Market Overview

Glacier Bancorp, Inc. Announces Results for the Quarter Ended December 31, 2015

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HIGHLIGHTS: 

  • Net income of $29.5 million for the current quarter was basically unchanged from the prior quarter's $29.6 million net income and was an increase of 5 percent from the prior year fourth quarter net income of $28.1 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 fourth quarter diluted earnings per share of $0.37, an increase of 5 percent.
  • Organic loan growth was $346 million, or 8 percent, for the current year.
  • Net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.02 percent, an increase of 6 basis points from 3.96 percent in the prior quarter.
  • Approved a special dividend of $0.30 per share.  This was the twelfth special dividend the Company has declared.
  • Paid a regular quarterly dividend of $0.19 per share in December.  The dividend was the 123rd consecutive quarterly dividend declared by the Company.
  • The Company completed the acquisition of Cañon National Bank, a community bank based in Cañon City, Colorado.

Results Summary

 Three Months ended Year ended
 Dec 31, Sep 30, Jun 30, Dec 31, Dec 31, Dec 31,
(Dollars in thousands, except per share data) 2015  2015 2015  2014 2015 2014
Net income$29,508  29,614  29,335  28,054  116,127  112,755 
Diluted earnings per share$0.39  0.39  0.39  0.37  1.54  1.51 
Return on average assets (annualized)1.32% 1.36% 1.39% 1.37% 1.36% 1.42%
Return on average equity (annualized)10.66% 10.93% 11.05% 10.66% 10.84% 11.11%

KALISPELL, Mont., Jan. 28, 2016 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $29.5 million for the current quarter, an increase of $1.4 million, or 5 percent, from the $28.1 million of net income for the prior year fourth quarter.  Diluted earnings per share for the current quarter was $0.39 per share, an increase of $0.02, or 5 percent, from the prior year fourth quarter diluted earnings per share of $0.37.  Included in the current quarter was $658 thousand of one-time acquisition related expenses.  "The fourth quarter capped off another very good year for Glacier Bancorp," said Mick Blodnick, President and Chief Executive Officer.  "We produced all time record earnings led by strong loan growth, continued improvement in our credit quality and a solid and consistent net interest margin.  Collectively, this helped us to once again this year post some excellent performance metrics, a feat our entire staff should be very proud of what they helped achieve," Blodnick said.

Net income for the twelve months ended December 31, 2015 was a record $116.1 million, an increase of $3.4 million, or 3 percent, from the $112.8 million of net income for the same period in the prior year.  Diluted earnings per share for the twelve months ended December 31, 2015 was $1.54 per share, an increase of $0.03, or 2 percent, from the diluted earnings per share for the prior year.

On October 31, 2015, the Company completed the acquisition of Cañon Bank Corporation and its subsidiary Cañon National Bank (collectively, "Cañon").  Goodwill of $9.8 million resulted from the acquisition which was based on the estimated fair value of the assets acquired and liabilities assumed.  "With the closing of Cañon National Bank this past quarter we add another quality financial institution to our Company," Blodnick stated.  "This new addition not only gains us access to the "front range" of Colorado with some new and exciting markets, but more importantly gives us some very talented bankers which were the real key to this transaction."  On February 28, 2015, the Company completed the acquisition of Montana Community Banks, Inc. and its subsidiary, Community Bank, Inc. (collectively, "CB") which resulted in goodwill of $1.1 million.  The Company incurred $2.3 million of legal and professional expenses in connection with the CB and Cañon acquisitions and the CB data conversion and integration during the current year.  The Company's results of operations and financial condition include the acquisitions of CB and Cañon from the acquisition dates and the following table provides information on the fair value of selected classifications of assets and liabilities acquired:

 Cañon CB  
 Oct 31, Feb 28,  
(Dollars in thousands) 2015  2015 Total
Total assets$270,121  175,774  445,895 
Investment securities68,486  42,350  110,836 
Loans receivable159,759  84,689  244,448 
Non-interest bearing deposits89,083  41,779  130,862 
Interest bearing deposits148,243  105,041  253,284 
Federal Home Loan Bank advances and other borrowed funds  3,292  3,292 

Asset Summary

       $ Change from
 Dec 31, Sep 30, Dec 31, Sep 30, Dec 31, 
(Dollars in thousands)2015 2015  2014  2015  2014
Cash and cash equivalents$193,253  242,835  442,409  (49,582) (249,156)
Investment securities, available-for-sale2,610,760  2,530,994  2,387,428  79,766  223,332 
Investment securities, held-to-maturity702,072  651,822  520,997  50,250  181,075 
Total investment securities3,312,832  3,182,816  2,908,425  130,016  404,407 
Loans receivable         
Residential real estate688,912  644,694  611,463  44,218  77,449 
Commercial3,733,517  3,581,667  3,263,448  151,850  470,069 
Consumer and other656,252  650,058  613,184  6,194  43,068 
Loans receivable5,078,681  4,876,419  4,488,095  202,262  590,586 
Allowance for loan and lease losses(129,697) (130,768) (129,753) 1,071  56 
Loans receivable, net4,948,984  4,745,651  4,358,342  203,333  590,642 
Other assets634,163  592,997  597,331  41,166  36,832 
Total assets$9,089,232  8,764,299  8,306,507  324,933  782,725 

Total investment securities of $3.313 billion at December 31, 2015 increased $130 million, or 4 percent, during the current quarter and increased $404 million, or 14 percent, from December 31, 2014.  The increase in the investment portfolio from the prior quarter and the prior year fourth 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 December 31, 2015 compared to 35 percent at December 31, 2014.

