Market Overview

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

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HIGHLIGHTS:

  • Net income of $29.3 million for the current quarter, an increase of 6 percent from the prior quarter $27.7 million net income and an increase of 2 percent from the prior year second quarter net income of $28.7 million.
     
  • Current quarter diluted earnings per share of $0.39, an increase of 5 percent from the prior quarter $0.37 diluted earnings per share and an increase of 3 percent from the prior year second quarter diluted earnings per share of $0.38.
     
  • The loan portfolio increased $120 million, or 10 percent annualized, during the current quarter.
     
  • Non-interest bearing deposits of $1.731 billion, increased $55.6 million, or 13 percent annualized, during the current quarter.
     
  • Gain of $7.6 million on the sale of residential real estate loans in the current quarter increased $2.2 million, or 40 percent, over the prior quarter and $2.8 million, or 59 percent, over the prior year second quarter.
     
  • Dividend declared of $0.19 per share, an increase of $0.01 per share, or 6 percent, over the prior quarter. The dividend was the 121st consecutive quarterly dividend declared by the Company.
     
  • Announced Randall ("Randy") M. Chesler to become president of Glacier Bank and to succeed Mick Blodnick as Chief Executive Officer of Glacier Bancorp, Inc. in 2017.
     
  • The Company successfully converted Community Bank, Inc.'s core system over to the Company's core system during the current quarter.


Results Summary




  Three Months ended Six Months ended
  Jun 30, Mar 31, Jun 30, Jun 30, Jun 30,
(Dollars in thousands, except per share data) 2015 2015 2014 2015 2014
Net income  $ 29,335 27,670 28,677 57,005 55,407
Diluted earnings per share  $ 0.39 0.37 0.38 0.76 0.74
Return on average assets (annualized) 1.39% 1.36% 1.47% 1.37% 1.43%
Return on average equity (annualized) 11.05% 10.72% 11.45% 10.89% 11.25%

KALISPELL, Mont., July 23, 2015 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $29.3 million for the current quarter, an increase of $658 thousand, or 2 percent, from the $28.7 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.39 per share, an increase of $0.01, or 3 percent, from the prior year second quarter diluted earnings per share of $0.38. Included in the current quarter non-interest expense was $1.4 million of one-time expenses including conversion related expenses. "It was another very strong quarter for earnings especially in the area of non-interest income as we exceeded our projections in most categories," said Mick Blodnick, President and Chief Executive Officer. "We generated excellent organic loan growth, once again allowing us to reduce the investment portfolio and still increase net interest income. Hopefully, the pace of loan growth we achieved in the first half of the year can be carried through the last half," Blodnick said.

Net income for the six months ended June 30, 2015 was $57.0 million, an increase of $1.6 million, or 3 percent, from the $55.4 million of net income for the same period in the prior year. Diluted earnings per share for the six months ended June 30, 2015 was $0.76 per share, an increase of $0.02, or 3 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 successfully converted CB's core system over to the Company's core system during the current quarter. The Company incurred $833 thousand 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:

  February 28,
(Dollars in thousands) 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
  Jun 30, Mar 31, Dec 31, Jun 30, Mar 31, Dec 31, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2015 2014 2014
Cash and cash equivalents $ 355,719 183,466 442,409 202,358 172,253 (86,690) 153,361
Investment securities, available-for-sale 2,361,830 2,544,093 2,387,428 2,559,411 (182,263) (25,598) (197,581)
Investment securities, held-to-maturity 593,314 570,285 520,997 483,557 23,029 72,317 109,757
Total investment securities 2,955,144 3,114,378 2,908,425 3,042,968 (159,234) 46,719 (87,824)
Loans receivable              
Residential real estate 635,674 637,465 611,463 587,340 (1,791) 24,211 48,334
Commercial 3,529,274 3,426,016 3,263,448 3,023,915 103,258 265,826 505,359
Consumer and other 642,483 624,188 613,184 592,024 18,295 29,299 50,459
Loans receivable 4,807,431 4,687,669 4,488,095 4,203,279 119,762 319,336 604,152
Allowance for loan and lease losses (130,519) (129,856) (129,753) (130,636) (663) (766) 117
Loans receivable, net 4,676,912 4,557,813 4,358,342 4,072,643 119,099 318,570 604,269
Other assets 602,035 619,439 597,331 572,125 (17,404) 4,704 29,910
Total assets $ 8,589,810 8,475,096 8,306,507 7,890,094 114,714 283,303 699,716
               

Total investment securities decreased $159 million, or 5 percent, during the current quarter and decreased $88 million, or 3 percent, from June 30, 2014. The decrease in the investment portfolio during the current quarter was the result of the Company redeploying security payments into the loan portfolio, although the Company continues to selectively purchase investment securities in the volatile market with its excess liquidity. Investment securities represented 34 percent of total assets at June 30, 2015 compared to 35 percent at December 31, 2014 and 39 percent at June 30, 2014.

