Market Overview

Glacier Bancorp, Inc. Announces Results for the Quarter Ended December 31, 2017

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4th Quarter 2017 Highlights:

  • Recognized a one-time tax expense of $19.7 million from the revaluation of the net deferred tax asset as a result of the Tax Cuts and Jobs Act ("Tax Act").   The Company believes that the financial results are more comparable excluding the impact of the revaluation of the net deferred tax asset, so we have included a Non-GAAP Financial Measures section within the earnings release that shows certain key business measures without the impact of the one-time tax adjustment.

  • Net income of $34.7 million for the current quarter, an increase of $3.7 million over the prior year fourth quarter net income of $31.0 million, excluding the impact of the Tax Act.  Including the impact from the Tax Act, net income was $15.0 million.

  • Current quarter diluted earnings per share of $0.44, an increase of 7 percent from the prior year fourth quarter diluted earnings per share of $0.41, excluding the impact of the Tax Act.  Including the impact from the Tax Act, diluted earnings per share was $0.19.

  • Net interest margin of 4.23 percent as a percentage of earning assets, on a tax equivalent basis, a 21 basis point increase over the 4.02 percent net interest margin in the fourth quarter of the prior year.

  • Declared and paid a regular quarterly dividend of $0.21 per share.  The dividend was the 131st consecutive quarterly dividend.

  • The Company announced the signing of a definitive agreement to acquire Inter-Mountain Bancorp, Inc., the holding company for First Security Bank, a community bank in Bozeman, Montana, with total assets of $1.028 billion as of December 31, 2017.

  • Total assets of $9.7 billion at year end enabled the Company to delay the impact of the Durbin Amendment for one additional year.

Year 2017 Highlights:

  • Record net income of $136 million for 2017, an increase of $14.9 million, or 12 percent, over the prior year net income of $121 million, excluding the impact of the Tax Act.  Including the impact from the Tax Act, net income was $116 million.

  • Diluted earnings per share of $1.75, an increase of 10 percent from the prior year diluted earnings per share of $1.59, excluding the impact of the Tax Act.  Including the impact from the Tax Act, diluted earnings per share was $1.50.

  • Organic loan growth of $601 million, or 11 percent, for the current year.

  • Net interest margin of 4.12 percent as a percentage of earning assets, on a tax equivalent basis, a 10 basis point increase over the 4.02 percent net interest margin in the prior year.

Non-GAAP Financial Measures - Tax Cuts and Jobs Act
In addition to the results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), this press release contains certain non-GAAP financial measures.  The Company believes that providing these non-GAAP financial measures provides investors with information useful in understanding the Company's financial performance, performance trends, and financial position.  While the Company uses these non-GAAP measures in its analysis of the Company's performance, this information should not be considered an alternative to measurements required by GAAP.

The following table provides a reconciliation of certain GAAP financial measures to non-GAAP financial measures.  The reconciling item between the GAAP and non-GAAP financial measures was the current quarter one-time net tax expense of $19.7 million.  The one-time net tax expense was driven by the Tax Act and the change in the current year federal marginal rate of 35 percent to 21 percent for future years, which resulted in this revaluation of its deferred tax assets and deferred tax liabilities ("net deferred tax asset").  The Company believes that the financial results are more comparable excluding the impact of the revaluation of the net deferred tax asset.

       
  Three Months ended   Year ended
(Dollars in thousands, except per share data) Dec 31,
2017
  Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
  Dec 31,
2017
  Dec 31,
2016
Net income (GAAP) $ 14,956     36,479     33,687     31,255     31,041     116,377     121,131  
Tax Act adjustment (GAAP) 19,699                     19,699      
Net income (non-GAAP) $ 34,655     36,479     33,687     31,255     31,041     136,076     121,131  
Basic earnings per share (GAAP) $ 0.19     0.47     0.43     0.41     0.41     1.50     1.59  
Tax Act adjustment (GAAP) 0.25                     0.25      
Basic earnings per share (non-GAAP) $ 0.44     0.47     0.43     0.41     0.41     1.75     1.59  
Diluted earnings per share (GAAP) $ 0.19     0.47     0.43     0.41     0.41     1.50     1.59  
Tax Act adjustment (GAAP) 0.25                     0.25      
Diluted earnings per share (non-GAAP) $ 0.44     0.47     0.43     0.41     0.41     1.75     1.59  
Return on average assets
  (annualized) (GAAP)
0.61 %   1.46 %   1.39 %   1.35 %   1.33 %   1.20 %   1.32 %
Tax Act adjustment (GAAP) 0.81 %   %   %   %   %   0.21 %   %
Return on average assets
  (annualized) (non-GAAP)
1.42 %   1.46 %   1.39 %   1.35 %   1.33 %   1.41 %   1.32 %
Return on average equity
  (annualized) (GAAP)
4.91 %   11.87 %   11.37 %   11.19 %   10.82 %   9.80 %   10.79 %
Tax Act adjustment (GAAP) 6.47 %   %   %   %   %   1.66 %   %
Return on average equity
  (annualized) (non-GAAP)
11.38 %   11.87 %   11.37 %   11.19 %   10.82 %   11.46 %   10.79 %
Dividend payout ratio
  (annualized) (GAAP)
110.53 %   108.51 %   48.84 %   51.22 %   121.95 %   76.00 %   69.18 %
Tax Act adjustment (GAAP) (62.80 )%   %   %   %   %   (10.86 )%   %
Dividend payout ratio
  (annualized) (non-GAAP)
47.73 %   108.51 %   48.84 %   51.22 %   121.95 %   65.14 %   69.18 %
Effective tax rate (GAAP) 67.69 %   24.19 %   26.11 %   23.79 %   23.74 %   35.70 %   24.67 %
Tax Act adjustment (GAAP) (42.57 )%   %   %   %   %   (10.88 )%   %
Effective tax rate (non-GAAP) 25.12 %   24.19 %   26.11 %   23.79 %   23.74 %   24.82 %   24.67 %
 