Excluding the Cañon acquisition, the Company continues to experience growth in the loan portfolio which increased $43.0 million, or 1 percent, during the current quarter.  Excluding the acquisition, the loan category with the largest dollar increase during the current quarter was commercial real estate loans which increased $25.7 million, or 1 percent.  The loan category with the largest percentage increase was residential construction (i.e., regulatory classification) which increased $12.4 million or 11 percent over the prior quarter.  Excluding the CB and Cañon acquisitions, the loan portfolio increased $346 million, or 8 percent, since December 31, 2014 with $278 million of the increase coming from growth in commercial loans.  "Our organic loan growth was well beyond our expectation this past year as a very strong first half of the year gave us the momentum to exceed our loan goal for 2015," Blodnick said.  "Loan volume in the fourth quarter was much better than what we historically experience even with the customary drop in agricultural lending.  It was especially encouraging to again see an increase in residential construction lending.  We have been working very hard this year to improve our totals in this particular loan category and it's nice to see it continue to generate positive results."

Credit Quality Summary

   At or for the  
 At or for the Nine Months At or for the
 Year ended ended Year ended
 Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2015  2015  2014
Allowance for loan and lease losses     
Balance at beginning of period$129,753  129,753  130,351 
Provision for loan losses2,284  1,873  1,912 
Charge-offs(7,001) (4,671) (7,603)
Recoveries4,661  3,813  5,093 
Balance at end of period$129,697  130,768  129,753 
Other real estate owned$26,815  26,609  27,804 
Accruing loans 90 days or more past due2,131  3,784  214 
Non-accrual loans51,133  54,632  61,882 
Total non-performing assets 1$80,079  85,025  89,900 
Non-performing assets as a percentage of subsidiary assets0.88% 0.97% 1.08%
Allowance for loan and lease losses as a percentage of non-performing loans244% 224% 209%
Allowance for loan and lease losses as a percentage of total loans2.55% 2.68% 2.89%
Net charge-offs as a percentage of total loans0.05% 0.02% 0.06%
Accruing loans 30-89 days past due$19,413  17,822  25,904 
Accruing troubled debt restructurings$63,590  63,638  69,129 
Non-accrual troubled debt restructurings$27,057  27,442  33,714 

__________
1 As of December 31, 2015, non-performing assets have not been reduced by U.S. government guarantees of $2.3 million.

Non-performing assets at December 31, 2015 were $80.1 million, a decrease of $4.9 million, or 6 percent, during the current quarter.  Non-performing assets at December 31, 2015 decreased $9.8 million, or 11 percent, from a year ago.  Early stage delinquencies (accruing loans 30-89 days past due) of $19.4 million at December 31, 2015 increased $1.6 million from the prior quarter and decreased $6.5 million from the prior year fourth quarter.

The allowance for loan and lease losses ("allowance") was $130 million at December 31, 2015 consistent with prior periods.  The allowance was 2.55 percent of total loans outstanding at December 31, 2015 compared to 2.68 percent at September 30, 2015 and 2.89 percent at December 31, 2014. 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 the bank acquisitions as a result of the acquired loans recorded at fair value.

Credit Quality Trends and Provision for Loan Losses

       Accruing  
       Loans 30-89 Non-Performing
 Provision Net ALLL Days Past Due Assets to
 for Loan Charge-Offs as a Percent as a Percent of Total Subsidiary
(Dollars in thousands)Losses (Recoveries) of Loans Loans Assets
Fourth quarter 2015$411  $1,482  2.55% 0.38% 0.88%
Third quarter 2015826  577  2.68% 0.37% 0.97%
Second quarter 2015282  (381) 2.71% 0.59% 0.98%
First quarter 2015765  662  2.77% 0.71% 1.07%
Fourth quarter 2014191  1,070  2.89% 0.58% 1.08%
Third quarter 2014360  364  2.93% 0.39% 1.21%
Second quarter 2014239  332  3.11% 0.44% 1.30%
First quarter 20141,122  744  3.20% 1.05% 1.37%

Net charge-offs of loans for the current quarter were $1.5 million compared to net charge-offs of $577 thousand for the prior quarter and net charge-offs of $1.1 million from the same quarter last year.  The current quarter provision for loan losses of $411 thousand decreased $415 thousand from the prior quarter and increased $220 thousand from the prior year fourth quarter.  Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of 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
 Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2015  2015  2014  2015  2014
Non-interest bearing deposits$1,918,310  1,893,723  1,632,403  24,587  285,907 
Interest bearing deposits5,026,698  4,779,456  4,712,809  247,242  313,889 
Repurchase agreements423,414  441,041  397,107  (17,627) 26,307 
Federal Home Loan Bank advances394,131  329,299  296,944  64,832  97,187 
Other borrowed funds6,602  6,619  7,311  (17) (709)
Subordinated debentures125,848  125,812  125,705  36  143 
Other liabilities117,579  113,541  106,181  4,038  11,398 
Total liabilities$8,012,582  7,689,491  7,278,460  323,091  734,122 

Excluding the Cañon acquisition, non-interest bearing deposits of $1.918 billion at December 31, 2015, decreased $64 million, or 3 percent, from the prior quarter which was primarily from seasonality and timing of deposits of large deposit customers.  Excluding the CB and Cañon acquisitions, non-interest bearing deposits increased $155 million, or 10 percent, from December 31, 2014.  Interest bearing deposits of $5.027 billion at December 31, 2015 included $230 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts).  Excluding the increase of $39.9 million in wholesale deposits and the Cañon acquisition, interest bearing deposits at December 31, 2015 increased $59.1 million, or 1 percent, during the current quarter.  Excluding the decrease of $19.5 million in wholesale deposits and the CB and Cañon acquisitions, core interest bearing deposits at December 31, 2015 increased $80 million, or 2 percent, from December 31, 2014.

