net interest margin from the prior year third quarter was the result of a 6 basis point increase in interest expense related to the interest rate swaps. “The net interest margin for the current and sequential quarter and for the first nine months of the current year have remained stable compared to the year ago quarters and year ago nine month period as the Bank divisions have been disciplined in pricing loans and interest bearing deposits,” said Ron Copher, Chief Financial Officer. “The growth in the non-interest bearing balances has served the Bank well to offset the higher interest expense associated with the interest rate swap.”

Non-interest Income

Non-interest income for the current quarter totaled $25.8 million which was stable compared to the prior quarter and an increase of $1.4 million, or 6 percent, over the same quarter last year. Service fee income of $16.0 million, increased $585 thousand, or 4 percent, from the prior quarter and increased $369 thousand, or 2 percent, from the prior year third quarter with both increases the result of the increased number of deposit accounts. Gain of $7.3 million on the sale of the residential loans in the current quarter decreased $274 thousand, or 4 percent, from the prior quarter and increased $1.3 million, or 22 percent, from the prior year third quarter as a result of an increase in mortgage purchase activity. Other non-interest income for the current quarter decreased $381 thousand, or 13 percent, over the prior quarter the result of annual incentives received in the second quarter of 2015. Other non-interest income decreased $358 thousand, or 13 percent, over the prior year third quarter due to a decrease in other real estate owned (“OREO”) income. Included in other income was operating revenue of $19 thousand from OREO and a gain of $110 thousand from the sale of OREO, a combined total of $129 thousand for the current quarter compared to $323 thousand for the prior quarter and $406 thousand for the prior year third quarter.

Non-interest Expense Summary

Three Months ended $ Change from
(Dollars in thousands)Sep 30,
2015
Jun 30,
2015
Mar 31,
2015
Sep 30,
2014
Jun 30,
2015
Mar 31,
2015
Sep 30,
2014
Compensation and employee benefits$33,534 32,729 32,244 30,142 805 1,290 3,392
Occupancy and equipment7,887 7,810 7,362 6,961 77 525 926
Advertising and promotions2,459 2,240 1,927 2,141 219 532 318
Data processing1,258 1,593 1,249 1,472 (335) 9 (214)
Other real estate owned1,047 1,377 758 602 (330) 289 445
Regulatory assessments and insurance1,478 1,006 1,305 1,435 472 173 43
Core deposit intangibles amortization720 755 731 692 (35) (11) 28
Other expenses10,729 12,435 9,921 10,793 (1,706) 808 (64)
Total non-interest expense$59,112 59,945 55,497 54,238 (833) 3,615 4,874

Compensation and employee benefits for the current quarter increased by $805 thousand, or 2 percent, from the prior quarter. Compensation and employee benefits for the current quarter increased by $3.4 million, or 11 percent, from the prior year third quarter due to the increased number of employees from the CB acquisition and the First National Bank of the Rockies (“FNBR”) acquisition in August 2014, and annual salary increases. Current quarter occupancy and equipment expense increased $926 thousand, or 13 percent, from the prior year third quarter as a result of added costs associated with the CB and FNBR acquisitions and equipment expense related to additional information technology infrastructure. The current quarter advertising expense increased $219 thousand, or 10 percent, from the prior quarter and increased $318 thousand, or 15 percent, from the prior year third quarter as a result of the Company actively marketing to its customer base in certain market areas. The current quarter data processing expense decreased $335 thousand, or 21 percent, from the prior quarter as a result of conversion related expenses and general increases during the prior quarter. The current quarter data processing expense decreased $214 thousand, or 15 percent, from the prior year third quarter as a result of a decrease in outsourced data processing expense from an acquired bank in the prior year third quarter. The current quarter OREO expense of $1.0 million was a decrease of $330 thousand from the prior quarter and included $559 thousand of operating expense, $452 thousand of fair value write-downs, and $37 thousand of loss from the sales of OREO. Current quarter other expenses of $10.7 million decreased by $1.7 million, or 14 percent, from the prior quarter primarily from expenses connected with equity investments in New Market Tax Credits (“NMTC”) projects and conversion related expenses which were incurred in the second quarter of 2015. The NMTC expenses were more than offset by the tax benefits included in federal income tax expense during the second quarter of 2015 which was the reason for the increase of $1.8 million in federal and state income tax during the current quarter.