Financial Highlights

       
  At or for the Three Months ended   At or for the Year ended
(Dollars in thousands,  except per share and market data) Dec 31,
2017
  Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
  Dec 31,
2017
  Dec 31,
2016
Operating results                          
Net income 1 $ 34,655     36,479     33,687     31,255     31,041     136,076     121,131  
Basic earnings per share 1 $ 0.44     0.47     0.43     0.41     0.41     1.75     1.59  
Diluted earnings per share 1 $ 0.44     0.47     0.43     0.41     0.41     1.75     1.59  
Dividends declared per share 2 $ 0.21     0.51     0.21     0.21     0.50     1.14     1.10  
Market value per share                          
Closing $ 39.39     37.76     36.61     33.93     36.23     39.39     36.23  
High $ 40.31     37.76     36.72     38.03     37.66     40.31     37.66  
Low $ 36.01     31.50     32.06     32.47     27.50     31.50     22.19  
Selected ratios and other data                          
Number of common stock shares
  outstanding
78,006,956   78,006,956   78,001,890   76,619,952   76,525,402   78,006,956   76,525,402
Average outstanding shares - basic 78,006,956   78,004,450   77,546,236   76,572,116   76,525,402   77,537,664   76,278,463
Average outstanding shares - diluted 78,094,494   78,065,942   77,592,325   76,633,283   76,615,272   77,607,605   76,341,836
Return on average assets (annualized) 1 1.42%   1.46%   1.39%   1.35%   1.33%   1.41%   1.32%
Return on average equity (annualized) 1 11.38%   11.87%   11.37%   11.19%   10.82%   11.46%   10.79%
Efficiency ratio 54.02%   53.44%   52.89%   55.57%   55.08%   53.94%   55.88%
Dividend payout ratio 1,2 47.73%   108.51%   48.84%   51.22%   121.95%   65.14%   69.18%
Loan to deposit ratio 87.29%   84.43%   81.86%   78.91%   78.10%   87.29%   78.10%
Number of full time equivalent
 employees
2,278   2,250   2,265   2,224   2,222   2,278   2,222
Number of locations 145   145   145   142   142   145   142
Number of ATMs 200   200   199   195   200   200   200


_______
1 Excludes a one-time revaluation of the deferred tax assets and deferred tax liabilities as a result of the Tax Act for the three months and year ended December 31, 2017.  For additional information on the revaluation, see the "Non-GAAP Financial Measures - Tax Cuts and Jobs Act" section above.
2 Includes a special dividend declared of $0.30 per share for the three months ended September 30, 2017 and December 31, 2016 and for the years ended December 31, 2017 and 2016.

KALISPELL, Mt., Jan. 25, 2018 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $34.7 million for the current quarter, an increase of $3.7 million, or 12 percent, from the $31.0 million of net income for the prior year fourth quarter, excluding the impact of the Tax Act.  Diluted earnings per share for the current quarter was $0.44 per share, an increase of $0.03, or 7 percent, from the prior year fourth quarter diluted earnings per share of $0.41, excluding the impact from the Tax Act.  Included in the current quarter was $937 thousand of acquisition-related expenses.  "2017 was an excellent year for the Company and we are extremely pleased to see our core business perform at these levels.  We thank all of our customers for their continued confidence in us and our employees for turning in another record year," said Randy Chesler, President and Chief Executive Officer.

Record net income for the year ended December 31, 2017 was $136 million, an increase of $14.9 million, or 12 percent, from the $121 million of net income for the prior year excluding the impact from the Tax Act.  Diluted earnings per share for 2017 was $1.75 per share, an increase of $0.16, or 10 percent, from the diluted earnings per share of $1.59 for the same period in the prior year, excluding the impact from the Tax Act.

During the fourth quarter of 2017, the Company announced the signing of a definitive agreement to acquire Inter-Mountain Bancorp, Inc., the holding company for First Security Bank, a community bank in Bozeman, Montana (collectively, "FSB").  As of December 31, 2017, FSB had total assets of $1.028 billion, gross loans of $640 million and total deposits of $891 million.  The acquisition marks the Company's 20th acquisition since 2000 and its ninth announced transaction in the past five years.  The acquisition has received the required regulatory approvals, is subject to other customary conditions of closing and is expected to be completed in February 2018.

During the second quarter of 2017, the Company announced the signing of a definitive agreement to acquire Columbine Capital Corp., the holding company for Collegiate Peaks Bank, a community bank in Buena Vista, Colorado (collectively, "Collegiate").  As of December 31, 2017, Collegiate had total assets of $533 million, gross loans of $346 million and total deposits of $464 million.  The acquisition has received the required regulatory approvals, is subject to other customary conditions of closing and is expected to be completed in January 2018.

On April 30, 2017, the Company completed the acquisition of TFB Bancorp, Inc., the holding company for The Foothills Bank, a community bank based in Yuma, Arizona (collectively, "Foothills").  The Company's results of operations and financial condition include the acquisition of Foothills from the acquisition date and the following table provides information on the fair value of selected classifications of assets and liabilities acquired:

   
                (Dollars in thousands) April 30,
2017
                 
  Total assets $ 385,839    
  Investment securities 25,420    
  Loans receivable 292,529    
  Non-interest bearing deposits 97,527    
  Interest bearing deposits 199,233    
  Federal Home Loan Bank advances 22,800    
         


Asset Summary

               
              $ Change from
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
  Sep 30,
2017
  Dec 31,
2016
Cash and cash equivalents $ 200,004     220,210     152,541     (20,206 )   47,463  
Investment securities, available-for-sale 1,778,243     1,886,517     2,425,477     (108,274 )   (647,234 )
Investment securities, held-to-maturity 648,313     655,128     675,674     (6,815 )   (27,361 )
  Total investment securities 2,426,556     2,541,645     3,101,151     (115,089 )   (674,595 )
Loans receivable                  
Residential real estate 720,728     734,242     674,347     (13,514 )   46,381  
Commercial real estate 3,577,139     3,503,976     2,990,141     73,163     586,998  
Other commercial 1,579,353     1,575,514     1,342,250     3,839     237,103  
Home equity 457,918     452,291     434,774     5,627     23,144  
Other consumer 242,686     243,410     242,951     (724 )   (265 )
  Loans receivable 6,577,824     6,509,433     5,684,463     68,391     893,361  
Allowance for loan and lease losses (129,568 )   (129,576 )   (129,572 )   8     4  
  Loans receivable, net 6,448,256     6,379,857     5,554,891     68,399     893,365  
Other assets 631,533     656,890     642,017     (25,357 )   (10,484 )
  Total assets $ 9,706,349     9,798,602     9,450,600     (92,253 )   255,749  
 

The Company successfully executed its strategy to stay below $10 billion in total assets as of year end to delay the impact of the Durbin Amendment for one additional year.  The Company accomplished this strategy in part by redeploying investment cash flow selectively and selling securities into the higher yielding loan portfolio.  The Durbin Amendment, which was passed as part of Dodd-Frank, establishes limits on the amount of interchange fees that can be charged to merchants for debit card processing and will reduce the Company's service charge fee income in the future.

Total investment securities of $2.427 billion at December 31, 2017 decreased $115 million, or 5 percent, during the current quarter and decreased $675 million, or 22 percent, from the prior year fourth quarter.  Investment securities represented 25 percent of total assets at December 31, 2017 compared to 33 percent of total assets at December 31, 2016.

The loan portfolio of $6.6 billion had seasonally slower growth in the fourth quarter of 2017, increasing $68.4 million, or 1 percent, during the quarter.  The loan category with the largest increase was commercial real estate loans which increased $73.2 million, or 2 percent.  Excluding the Foothills acquisition, the loan portfolio increased $601 million, or 11 percent, since the prior year end and primarily came from growth in commercial real estate and other commercial loans of $357 million and $209 million, respectively.