Securities sold under agreements to repurchase ("repurchase agreements") of $423 million at December 31, 2015 decreased $17.6 million, or 4 percent, from the prior quarter and was primarily the result of timing of deposits in existing repurchase agreements.  Federal Home Loan Bank ("FHLB") advances of $394 million at December 31, 2015 increased $64.8 million, or 20 percent, for the current quarter due to seasonal reduction in deposit balances and increased $97.2 million, or 33 percent, since December 31, 2014 due to deposit fluctuations and the Company taking advantage of attractive term borrowings that were available from FHLB of Seattle prior to its merger with FHLB of Des Moines during the second quarter of 2015.

Stockholders' Equity Summary

          $ Change from  
 Dec 31,  Sep 30,  Dec 31,  Sep 30,  Dec 31, 
(Dollars in thousands, except per share data)  2015  2015  2014  2015  2014 
Common equity$  1,074,661  1,066,801  1,010,303  7,860  64,358 
Accumulated other comprehensive income 1,989  8,007  17,744  (6,018) (15,755)
Total stockholders' equity 1,076,650  1,074,808  1,028,047  1,842  48,603 
Goodwill and core deposit intangible, net (155,193) (141,624) (140,606) (13,569) (14,587)
Tangible stockholders' equity$  921,457  933,184  887,441  (11,727) 34,016 
                
Stockholders' equity to total assets 11.85% 12.26% 12.38%      
Tangible stockholders' equity to  total tangible assets 10.31% 10.82% 10.87%      
Book value per common share$  14.15  14.23  13.70  (0.08) 0.45 
Tangible book value per common share$  12.11  12.35  11.83  (0.24) 0.28 
Market price per share at end of period$  26.53  26.39  27.77  0.14  (1.24)

Tangible stockholders' equity of $921 million at December 31, 2015 decreased $11.7 million, or 1 percent, from the prior quarter primarily from a decrease in accumulated other comprehensive income and an increase in goodwill and intangibles from the Cañon acquisition, both of which were partially offset by $15.2 million of Company stock issued in connection with the Cañon acquisition.  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 and Cañon acquisitions, both of which offset the decrease in accumulated other comprehensive income and increases in goodwill and intangibles from acquisitions.  At December 31, 2015, the tangible book value per common share was $12.11 a decrease of $0.24 per share from $12.35 the prior quarter.  The decrease resulted from shares issued in the Cañon acquisition and the decrease in accumulated other comprehensive income.  Tangible book value per common share for December 31, 2015, increased $0.28 per share from the prior year fourth quarter.

Cash Dividend
On December 30, 2015, the Company's Board of Directors declared a special cash dividend of $0.30 per share, which was the twelfth special dividend approved by the Company.  The dividend was payable January 21, 2016 to shareholders of record on January 12, 2016.  On November 24, 2015, the Company's Board of Directors declared a regular quarterly cash dividend of $0.19 per share.  The dividend was payable December 17, 2015 to shareholders of record on December 8, 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 December 31, 2015
Compared to September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014
 
Income Summary
  
 Three Months ended
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands) 2015  2015  2015  2015  2014
Net interest income         
Interest income$83,211  80,367  78,617  77,486  76,179 
Interest expense7,215  7,309  7,369  7,382  7,368 
Total net interest income75,996  73,058  71,248  70,104  68,811 
Non-interest income         
Service charges, loan fees, and other fees15,966  16,030  15,445  14,156  15,129 
Gain on sale of loans6,033  7,326  7,600  5,430  5,424 
Gain (loss) on sale of investments143  (31) (98) 5  (28)
Other income2,325  2,474  2,855  3,102  3,453 
Total non-interest income24,467  25,799  25,802  22,693  23,978 
 $100,463  98,857  97,050  92,797  92,789 
Net interest margin (tax-equivalent)4.02% 3.96% 3.98% 4.03% 3.92%
          
   $ Change from
   Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands)   2015 2015  2015  2014
Net interest income         
Interest income  $2,844  4,594  5,725  7,032 
Interest expense  (94) (154) (167) (153)
Total net interest income  2,938  4,748  5,892  7,185 
Non-interest income              
Service charges, loan fees, and other fees  (64) 521  1,810  837 
Gain on sale of loans  (1,293) (1,567) 603  609 
Gain (loss) on sale of investments  174  241  138  171 
Other income  (149) (530) (777) (1,128)
Total non-interest income  (1,332) (1,335) 1,774  489 
   $1,606  3,413  7,666  7,674 

Net Interest Income
In the current quarter, interest income of $83.2 million increased $2.8 million, or 4 percent from the prior quarter and was driven primarily by increases in interest income on investment securities, residential real estate loans and  commercial loans.  Interest income during the current quarter increased $7.0 million, or 9 percent, over the prior year fourth quarter and was principally due to higher interest income on commercial loans which increased $5.2 million, or 14 percent, as a result of an increased volume and yield on commercial loans.  Interest income of $23.7 million on investment securities increased $1.3 million, or 6 percent, over the prior quarter and increased $1.7 million, or 8 percent, over the prior year fourth quarter with both increases the result of higher volume and yield on the investment portfolio.