The loan portfolio increased $120 million, or 3 percent, during the current quarter. The loan category with the largest dollar and percent increase during the current quarter was commercial loans which increased $103 million, or 3 percent. Excluding the CB acquisition and the First National Bank of the Rockies ("FNBR") acquisition in August 2014, the loan portfolio increased $382 million, or 9 percent, since June 30, 2014 with $322 million of the increase coming from growth in commercial loans.

During the current quarter, the merger of the Federal Home Loan Bank ("FHLB") of Seattle and the FHLB of Des Moines was completed with minimal disruption to the Company. As a result of the merger, FHLB of Seattle stock of $29.4 million was redeemed by FHLB of Des Moines. 

Credit Quality Summary

  At or for the
Six Months
ended

At or for the
Three Months
ended

At or for the
Year ended
At or for the
Six Months
ended

  Jun 30, Mar 31, Dec 31, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014
Allowance for loan and lease losses        
Balance at beginning of period  $ 129,753 129,753 130,351 130,351
Provision for loan losses 1,047 765 1,912 1,361
Charge-offs (2,598) (1,297) (7,603) (3,324)
Recoveries 2,317 635 5,093 2,248
Balance at end of period  $ 130,519 129,856 129,753 130,636
Other real estate owned  $ 26,686 28,124 27,804 26,338
Accruing loans 90 days or more past due 618 2,357 214 980
Non-accrual loans 56,918 60,287 61,882 75,147
Total non-performing assets 1  $ 84,222 90,768 89,900 102,465
Non-performing assets as a percentage of subsidiary assets 0.98% 1.07% 1.08% 1.30%
Allowance for loan and lease losses as a percentage of non-performing loans 227% 207% 209% 172%
Allowance for loan and lease losses as a percentage of total loans 2.71% 2.77% 2.89% 3.11%
Net charge-offs as a percentage of total loans 0.01% 0.01% 0.06% 0.03%
Accruing loans 30-89 days past due  $ 28,474 33,450 25,904 18,592
Accruing troubled debt restructurings  $ 64,336 69,397 69,129 73,981
Non-accrual troubled debt restructurings  $ 32,664 34,237 33,714 35,786
         
1 As of June 30, 2015, non-performing assets have not been reduced by U.S. government guarantees of $5.0 million.        

Non-performing assets at June 30, 2015 were $84.2 million, a decrease of $6.5 million, or 7 percent, during the current quarter. Non-performing assets at June 30, 2015 decreased $18.2 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 $42.8 million, or 51 percent, of the non-performing assets at June 30, 2015. The Company has continued to make progress by reducing this category the past few years and the category decreased $2.8 million, or 6 percent, from the prior quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $28.5 million at June 30, 2015 decreased $5.0 million from the prior quarter and increased $9.9 million from the prior year second quarter.

The allowance for loan and lease losses ("allowance") was $131 million at June 30, 2015 and continued to remain stable compared to the prior periods. The allowance was 2.71 percent of total loans outstanding at June 30, 2015 compared to 2.89 percent at December 31, 2014 and 3.11 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
(Recoveries) 
Charge-Offs

ALLL
as a Percent
of Loans

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



Non-Performing
Assets to
Total Subsidiary
Assets


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%
Third quarter 2013 1,907 2,025 3.27% 0.66% 1.56%

Net recoveries of loans for the current quarter were $381 thousand compared to net charge-offs of $662 thousand for the prior quarter and $332 thousand from the same quarter last year. The current quarter provision for loan losses of $282 thousand decreased $483 thousand from the prior quarter and increased $43 thousand from the prior year second 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
  Jun 30, Mar 31, Dec 31, Jun 30, Mar 31, Dec 31, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2015 2014 2014
Non-interest bearing deposits $ 1,731,015 1,675,451 1,632,403 1,464,938 55,564 98,612 266,077
Interest bearing deposits 4,827,642 4,783,341 4,712,809 4,280,898 44,301 114,833 546,744
Repurchase agreements 408,935 425,652 397,107 315,240 (16,717) 11,828 93,695
Federal Home Loan Bank advances 329,470 298,148 296,944 607,305 31,322 32,526 (277,835)
Other borrowed funds 6,665 6,703 7,311 7,367 (38) (646) (702)
Subordinated debentures 125,776 125,741 125,705 125,633 35 71 143
Other liabilities 103,856 106,536 106,181 78,698 (2,680) (2,325) 25,158
Total liabilities $ 7,533,359 7,421,572 7,278,460 6,880,079 111,787 254,899 653,280

Non-interest bearing deposits of $1.731 billion at June 30, 2015, increased $55.6 million, or 3 percent, from the prior quarter. Excluding the CB and FNBR acquisitions, non-interest bearing deposits increased $144 million, or 10 percent, from June 30, 2014. Interest bearing deposits of $4.828 billion at June 30, 2015 included $197 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Excluding the $14.1 million decrease in wholesale deposits, interest bearing deposits at June 30, 2015 increased $58.4 million, or 1 percent, during the current quarter. Excluding the CB and FNBR acquisitions and the decrease of $18.1 million in wholesale deposits, interest bearing deposits at June 30, 2015 increased $230 million, or 6 percent, from June 30, 2014.