Credit Quality Summary

           
  At or for the
Year ended
  At or for the
Nine Months
ended
  At or for the
Year ended
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
Allowance for loan and lease losses          
Balance at beginning of period $ 129,572     129,572     129,697  
Provision for loan losses 10,824     7,938     2,333  
Charge-offs (19,331 )   (14,801 )   (11,496 )
Recoveries 8,503     6,867     9,038  
Balance at end of period $ 129,568     129,576     129,572  
Other real estate owned $ 14,269     14,359     20,954  
Accruing loans 90 days or more past due 6,077     3,944     1,099  
Non-accrual loans 44,833     46,770     49,332  
Total non-performing assets $ 65,179     65,073     71,385  
Non-performing assets as a percentage of subsidiary assets 0.68 %   0.67 %   0.76 %
Allowance for loan and lease losses as a percentage of non-performing loans 255 %   256 %   257 %
Allowance for loan and lease losses as a percentage of total loans 1.97 %   1.99 %   2.28 %
Net charge-offs as a percentage of total loans 0.17 %   0.12 %   0.04 %
Accruing loans 30-89 days past due $ 37,687     29,115     25,617  
Accruing troubled debt restructurings $ 38,491     31,093     52,077  
Non-accrual troubled debt restructurings $ 23,709     22,134     21,693  
U.S. government guarantees included in non-performing assets $ 2,513     1,913     1,746  
                   

Non-performing assets at December 31, 2017 were $65.1 million, a decrease of $6.2 million, or 9 percent, from a year ago.  Non-performing assets as a percentage of subsidiary assets at December 31, 2017 was 0.68 percent which was a decrease of 8 basis points from the prior year end of 0.76 percent.  Early stage delinquencies (accruing loans 30-89 days past due) of $37.7 million at December 31, 2017 increased $8.6 million from the prior quarter and increased $12.1 million from the prior year end.  The allowance for loan and lease losses ("allowance") as a percent of total loans outstanding at December 31, 2017 was 1.97 percent, a decrease of 31 basis points from 2.28 percent at December 31, 2016, such decrease was driven by loan growth, stabilizing credit quality, and no allowance carried over from the Foothills acquisition as a result of the acquired loans recorded at fair value.

Credit Quality Trends and Provision for Loan Losses

 
(Dollars in thousands) Provision
for Loan
Losses
  Net
Charge-Offs
(Recoveries)
  ALLL
as a Percent
of Loans
  Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans
  Non-Performing
Assets to
Total Subsidiary
Assets
Fourth quarter 2017 $ 2,886     $ 2,894          1.97 %        0.57 %         0.68 %
Third quarter 2017 3,327     3,628     1.99 %   0.45 %   0.67 %
Second quarter 2017 3,013     2,362     2.05 %   0.49 %   0.70 %
First quarter 2017 1,598     1,944     2.20 %   0.67 %   0.75 %
Fourth quarter 2016 1,139     4,101     2.28 %   0.45 %   0.76 %
Third quarter 2016 626     478     2.37 %   0.49 %   0.84 %
Second quarter 2016     (2,315 )   2.46 %   0.44 %   0.82 %
First quarter 2016 568     194     2.50 %   0.46 %   0.88 %
                             

Net charge-offs for the current quarter were $2.9 million compared to $3.6 million for the prior quarter and $4.1 million from the same quarter last year.  There was $2.9 million of current quarter provision for loan losses, compared to $3.3 million in the prior quarter and $1.1 million in 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
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
  Sep 30,
2017
  Dec 31,
2016
Deposits                  
Non-interest bearing deposits $ 2,311,902     2,355,983     2,041,852     (44,081 )   270,050  
NOW and DDA accounts 1,695,246     1,733,353     1,588,550     (38,107 )   106,696  
Savings accounts 1,082,604     1,081,056     996,061     1,548     86,543  
Money market deposit accounts 1,512,693     1,564,738     1,464,415     (52,045 )   48,278  
Certificate accounts 817,259     846,005     948,714     (28,746 )   (131,455 )
  Core deposits, total 7,419,704     7,581,135     7,039,592     (161,431 )   380,112  
Wholesale deposits 160,043     186,019     332,687     (25,976 )   (172,644 )
  Deposits, total 7,579,747     7,767,154     7,372,279     (187,407 )   207,468  
Repurchase agreements 362,573     453,596     473,650     (91,023 )   (111,077 )
Federal Home Loan Bank advances 353,995     153,685     251,749     200,310     102,246  
Other borrowed funds 8,224     8,243     4,440     (19 )   3,784  
Subordinated debentures 126,135     126,099     125,991     36     144  
Other liabilities 76,618     83,624     105,622     (7,006 )   (29,004 )
  Total liabilities $ 8,507,292     8,592,401     8,333,731     (85,109 )   173,561  
 

The Company reduced the amount of on-balance sheet deposits during the quarter as part of its strategy to stay below $10 billion in total assets.  Core deposits decreased $161 million, or 2 percent, from the prior quarter, and decreased $380 million, or 5 percent, from the prior year end.  The Company utilized a third party vendor to transfer $433 million of deposits off balance sheet as of December 31, 2017, an increase of $268 million over the prior quarter, or 162 percent, over the prior quarter.  These deposits can be brought back onto the Company's balance sheet at the Company's discretion.  Including the deposit accounts transferred, organic core deposits increased $478 million, or 7 percent, from December 31, 2016.  At December 31, 2017, wholesale deposits were $160 million, a decrease of $26.0 million, or 14 percent, over the prior quarter and a decrease of $173 million, or 52 percent, over the prior year end.

Securities sold under agreements to repurchase ("repurchase agreements") of $363 million at December 31, 2017 decreased $91.0 million, or 20 percent, from the prior quarter and decreased $111 million, or 23 percent, from the prior year end.  Federal Home Loan Bank ("FHLB") advances of $354 million at December 31, 2017, increased $200 million over prior quarter and increased $102 million over the prior year end.  The increases were the result of strategically managing the deposit accounts to stay below $10 billion and utilizing FHLB advances to manage the daily liquidity needs for loan growth.