An interest rate swap with a notional amount of $100 million and a three and a half year deferred start began its  accrual period in December of 2015 with a fixed interest rate of 2.498 percent.  The interest rate swap expense will be offset by the maturity of a $75 million term FHLB borrowing in December with a 3.48 percent rate and was replaced with lower cost funding.  The Company's total accruing notional amount of interest rate swaps at year end was $260 million. The current quarter interest expense of $7.2 million decreased $94 thousand, or 1 percent, from the prior quarter.  The current quarter interest expense decreased $153 thousand from the prior year fourth quarter.  The total cost of funding (including non-interest bearing deposits) for the current quarter was 37 basis points compared to 39 basis points for the prior quarter and 42 basis points in the prior year fourth quarter.

The Company's net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.02 percent compared to 3.96 percent in the prior quarter. The 6 basis points increase in the current quarter net interest margin was primarily driven by a 4 basis points increase in the yield on the investment portfolio.  Included in the current quarter net interest margin was 2 basis points related to the recovery of interest on loans previously placed on non-accrual compared to 4 basis points in the prior quarter.  The Company's current quarter net interest margin  increased 10 basis points from the prior year fourth quarter net interest margin of 3.92 percent.  The increase in the net interest margin from the prior year fourth quarter was the result of a 5 basis points reduction in cost of funding, increased yield on investments securities, and increased volume of higher yielding commercial loans.  "Maintaining the stable net interest margin during the challenging interest rate environment of the current quarter and year reflects the Bank divisions' commitment to pricing loans at higher yields where possible and growing a lower cost deposit base, especially non-interest bearing deposits," said Ron Copher, Chief Financial Officer.  "The Bank's non-interest bearing deposit base will serve the Bank well across higher interest rate environments."

Non-interest Income
Non-interest income for the current quarter totaled $24.5 million, a decrease of $1.3 million, or 5 percent, from the prior quarter and an increase of $489 thousand, or 2 percent, over the same quarter last year.  Service fee income of $16.0 million, increased $837 thousand, or 6 percent, from the prior year fourth quarter driven by the increased number of deposit accounts.  The Company generated $6.0 million on the sale of residential loans in the current quarter a decrease of $1.3 million, or 18 percent, from the prior quarter as a result of seasonal fluctuations.   Gain on sale of residential loans for the current quarter increased $609 thousand, or 11 percent, from the prior year fourth quarter as a result of an increase in mortgage purchase activity.  Other non-interest income for the current quarter decreased $1.1 million, or 33 percent, over the prior year fourth quarter primarily due to insurance proceeds recognized in the prior year fourth quarter from a bank owned life insurance policy.  Included in other income was operating revenue of $28 thousand from OREO and a gain of $211 thousand from the sale of OREO, a combined total of $239 thousand for the current quarter compared to $129 thousand for the prior quarter and $442 thousand for the prior year fourth quarter.

Non-interest Expense Summary

 Three Months ended
 Dec 31,  Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands)2015 2015 2015 2015 2014
Compensation and employee benefits$35,902  33,534  32,729  32,244  30,807 
Occupancy and equipment8,090  7,887  7,810  7,362  7,191 
Advertising and promotions2,035  2,459  2,240  1,927  2,046 
Data processing1,733  1,258  1,593  1,249  1,815 
Other real estate owned511  1,047  1,377  758  893 
Regulatory assessments and insurance1,494  1,478  1,006  1,305  1,009 
Core deposit intangibles amortization758  720  755  731  716 
Other expenses11,680  10,729  12,435  9,921  11,221 
Total non-interest expense$62,203  59,112  59,945  55,497  55,698 
          
   $ Change from
   Sep 30, Jun 30, Mar 31, Dec 31,
(Dollars in thousands)   2015  2015  2015  2014
Compensation and employee benefits  $2,368  3,173  3,658  5,095 
Occupancy and equipment  203  280  728  899 
Advertising and promotions  (424) (205) 108  (11)
Data processing  475  140  484  (82)
Other real estate owned  (536) (866) (247) (382)
Regulatory assessments and insurance  16  488  189  485 
Core deposit intangibles amortization  38  3  27  42 
Other expense  951  (755) 1,759  459 
Total non-interest expense  $3,091  2,258  6,706  6,505 

Compensation and employee benefits for the current quarter increased by $2.4 million, or 7 percent, from the prior quarter as a result of an increased number of employees from the Cañon acquisition and benefit accruals from higher performance.  Compensation and employee benefits for the current quarter increased by $5.1 million, or 17 percent, from the prior year fourth quarter due to the increased number of employees from the CB and Cañon acquisitions, annual salary increases, and an increase in the number of employees.  Current quarter occupancy and equipment expense increased $899 thousand, or 13 percent, from the prior year fourth quarter as a result of added costs associated with the CB and Cañon acquisitions and equipment expense related to additional information technology infrastructure.  The current quarter advertising expense decreased $424 thousand, or 17 percent, from the prior quarter as a result of timing of advertising expense. The current quarter data processing expense increased $475 thousand, or 38 percent, from the prior quarter primarily from outsourced data processing expense from the Cañon acquisition.  The current quarter OREO expense of $511 thousand was a decrease of $536 thousand from the prior quarter and included $358 thousand of operating expense, $54 thousand of fair value write-downs, and $99 thousand of loss from the sales of OREO.  Current quarter other expenses of $11.7 million increased by $951 thousand, or 9 percent, from the prior quarter primarily from professional expenses associated with the Cañon acquisition and expenses connected with equity investments in New Market Tax Credits ("NMTC") projects.  The NMTC expenses were more than offset by the tax benefits included in federal income tax expense.  Federal and state income tax expense of $8.3 million in the current quarter decreased $964 thousand from the prior quarter and was primarily the result of the increase in NMTC credits recognized during the current quarter.