FHLB advances of $329 million at June 30, 2015 increased $31.3 million, or 11 percent, during the current quarter 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. FHLB advances as of June 30, 2015, decreased $278 million, or 46 percent, from June 30, 2014 as growth in deposits and continued balance sheet restructuring reduced the need for additional borrowings.

Stockholders' Equity Summary

          $ Change from
  Jun 30, Mar 31, Dec 31, Jun 30, Mar 31, Dec 31, Jun 30,
 (Dollars in thousands, except per share data) 2015 2015 2014 2014 2015 2014 2014
Common equity  $ 1,051,011 1,035,497 1,010,303 985,809 15,514 40,708 65,202
Accumulated other comprehensive income 5,440 18,027 17,744 24,206 (12,587) (12,304) (18,766)
Total stockholders' equity 1,056,451 1,053,524 1,028,047 1,010,015 2,927 28,404 46,436
Goodwill and core deposit intangible, net (142,344) (143,099) (140,606) (137,815) 755 (1,738) (4,529)
Tangible stockholders' equity  $ 914,107 910,425 887,441 872,200 3,682 26,666 41,907
Stockholders' equity to total assets 12.30% 12.43% 12.38% 12.8%      
Tangible stockholders' equity to total tangible assets 10.82% 10.93% 10.87% 11.25%      
Book value per common share  $ 13.99 13.95 13.7 13.56 0.04 0.29 0.43
Tangible book value per common share  $ 12.10 12.05 11.83 11.71 0.05 0.27 0.39
Market price per share at end of period  $ 29.42 25.15 27.77 28.38 4.27 1.65 1.04

Tangible stockholders' equity of $914 million at June 30, 2015 increased $3.7 million, or less than 1 percent, from the prior quarter which was primarily the result of earnings retention which offset the decrease in accumulated other comprehensive income. Tangible stockholders' equity increased $41.9 million from a year ago as the result of earnings retention and Company stock issued in connection with the CB and FNBR acquisitions, both of which offset the decrease in accumulated other comprehensive income. Tangible book value per common share of $12.10 increased $0.05 per share from the prior quarter and increased $0.39 per share from the prior year second quarter.

Cash Dividend

On June 30, 2015, the Company's Board of Directors declared a cash dividend of $0.19 per share, an increase of $0.01 per share, or 6 percent, over the prior quarter. The dividend was payable July 16, 2015 to shareholders of record on July 10, 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 June 30, 2015

Compared to March 31, 2015 and June 30, 2014

Income Summary

  Three Months ended $ Change from
(Dollars in thousands) Jun 30, Mar 31, Jun 30, Mar 31, Jun 30,
  2015 2015 2014 2015 2014
Net interest income          
Interest income $ 78,617 77,486 73,963 1,131 4,654
Interest expense 7,369 7,382 6,528 (13) 841
Total net interest income 71,248 70,104 67,435 1,144 3,813
Non-interest income          
Service charges, loan fees, and other fees 15,445 14,156 14,747 1,289 698
Gain on sale of loans 7,600 5,430 4,778 2,170 2,822
(Loss) gain on sale of investments (98) 5 (48) (103) (50)
Other income 2,855 3,102 3,027 (247) (172)
Total non-interest income 25,802 22,693 22,504 3,109 3,298
  $ 97,050 92,797 89,939 4,253 7,111
Net interest margin (tax-equivalent) 3.98% 4.03% 3.99%    

 

Net Interest Income

In the current quarter, interest income of $78.6 million increased $1.1 million, or 1 percent from the prior quarter. The current quarter increase in interest income was primarily driven by increases in interest income on commercial loans. Income on commercial loans of $40.7 million increased $1.7 million, or 4 percent, from the prior quarter. In addition, interest income increased $4.7 million, or 6 percent, over the prior year second quarter and was also attributable to higher interest income on commercial loans. The current quarter interest income on commercial loans increased $5.4 million, or 15 percent, over the prior year second quarter primarily the result of an increased volume in commercial loans. Interest income on investment securities of $22.0 million decreased $1.0 million, or 4 percent, over the prior quarter and decreased $1.9 million, or 8 percent, over the prior year second quarter principally due to a decreased volume of investment securities.

The current quarter interest expense of $7.4 million decreased $13 thousand, or less than 1 percent, from the prior quarter. The current quarter interest expense increased $841 thousand from the prior year second 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 40 basis points compared to 42 basis points for the prior quarter and 39 basis points in the prior year second quarter.

The Company's net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 3.98 percent compared to 4.03 percent in the prior quarter. The 5 basis points decrease in the current quarter net interest margin was primarily driven by an 8 basis points reduction attributable to the investment portfolio. The reduction in the investment portfolio coupled with additional liquidity caused the cash balance to build through the quarter. The Company's current quarter net interest margin decreased 1 basis point from the prior year second quarter net interest margin of 3.99 percent. "The Bank divisions continue to achieve strong growth in their non-interest bearing deposit balances as well as low-cost interest bearing deposit balances," said Ron Copher, Chief Financial Officer. "Moreover, the Bank divisions maintained discipline over the pricing of their interest bearing balances," Copher said.