Stockholders' Equity Summary

               
              $ Change from
(Dollars in thousands, except per share data) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
  Sep 30,
2017
  Dec 31,
2016
Common equity $ 1,201,036     1,201,534     1,124,251     (498 )   76,785  
Accumulated other comprehensive (loss) income (1,979 )   4,667     (7,382 )   (6,646 )   5,403  
Total stockholders' equity 1,199,057     1,206,201     1,116,869     (7,144 )   82,188  
Goodwill and core deposit intangible, net (191,995 )   (192,609 )   (159,400 )   614     (32,595 )
Tangible stockholders' equity $ 1,007,062     1,013,592     957,469     (6,530 )   49,593  
                               
Stockholders' equity to total assets   12.35 %   12.31 %   11.82 %            
Tangible stockholders' equity to total tangible assets   10.58 %   10.55 %   10.31 %            
Book value per common share $ 15.37     15.46     14.59     (0.09 )   0.78  
Tangible book value per common share $ 12.91     12.99     12.51     (0.08 )   0.40  
                               

Tangible stockholders' equity of $1.007 billion at December 31, 2017 decreased $6.5 million compared to the prior quarter which was the result of a decrease in accumulated other comprehensive income.  Tangible stockholders' equity increased $49.6 million, or 5 percent, from a year ago, the result of earnings retention and $46.7 million of Company stock issued in connection with the Foothills acquisition; such increases more than offset the increase in goodwill and core deposit intangibles.  Tangible book value per common share at quarter end decreased $0.08 per share from the prior quarter and increased $0.40 per share from a year ago.

Cash Dividend
On November 15, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.21 per share.  The dividend was payable December 14, 2017 to shareholders of record on December 5, 2017.  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, 2017
Compared to September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016

Income Summary

   
  Three Months ended
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
Net interest income                  
Interest income $ 96,898     96,464     94,032     87,628     87,759  
Interest expense 7,072     7,652     7,774     7,366     7,214  
      Total net interest income 89,826     88,812     86,258     80,262     80,545  
Non-interest income                  
Service charges and other fees 17,282     17,307     17,495     15,633     15,645  
Miscellaneous loan fees and charges 1,077     1,211     1,092     980     1,234  
Gain on sale of loans 7,408     9,141     7,532     6,358     9,765  
(Loss) gain on sale of investments (115 )   77     (522 )   (100 )   (757 )
Other income 2,057     3,449     2,059     2,818     2,127  
      Total non-interest income 27,709     31,185     27,656     25,689     28,014  
  $ 117,535     119,997     113,914     105,951     108,559  
Net interest margin (tax-equivalent) 4.23 %   4.11 %   4.12 %   4.03 %   4.02 %
                   
      $ Change from
(Dollars in thousands)     Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
Net interest income                  
Interest income     $ 434     2,866     9,270     9,139  
Interest expense     (580 )   (702 )   (294 )   (142 )
      Total net interest income     1,014     3,568     9,564     9,281  
Non-interest income                  
Service charges and other fees     (25 )   (213 )   1,649     1,637  
Miscellaneous loan fees and charges     (134 )   (15 )   97     (157 )
Gain on sale of loans     (1,733 )   (124 )   1,050     (2,357 )
(Loss) gain on sale of investments     (192 )   407     (15 )   642  
Other income     (1,392 )   (2 )   (761 )   (70 )
      Total non-interest income     (3,476 )   53     2,020     (305 )
      $ (2,462 )   3,621     11,584     8,976  
 

Net Interest Income
In the current quarter, interest income of $96.9 million increased $434 thousand, or 45 basis points, from the prior quarter and increased $9.1 million, or 10 percent, over the prior year fourth quarter with both increases attributable to the increase in interest from commercial loans.  Interest income on commercial loans increased $1.5 million, or 2 percent, from the prior quarter and increased $11.6 million, or 23 percent, from the prior year fourth quarter.  As a result of the shrinking investment portfolio, interest income from investments decreased $1.3 million from the prior quarter and $3.0 million from the prior year fourth quarter.

The current quarter interest expense of $7.1 million decreased $580 thousand, or 8 percent, from the prior quarter and was driven primarily by the decrease in wholesale deposits.  Current quarter interest expense decreased $142 thousand, or 2 percent, from the prior year fourth quarter.  The total cost of funding (including non-interest bearing deposits) for the current quarter was 33 basis points compared to 35 basis points for the prior quarter and 36 basis points for 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 4.23 percent compared to 4.11 percent in the prior quarter.  The 12 basis points increase in the net interest margin was the result of an 11 basis points increase on the earning asset yield and a decrease of 2 basis points in cost of funds.  The increase in earning asset yield was primarily driven by the continuing shift of lower yielding investments to higher yielding loans coupled with increased yields on loans and investments.  The decrease in cost of funds was driven by the decrease in wholesale deposits which more than offset the increase in interest expense on FHLB advances.  The current quarter net interest margin increased 21 basis points over the prior year fourth quarter net interest margin of 4.02 percent, due to the remix of earning assets to higher yielding loans and higher yielding earning assets.

Non-interest Income
Non-interest income for the current quarter totaled $27.7 million, a decrease of $3.5 million, or 11 percent, from the prior quarter and a decrease of $305 thousand, or 1 percent, over the same quarter last year.  Service charges and other fees of $17.3 million, increased $1.6 million, or 10 percent, from the prior year fourth quarter primarily  from the increased number of accounts.  Gain on sale of loans for the current quarter decreased $1.7 million, or 19 percent, from the prior quarter as a result of a seasonal slowdown in purchase activity.  Gain on sale of loans decreased $2.4 million, or 24 percent, from the prior year fourth quarter as a result of decreased refinance and purchase activity.  Other income of $2.1 million, decreased $1.4 million, or 40 percent, over the prior quarter due to the decrease in gain on sale of other real estate owned ("OREO").  Gain on sale of OREO during the fourth quarter of 2017 was $62.7 thousand compared to $1.5 million in the prior quarter.

Non-interest Expense Summary

   
  Three Months ended
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
Compensation and employee benefits $ 40,465     41,297     39,498     39,246     38,826  
Occupancy and equipment 6,925     6,500     6,560     6,646     6,692  
Advertising and promotions 2,024     2,239     2,169     1,973     2,125  
Data processing 3,970     3,647     3,409     3,124     3,408  
Other real estate owned 377     817     442     273     2,076  
Regulatory assessments and insurance 1,069     1,214     1,087     1,061     1,048  
Core deposit intangibles amortization 614     640     639     601     608  
Other expenses 12,922     12,198     11,505     10,420     11,934  
Total non-interest expense $ 68,366     68,552     65,309     63,344     66,717  
                   
       
    $ Change from
(Dollars in thousands)   Sep 30,
2017
  Jun 30,
2017
  Mar 31,
2017
  Dec 31,
2016
Compensation and employee benefits     $ (832 )   967     1,219     1,639  
Occupancy and equipment     425     365     279     233  
Advertising and promotions     (215 )   (145 )   51     (101 )
Data processing     323     561     846     562  
Other real estate owned     (440 )   (65 )   104     (1,699 )
Regulatory assessments and insurance     (145 )   (18 )   8     21  
Core deposit intangibles amortization     (26 )   (25 )   13     6  
Other expense     724     1,417     2,502     988  
Total non-interest expense     $ (186 )   3,057     5,022     1,649  
 

During 2016, the Company consolidated its Bank divisions' individual core database systems into a single core database and re-issued debit cards with chip technology (the Core Consolidation Project or "CCP").  Expenses related to CCP were $741 thousand during the fourth quarter of 2016. Excluding CCP expenses, non-interest expense for the current quarter increased $2.4 million, or 4 percent, over the prior year fourth quarter.

