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Section 1: 8-K (FORM 8-K)

gbci-20200123
0000868671false00008686712020-01-232020-01-23

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________
FORM 8-K
____________________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 23, 2020

____________________________________________________________
GLACIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
____________________________________________________________

Montana000-1891181-0519541
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

49 Commons LoopKalispell,Montana59901
(Address of principal executive offices)(Zip Code)

(406)756-4200
(Registrant’s telephone number, including area code)
____________________________________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueGBCINASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02.
On January 23, 2020, the Company issued a press release announcing its financial results for the quarter ended December 31, 2019. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information in this Item 2.02 and the Exhibit attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such document or filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Exhibit 99.1 - Press Release dated January 23, 2020, announcing financial results for the quarter ended December 31, 2019.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document).




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated:January 23, 2020GLACIER BANCORP, INC.
/s/ Randall M. Chesler
By:Randall M. Chesler
President and CEO



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Section 2: EX-99.1 (EX-99.1)

Document

402413353_gbcilogostatesmay20191.jpg
NEWS RELEASE
January 23, 2020

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

GLACIER BANCORP, INC. ANNOUNCES
RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2019

4th Quarter 2019 Highlights:
Net income of $57.4 million for the current quarter, an increase of $7.8 million, or 16 percent, over the prior year fourth quarter net income of $49.6 million.
Current quarter diluted earnings per share of $0.62, an increase of 5 percent from the prior year fourth quarter diluted earnings per share of $0.59.
Net interest margin of 4.45 percent increased 3 basis points compared to 4.42 percent in the prior quarter and increased 15 basis points over the prior year fourth quarter net interest margin of 4.30 percent.
Interest bearing deposits increased $65 million, or 4 percent annualized, during the current quarter.
Non-performing assets of $37.4 million, decreased $17.7 million, or 32 percent, from the prior quarter non-performing assets of $55.1 million.
Declared a special dividend of $0.20 per share. This was the 16th special dividend the Company has declared.
Declared and paid a regular dividend of $0.29 per share. The Company has declared 139 consecutive quarterly dividends and has increased the dividend 45 times.

Year 2019 Highlights:
Net income of $211 million for 2019, an increase of $28.7 million, or 16 percent, over the prior year net income of $182 million.
Diluted earnings per share of $2.38, an increase of 10 percent from the prior year diluted earnings per share of $2.17.
Net interest margin of 4.39 percent for 2019, an increase of 18 basis points from the net interest margin of 4.21 percent in 2018.
Core deposits organically grew $401 million, or 4 percent, during 2019, including non-interest bearing deposit growth of $305 million, or 10 percent.
Organic loan growth was $364 million, or 4 percent for 2019.
1


Regular quarterly dividends declared of $1.11 per share, an increase of $0.10 per share, or 10 percent, over the prior year regular quarterly dividends of $1.01.
The Company announced the signing of a definitive agreement to acquire State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona with total assets of $678 million at December 31, 2019 which will significantly enhance its Arizona franchise.
The Company entered Nevada by completing the acquisition of Heritage Bancorp, the parent company of Heritage Bank of Nevada (collectively, "Heritage"), a community bank based in Reno, Nevada, with total assets of $978 million.
The Company completed the acquisition of FNB Bancorp, the holding company for The First National Bank of Layton (collectively, "FNB"), a community bank based in Layton, Utah, with total assets of $379 million.
Financial Highlights
 At or for the Three Months endedAt or for the Year ended
(Dollars in thousands, except per share and market data)
Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Dec 31,
2019
Dec 31,
2018
Operating results
Net income$57,410  51,610  52,392  49,132  49,599  210,544  181,878  
Basic earnings per share$0.62  0.57  0.61  0.58  0.59  2.39  2.18  
Diluted earnings per share$0.62  0.57  0.61  0.58  0.59  2.38  2.17  
Dividends declared per share$0.49  0.29  0.27  0.26  0.56  1.31  1.31  
Market value per share
Closing$45.99  40.46  40.55  40.07  39.62  45.99  39.62  
High$46.51  42.61  43.44  45.47  47.67  46.51  47.67  
Low$38.99  37.70  38.65  37.58  36.84  37.58  35.77  
Selected ratios and other data
Number of common stock shares outstanding
92,289,75092,180,61886,637,39484,588,19984,521,69292,289,75084,521,692
Average outstanding shares - basic92,243,13390,294,81185,826,29084,549,97484,521,64088,255,29083,603,515
Average outstanding shares - diluted92,365,02190,449,19585,858,28684,614,24884,610,01888,385,77583,677,185
Return on average assets (annualized)1.67 %1.55 %1.69 %1.67 %1.66 %1.64 %1.59 %
Return on average equity (annualized)11.61 %10.92 %12.82 %13.02 %13.08 %12.01 %12.56 %
Efficiency ratio54.90 %65.95 %54.50 %55.37 %53.93 %57.78 %54.73 %
Dividend payout ratio79.03 %50.88 %44.26 %44.83 %94.92 %54.81 %60.09 %
Loan to deposit ratio88.92 %88.71 %90.27 %87.14 %87.64 %88.92 %87.64 %
Number of full time equivalent employees
2,8262,8022,7032,6342,6232,8262,623
Number of locations181182175169167181167
Number of ATMs248238228222216248216
______________________________
1 Includes a special dividend declared of $0.20 and $0.30 per share for the three months ended December 31, 2019 and December 31, 2018 and for the years ended December 31, 2019 and 2018.
KALISPELL, Mont., Jan 23, 2020 (GLOBE NEWSWIRE) - Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $57.4 million for the current quarter, an increase of $7.8 million, or 16 percent, from the $49.6 million of net income for the prior year fourth quarter. Diluted earnings per share for the current quarter was $0.62 per share, an increase of 5 percent from the prior year fourth quarter diluted earnings per share of $0.59. Included in the current quarter was acquisition-related expenses of $4.4 million and a $1.3 million
2