Non-interest Income

Non-interest income for the current quarter totaled $25.8 million, an increase of $3.1 million, or 14 percent, over the prior quarter and an increase of $3.3 million, or 15 percent, over the same quarter last year. Service fee income of $15.4 million, increased $1.3 million, or 9 percent, from the prior quarter as a result of seasonal activity and increased $698 thousand, or 5 percent, from the prior year second quarter as a result of the increased number of deposit accounts. "Fee income has been exceptional through the first six months of the year, but especially the most recent quarter," said Blodnick. "All the hard work our banks have done the past five years to build their customer base is paying off. A larger customer base allows us more engagement with these individuals and businesses and the opportunity to provide more products and services resulting in greater revenue." Gain of $7.6 million on the sale of the residential loans in the current quarter increased $2.2 million, or 40 percent, from the prior quarter and increased $2.8 million, or 59 percent, from the prior year second quarter as a result of an increase in mortgage refinancing and purchase activity. Other non-interest income for the current quarter decreased $247 thousand, or 8 percent, over the prior quarter and decreased $172 thousand, or 6 percent, over the prior year second quarter. Included in other income was operating revenue of $5 thousand from other real estate owned ("OREO") and a gain of $318 thousand from the sale of OREO, a combined total of $323 thousand for the current quarter compared to $417 thousand for the prior quarter and $615 thousand for the prior year second quarter.

Non-interest Expense Summary

  Three Months ended $ Change from
  Jun 30, Mar 31, Jun 30, Mar 31, Jun 30,
(Dollars in thousands) 2015 2015 2014 2015 2014
Compensation and employee benefits $ 32,729 32,244 28,988 485 3,741
Occupancy and equipment 7,810 7,362 6,733 448 1,077
Advertising and promotions 2,240 1,927 1,948 313 292
Data processing 1,593 1,249 2,032 344 (439)
Other real estate owned 1,377 758 566 619 811
Regulatory assessments and insurance 1,006 1,305 1,028 (299) (22)
Core deposit intangibles amortization 755 731 693 24 62
Other expenses 12,435 9,921 10,685 2,514 1,750
Total non-interest expense $ 59,945 55,497 52,673 4,448 7,272

Compensation and employee benefits for the current quarter increased by $485 thousand, or 2 percent, from the prior quarter due to the increased number of employees from the CB acquisition. Compensation and employee benefits for the current quarter increased by $3.7 million from the prior year second quarter due to of the increased number of employees from the CB and FNBR acquisitions and salary increases. Current quarter occupancy and equipment expense increased $1.1 million, or 16 percent, from the prior year second quarter as a result of added costs associated with the CB and FNBR acquisitions. The current quarter advertising expense increased $313 thousand, or 16 percent, from the prior quarter and increased $292 thousand, or 15 percent, as a result of the Company actively marketing to its customer base. The current quarter data processing expense increased $344 thousand, or 28 percent, from the prior quarter as a result of conversion related expenses and general increases during the current quarter. The current quarter data processing expense decreased $439 thousand, or 22 percent, from the prior year second quarter as a result of conversion related expenses in the prior year second quarter. The current quarter OREO expense of $1.4 million included $437 thousand of operating expense, $846 thousand of fair value write-downs, and $93 thousand of loss from the sales of OREO. Current quarter other expenses of $12.4 million increased by $2.5 million, or 25 percent, from the prior quarter primarily from expenses connected with equity investments in New Market Tax Credits ("NMTC") projects and conversion related expenses. The NMTC expenses are more than offset by the tax benefits included in federal income tax expense. Current quarter other expense increased $1.8 million, or 16 percent, from the prior year second quarter due to conversion related expenses.

Efficiency Ratio

The efficiency ratio for the current quarter was 55.91 percent and the prior year second quarter was 54.73 percent. The 1.18 percent increase in efficiency ratio resulted from increases in non-interest expense driven by increased compensation and other operational expenses, which exceeded the increases in net interest income from an increase in earning assets and increases in non-interest income from greater mortgage refinancing activity. The efficiency ratio was also negatively impacted by the higher efficiency ratios from the recently acquired banks; however, the Company expects synergies to be realized in the near term. 