Compensation and employee benefits increased by $1.6 million, or 4 percent, from the prior year fourth quarter due to salary increases and the increased number of employees from acquisitions.  Data processing expense increased $323 thousand, or 9 percent, from the prior quarter and increased $562, or 16 percent, from the prior year fourth quarter.  Other expenses increased $724 thousand, or 6 percent from the prior quarter and increased $988 thousand, or 8 percent, from the prior year fourth quarter with changes in several categories and the primary increase was from acquisition related expenses.

Federal and State Income Tax Expense
Tax expense during the fourth quarter of 2017 was $31.3 million, an increase $19.7 million, or 169 percent, over the prior quarter and an increase of  $21.7 million, or 224 percent, over the prior year fourth quarter with the increases due to the revaluation of the Company's net deferred tax asset.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to the years in which the temporary differences are expected to be recognized.  The effect on deferred tax assets and liabilities from a change in tax rates is recognized in net income in the period that includes the enactment date which occurred on December 22, 2017 with the enactment of the Tax Act.  The current year federal marginal rate was 35 percent and will decrease to 21 percent in 2018.  Excluding the impact of the Tax Act, the effective federal and state income tax rate for the Company was 25.1 percent in 2017 and is expected to decrease to a range of 17 to 18 percent during 2018 as a result of the Tax Act.

Efficiency Ratio
The current quarter efficiency ratio was 54.02 percent, a 58 basis points increase from the prior quarter efficiency ratio of 53.44 percent which was primarily driven by a seasonal slowing of residential refinance and purchase activity which caused a decrease in the gain on sale of loans.  The current quarter efficiency ratio decreased 106 basis points from the prior year fourth quarter ratio of 55.08 percent and was attributable to the increase in net interest income primarily due to higher interest income on commercial loans.  "The Bank divisions' success in growing loans at higher yields while controlling funding costs throughout the year is reflected in the efficiency ratio improvement," said Ron Copher, Chief Financial Officer.


Operating Results for Year ended December 31, 2017
Compared to December 31, 2016

Income Summary

           
  Year ended        
(Dollars in thousands) Dec 31,
2017
  Dec 31,
2016
  $ Change   % Change
Net interest income              
Interest income $ 375,022     $ 344,153     $ 30,869              9 %
Interest expense 29,864     29,631     233     1 %
      Total net interest income 345,158     314,522     30,636     10 %
Non-interest income              
Service charges and other fees 67,717     62,405     5,312     9 %
Miscellaneous loan fees and charges 4,360     4,613     (253 )   (5 )%
Gain on sale of loans 30,439     33,606     (3,167 )   (9 )%
Loss on sale of investments (660 )   (1,463 )   803     (55 )%
Other income 10,383     8,157     2,226     27 %
      Total non-interest income 112,239     107,318     4,921     5 %
  $ 457,397     $ 421,840     $ 35,557     8 %
Net interest margin (tax-equivalent) 4.12 %   4.02 %        
 

Net Interest Income
Interest income for the current year increased $30.9 million, or 9 percent, from the prior year and was attributable to a $38.4 million increase in income from commercial loans which more than offset the decrease of $8.4 million in interest income on investments.

Interest expense of $29.9 million for the current year increased $233 thousand over the prior year.  Interest expense on deposits decreased $1.6 million, or 9 percent, and was due to the decrease in wholesale deposits.  Interest expense on repurchase agreements, FHLB advances, and subordinated debt increased $1.8 million, or 16 percent, over the prior year and was primarily driven by the increase in interest rates.  The total funding cost (including non-interest bearing deposits) for 2017 was 36 basis points compared to 37 basis points for 2016.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for 2017 was 4.12 percent, a 10 basis point increase from the net interest margin of 4.02 percent for 2016.  The increase in the margin was primarily attributable to a shift in earning assets to higher yielding loans.  Additionally, there was an increase in  yields on earning assets combined with a continued increase in low cost deposits during the current year.

Non-interest Income
Non-interest income of $112.2 million for 2017 increased $4.9 million, or 5 percent, over last year.  Service charges and other fees of $67.7 million for 2017 increased $5.3 million, or 9 percent, from the prior year as a result of an increased number of deposit accounts.  The gain on sale of loans of $30.4 million for 2017 decreased $3.2 million, or 9 percent, from prior year which was due to a lower volume of refinanced and purchased mortgages.  Other income of $10.4 million for 2017 increased $2.2 million, or 27 percent, over last year and was the result of an increase on gain on sale of OREO.

Non-interest Expense Summary

           
  Year ended        
(Dollars in thousands) Dec 31,
2017
  Dec 31,
2016
  $ Change   % Change
Compensation and employee benefits $ 160,506     $ 151,697     $ 8,809              6 %
Occupancy and equipment 26,631     25,979     652     3 %
Advertising and promotions 8,405     8,433     (28 )   %
Data processing 14,150     14,390     (240 )   (2 )%
Other real estate owned 1,909     2,895     (986 )   (34 )%
Regulatory assessments and insurance 4,431     4,780     (349 )   (7 )%
Core deposit intangibles amortization 2,494     2,970     (476 )   (16 )%
Other expenses 47,045     47,570     (525 )   (1 )%
Total non-interest expense $ 265,571     $ 258,714     $ 6,857     3 %
 

Expenses related to CCP were $4.3 million during 2016. Excluding CCP expenses, non-interest expense for the current year increased $11.2 million, or 4 percent, over the prior year.  Compensation and employee benefits for 2017 increased $8.8 million, or 6 percent, from the same period last year due to salary increases and the increased number of employees from the acquired banks.  Occupancy and equipment expense increased $652 thousand, or 3 percent from the prior year as a result of increased costs from acquisitions.  Data processing expense decreased $240 thousand, or 2 percent, from the prior year as a result of decreased costs associated with CCP.  Current year other expenses of $47.0 million decreased $525 thousand, or 1 percent, from the prior year and was principally driven by decreased costs associated with CCP.

Provision for Loan Losses
The provision for loan losses was $10.8 million for 2017, an increase of $8.5 million from the same period in the prior year.  Net charge-offs during 2017 were $10.8 million compared to $2.5 million during 2016.

Federal and State Income Tax Expense
Tax expense of $64.6 million in 2017 increased $25.0 million, or 63 percent, over the prior year as a result of the $19.7 million revaluation of the Company's deferred tax asset related to the Tax Act.

Efficiency Ratio
The efficiency ratio of 53.94 percent for 2017 decreased 194 basis points from the prior year efficiency ratio of 55.88 percent which resulted from the increase in net interest income largely due to higher interest income on commercial loans.