reduction in regulatory assessment and insurance expense from Small Bank Assessment credits applied by the FDIC. “These results represent a strong close to a great year. We are especially pleased to see the substantial improvement in credit this quarter and a business that continues to withstand market headwinds. The Company's growth and performance for the quarter and the full year was well balanced across all of our key operating metrics,” said Randy Chesler, President and Chief Executive Officer. “Our Company has grown stronger during 2019, both organically and with the addition of Heritage Bank in Nevada and First Community Bank in Utah. With this foundation, we believe the Glacier team is set to have another strong year in 2020.”

Net income for 2019 was $211 million, an increase of $28.7 million, or 16 percent, from the $182 million of net income for the prior year. Diluted earnings per share for the current year was $2.38 per share, an increase of $0.21, or 10 percent, from the diluted earnings per share of $2.17 for the same period in the prior year.

In September of 2019, the Company announced the signing of a definitive agreement to acquire State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona (collectively, "SBAZ"). SBAZ provides banking services to individuals and businesses in Arizona with ten banking offices located in Bullhead City, Cottonwood, Kingman, Lake Havasu City, Phoenix, Prescott Valley and Prescott. As of December 31, 2019, SBAZ had total assets of $678 million, gross loans of $439 million and total deposits of $587 million. The acquisition has received regulatory approvals, is subject to other customary conditions of closing and is expected to be completed in the first quarter of 2020. Upon closing of the transaction, SBAZ will merge into the Company's Foothills Bank division and will expand the Company's footprint in Arizona to cover all major markets in the state and be a leading community bank in Arizona.

On July 31, 2019, the Company completed the acquisition of Heritage Bancorp, the bank holding company for Heritage Bank of Nevada, a community bank based in Reno, Nevada (collectively, “Heritage”). Upon closing of the transaction, Heritage became the Company’s sixteenth Bank division. This acquisition also marks the Company's first entrance into the state of Nevada.

On April 30, 2019, the Company completed the acquisition of FNB Bancorp, the holding company for The First National Bank of Layton, a community bank based in Layton, Utah (“FNB”). Upon closing of the transaction, FNB became First Community Bank Utah, the Company’s first division in Utah and the fifteenth Bank division. In October, the Company combined its four existing Utah-based branches into First Community Bank Utah, enhancing the Company's growth prospects in one of the fastest growing markets in the United States.