Efficiency Ratio

The efficiency ratio for the current quarter was 54.32 percent compared to 55.91 percent in the prior quarter. The 1.59 percent decrease in efficiency ratio resulted from decreases in expenses associated with NMTC projects and increases in net interest income primarily from volume increases in commercial loans and investment securities. The current quarter efficiency ratio of 54.32 percent compares to 53.87 percent in the prior year third quarter. The 45 basis point increase in efficiency ratio resulted from increases in non-interest expense driven by increased compensation and other operational expenses, which outpaced the increases in net interest income from an increase in earning assets.

Operating Results for Nine Months ended September 30, 2015
Compared to September 30, 2014

Income Summary

Nine Months ended $ Change % Change
(Dollars in thousands)Sep 30,
2015
Sep 30,
2014
Net interest income
Interest income$236,470 $223,740 $12,730 6%
Interest expense22,060 19,598 2,462 13%
Total net interest income214,410 204,142 10,268 5%
Non-interest income
Service charges, loan fees, and other fees45,631 43,656 1,975 5%
Gain on sale of loans20,356 14,373 5,983 42%
Loss on sale of investments(124) (160) 36 (23)%
Other income8,431 8,455 (24) %
Total non-interest income74,294 66,324 7,970 12%
$288,704 $270,466 $18,238 7%
Net interest margin (tax-equivalent)3.99% 4.00%

Net Interest Income

Interest income for the first nine months of the current year increased $12.7 million, or 6 percent, from the prior year first nine months and was principally due to an increase in income from commercial loans. Current year interest income of $122 million on commercial loans increased $14.2 million, or 13 percent, from the prior year first nine months and was primarily the result of an increased volume of commercial loans. Current year interest income of $67.4 million on investment securities decreased $3.6 million, or 5 percent, over the same period last year, as a result of a decreased rate on investment securities, although the tax effective yield adjustment reduced this decrease to $140 thousand.

Interest expense for the first nine months of the current year increased $2.5 million, or 13 percent, from the prior year first nine months and was primarily due to the interest expense associated with the interest rate swap which started interest expense accruals in the fourth quarter of 2014. The total funding cost (including non-interest bearing deposits) for the first nine months of 2015 was 40 basis points compared to 39 basis points for the first nine months of 2014.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first nine months of 2015 was 3.99 percent, a decrease of 1 basis point from the prior year first nine months net interest margin of 4.00 percent. The 1 basis point reduction was attributable to a combination of items including an increase in interest expense from the interest rate swaps which was partially offset by increases in higher yielding earning assets.

Non-interest Income

Non-interest income of $74.3 million for the first nine months of 2015 increased $8.0 million, or 12 percent, over the same period last year. Service charges and other fees of $45.6 million for the first nine months of 2015 increased $2.0 million, or 5 percent, from the same period last year driven by the increased number of deposit accounts. The gains of $20.4 million on the sale of residential loans for the first nine months of 2015 increased $6.0 million, or 42 percent, from the first nine months of 2014 resulting from an increase in mortgage refinancing and purchase activity. Other income was unchanged from the nine month period last year. Included in other income was operating revenue of $95 thousand from OREO and gains of $775 thousand from the sales of OREO, which totaled $870 thousand for the first nine months of 2015 compared to $1.8 million for the same period in the prior year.

Non-interest Expense Summary

Nine Months ended
(Dollars in thousands)Sep 30,
2015
Sep 30,
2014
$ Change% Change
Compensation and employee benefits$98,507 $87,764 $10,743 12%
Occupancy and equipment23,059 20,307 2,752 14%
Advertising and promotions6,626 5,866 760 13%
Data processing4,100 4,792 (692) (14)%
Other real estate owned3,182 1,675 1,507 90%
Regulatory assessments and insurance3,789 4,055 (266) (7)%
Core deposit intangible amortization2,206 2,095 111 5%
Other expenses33,085 30,427 2,658 9%
Total non-interest expense$174,554 $156,981 $17,573 11%