Efficiency Ratio
The efficiency ratio for the current quarter was 56.52 percent compared to 54.32 percent in the prior quarter.  The  2.20 percent increase in efficiency ratio was from increased compensation expense from the Cañon acquisition and increased benefit accruals combined with seasonal decreases in gain on sale of residential loans, both of which were higher than the increased interest income the Company experienced during the current quarter.  The current quarter efficiency ratio of 56.52 percent compares to 55.11 percent in the prior year fourth quarter.  The 1.41 percent increase in efficiency ratio resulted primarily from increased compensation expense from recent acquisitions and increased salary and benefits which outpaced the increases to net interest income and non-interest income for the same period. 

Operating Results for Year ended December 31, 2015
Compared to December 31, 2014
      
Income Summary     
 Year ended $ Change % Change
(Dollars in thousands)Dec 31,
 2015
 Dec 31,
 2014
 
Net interest income       
Interest income$319,681  $299,919  $19,762  7%
Interest expense29,275  26,966  2,309  9%
Total net interest income290,406  272,953  17,453  6%
Non-interest income        
Service charges, loan fees, and other fees61,597  58,785  2,812  5%
Gain on sale of loans26,389  19,797  6,592  33%
Gain (loss) on sale of investments19  (188) 207  (110)%
Other income10,756  11,908  (1,152) (10)%
Total non-interest income98,761  90,302  8,459  9%
 $389,167  $363,255  $25,912  7%
Net interest margin (tax-equivalent)4.00% 3.98%    

Net Interest Income
Interest income for 2015 increased $19.8 million, or 7 percent, from the prior year and was principally due to an increase in income from commercial loans.  Current year interest income of $165 million on commercial loans increased $19.3 million, or 13 percent, from the prior year and was primarily the result of an increased volume of commercial loans.  Current year interest income of $91.1 million on investment securities decreased $2.0 million, or 2 percent, over the same period last year, due to a decreased yield on investment securities.  On a tax-equivalent  basis, the current year interest income of $118.8 million on investment securities increased $2.8 million, or 2 percent, over the prior year.

Interest expense for 2015 increased $2.3 million, or 9 percent, from the prior year and was primarily due to the interest expense associated with the interest rate swaps.  Excluding the impact of the interest rate swaps, interest expense for 2015 decreased by $1.7 million, or 7 percent, from the prior year.  The total funding cost (including non-interest bearing deposits) for the current year was 40 basis points compared to 39 basis points for the prior year.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current year was 4.00 percent, an increase of 2 basis point from the prior year net interest margin of 3.98 percent.  The 2 basis points increase was attributable to a combination of items including a shift in earning assets to the higher yielding loan portfolio and an increased yield on the investment securities portfolio.  In addition, the continued decreased yield on core deposits offset the increased interest expense from the interest rate swaps.  Excluding the effects of the interest rate swaps, the current year cost of funds was 33 basis points compared to 38 basis points in the prior year.

Non-interest Income
Non-interest income of $98.8 million for the current year increased $8.5 million, or 9 percent, over the same period last year.  Service charges and other fees of $61.6 million for the current year increased $2.8 million, or 5 percent, from last year and was driven by the increased number of deposit accounts and higher usage of deposit services from legacy customers.  The gain of $26.4 million on the sale of residential loans for the current year increased $6.6 million, or 33 percent, from the prior year which was attributable to an increase in mortgage refinancing and purchase activity.  Other income of $10.8 million for the current year decreased $1.2 million, or 10 percent, over the prior year due to a decrease in gain on sale of OREO and insurance proceeds recognized in the prior year fourth quarter from a bank owned life insurance policy.  Included in other income was operating revenue of $123 thousand from OREO and gains of $986 thousand from the sales of OREO, which totaled $1.1 million for 2015 compared to $2.3 million for the same period in the prior year.

Non-interest Expense Summary

 Year ended $ Change % Change
(Dollars in thousands)Dec 31,
 2015
 Dec 31,
 2014
 
Compensation and employee benefits$134,409  $118,571  $15,838  13%
Occupancy and equipment31,149  27,498  3,651  13%
Advertising and promotions8,661  7,912  749  9%
Data processing5,833  6,607  (774) (12)%
Other real estate owned3,693  2,568  1,125  44%
Regulatory assessments and insurance5,283  5,064  219  4%
Core deposit intangible amortization2,964  2,811  153  5%
Other expenses44,765  41,648  3,117  7%
Total non-interest expense$236,757  $212,679  $24,078  11%