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 trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company's net interest income and profitability;
  • changes in the cost and scope of insurance from the Federal Deposit Insurance Corporation and other third parties;
  • legislative or regulatory changes, including increased banking and consumer protection regulation 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 reputation of banks and the financial services industry could deteriorate, which could adversely affect the Company's ability to obtain (and maintain) customers;
  • competition among financial institutions in the Company's markets may increase significantly;
  • the risks presented by continued 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;
  • the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
  • 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;
  • material failure, potential interruption or breach in security of the Company's systems and technological changes which could expose us to new risks (e.g., cybersecurity), fraud or system failures;
  • natural disasters, including fires, floods, earthquakes, and other unexpected events;
  • the Company's success in managing risks involved in the foregoing; and
  • the effects of any reputational damage to the Company resulting from any of 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.

Conference Call Information
A conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, January 26, 2018.  The conference call will be accessible by telephone and through the internet. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 5089588.  To participate on the webcast, log on to: https://edge.media-server.com/m6/p/oqu7ruzu.  If you are unable to participate during the live webcast, the call will be archived on our website, www.glacierbancorp.com, or by calling 855-859-2056 with the ID 5089588 by February 9, 2018.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. 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, with operations in Idaho, Utah and Washington; 1st Bank, Evanston, operating in Wyoming and Utah; Citizens Community Bank, Pocatello, operating in Idaho; Bank of the San Juans, Durango, operating in Colorado; First Bank of Wyoming, Powell, and First State Bank, Wheatland, both operating in Wyoming; North Cascades Bank, Chelan, with operations in Washington; and The Foothills Bank, Yuma, with operations in Arizona.


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition

 
(Dollars in thousands, except per share data) December 31,
2017
  September 30,
2017
  December 31,
2016
Assets          
Cash on hand and in banks $ 139,948     136,822     135,268  
Federal funds sold     210      
Interest bearing cash deposits 60,056     83,178     17,273  
     Cash and cash equivalents 200,004     220,210     152,541  
Investment securities, available-for-sale 1,778,243     1,886,517     2,425,477  
Investment securities, held-to-maturity 648,313     655,128     675,674  
     Total investment securities 2,426,556     2,541,645     3,101,151  
Loans held for sale 38,833     48,709     72,927  
Loans receivable 6,577,824     6,509,433     5,684,463  
Allowance for loan and lease losses (129,568 )   (129,576 )   (129,572 )
     Loans receivable, net 6,448,256     6,379,857     5,554,891  
Premises and equipment, net 177,348     178,672     176,198  
Other real estate owned 14,269     14,359     20,954  
Accrued interest receivable 44,462     50,492     45,832  
Deferred tax asset 38,344     58,916     67,121  
Core deposit intangible, net 14,184     14,798     12,347  
Goodwill 177,811     177,811     147,053  
Non-marketable equity securities 29,884     21,890     25,550  
Other assets 96,398     91,243     74,035  
     Total assets $ 9,706,349     9,798,602     9,450,600  
Liabilities          
Non-interest bearing deposits $ 2,311,902     2,355,983     2,041,852  
Interest bearing deposits 5,267,845     5,411,171     5,330,427  
Securities sold under agreements to repurchase 362,573     453,596     473,650  
FHLB advances 353,995     153,685     251,749  
Other borrowed funds 8,224     8,243     4,440  
Subordinated debentures 126,135     126,099     125,991  
Accrued interest payable 3,450     3,154     3,584  
Other liabilities 73,168     80,470     102,038  
     Total liabilities 8,507,292     8,592,401     8,333,731  
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
780     780     765  
Paid-in capital 797,997     797,381     749,107  
Retained earnings - substantially restricted 402,259     403,373     374,379  
Accumulated other comprehensive (loss) income (1,979 )   4,667     (7,382 )
     Total stockholders' equity 1,199,057     1,206,201     1,116,869  
     Total liabilities and stockholders' equity $ 9,706,349     9,798,602     9,450,600  
 


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

       
  Three Months ended   Year ended
(Dollars in thousands, except per share data) December 31,
2017
  September 30,
2017
  December 31,
2016
  December 31,
2017
  December 31,
2016
Interest Income                  
Investment securities $ 18,663     19,987     21,645     81,968     90,392  
Residential real estate loans 8,520     8,326     8,463     33,114     33,410  
Commercial loans 61,329     59,875     49,750     227,356     188,949  
Consumer and other loans 8,386     8,276     7,901     32,584     31,402  
     Total interest income 96,898     96,464     87,759     375,022     344,153  
Interest Expense                  
Deposits 3,288     4,564     4,497     16,793     18,402  
Securities sold under agreements to
 repurchase
496     537     325     1,858     1,207  
Federal Home Loan Bank advances 2,106     1,398     1,377     6,748     6,221  
Other borrowed funds 24     21     18     79     67  
Subordinated debentures 1,158     1,132     997     4,386     3,734  
     Total interest expense 7,072     7,652     7,214     29,864     29,631  
Net Interest Income 89,826     88,812     80,545     345,158     314,522  
Provision for loan losses 2,886     3,327     1,139     10,824     2,333  
     Net interest income after provision for loan
      losses
86,940     85,485     79,406     334,334     312,189  
Non-Interest Income                  
Service charges and other fees 17,282     17,307     15,645     67,717     62,405  
Miscellaneous loan fees and charges 1,077     1,211     1,234     4,360     4,613  
Gain on sale of loans 7,408     9,141     9,765     30,439     33,606  
(Loss) gain on sale of investments (115 )   77     (757 )   (660 )   (1,463 )
Other income 2,057     3,449     2,127     10,383     8,157  
     Total non-interest income 27,709     31,185     28,014     112,239     107,318  
Non-Interest Expense                  
Compensation and employee benefits 40,465     41,297     38,826     160,506     151,697  
Occupancy and equipment 6,925     6,500     6,692     26,631     25,979  
Advertising and promotions 2,024     2,239     2,125     8,405     8,433  
Data processing 3,970     3,647     3,408     14,150     14,390  
Other real estate owned 377     817     2,076     1,909     2,895  
Regulatory assessments and insurance 1,069     1,214     1,048     4,431     4,780  
Core deposit intangibles amortization 614     640     608     2,494     2,970  
Other expenses 12,922     12,198     11,934     47,045     47,570  
     Total non-interest expense 68,366     68,552     66,717     265,571     258,714  
Income Before Income Taxes 46,283     48,118     40,703     181,002     160,793  
Federal and state income tax expense 31,327     11,639     9,662     64,625     39,662  
Net Income $ 14,956     36,479     31,041     116,377     121,131  
 