The Company’s results of operations and financial condition include both acquisitions beginning on the acquisition dates and the following table discloses the preliminary fair value estimates of selected classifications of assets and liabilities acquired:

HeritageFNB
(Dollars in thousands)July 31,
2019
April 30,
2019
Total
Total assets977,944  $379,155  1,357,099  
Debt securities103,231  47,247  150,478  
Loans receivable615,279  245,485  860,764  
Non-interest bearing deposits296,393  93,647  390,040  
Interest bearing deposits425,827  180,999  606,826  
Borrowings—  7,273  7,273  

3


Asset Summary
$ Change from
(Dollars in thousands)Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Sep 30,
2019
Dec 31,
2018
Cash and cash equivalents$330,961  406,384  203,790  (75,423) 127,171  
Debt securities, available-for-sale2,575,252  2,459,036  2,571,663  116,216  3,589  
Debt securities, held-to-maturity224,611  234,992  297,915  (10,381) (73,304) 
Total debt securities2,799,863  2,694,028  2,869,578  105,835  (69,715) 
Loans receivable
Residential real estate926,388  936,877  887,742  (10,489) 38,646  
Commercial real estate5,579,307  5,548,174  4,657,561  31,133  921,746  
Other commercial2,094,254  2,145,257  1,911,171  (51,003) 183,083  
Home equity617,201  615,781  544,688  1,420  72,513  
Other consumer295,660  294,999  286,387  661  9,273  
Loans receivable9,512,810  9,541,088  8,287,549  (28,278) 1,225,261  
Allowance for loan and lease losses
(124,490) (125,535) (131,239) 1,045  6,749  
Loans receivable, net9,388,320  9,415,553  8,156,310  (27,233) 1,232,010  
Other assets1,164,855  1,202,827  885,806  (37,972) 279,049  
Total assets$13,683,999  13,718,792  12,115,484  (34,793) 1,568,515  

Total debt securities of $2.800 billion at December 31, 2019 increased $106 million, or 4 percent, during the current quarter and decreased $69.7 million, or 2 percent, from the prior year. Debt securities represented 20 percent of total assets at December 31, 2019 compared to 24 percent of total assets at December 31, 2018. The level of debt securities will continue to fluctuate as necessary to supplement liquidity needs of the Company.

The loan portfolio of $9.513 billion decreased $28.3 million, or 30 basis points, during the current quarter primarily as a result of seasonality and a few isolated loan payoffs. Excluding the FNB and Heritage acquisitions, the loan portfolio increased $364 million, or 4 percent, since December 31, 2018, with the largest increase in commercial real estate loans, which increased $195 million, or 4 percent.

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.

4


Credit Quality Summary
At or for the Year endedAt or for the Nine Months endedAt or for the Year ended
(Dollars in thousands)Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Allowance for loan and lease losses
Balance at beginning of period$131,239  131,239  129,568  
Provision for loan losses57  57  9,953  
Charge-offs(15,178) (12,090) (17,807) 
Recoveries8,372  6,329  9,525  
Balance at end of period$124,490  125,535  131,239  
Other real estate owned$5,142  7,148  7,480  
Accruing loans 90 days or more past due1,412  7,912  2,018  
Non-accrual loans30,883  40,017  47,252  
Total non-performing assets$37,437  55,077  56,750  
Non-performing assets as a percentage of subsidiary assets
0.27 %0.40 %0.47 %
Allowance for loan and lease losses as a percentage of non-performing loans
385 %262 %266 %
Allowance for loan and lease losses as a percentage of total loans
1.31 %1.32 %1.58 %
Net charge-offs as a percentage of total loans0.07 %0.06 %0.10 %
Accruing loans 30-89 days past due$23,192  29,954  33,567  
Accruing troubled debt restructurings$34,055  32,949  25,833  
Non-accrual troubled debt restructurings$3,346  6,723  10,660  
U.S. government guarantees included in non-performing assets$1,786  3,000  4,811  

The Company experienced another successful quarter in reducing non-performing assets as the Bank divisions continued to focus on resolving outstanding credit issues. Non-performing assets of $37.4 million at December 31, 2019 decreased $17.6 million, or 32 percent, over the prior quarter and decreased $19.3 million, or 34 percent, over the prior year end. Non-performing assets as a percentage of subsidiary assets at December 31, 2019 was 0.27 percent, a decrease of 13 basis point from the prior quarter, and a decrease of 20 basis points from the prior year fourth quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $23.2 million at December 31, 2019 decreased $6.8 million from the prior quarter and decreased $10.4 million from the prior year end. Early stage delinquencies as a percentage of loans at December 31, 2019 was 0.24 percent, which was a decrease of 7 basis points from prior quarter and a 17 basis points decrease from prior year end.

The allowance for loan and lease losses (“allowance”) as a percent of total loans outstanding at December 31, 2019 was 1.31 percent, which was a 1 basis point decrease compared to the prior quarter and a decrease of 27 basis points from a year ago. The decrease from prior year end was attributable to stabilizing credit quality and the addition of loans from the acquisitions which were added to the portfolio on a fair value basis and as a result did not require an allowance at acquisition date.