Compensation and employee benefits for the current year increased $15.8 million, or 13 percent, from last year due to the increased number of employees primarily from the acquired banks, additional benefit costs and annual salary increases.  Occupancy and equipment expense increased $3.7 million, or 13 percent, as a result of increased costs associated with  acquisitions and equipment expense related to additional information technology infrastructure. Outsourced data processing expense decreased $774 thousand, or 12 percent, from the prior year as a result of a decrease in conversion related expenses and outsourced data processing expense from an acquired bank.  OREO expense of $3.7 million in the current year increased $1.1 million, or 44 percent, from the prior year.  OREO expenses continue to fluctuate based on the level of activity in various quarters.  OREO expense for 2015 included $1.8 million of operating expenses, $1.6 million of fair value write-downs, and $349 thousand of loss from the sales of OREO.  OREO expense for 2014 included $1.4 million of operating expenses, $691 thousand of fair value write-downs, and $442 thousand of loss from the sales of OREO.  Other expense of $44.8 million for the current year increased by $3.1 million, or 7 percent, from the prior year primarily due to increases in conversion and acquisition related expenses.

Provision for Loan Losses
The provision for loan losses was $2.3 million for the current year, an increase of $372 thousand, or 19 percent, from the same period in the prior year.  Net charged-off loans during 2015 were $2.3 million, a decrease of $170 thousand from 2014.

Efficiency Ratio
The efficiency ratio was 55.40 percent for 2015 compared to 54.31 percent for 2014.  The increase in the efficiency ratio resulted primarily from compensation expense from increased acquired bank employees and salary increases outpacing the increase in net interest income primarily from commercial loans and non-interest income principally from the increase in gain on sale of loans.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 88 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 Glacier Bank divisions;
  • potential interruption or breach in security of the Company's systems; and
  • the Company's success in managing risks involved in the foregoing.

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

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition
 
 December 31, September 30, December 31,
(Dollars in thousands, except per share data) 2015  2015  2014
Assets     
Cash on hand and in banks$117,137  104,363  122,834 
Federal funds sold6,080  2,210  1,025 
Interest bearing cash deposits70,036  136,262  318,550 
Cash and cash equivalents193,253  242,835  442,409 
Investment securities, available-for-sale2,610,760  2,530,994  2,387,428 
Investment securities, held-to-maturity702,072  651,822  520,997 
Total investment securities3,312,832  3,182,816  2,908,425 
Loans held for sale56,514  40,456  46,726 
Loans receivable5,078,681  4,876,419  4,488,095 
Allowance for loan and lease losses(129,697) (130,768) (129,753)
Loans receivable, net4,948,984  4,745,651  4,358,342 
Premises and equipment, net194,030  185,864  179,175 
Other real estate owned26,815  26,609  27,804 
Accrued interest receivable44,524  46,786  40,587 
Deferred tax asset58,475  55,095  41,737 
Core deposit intangible, net14,555  10,781  10,900 
Goodwill140,638  130,843  129,706 
Non-marketable equity securities27,495  24,905  52,868 
Other assets71,117  71,658  67,828 
Total assets$9,089,232  8,764,299  8,306,507 
Liabilities     
Non-interest bearing deposits$1,918,310  1,893,723  1,632,403 
Interest bearing deposits5,026,698  4,779,456  4,712,809 
Securities sold under agreements to repurchase423,414  441,041  397,107 
FHLB advances394,131  329,299  296,944 
Other borrowed funds6,602  6,619  7,311 
Subordinated debentures125,848  125,812  125,705 
Accrued interest payable3,517  3,641  4,155 
Other liabilities114,062  109,900  102,026 
Total liabilities8,012,582  7,689,491  7,278,460 
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 authorized761  755  750 
Paid-in capital736,368  720,639  708,356 
Retained earnings - substantially restricted337,532  345,407  301,197 
Accumulated other comprehensive income1,989  8,007  17,744 
Total stockholders' equity1,076,650  1,074,808  1,028,047 
Total liabilities and stockholders' equity$9,089,232  8,764,299  8,306,507 
Number of common stock shares issued and outstanding76,086,288  75,532,082  75,026,092 



Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations
 
 Three Months ended Year ended
 December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands, except per share data) 2015  2015  2014  2015  2014
Interest Income         
Investment securities$23,731  22,437  22,050  91,086  93,052 
Residential real estate loans8,572  7,878  8,464  32,153  30,721 
Commercial loans43,109  42,137  37,935  164,966  145,631 
Consumer and other loans7,799  7,915  7,730  31,476  30,515 
Total interest income83,211  80,367  76,179  319,681  299,919 
Interest Expense         
Deposits3,932  3,947  4,018  16,138  13,195 
Securities sold under agreements to repurchase287  261  238  1,021  865 
Federal Home Loan Bank advances2,156  2,273  2,253  8,841  9,570 
Federal funds purchased and other borrowed funds18  21  64  81  199 
Subordinated debentures822  807  795  3,194  3,137 
Total interest expense7,215  7,309  7,368  29,275  26,966 
Net Interest Income75,996  73,058  68,811  290,406  272,953 
Provision for loan losses411  826  191  2,284  1,912 
Net interest income after provision for loan losses75,585  72,232  68,620  288,122  271,041 
Non-Interest Income         
Service charges and other fees15,044  14,975  14,004  57,321  54,089 
Miscellaneous loan fees and charges922  1,055  1,125  4,276  4,696 
Gain on sale of loans6,033  7,326  5,424  26,389  19,797 
Gain (loss) on sale of investments143  (31) (28) 19  (188)
Other income2,325  2,474  3,453  10,756  11,908 
Total non-interest income24,467  25,799  23,978  98,761  90,302 
Non-Interest Expense         
Compensation and employee benefits35,902  33,534  30,807  134,409  118,571 
Occupancy and equipment8,090  7,887  7,191  31,149  27,498 
Advertising and promotions2,035  2,459  2,046  8,661  7,912 
Data processing1,733  1,258  1,815  5,833  6,607 
Other real estate owned511  1,047  893  3,693  2,568 
Regulatory assessments and insurance1,494  1,478  1,009  5,283  5,064 
Core deposit intangibles amortization758  720  716  2,964  2,811 
Other expenses11,680  10,729  11,221  44,765  41,648 
Total non-interest expense62,203  59,112  55,698  236,757  212,679 
Income Before Income Taxes37,849  38,919  36,900  150,126  148,664 
Federal and state income tax expense8,341  9,305  8,846  33,999  35,909 
Net Income$29,508  29,614  28,054  116,127  112,755 
Basic earnings per share$0.39  0.39  0.37  1.54  1.51 
Diluted earnings per share$0.39  0.39  0.37  1.54  1.51 
Dividends declared per share$0.49  0.19  0.48  1.05  0.98 
Average outstanding shares - basic75,893,521  75,531,923  75,025,201  75,542,455  74,641,957 
Average outstanding shares - diluted75,968,169  75,586,453  75,082,566  75,595,581  74,687,315 