Operating Results for Six Months ended June 30, 2015

Compared to June 30, 2014

Income Summary

  Six Months ended    
  Jun 30, Jun 30,    
(Dollars in thousands) 2015 2014 $ Change % Change
Net interest income        
Interest income $ 156,103 $ 148,050 $ 8,053 5%
Interest expense 14,751 13,168 1,583 12%
Total net interest income 141,352 134,882 6,470 5%
Non-interest income        
Service charges, loan fees, and other fees 29,601 27,995 1,606 6%
Gain on sale of loans 13,030 8,373 4,657 56%
Loss on sale of investments (93) (99) 6 (6)%
Other income 5,957 5,623 334 6%
Total non-interest income 48,495 41,892 6,603 16%
  $ 189,847 $ 176,774 $ 13,073 7%
Net interest margin (tax-equivalent) 4.00% 4.01%    

Net Interest Income

Net interest income for the first six months of the current year was $141 million, an increase of $6.5 million, or 5 percent, over the same period last year. Interest income for the first six months of the current year increased $8.1 million, or 5 percent, from the prior year first six months and was principally due to an increase in income from commercial loans. Current year interest income of $79.7 million on commercial loans increased $9.4 million, or 13 percent, from the first half of last year and was primarily the result of an increased volume of commercial loans. Current year interest income of $44.9 million on investment securities decreased $3.3 million, or 7 percent, over the same period last year, as a result of a combined decreased rate on investment securities and decreased volume of investment securities.

Interest expense for the first six months of the current year increased $1.6 million, or 12 percent, from the prior year first six months and was 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 six months of 2015 was 41 basis points compared to 39 basis points for the first six months of 2014.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first six months of 2015 was 4.00 percent, a 1 basis point decrease from the net interest margin of 4.01 percent for the first six months of 2014.

Non-interest Income

Non-interest income of $48.5 million for the first half of 2015 increased $6.6 million, or 16 percent, over the same period last year. Service charges and other fees of $29.6 million for the first six months of 2015 increased $1.6 million, or 6 percent, from the same period last year driven by the increased number of deposit accounts and increases from recent acquisitions. The gains of $13.0 million on the sale of residential loans for the first half of 2015 increased $4.7 million, or 56 percent, from the first half of 2014 resulting from a pickup in mortgage refinancing and purchase activity. Included in other income was operating revenue of $75 thousand from OREO and gains of $665 thousand from the sales of OREO, which totaled $740 thousand for the first half of 2015 compared to $1.4 million for the same period in the prior year.

Non-interest Expense Summary

  Six Months ended    
  Jun 30, Jun 30,    
(Dollars in thousands) 2015 2014 $ Change % Change
Compensation and employee benefits  $ 64,973  $ 57,622  $ 7,351 13%
Occupancy and equipment 15,172 13,346 1,826 14%
Advertising and promotions 4,167 3,725 442 12%
Data processing 2,842 3,320 (478) (14)%
Other real estate owned 2,135 1,073 1,062 99%
Regulatory assessments and insurance 2,311 2,620 (309) (12)%
Core deposit intangible amortization 1,486 1,403 83 6%
Other expenses 22,356 19,634 2,722 14%
Total non-interest expense  $ 115,442  $ 102,743  $ 12,699 12%

Compensation and employee benefits for the first six months of 2015 increased $7.4 million, or 13 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 $1.8 million, or 14 percent, as a result of increased costs associated with the CB and FNBR acquisitions. Outsourced data processing expense decreased $478 thousand, or 14 percent, from the prior year first six months as a result of a decrease in conversion related expenses. OREO expense of $2.1 million in the first six months of 2015 increased $1.1 million, or 99 percent, from the first six months of the prior year. OREO expense for the first six months of 2015 included $851 thousand of operating expenses, $1.1 million of fair value write-downs, and $214 thousand of loss from the sales of OREO. OREO expenses tend to fluctuate based on the level of activity in various quarters. Other expense of $22.4 million for the first half of 2015 increased by $2.7 million, or 14 percent, from the first half of the prior year primarily from increases in conversion related expenses.

Provision for Loan Losses

The provision for loan losses was $1.0 million for the first six months of 2015, a decrease of $314 thousand, or 23 percent, from the same period in the prior year. Net charged-off loans during the first six months of 2015 was $281 thousand, a decrease of $795 thousand from the first six months of 2014.

Efficiency Ratio

The efficiency ratio was 55.36 percent for the first six months of 2015 and 54.11 percent for the first six 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 gains 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
 