Compensation and employee benefits for the first nine months of 2015 increased $10.7 million, or 12 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 $2.8 million, or 14 percent, as a result of increased costs associated with the CB and FNBR acquisitions and equipment expense related to additional information technology infrastructure. Outsourced data processing expense decreased $692 thousand, or 14 percent, from the prior year first nine months as a result of a decrease in conversion related expenses and outsourced data processing expense from an acquired bank. OREO expense of $3.2 million in the first nine months of 2015 increased $1.5 million, or 90 percent, from the first nine months of the prior year. OREO expenses tend to fluctuate based on the level of activity in various quarters. OREO expense for the first nine months of 2015 included $1.4 million of operating expenses, $1.5 million of fair value write-downs, and $250 thousand of loss from the sales of OREO. Other expense of $33.1 million for the first nine months of 2015 increased by $2.7 million, or 9 percent, from the first nine months of the prior year primarily due to increases in conversion and acquisition related expenses.

Provision for Loan Losses

The provision for loan losses was $1.9 million for the first nine months of 2015, an increase of $152 thousand, or 9 percent, from the same period in the prior year. Net charged-off loans during the first nine months of 2015 were $858 thousand, a decrease of $582 thousand from the first nine months of 2014.

Efficiency Ratio

The efficiency ratio was 55.01 percent for the first nine months of 2015 and 54.03 percent for the first nine months of 2014. The increase in the efficiency ratio resulted from compensation expense and increased costs from acquisitions outpacing the increase in net interest income and increases in gain on sale of loans.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 82 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;
  • 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 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 Chief Executive Officer, 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,
2015
June 30,
2015
December 31,
2014
September 30,
2014
Assets
Cash on hand and in banks$104,363 120,783 122,834 109,947
Federal funds sold2,210 1,025 488
Interest bearing cash deposits136,262 234,936 318,550 171,662
Cash and cash equivalents242,835 355,719 442,409 282,097
Investment securities, available-for-sale2,530,994 2,361,830 2,387,428 2,398,196
Investment securities, held-to-maturity651,822 593,314 520,997 482,757
Total investment securities3,182,816 2,955,144 2,908,425 2,880,953
Loans held for sale40,456 53,201 46,726 65,598
Loans receivable4,876,419 4,807,431 4,488,095 4,459,099
Allowance for loan and lease losses(130,768) (130,519) (129,753) (130,632)
Loans receivable, net4,745,651 4,676,912 4,358,342 4,328,467
Premises and equipment, net185,864 186,858 179,175 178,509
Other real estate owned26,609 26,686 27,804 28,374
Accrued interest receivable46,786 44,563 40,587 42,981
Deferred tax asset55,095 56,571 41,737 44,452
Core deposit intangible, net10,781 11,501 10,900 11,617
Goodwill130,843 130,843 129,706 129,706
Non-marketable equity securities24,905 24,914 52,868 52,868
Other assets71,658 66,898 67,828 64,188
Total assets$8,764,299 8,589,810 8,306,507 8,109,810
Liabilities
Non-interest bearing deposits$1,893,723 1,731,015 1,632,403 1,595,971
Interest bearing deposits4,779,456 4,827,642 4,712,809 4,510,840
Securities sold under agreements to repurchase441,041 408,935 397,107 367,213
FHLB advances329,299 329,470 296,944 366,866
Other borrowed funds6,619 6,665 7,311 7,351
Subordinated debentures125,812 125,776 125,705 125,669
Accrued interest payable3,641 3,790 4,155 3,058
Other liabilities109,900 100,066 102,026 92,362
Total liabilities7,689,491 7,533,359 7,278,460 7,069,330
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 authorized755 755 750 750
Paid-in capital720,639 720,073 708,356 707,821
Retained earnings - substantially restricted345,407 330,183 301,197 309,234
Accumulated other comprehensive income8,007 5,440 17,744 22,675
Total stockholders’ equity1,074,808 1,056,451 1,028,047 1,040,480
Total liabilities and stockholders’ equity$8,764,299 8,589,810 8,306,507 8,109,810
Number of common stock shares issued and outstanding75,532,082 75,531,258 75,026,092 75,024,092