Glacier Bancorp, Inc.
Average Balance Sheet
 
 Three Months ended Year ended
 December 31, 2015 December 31, 2015
     Average     Average
 Average Interest & Yield/ Average Interest & Yield/
(Dollars in thousands)Balance Dividends Rate Balance Dividends Rate
Assets           
Residential real estate loans$728,346  $8,572  4.71% $687,013  $32,153  4.68%
Commercial loans 13,601,427  43,828  4.83% 3,459,470  167,587  4.84%
Consumer and other loans648,683  7,799  4.77% 631,512  31,476  4.98%
Total loans 24,978,456  60,199  4.80% 4,777,995  231,216  4.84%
Tax-exempt investment securities 31,361,905  20,173  5.92% 1,328,908  77,199  5.81%
Taxable investment securities 41,988,643  11,176  2.25% 1,918,283  41,648  2.17%
Total earning assets8,329,004  91,548  4.36% 8,025,186  350,063  4.36%
Goodwill and intangibles147,572       143,293      
Non-earning assets400,730       389,126      
Total assets$8,877,306       $8,557,605      
Liabilities             
Non-interest bearing deposits$1,918,399  $  % $1,756,888  $  %
NOW accounts1,441,615  284  0.08% 1,371,340  1,074  0.08%
Savings accounts811,804  97  0.05% 758,776  360  0.05%
Money market deposit accounts1,372,881  522  0.15% 1,340,967  2,066  0.15%
Certificate accounts1,081,921  1,607  0.59% 1,131,210  6,891  0.61%
Wholesale deposits 5201,695  1,422  2.80% 206,889  5,747  2.78%
FHLB advances332,910  2,156  2.53% 319,565  8,841  2.73%
Repurchase agreements and  other borrowed funds523,213  1,127  0.85% 509,431  4,296  0.84%
Total funding liabilities7,684,438  7,215  0.37% 7,395,066  29,275  0.40%
Other liabilities94,505      91,360     
Total liabilities7,778,943      7,486,426     
Stockholders' Equity           
Common stock759      755     
Paid-in capital730,927      720,827     
Retained earnings358,860      336,998     
Accumulated other comprehensive income7,817      12,599     
Total stockholders' equity1,098,363      1,071,179     
Total liabilities and stockholders' equity$8,877,306      $8,557,605     
Net interest income (tax-equivalent)  $84,333      $320,788   
Net interest spread (tax-equivalent)    3.99%     3.96%
Net interest margin (tax-equivalent)    4.02%     4.00%

__________
1    Includes tax effect of $719 thousand and $2.6 million on tax-exempt municipal loan and lease income for the three months and year  ended December 31, 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 $7.3 million and $26.3 million on tax-exempt investment security income for the three months and year ended December 31, 2015.
4    Includes tax effect of $362 thousand and $1.4 million on federal income tax credits for the three months and year ended December 31, 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
 Dec 31, Sep 30, Dec 31, Sep 30, Dec 31,
(Dollars in thousands) 2015  2015  2014  2015  2014
Custom and owner occupied construction$75,094  $64,951  $56,689  16% 32%
Pre-sold and spec construction50,288  46,921  47,406  7% 6%
Total residential construction125,382  111,872  104,095  12% 20%
Land development62,356  83,756  82,829  (26)% (25)%
Consumer land or lots97,270  98,490  101,818  (1)% (4)%
Unimproved land73,844  74,439  86,116  (1)% (14)%
Developed lots for operative builders12,336  13,697  14,126  (10)% (13)%
Commercial lots22,035  22,937  16,205  (4)% 36%
Other construction156,784  122,347  150,075  28% 4%
Total land, lot, and other construction424,625  415,666  451,169  2% (6)%
Owner occupied938,625  885,736  849,148  6% 11%
Non-owner occupied774,192  739,057  674,381  5% 15%
Total commercial real estate1,712,817  1,624,793  1,523,529  5% 12%
Commercial and industrial649,553  619,688  547,910  5% 19%
Agriculture367,339  386,523  310,785  (5)% 18%
1st lien856,193  801,705  775,785  7% 10%
Junior lien65,383  67,351  68,358  (3)% (4)%
Total 1-4 family921,576  869,056  844,143  6% 9%
Multifamily residential201,542  189,944  160,426  6% 26%
Home equity lines of credit372,039  359,605  334,788  3% 11%
Other consumer150,469  154,095  133,773  (2)% 12%
Total consumer522,508  513,700  468,561  2% 12%
Other209,853  185,633  124,203  13% 69%
Total loans receivable, including loans held for sale5,135,195  4,916,875  4,534,821  4% 13%
Less loans held for sale 1(56,514) (40,456) (46,726) 40% 21%
Total loans receivable$5,078,681  $4,876,419  $4,488,095  4% 13%