Glacier Bancorp, Inc.
Average Balance Sheets

   
  Three Months ended
  December 31, 2017   December 31, 2016
(Dollars in thousands) Average
Balance
  Interest &
Dividends
  Average
Yield/
Rate
  Average
Balance
  Interest &
Dividends
  Average
Yield/
Rate
Assets                      
Residential real estate loans $ 758,180     $ 8,520     4.50 %   $ 756,796     $ 8,463     4.47 %
Commercial loans 1 5,089,922     63,140     4.92 %   4,225,252     51,039     4.81 %
Consumer and other loans 695,288     8,386     4.79 %   677,300     7,901     4.64 %
Total loans 2 6,543,390     80,046     4.85 %   5,659,348     67,403     4.74 %
Tax-exempt investment securities 3 1,089,640     15,485     5.68 %   1,290,962     18,487     5.73 %
Taxable investment securities 4 1,483,157     8,774     2.37 %   1,809,816     9,813     2.17 %
Total earning assets 9,116,187     104,305     4.54 %   8,760,126     95,703     4.35 %
Goodwill and intangibles 192,663             159,771          
Non-earning assets 402,802             389,562          
Total assets $ 9,711,652             $ 9,309,459          
Liabilities                      
Non-interest bearing deposits $ 2,334,103     $     %   $ 2,045,833     $     %
NOW and DDA accounts 1,704,799     408     0.10 %   1,533,225     254     0.07 %
Savings accounts 1,087,212     164     0.06 %   979,377     134     0.05 %
Money market deposit accounts 1,552,045     610     0.16 %   1,451,803     548     0.15 %
Certificate accounts 831,107     1,203     0.57 %   961,707     1,393     0.58 %
Wholesale deposits 5 161,320     903     2.22 %   335,579     2,168     2.57 %
FHLB advances 226,334     2,106     3.64 %   220,921     1,377     2.44 %
Repurchase agreements and
  other borrowed funds
512,780     1,678     1.30 %   538,305     1,340     0.99 %
Total funding liabilities 8,409,700     7,072     0.33 %   8,066,750     7,214     0.36 %
Other liabilities 93,335             101,383          
Total liabilities 8,503,035             8,168,133          
Stockholders' Equity                      
Common stock 780             765          
Paid-in capital 797,607             748,730          
Retained earnings 410,836             389,289          
Accumulated other comprehensive
  (loss) income
(606 )           2,542          
Total stockholders' equity 1,208,617             1,141,326          
Total liabilities and stockholders' equity $ 9,711,652             $ 9,309,459          
Net interest income (tax-equivalent)     $ 97,233             $ 88,489      
Net interest spread (tax-equivalent)         4.21 %           3.99 %
Net interest margin (tax-equivalent)         4.23 %           4.02 %

__________
1    Includes tax effect of $1.8 million and $1.3 million on tax-exempt municipal loan and lease income for the three months ended December 31, 2017 and 2016, respectively.
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 $5.3 million and $6.3 million on tax-exempt investment securities income for the three months ended December 31, 2017 and 2016, respectively.
4    Includes tax effect of $313 thousand and $353 thousand on federal income tax credits for the three months ended December 31, 2017 and 2016, respectively.
5    Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.


Glacier Bancorp, Inc.
Average Balance Sheets (continued)

   
  Year ended
  December 31, 2017   December 31, 2016
(Dollars in thousands) Average
Balance
 
Interest &
Dividends 
  Average
Yield/
Rate
  Average
Balance
  Interest &
Dividends
  Average
Yield/
Rate
Assets                      
Residential real estate loans $ 744,523     $ 33,114     4.45 %   $ 741,876     $ 33,410     4.50 %
Commercial loans 1 4,792,720     233,744     4.88 %   3,993,363     193,147     4.84 %
Consumer and other loans 684,129     32,584     4.76 %   668,990     31,402     4.69 %
Total loans 2 6,221,372     299,442     4.81 %   5,404,229     257,959     4.77 %
Tax-exempt investment securities 3 1,160,182     66,077     5.70 %   1,325,810     75,907     5.73 %
Taxable investment securities 4 1,722,264     39,727     2.31 %   1,874,240     41,775     2.23 %
Total earning assets 9,103,818     405,246     4.45 %   8,604,279     375,641     4.37 %
Goodwill and intangibles 180,014             155,981          
Non-earning assets 394,363             392,353          
Total assets $ 9,678,195             $ 9,152,613          
Liabilities                      
Non-interest bearing deposits $ 2,175,750     $     %   $ 1,934,543     $     %
NOW and DDA accounts 1,656,865     1,402     0.08 %   1,498,928     1,062     0.07 %
Savings accounts 1,055,688     624     0.06 %   920,058     464     0.05 %
Money market deposit accounts 1,547,659     2,407     0.16 %   1,420,700     2,183     0.15 %
Certificate accounts 888,887     5,114     0.58 %   1,013,046     5,998     0.59 %
Wholesale deposits 5 275,804     7,246     2.63 %   335,616     8,695     2.59 %
FHLB advances 258,528     6,748     2.57 %   294,952     6,221     2.07 %
Repurchase agreements and
  other borrowed funds
547,307     6,323     1.16 %   515,254     5,008     0.97 %
Total funding liabilities 8,406,488     29,864     0.36 %   7,933,097     29,631     0.37 %
Other liabilities 83,991             96,392          
Total liabilities 8,490,479             8,029,489          
Stockholders' Equity                      
Common stock 775             763          
Paid-in capital 781,267             740,792          
Retained earnings 406,200             371,925          
Accumulated other comprehensive
  (loss) income
(526 )           9,644          
Total stockholders' equity 1,187,716             1,123,124          
Total liabilities and stockholders' equity $ 9,678,195             $ 9,152,613          
Net interest income (tax-equivalent)     $ 375,382             $ 346,010      
Net interest spread (tax-equivalent)         4.09 %           4.00 %
Net interest margin (tax-equivalent)         4.12 %           4.02 %

__________
1    Includes tax effect of $6.4 million and $4.2 million on tax-exempt municipal loan and lease income for the years ended December 31, 2017 and 2016, respectively.
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 $22.5 million and $25.9 million on tax-exempt investment securities income for the years ended December 31, 2017 and 2016, respectively.
4    Includes tax effect of $1.3 million and $1.4 million on federal income tax credits for the years ended December 31, 2017 and 2016, respectively.
5    Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.


Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification

       
  Loans Receivable, by Loan Type   % Change from
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
  Sep 30,
2017
  Dec 31,
2016
Custom and owner occupied construction $ 109,555     $ 106,615     $ 86,233        3 %     27 %
Pre-sold and spec construction 72,160     82,023     66,184     (12 )%   9 %
Total residential construction 181,715     188,638     152,417     (4 )%   19 %
Land development 82,398     83,414     75,078     (1 )%   10 %
Consumer land or lots 102,289     99,866     97,449     2 %   5 %
Unimproved land 65,753     64,610     69,157     2 %   (5 )%
Developed lots for operative builders 14,592     12,830     13,254     14 %   10 %
Commercial lots 23,770     25,984     30,523     (9 )%   (22 )%
Other construction 391,835     367,060     257,769     7 %   52 %
Total land, lot, and other construction 680,637     653,764     543,230     4 %   25 %
Owner occupied 1,132,833     1,109,796     977,932     2 %   16 %
Non-owner occupied 1,186,066     1,180,976     929,729     %   28 %
Total commercial real estate 2,318,899     2,290,772     1,907,661     1 %   22 %
Commercial and industrial 751,221     766,970     686,870     (2 )%   9 %
Agriculture 450,616     468,168     407,208     (4 )%   11 %
1st lien 877,335     873,061     877,893     %   %
Junior lien 51,155     53,337     58,564     (4 )%   (13 )%
Total 1-4 family 928,490     926,398     936,457     %   (1 )%
Multifamily residential 189,342     185,891     184,068     2 %   3 %
Home equity lines of credit 440,105     429,483     402,614     2 %   9 %
Other consumer 148,247     153,363     155,193     (3 )%   (4 )%
Total consumer 588,352     582,846     557,807     1 %   5 %
States and political subdivisions 383,252     351,869     255,420     9 %   50 %
Other 144,133     142,826     126,252     1 %   14 %
Total loans receivable, including  loans held for sale 6,616,657     6,558,142     5,757,390     1 %   15 %
Less loans held for sale 1 (38,833 )   (48,709 )   (72,927 )   (20 )%   (47 )%
Total loans receivable $ 6,577,824     $ 6,509,433     $ 5,684,463     1 %   16 %


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


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification

   

Non-performing Assets, by Loan Type
  Non-
Accrual
Loans
  Accruing
Loans 90
Days
or More Past
Due
  Other
Real Estate
Owned
(Dollars in thousands) Dec 31,
2017
  Sep 30,
2017
  Dec 31,
2016
  Dec 31,
2017
  Dec 31,
2017
  Dec 31,
2017
Custom and owner occupied construction $ 48     177                 48  
Pre-sold and spec construction 38     267     226     38          
Total residential construction 86     444     226     38         48  
Land development 7,888     8,116     9,864     806         7,082  
Consumer land or lots 1,861     2,451     2,137     1,065         796  
Unimproved land 10,866     10,320     11,905     8,760         2,106  
Developed lots for operative builders 116     116     175             116  
Commercial lots 1,312     1,374     1,466     260         1,052  
Other construction 151     151                 151  
Total land, lot and other
  construction
22,194     22,528     25,547     10,891         11,303  
Owner occupied 13,848     14,207     18,749     11,778     698     1,372  
Non-owner occupied 4,584     4,251     3,426     3,711     312     561  
Total commercial real estate 18,432     18,458     22,175     15,489     1,010     1,933  
Commercial and industrial 5,294     5,190     5,184     4,700     533     61  
Agriculture 3,931     3,998     1,615     3,931          
1st lien 9,261     7,688     9,186     6,452     2,605     204  
Junior lien 567     591     1,167     518         49  
Total 1-4 family 9,828     8,279     10,353     6,970     2,605     253  
Multifamily residential         400              
Home equity lines of credit 3,292     4,151     5,494     2,652         640  
Other consumer 322     225     391     162     129     31  
Total consumer 3,614     4,376     5,885     2,814     129     671  
States and political subdivisions 1,800     1,800             1,800      
Total $ 65,179     65,073     71,385     44,833     6,077     14,269  
 



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,
2017
  Sep 30,
2017
  Dec 31,
2016
  Sep 30,
2017
  Dec 31,
2016
Custom and owner occupied construction $ 300     $ 415     $ 1,836     (28 )%   (84 )%
Pre-sold and spec construction 102     451         (77 )%   n/m
 
Total residential construction 402     866     1,836     (54 )%   (78 )%
Land development     5     154     (100 )%   (100 )%
Consumer land or lots 353     615     638     (43 )%   (45 )%
Unimproved land 662     621     1,442     7  %   (54 )%
Developed lots for operative builders 7             n/m
    n/m
 
Commercial lots 108     15         620  %   n/m
 
Total land, lot and other construction 1,130     1,256     2,234     (10 )%   (49 )%
Owner occupied 4,726     4,450     2,307     6  %   105  %
Non-owner occupied 2,399     5,502     1,689     (56 ) %   42  %
Total commercial real estate 7,125     9,952     3,996     (28 )%   78  %
Commercial and industrial 6,472     5,784     3,032     12  %   113  %
Agriculture 3,205     780     1,133     311  %   183  %
1st lien 10,865     2,973     7,777     265  %   40  %
Junior lien 4,348     3,463     1,016     26  %   328  %
Total 1-4 family 15,213     6,436     8,793     136  %   73  %
Multifamily Residential     237     10     (100 )%   (100 )%
Home equity lines of credit 1,962     2,065     1,537     (5 )%   28  %
Other consumer 2,109     1,735     1,180     22  %   79  %
Total consumer 4,071     3,800     2,717     7  %   50  %
States and political subdivisions         1,800     n/m
    (100 )%
Other 69     4     66     1,625  %   5  %
Total $ 37,687     $ 29,115     $ 25,617     29  %   47  %


_______
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,
2017
  Sep 30,
2017
  Dec 31,
2016
  Dec 31,
2017
  Dec 31,
2017
Custom and owner occupied construction $     58     (1 )   62     62  
Pre-sold and spec construction (23 )   (19 )   786         23  
Total residential construction (23 )   39     785     62     85  
Land development (143 )   (67 )   (2,661 )       143  
Consumer land or lots 222     (150 )   (688 )   411     189  
Unimproved land (304 )   (177 )   (184 )       304  
Developed lots for operative builders (107 )   (16 )   (27 )       107  
Commercial lots (6 )   (4 )   27         6  
Other construction 389     390         389      
Total land, lot and other construction 51     (24 )   (3,533 )   800     749  
Owner occupied 3,908     3,416     1,196     4,556     648  
Non-owner occupied 368     214     44     382     14  
Total commercial real estate 4,276     3,630     1,240     4,938     662  
Commercial and industrial 883     429     (370 )   1,597     714  
Agriculture 9     (11 )   50     37     28  
1st lien (23 )   (201 )   487     356     379  
Junior lien 719     746     60     815     96  
Total 1-4 family 696     545     547     1,171     475  
Multifamily residential (230 )   (229 )   229         230  
Home equity lines of credit 272     262     611     463     191  
Other consumer 505     98     257     735     230  
Total consumer 777     360     868     1,198     421  
Other 4,389     3,195     2,642     9,528     5,139  
Total $ 10,828     7,934     2,458     19,331     8,503  
 


Visit our website at www.glacierbancorp.com

   
  CONTACT: Randall M. Chesler, CEO
  (406) 751-4722
  Ron J. Copher, CFO
  (406) 751-7706

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