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months ended Nine Months ended
(Dollars in thousands, except per share data)September 30,
2015
June 30,
2015
September 30,
2014
September 30,
2015
September 30,
2014
Interest Income
Investment securities$22,437 21,959 22,794 67,355 71,002
Residential real estate loans7,878 7,942 7,950 23,581 22,257
Commercial loans42,137 40,698 37,387 121,857 107,696
Consumer and other loans7,915 8,018 7,559 23,677 22,785
Total interest income80,367 78,617 75,690 236,470 223,740
Interest Expense
Deposits3,947 4,112 3,027 12,206 9,177
Securities sold under agreements to repurchase261 232 225 734 627
Federal Home Loan Bank advances2,273 2,217 2,356 6,685 7,317
Federal funds purchased and other borrowed funds21 15 34 63 135
Subordinated debentures807 793 788 2,372 2,342
Total interest expense7,309 7,369 6,430 22,060 19,598
Net Interest Income73,058 71,248 69,260 214,410 204,142
Provision for loan losses826 282 360 1,873 1,721
Net interest income after provision for loan losses72,232 70,966 68,900 212,537 202,421
Non-Interest Income
Service charges and other fees14,975 14,303 14,319 42,277 40,085
Miscellaneous loan fees and charges1,055 1,142 1,342 3,354 3,571
Gain on sale of loans7,326 7,600 6,000 20,356 14,373
Loss on sale of investments(31) (98) (61) (124) (160)
Other income2,474 2,855 2,832 8,431 8,455
Total non-interest income25,799 25,802 24,432 74,294 66,324
Non-Interest Expense
Compensation and employee benefits33,534 32,729 30,142 98,507 87,764
Occupancy and equipment7,887 7,810 6,961 23,059 20,307
Advertising and promotions2,459 2,240 2,141 6,626 5,866
Data processing1,258 1,593 1,472 4,100 4,792
Other real estate owned1,047 1,377 602 3,182 1,675
Regulatory assessments and insurance1,478 1,006 1,435 3,789 4,055
Core deposit intangibles amortization720 755 692 2,206 2,095
Other expenses10,729 12,435 10,793 33,085 30,427
Total non-interest expense59,112 59,945 54,238 174,554 156,981
Income Before Income Taxes38,919 36,823 39,094 112,277 111,764
Federal and state income tax expense9,305 7,488 9,800 25,658 27,063
Net Income$29,614 29,335 29,294 86,619 84,701
Basic earnings per share$0.39 0.39 0.40 1.15 1.14
Diluted earnings per share$0.39 0.39 0.40 1.15 1.14
Dividends declared per share$0.19 0.19 0.17 0.56 0.50
Average outstanding shares - basic75,531,923 75,530,591 74,631,317 75,424,147 74,512,806
Average outstanding shares - diluted75,586,453 75,565,655 74,676,124 75,469,355 74,554,263


Glacier Bancorp, Inc.
Average Balance Sheet
Three Months ended Nine Months ended
September 30, 2015 September 30, 2015
(Dollars in thousands)Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Assets
Residential real estate loans$679,037 $7,878 4.64% $673,084 $23,581 4.67%
Commercial loans 13,510,098 42,811 4.84% 3,411,631 123,759 4.85%
Consumer and other loans639,155 7,915 4.91% 625,726 23,677 5.06%
Total loans 24,828,290 58,604 4.82% 4,710,441 171,017 4.85%
Tax-exempt investment securities 31,334,980 19,511 5.85% 1,317,788 57,026 5.77%
Taxable investment securities 41,930,378 10,063 2.09% 1,894,572 30,472 2.14%
Total earning assets8,093,648 88,178 4.32% 7,922,801 258,515 4.36%
Goodwill and intangibles142,031 141,851
Non-earning assets384,452 385,216
Total assets$8,620,131 $8,449,868
Liabilities
Non-interest bearing deposits$1,793,899 $ % $1,702,459 $ %
NOW accounts1,387,334 264 0.08% 1,347,658 790 0.08%
Savings accounts763,430 90 0.05% 740,905 263 0.05%
Money market deposit accounts1,349,244 514 0.15% 1,330,212 1,544 0.16%
Certificate accounts1,125,276 1,657 0.58% 1,147,820 5,284 0.62%
Wholesale deposits 5190,724 1,422 2.96% 208,640 4,325 2.77%
FHLB advances329,797 2,273 2.70% 315,068 6,685 2.80%
Repurchase agreements and other borrowed funds512,807 1,089 0.84% 504,787 3,169 0.84%
Total funding liabilities7,452,511 7,309 0.39% 7,297,549 22,060 0.40%
Other liabilities92,955 90,300
Total liabilities7,545,466 7,387,849
Stockholders’ Equity
Common stock755 754
Paid-in capital720,325 717,424
Retained earnings344,768 329,630
Accumulated other comprehensive income8,817 14,211
Total stockholders’ equity1,074,665 1,062,019
Total liabilities and stockholders’ equity$8,620,131 $8,449,868
Net interest income (tax-equivalent) $80,869 $236,455
Net interest spread (tax-equivalent) 3.93% 3.96%
Net interest margin (tax-equivalent) 3.96% 3.99%