_______
1 Loans held for sale are primarily 1st lien 1-4 family loans.


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification
 
     Accruing  
   Non- Loans 90 Days Other
   Accrual or  More  Real Estate
 Non-performing Assets, by Loan Type Loans Past  Due Owned
 Dec 31, Sep 30, Dec 31, Dec 31,Dec 31,Dec 31,
(Dollars in thousands) 2015  2015  2014  2015 2015 2015
Custom and owner occupied construction$1,016  1,048  1,132  1,016     
Pre-sold and spec construction    218       
Total residential construction1,016  1,048  1,350  1,016     
Land development17,582  17,719  20,842  6,791    10,791 
Consumer land or lots2,250  2,430  3,581  934  20  1,296 
Unimproved land12,328  12,055  14,170  8,382    3,946 
Developed lots for operative builders488  492  1,318  267    221 
Commercial lots1,521  1,631  2,660  241    1,280 
Other construction4,236  4,244  5,151      4,236 
Total land, lot and other construction38,405  38,571  47,722  16,615  20  21,770 
Owner occupied10,952  12,719  13,574  8,794    2,158 
Non-owner occupied3,446  3,833  3,013  2,634    812 
Total commercial real estate14,398  16,552  16,587  11,428    2,970 
Commercial and industrial3,993  5,110  4,375  3,916  20  57 
Agriculture3,281  3,114  3,074  2,666  167  448 
1st lien10,691  11,953  9,580  9,264  64  1,363 
Junior lien668  660  442  668     
Total 1-4 family11,359  12,613  10,022  9,932  64  1,363 
Multifamily residential113    440  113     
Home equity lines of credit5,486  6,013  6,099  5,338  15  133 
Other consumer228  204  231  109  45  74 
Total consumer5,714  6,217  6,330  5,447  60  207 
Other1,800  1,800      1,800   
Total$80,079  85,025  89,900  51,133  2,131  26,815 


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)
    
 Accruing 30-  
 89 Days Delinquent Loans,  by Loan Type % Change from
(Dollars in thousands)Dec 31,
 2015
 Sep 30,
 2015
 Dec 31,
 2014
 Sep 30,
 2015
 Dec 31,
 2014
Custom and owner occupied construction$462  $138  $  235% n/m 
Pre-sold and spec construction181  144  869  26% (79)%
Total residential construction643  282  869  128% (26)%
Land development447      n/m  n/m 
Consumer land or lots166  266  391  (38)% (58)%
Unimproved land774  304  267  155% 190%
Commercial lots    21  n/m  (100)%
Other construction337      n/m  n/m 
Total land, lot and other construction1,724  570  679  202% 154%
Owner occupied2,760  2,497  5,971  11% (54)%
Non-owner occupied923  5,529  3,131  (83)% (71)%
Total commercial real estate3,683  8,026  9,102  (54)% (60)%
Commercial and industrial1,968  2,774  2,915  (29)% (32)%
Agriculture1,014  867  994  17% 2%
1st lien6,272  2,510  6,804  150% (8)%
Junior lien1,077  228  491  372% 119%
Total 1-4 family7,349  2,738  7,295  168% 1%
Multifamily Residential662  114    481% n/m 
Home equity lines of credit1,046  1,599  1,288  (35)% (19)%
Other consumer1,227  811  928  51% 32%
Total consumer2,273  2,410  2,216  (6)% 3%
Other97  41  1,834  137% (95)%
Total$19,413  $17,822  $25,904  9% (25)%


_______
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)Dec 31,
 2015
 Sep 30,
 2015
 Dec 31,
 2014
 Dec 31,
 2015
Dec 31,
 2015
Pre-sold and spec construction$(53) (34) (94)   53 
Land development(288) (293) (390) 957  1,245 
Consumer land or lots66  (8) 375  512  446 
Unimproved land(325) (152) 52    325 
Developed lots for operative builders(85) (72) (140) 51  136 
Commercial lots(26) (5) (6)   26 
Other construction(1) (1)     1 
Total land, lot and other construction(659) (531) (109) 1,520  2,179 
Owner occupied247  249  669  668  421 
Non-owner occupied93  105  (162) 116  23 
Total commercial real estate340  354  507  784  444 
Commercial and industrial1,389  1,011  1,069  2,166  777 
Agriculture50  (8) 28  59  9 
1st lien834  (80) 372  971  137 
Junior lien(125) (106) 183  79  204 
Total 1-4 family709  (186) 555  1,050  341 
Multifamily residential(318) (318) 138    318 
Home equity lines of credit740  531  190  897  157 
Other consumer143  39  226  525  382 
Total consumer883  570  416  1,422  539 
Other(1)       1 
Total$2,340  858  2,510  7,001  4,661 

Visit our website at www.glacierbancorp.com 

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