  June 30, March 31, December 31, June 30,
(Dollars in thousands, except per share data) 2015 2015 2014 2014
Assets        
Cash on hand and in banks  $ 120,783 109,746 122,834 130,114
Federal funds sold 1,025 2,852
Interest bearing cash deposits 234,936 73,720 318,550 69,392
Cash and cash equivalents 355,719 183,466 442,409 202,358
Investment securities, available-for-sale 2,361,830 2,544,093 2,387,428 2,559,411
Investment securities, held-to-maturity 593,314 570,285 520,997 483,557
Total investment securities 2,955,144 3,114,378 2,908,425 3,042,968
Loans held for sale 53,201 54,132 46,726 56,021
Loans receivable 4,807,431 4,687,669 4,488,095 4,203,279
Allowance for loan and lease losses (130,519) (129,856) (129,753) (130,636)
Loans receivable, net 4,676,912 4,557,813 4,358,342 4,072,643
Premises and equipment, net 186,858 187,067 179,175 167,741
Other real estate owned 26,686 28,124 27,804 26,338
Accrued interest receivable 44,563 43,260 40,587 41,765
Deferred tax asset 56,571 41,220 41,737 34,505
Core deposit intangible, net 11,501 12,256 10,900 8,109
Goodwill 130,843 130,843 129,706 129,706
Non-marketable equity securities 24,914 54,277 52,868 52,715
Other assets 66,898 68,260 67,828 55,225
Total assets  $ 8,589,810 8,475,096 8,306,507 7,890,094
Liabilities        
Non-interest bearing deposits  $ 1,731,015 1,675,451 1,632,403 1,464,938
Interest bearing deposits 4,827,642 4,783,341 4,712,809 4,280,898
Securities sold under agreements to repurchase 408,935 425,652 397,107 315,240
FHLB advances 329,470 298,148 296,944 607,305
Other borrowed funds 6,665 6,703 7,311 7,367
Subordinated debentures 125,776 125,741 125,705 125,633
Accrued interest payable 3,790 3,893 4,155 3,163
Other liabilities 100,066 102,643 102,026 75,535
Total liabilities 7,533,359 7,421,572 7,278,460 6,880,079
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 755 755 750 745
Paid-in capital 720,073 719,506 708,356 692,343
Retained earnings - substantially restricted 330,183 315,236 301,197 292,721
Accumulated other comprehensive income 5,440 18,027 17,744 24,206
Total stockholders' equity 1,056,451 1,053,524 1,028,047 1,010,015
Total liabilities and stockholders' equity  $ 8,589,810 8,475,096 8,306,507 7,890,094
Number of common stock shares issued and outstanding 75,531,258 75,530,030 75,026,092 74,467,908
         
Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
 
  Three Months ended Six Months ended
  June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands, except per share data) 2015 2015 2014 2015 2014
Interest Income          
Residential real estate loans $ 7,942 7,761 7,220 15,703 14,307
Commercial loans 40,698 39,022 35,267 79,720 70,309
Consumer and other loans 8,018 7,744 7,583 15,762 15,226
Investment securities 21,959 22,959 23,893 44,918 48,208
Total interest income 78,617 77,486 73,963 156,103 148,050
Interest Expense          
Deposits 4,112 4,147 3,061 8,259 6,150
Securities sold under agreements to repurchase 232 241 192 473 402
Federal Home Loan Bank advances 2,217 2,195 2,447 4,412 4,961
Federal funds purchased and other borrowed funds 15 27 48 42 101
Subordinated debentures 793 772 780 1,565 1,554
Total interest expense 7,369 7,382 6,528 14,751 13,168
Net Interest Income 71,248 70,104 67,435 141,352 134,882
Provision for loan losses 282 765 239 1,047 1,361
Net interest income after provision for loan losses 70,966 69,339 67,196 140,305 133,521
Non-Interest Income          
Service charges and other fees 14,303 12,999 13,547 27,302 25,766
Miscellaneous loan fees and charges 1,142 1,157 1,200 2,299 2,229
Gain on sale of loans 7,600 5,430 4,778 13,030 8,373
(Loss) gain on sale of investments (98) 5 (48) (93) (99)
Other income 2,855 3,102 3,027 5,957 5,623
Total non-interest income 25,802 22,693 22,504 48,495 41,892
Non-Interest Expense          
Compensation and employee benefits 32,729 32,244 28,988 64,973 57,622
Occupancy and equipment 7,810 7,362 6,733 15,172 13,346
Advertising and promotions 2,240 1,927 1,948 4,167 3,725
Data processing 1,593 1,249 2,032 2,842 3,320
Other real estate owned 1,377 758 566 2,135 1,073
Regulatory assessments and insurance 1,006 1,305 1,028 2,311 2,620
Core deposit intangibles amortization 755 731 693 1,486 1,403
Other expenses 12,435 9,921 10,685 22,356 19,634
Total non-interest expense 59,945 55,497 52,673 115,442 102,743
Income Before Income Taxes 36,823 36,535 37,027 73,358 72,670
Federal and state income tax expense 7,488 8,865 8,350 16,353 17,263
Net Income $ 29,335 27,670 28,677 57,005 55,407
Basic earnings per share $ 0.39 0.37 0.38 0.76 0.74
Diluted earnings per share $ 0.39 0.37 0.38 0.76 0.74
Dividends declared per share $ 0.19 0.18 0.17 0.37 0.33
Average outstanding shares - basic 75,530,591 75,206,348 74,467,576 75,369,366 74,452,568
Average outstanding shares - diluted 75,565,655 75,244,959 74,499,660 75,407,621 74,491,459
           