5


Credit Quality Trends and Provision for Loan Losses
(Dollars in thousands)Provision
for Loan
Losses
Net
Charge-Offs
ALLL
as a Percent
of Loans
Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans
Non-Performing
Assets to
Total Subsidiary
Assets
Fourth quarter 2019$—  $1,045  1.31 %0.24 %0.27 %
Third quarter 2019—  3,519  1.32 %0.31 %0.40 %
Second quarter 2019—  732  1.46 %0.43 %0.41 %
First quarter 201957  1,510  1.56 %0.44 %0.42 %
Fourth quarter 20181,246  2,542  1.58 %0.41 %0.47 %
Third quarter 20183,194  2,223  1.63 %0.31 %0.61 %
Second quarter 20184,718  762  1.66 %0.50 %0.71 %
First quarter 2018795  2,755  1.66 %0.59 %0.64 %

Net charge-offs for the current quarter were $1.0 million compared to $3.5 million for the prior quarter and $2.5 million from the same quarter last year. There was no current or prior quarter provision for loan losses compared to $1.2 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. 

Liability Summary
$ Change from
(Dollars in thousands)Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Sep 30,
2019
Dec 31,
2018
Deposits
Non-interest bearing deposits$3,696,627  3,772,766  3,001,178  (76,139) 695,449  
NOW and DDA accounts2,645,404  2,592,483  2,391,307  52,921  254,097  
Savings accounts1,485,487  1,472,465  1,346,790  13,022  138,697  
Money market deposit accounts
1,937,141  1,940,517  1,684,284  (3,376) 252,857  
Certificate accounts958,501  955,765  901,484  2,736  57,017  
Core deposits, total10,723,160  10,733,996  9,325,043  (10,836) 1,398,117  
Wholesale deposits53,297  134,629  168,724  (81,332) (115,427) 
Deposits, total10,776,457  10,868,625  9,493,767  (92,168) 1,282,690  
Repurchase agreements569,824  558,752  396,151  11,072  173,673  
Federal Home Loan Bank advances
38,611  8,707  440,175  29,904  (401,564) 
Other borrowed funds28,820  14,808  14,708  14,012  14,112  
Subordinated debentures139,914  139,913  134,051   5,863  
Other liabilities169,640  174,586  120,778  (4,946) 48,862  
Total liabilities$11,723,266  11,765,391  10,599,630  (42,125) 1,123,636  

Core deposits of $10.723 billion as of December 31, 2019 decreased $10.8 million or 10 basis points, from the prior quarter with the decrease primarily attributable to the $76 million, or 2 percent, seasonal reduction in non-interest bearing deposits. Excluding acquisitions, core deposits increased $401 million, or 4 percent, from prior year end with non-interest bearing deposits increasing $305 million, or 10 percent. Non-interest bearing deposits were 34 percent of total core deposits at current year end, an increase of 2 percent from 32 percent of total core deposits at the prior year end.

6


Wholesale deposits of $53.3 million at December 31, 2019 decreased $81.3 million from prior quarter and decreased $115 million from the prior year end. FHLB advances of $38.6 million at December 31, 2019 increased $29.9 million from prior quarter and decreased $402 million from the prior year end. As a result of the prior quarter's balance sheet strategy, the Company reduced its overall wholesale funding during 2019. The balance sheet strategy included early termination of the Company's $260 million notional pay-fixed interest rate swaps and corresponding debt. Wholesale deposits and FHLB advances will continue to fluctuate as necessary for balance sheet growth and to supplement liquidity needs of the Company.

Stockholders’ Equity Summary
$ Change from
(Dollars in thousands, except per share data)
Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Sep 30,
2019
Dec 31,
2018
Common equity$1,920,507  1,905,306  1,525,281  15,201  395,226  
Accumulated other comprehensive income (loss)
40,226  48,095  (9,427) (7,869) 49,653  
Total stockholders’ equity
1,960,733  1,953,401  1,515,854  7,332  444,879  
Goodwill and core deposit intangible, net
(519,704) (522,274) (338,828) 2,570  (180,876) 
Tangible stockholders’ equity
$1,441,029  1,431,127  1,177,026  9,902  264,003  
Stockholders’ equity to total assets
14.33 %14.24 %12.51 %
Tangible stockholders’ equity to total tangible assets
10.95 %10.84 %9.99 %
Book value per common share
$21.25  21.19  17.93  0.06  3.32  
Tangible book value per common share
$15.61  15.53  13.93  0.08  1.68  