__________
1 Includes tax effect of $674 thousand and $1.9 million on tax-exempt municipal loan and lease income for the three and nine months ended September 30, 2015.
2 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.
3 Includes tax effect of $6.8 million and $19.1 million on tax-exempt investment security income for the three and nine months ended September 30, 2015.
4 Includes tax effect of $362 thousand and $1.1 million on federal income tax credits for the three and nine months ended September 30, 2015.
5 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,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Custom and owner occupied construction$64,951 $56,460 $56,689 $59,121 15% 15% 10%
Pre-sold and spec construction46,921 45,063 47,406 44,085 4% (1)% 6%
Total residential construction111,872 101,523 104,095 103,206 10% 7% 8%
Land development83,756 78,059 82,829 88,507 7% 1% (5)%
Consumer land or lots98,490 98,365 101,818 99,003 % (3)% (1)%
Unimproved land74,439 76,726 86,116 66,684 (3)% (14)% 12%
Developed lots for operative builders13,697 13,673 14,126 15,471 % (3)% (11)%
Commercial lots22,937 20,047 16,205 16,050 14% 42% 43%
Other construction122,347 126,966 150,075 149,207 (4)% (18)% (18)%
Total land, lot, and other construction415,666 413,836 451,169 434,922 % (8)% (4)%
Owner occupied885,736 874,651 849,148 834,742 1% 4% 6%
Non-owner occupied739,057 718,024 674,381 658,429 3% 10% 12%
Total commercial real estate1,624,793 1,592,675 1,523,529 1,493,171 2% 7% 9%
Commercial and industrial619,688 635,259 547,910 573,617 (2)% 13% 8%
Agriculture386,523 374,258 310,785 317,506 3% 24% 22%
1st lien801,705 802,152 775,785 782,116 % 3% 3%
Junior lien67,351 67,019 68,358 71,678 % (1)% (6)%
Total 1-4 family869,056 869,171 844,143 853,794 % 3% 2%
Multifamily residential189,944 195,674 160,426 168,760 (3)% 18% 13%
Home equity lines of credit359,605 356,077 334,788 322,442 1% 7% 12%
Other consumer154,095 147,427 133,773 139,045 5% 15% 11%
Total consumer513,700 503,504 468,561 461,487 2% 10% 11%
Other185,633 174,732 124,203 118,234 6% 49% 57%
Total loans receivable, including loans held for sale4,916,875 4,860,632 4,534,821 4,524,697 1% 8% 9%
Less loans held for sale 1(40,456) (53,201) (46,726) (65,598) (24)% (13)% (38)%
Total loans receivable$4,876,419 $4,807,431 $4,488,095 $4,459,099 1% 9% 9%