Glacier Bancorp, Inc.
Average Balance Sheet
 
  Three Months ended Six Months ended
  June 30, 2015 June 30, 2015
      Average     Average
  Average Interest & Yield/ Average Interest & Yield/
(Dollars in thousands) Balance Dividends Rate Balance Dividends Rate
Assets            
Residential real estate loans $ 688,214 $ 7,942 4.62% $ 670,058 $ 15,703 4.69%
Commercial loans 1 3,439,432 41,343 4.82% 3,361,582 80,948 4.86%
Consumer and other loans 627,847 8,018 5.12% 618,900 15,762 5.14%
Total loans 2 4,755,493 57,303 4.83% 4,650,540 112,413 4.87%
Tax-exempt investment securities 3 1,315,849 19,022 5.78% 1,309,049 37,515 5.73%
Taxable investment securities 4 1,848,222 9,655 2.09% 1,876,372 20,409 2.18%
Total earning assets 7,919,564 85,980 4.35% 7,835,961 170,337 4.38%
Goodwill and intangibles 142,781     141,759    
Non-earning assets 391,562     385,605    
Total assets 8,453,907     8,363,325    
Liabilities            
Non-interest bearing deposits $ 1,693,414 $ — —% $ 1,655,981 $ — —%
NOW accounts 1,343,474 258 0.08% 1,327,491 526 0.08%
Savings accounts 744,845 84 0.05% 729,456 173 0.05%
Money market deposit accounts 1,336,889 513 0.15% 1,320,538 1,030 0.16%
Certificate accounts 1,153,143 1,784 0.62% 1,159,279 3,627 0.63%
Wholesale deposits 5 215,138 1,473 2.75% 217,746 2,903 2.69%
FHLB advances 315,104 2,217 2.78% 307,581 4,412 2.85%
Repurchase agreements and other borrowed funds 497,638 1,040 0.84% 500,710 2,080 0.84%
Total funding liabilities 7,299,645 7,369 0.40% 7,218,782 14,751 0.41%
Other liabilities 89,751     88,952    
Total liabilities 7,389,396     7,307,734    
Stockholders' Equity            
Common stock 755     754    
Paid-in capital 719,730     715,949    
Retained earnings 329,781     321,936    
Accumulated other comprehensive income 14,245     16,952    
Total stockholders' equity 1,064,511     1,055,591    
Total liabilities and stockholders' equity $ 8,453,907     $ 8,363,325    
Net interest income (tax-equivalent)   $ 78,611     $ 155,586  
Net interest spread (tax-equivalent)     3.95%     3.97%
Net interest margin (tax-equivalent)     3.98%     4.00%
             
1 Includes tax effect of $645 thousand and $1.2 million on tax-exempt municipal loan and lease income for the three and six months ended June 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 $6.4 million and $12.3 million on tax-exempt investment security income for the three and six months ended June 30, 2015.
4 Includes tax effect of $362 thousand and $724 thousand on federal income tax credits for the three and six months ended June 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) Jun 30, Mar 31, Dec 31, Jun 30, Mar 31, Dec 31, Jun 30,
  2015 2015 2014 2014 2015 2014 2014
Custom and owner occupied construction  $ 56,460  $ 51,693  $ 56,689  $ 51,497 9% —% 10%
Pre-sold and spec construction 45,063 44,865 47,406 34,114 —% (5)% 32%
Total residential construction 101,523 96,558 104,095 85,611 5% (2)% 19%
Land development 78,059 81,488 82,829 81,589 (4)% (6)% (4)%
Consumer land or lots 98,365 97,519 101,818 101,042 1% (3)% (3)%
Unimproved land 76,726 80,206 86,116 51,457 (4)% (11)% 49%
Developed lots for operative builders 13,673 14,210 14,126 15,123 (4)% (3)% (10)%
Commercial lots 20,047 21,059 16,205 17,238 (5)% 24% 16%
Other construction 126,966 148,535 150,075 112,081 (15)% (15)% 13%
Total land, lot, and other construction 413,836 443,017 451,169 378,530 (7)% (8)% 9%
Owner occupied 874,651 877,293 849,148 816,859 —% 3% 7%
Non-owner occupied 718,024 704,990 674,381 617,693 2% 6% 16%
Total commercial real estate 1,592,675 1,582,283 1,523,529 1,434,552 1% 5% 11%
Commercial and industrial 635,259 585,501 547,910 549,143 8% 16% 16%
Agriculture 374,258 340,364 310,785 288,555 10% 20% 30%
1st lien 802,152 796,947 775,785 757,954 1% 3% 6%
Junior lien 67,019 67,217 68,358 73,130 —% (2)% (8)%
Total 1-4 family 869,171 864,164 844,143 831,084 1% 3% 5%
Multifamily residential 195,674 177,187 160,426 152,169 10% 22% 29%
Home equity lines of credit 356,077 347,693 334,788 309,282 2% 6% 15%
Other consumer 147,427 141,347 133,773 134,414 4% 10% 10%
Total consumer 503,504 489,040 468,561 443,696 3% 7% 13%
Other 174,732 163,687 124,203 95,960 7% 41% 82%
Total loans receivable, including loans held for sale 4,860,632 4,741,801 4,534,821 4,259,300 3% 7% 14%
Less loans held for sale 1 (53,201) (54,132) (46,726) (56,021) (2)% 14% (5)%
Total loans receivable  $ 4,807,431  $ 4,687,669  $ 4,488,095  $ 4,203,279 3% 7% 14%
               