Tangible stockholders’ equity of $1.441 billion at December 31, 2019 increased $9.9 million, or 70 basis points, compared to the prior quarter which was driven by earnings retention. Tangible stockholders’ equity increased $264 million, or 22 percent, over the prior year end which was primarily the result of earnings retention, an increase in other comprehensive income, and the result of $317 million of Company stock issued for current year acquisitions. Tangible book value per common share of $15.61 at current quarter end increased $0.08 per share from the prior quarter and increased $1.68 per share from a year ago.

Cash Dividends
On December 30, 2019, the Company’s Board of Directors declared a special cash dividend of $0.20 per share, the 16th special dividend the Company has declared. The special dividend was payable January 16, 2020 to shareholders of record on January 7, 2020. On November 13, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share. The regular quarterly dividend was payable December 19, 2019 to shareholders of record on December 10, 2019. The Company has declared 139 consecutive quarterly dividends. Regular quarterly dividends for 2019 were $1.11 per share, an increase of $0.10 per share, or 10 percent, compared to prior year quarterly dividends of $1.01 per share. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.


7


Operating Results for Three Months Ended December 31, 2019 
Compared to September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018

Income Summary
 Three Months ended
(Dollars in thousands)Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Net interest income
Interest income$145,281  142,395  132,385  126,116  125,310  
Interest expense8,833  10,947  12,089  10,904  9,436  
Total net interest income136,448  131,448  120,296  115,212  115,874  
Non-interest income
Service charges and other fees
14,756  15,138  20,025  18,015  19,708  
Miscellaneous loan fees and charges1,379  1,775  1,192  967  1,278  
Gain on sale of loans10,135  10,369  7,762  5,798  5,639  
Gain (loss) on sale of investments257  13,811  134  213  (357) 
Other income1,890  1,956  1,721  3,481  2,226  
Total non-interest income28,417  43,049  30,834  28,474  28,494  
Total income$164,865  174,497  151,130  143,686  144,368  
Net interest margin (tax-equivalent)
4.45 %4.42 %4.33 %4.34 %4.30 %
$ Change from  
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Net interest income  
Interest income  $2,886  12,896  19,165  19,971  
Interest expense  (2,114) (3,256) (2,071) (603) 
Total net interest income  5,000  16,152  21,236  20,574  
Non-interest income  
Service charges and other fees
(382) (5,269) (3,259) (4,952) 
Miscellaneous loan fees and charges  (396) 187  412  101  
Gain on sale of loans  (234) 2,373  4,337  4,496  
Gain (loss) on sale of investments (13,554) 123  44  614  
Other income  (66) 169  (1,591) (336) 
Total non-interest income  (14,632) (2,417) (57) (77) 
Total income  $(9,632) 13,735  21,179  20,497  

Net Interest Income
The current quarter net interest income of $136 million increased $5.0 million, or 4 percent, over the prior quarter and increased $20.6 million, or 18 percent, from the prior year fourth quarter. The current quarter interest income of $145 million increased $2.9 million, or 2 percent, over the prior quarter and increased $20.0 million, or 16 percent, over prior year fourth quarter and was primarily driven by an increase in interest income on commercial loans. Interest income on commercial loans increased $3.1 million, or 3 percent, from the prior quarter and increased $18.1 million, or 22 percent, from the prior year fourth quarter.

The current quarter interest expense of $8.8 million decreased $2.1 million, or 19 percent, over the prior quarter
8


and decreased $603 thousand, or 6 percent, over prior year fourth quarter which was driven by the decrease in higher cost FHLB advances and wholesale deposits. During the current quarter, the total cost of funding (including non-interest bearing deposits) declined 9 basis points to 30 basis points compared to 39 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 4.45 percent compared to 4.42 percent in the prior quarter. The core net interest margin, excluding $2.1 million, or 6 basis points, of discount accretion and $2.0 million, or 6 basis points, of non-accrual interest recoveries, was 4.33 percent compared to 4.35 in the prior quarter and 4.25 percent in the prior year fourth quarter. The Company experienced a 2 basis points decrease in the core net interest margin during the current quarter from decreased yields on loans and investments that more than offset the decrease in the cost of funding from the reduction of FHLB borrowings. The core net interest margin increased 8 basis points from the prior year fourth quarter primarily the result of increased yields on the loan portfolio and a decrease in funding cost. “The stable net margin reflects the full quarter benefits of September's balance sheet strategy to improve net interest income by reducing high cost funding and low yield securities,” said Ron Copher, Chief Financial Officer. “In addition, the average balance of non-interest bearing deposits increased in the current quarter and over the entire year.”              