_______

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,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Sep 30,
2015
Sep 30,
2015
Sep 30,
2015
Custom and owner occupied construction$1,048 1,079 1,132 1,164 1,048
Pre-sold and spec construction 18 218 222
Total residential construction1,048 1,097 1,350 1,386 1,048
Land development17,719 20,405 20,842 24,803 7,769 9,950
Consumer land or lots2,430 2,647 3,581 3,451 1,105 1,325
Unimproved land12,055 12,580 14,170 13,659 8,607 3,448
Developed lots for operative builders492 848 1,318 1,672 270 222
Commercial lots1,631 2,050 2,660 2,697 241 1,390
Other construction4,244 4,244 5,151 5,154 4,244
Total land, lot and other construction38,571 42,774 47,722 51,436 17,992 20,579
Owner occupied12,719 13,057 13,574 14,913 8,220 1,444 3,055
Non-owner occupied3,833 3,179 3,013 3,768 2,713 1,120
Total commercial real estate16,552 16,236 16,587 18,681 10,933 1,444 4,175
Commercial and industrial5,110 5,805 4,375 4,833 4,868 199 43
Agriculture3,114 2,769 3,074 3,430 2,499 167 448
1st lien11,953 9,867 9,580 13,236 10,538 107 1,308
Junior lien660 739 442 481 660
Total 1-4 family12,613 10,606 10,022 13,717 11,198 107 1,308
Multifamily residential 440 450
Home equity lines of credit6,013 4,742 6,099 3,985 5,991 22
Other consumer204 164 231 222 103 45 56
Total consumer6,217 4,906 6,330 4,207 6,094 67 56
Other1,800 29 1,800
Total$85,025 84,222 89,900 98,140 54,632 3,784 26,609


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,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Custom and owner occupied construction$138 $ $ $ n/m n/m n/m
Pre-sold and spec construction144 869 179 n/m (83)% (20)%
Total residential construction282 869 179 n/m (68)% 58%
Consumer land or lots266 158 391 62 68% (32)% 329%
Unimproved land304 755 267 1,177 (60)% 14% (74)%
Developed lots for operative builders 21 n/m n/m (100)%
Commercial lots 66 21 106 (100)% (100)% (100)%
Other construction 660 n/m n/m (100)%
Total land, lot and other construction570 979 679 2,026 (42)% (16)% (72)%
Owner occupied2,497 4,727 5,971 4,341 (47)% (58)% (42)%
Non-owner occupied5,529 8,257 3,131 266 (33)% 77% 1,979%
Total commercial real estate8,026 12,984 9,102 4,607 (38)% (12)% 74%
Commercial and industrial2,774 6,760 2,915 3,376 (59)% (5)% (18)%
Agriculture867 353 994 152 146% (13)% 470%
1st lien2,510 2,891 6,804 3,738 (13)% (63)% (33)%
Junior lien228 335 491 275 (32)% (54)% (17)%
Total 1-4 family2,738 3,226 7,295 4,013 (15)% (62)% (32)%
Multifamily Residential114 671 684 (83)% n/m (83)%
Home equity lines of credit1,599 2,464 1,288 1,725 (35)% 24% (7)%
Other consumer811 996 928 789 (19)% (13)% 3%
Total consumer2,410 3,460 2,216 2,514 (30)% 9% (4)%
Other41 41 1,834 19 % (98)% 116%
Total$17,822 $28,474 $25,904 $17,570 (37)% (31)% 1%

_______

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,
2015
Jun 30,
2015
Dec 31,
2014
Sep 30,
2014
Sep 30,
2015
Sep 30,
2015
Pre-sold and spec construction$(34) (23) (94) (58) 34
Land development(293) (807) (390) (319) 828 1,121
Consumer land or lots(8) (77) 375 69 306 314
Unimproved land(152) (86) 52 (186) 152
Developed lots for operative builders(72) (98) (140) (125) 51 123
Commercial lots(5) (3) (6) (5) 5
Other construction(1) (1) 1
Total land, lot and other construction(531) (1,072) (109) (566) 1,185 1,716
Owner occupied249 271 669 201 587 338
Non-owner occupied105 109 (162) (44) 116 11
Total commercial real estate354 380 507 157 703 349
Commercial and industrial1,011 1,007 1,069 932 1,638 627
Agriculture(8) (7) 28 (1) 8
1st lien(80) (49) 372 207 39 119
Junior lien(106) (129) 183 199 79 185
Total 1-4 family(186) (178) 555 406 118 304
Multifamily residential(318) (29) 138 138 318
Home equity lines of credit531 206 190 222 660 129
Other consumer39 (3) 226 210 367 328
Total consumer570 203 416 432 1,027 457
Total$858 281 2,510 1,440 4,671 3,813

Visit our website at www.glacierbancorp.com

CONTACT: Michael J. Blodnick (406) 751-4701 Ron J. Copher (406) 751-7706

Source:Glacier Bancorp, Inc.