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
  Jun 30, Mar 31, Dec 31, Jun 30, Jun 30, Jun 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2015 2015 2015
Custom and owner occupied construction $ 1,079 1,101 1,132 1,196 1,079
Pre-sold and spec construction 18 218 218 609 18
Total residential construction 1,097 1,319 1,350 1,805 1,097
Land development 20,405 21,220 20,842 23,718 10,301 10,104
Consumer land or lots 2,647 2,531 3,581 2,804 1,062 177 1,408
Unimproved land 12,580 13,448 14,170 12,421 10,579 2,001
Developed lots for operative builders 848 929 1,318 2,186 436 201 211
Commercial lots 2,050 2,496 2,660 2,787 241 1,809
Other construction 4,244 4,989 5,151 5,156 4,244
Total land, lot and other construction 42,774 45,613 47,722 49,072 22,619 378 19,777
Owner occupied 13,057 13,121 13,574 14,595 9,781 11 3,265
Non-owner occupied 3,179 3,771 3,013 3,956 1,577 164 1,438
Total commercial real estate 16,236 16,892 16,587 18,551 11,358 175 4,703
Commercial and industrial 5,805 6,367 4,375 5,850 5,698 22 85
Agriculture 2,769 2,845 3,074 3,506 2,321 448
1st lien 9,867 9,502 9,580 17,240 8,210 31 1,626
Junior lien 739 680 442 1,146 739
Total 1-4 family 10,606 10,182 10,022 18,386 8,949 31 1,626
Multifamily residential 440 729
Home equity lines of credit 4,742 5,507 6,099 4,289 4,742
Other consumer 164 243 231 277 105 12 47
Total consumer 4,906 5,750 6,330 4,566 4,847 12 47
Other 29 1,800 29
Total $ 84,222 90,768 89,900 102,465 56,918 618 26,686
               
Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
 
  Accruing 30-89 Days Delinquent Loans,  by Loan Type % Change from
  Jun 30, Mar 31, Dec 31, Jun 30, Mar 31, Dec 31, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2015 2014 2014
Pre-sold and spec construction 869 144 n/m (100)% (100)%
Consumer land or lots 158 365 391 267 (57)% (60)% (41)%
Unimproved land 755 278 267 899 172% 183% (16)%
Developed lots for operative builders 19 (100)% n/m n/m
Commercial lots 66 585 21 (89)% 214% n/m
Total land, lot and other construction 979 1,247 679 1,166 (21)% 44% (16)%
Owner occupied 4,727 4,841 5,971 6,125 (2)% (21)% (23)%
Non-owner occupied 8,257 4,327 3,131 1,665 91% 164% 396%
Total commercial real estate 12,984 9,168 9,102 7,790 42% 43% 67%
Commercial and industrial 6,760 6,600 2,915 2,528 2% 132% 167%
Agriculture 353 3,715 994 497 (90)% (64)% (29)%
1st lien 2,891 7,307 6,804 2,408 (60)% (58)% 20%
Junior lien 335 384 491 536 (13)% (32)% (38)%
Total 1-4 family 3,226 7,691 7,295 2,944 (58)% (56)% 10%
Multifamily Residential 671 676 689 (1)% n/m (3)%
Home equity lines of credit 2,464 3,350 1,288 1,839 (26)% 91% 34%
Other consumer 996 1,003 928 938 (1)% 7% 6%
Total consumer 3,460 4,353 2,216 2,777 (21)% 56% 25%
Other 41 1,834 57 n/m (98)% (28)%
Total 28,474 33,450 25,904 18,592 (15)% 10% 53%
               
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
  Jun 30, Mar 31, Dec 31, Jun 30, Jun 30, Jun 30,
(Dollars in thousands) 2015 2015 2014 2014 2015 2015
Pre-sold and spec construction $ (23) (9) (94) (39) 23
Land development (807) (23) (390) (333) 256 1,063
Consumer land or lots (77) (15) 375 97 71 148
Unimproved land (86) (50) 52 (126) 86
Developed lots for operative builders (98) (96) (140) (117) 13 111
Commercial lots (3) (1) (6) (3) 3
Other construction (1) (1) 1
Total land, lot and other construction (1,072) (186) (109) (482) 340 1,412
Owner occupied 271 316 669 (7) 349 78
Non-owner occupied 109 82 (162) (184) 116 7
Total commercial real estate 380 398 507 (191) 465 85
Commercial and industrial 1,007 426 1,069 1,343 1,272 265
Agriculture (7) (4) 28 7
1st lien (49) (30) 372 298 19 68
Junior lien (129) (54) 183 91 29 158
Total 1-4 family (178) (84) 555 389 48 226
Multifamily residential (29) (20) 138 1 29
Home equity lines of credit 206 121 190 (120) 227 21
Other consumer (3) 20 226 175 246 249
Total consumer 203 141 416 55 473 270
Total $ 281 662 2,510 1,076 2,598 2,317
             

Visit our website at www.glacierbancorp.com.

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