Non-interest Income
Non-interest income for the current quarter totaled $28.4 million which was a decrease of $14.6 million, or 34 percent, over the prior quarter and a decrease of $77 thousand, or 27 basis points, over the same quarter last year. In the prior quarter as part of the balance sheet strategy, the Company sold $308 million of securities and recognized gain of $13.8 million. Service charges and other fees of $14.8 million for the current quarter decreased $5.0 million, or 25 percent, from the prior year fourth quarter due to the Company's decrease in interchange fees as a result of the Durbin Amendment. As of July 1, 2019, the Company became subject to the Durbin Amendment which established limits on the amount of interchange fees that can be charged to merchants for debit card processing. Gain on the sale of loans of $10.1 million for the current quarter increased $4.5 million, or 80 percent, compared to the prior year fourth quarter as a result of increased purchase and refinance activity.

9


Non-interest Expense Summary
 Three Months ended
(Dollars in thousands)Dec 31,
2019
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Compensation and employee benefits$55,543  62,509  51,973  52,728  50,385  
Occupancy and equipment9,149  8,731  8,180  8,437  7,884  
Advertising and promotions2,747  2,719  2,767  2,388  2,434  
Data processing4,972  4,466  4,062  3,892  3,951  
Other real estate owned609  166  191  139  264  
Regulatory assessments and insurance45  593  1,848  1,285  1,263  
Loss on termination of hedging activities—  13,528  —  —  —  
Core deposit intangibles amortization2,566  2,360  1,865  1,694  1,731  
Other expenses19,621  15,603  15,284  12,267  13,964  
Total non-interest expense$95,252  110,675  86,170  82,830  81,876  
$ Change from  
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Dec 31,
2018
Compensation and employee benefits$(6,966) 3,570  2,815  5,158  
Occupancy and equipment418  969  712  1,265  
Advertising and promotions28  (20) 359  313  
Data processing506  910  1,080  1,021  
Other real estate owned443  418  470  345  
Regulatory assessments and insurance(548) (1,803) (1,240) (1,218) 
Loss on termination of hedging activities(13,528) —  —  —  
Core deposit intangibles amortization206  701  872  835  
Other expenses4,018  4,337  7,354  5,657  
Total non-interest expense$(15,423) 9,082  12,422  13,376  

Total non-interest expense of $95.3 million for the current quarter decreased $15.4 million, or 14 percent, over the prior quarter and increased $13.4 million, or 16 percent, over the prior year fourth quarter. Compensation and employee benefits decreased by $7.0 million, or 11 percent, from the prior quarter primarily due to the $5.4 million of stock compensation expense related to the accelerated vesting of stock options from the Heritage acquisition in the prior quarter. Compensation and employee benefits increased $5.2 million, or 10 percent, from the prior year fourth quarter due to an increased number of employees driven by acquisition and organic growth. Occupancy and equipment expense increased $418 thousand, or 5 percent, over the prior quarter and increased $1.3 million, or 16 percent, over the prior year fourth quarter as a result of the current year acquisitions and general cost increases. Data processing expense increased $506 thousand, or 11 percent, over the prior quarter and increased $1.0 million, or 26 percent, over the prior year fourth quarter primarily as a result of the current year acquisitions. Regulatory assessment and insurance decreased $1.2 million, or 96 percent, from the prior year fourth quarter primarily as a result of $1.3 million of Small Bank Assessment credits applied by the FDIC during the current quarter. The prior quarter loss on termination of hedging activities included a $3.5 million write-off of the remaining unamortized deferred prepayment penalties on FHLB advances and a $10.0 million loss on the termination of pay-fixed interest rate swaps with notional amounts totaling $260 million. Other expenses of $19.6 million, increased $4.0 million, or 26 percent, from the prior quarter and was primarily driven by an increase in acquisition-related expenses. Other expenses included
10


acquisition-related expenses of $4.4 million in the current quarter compared to $2.1 million in the prior quarter and $520 thousand in the prior year fourth quarter.

Federal and State Income Tax Expense
Tax expense during the fourth quarter of 2019 was $12.2 million, which was stable compared to the prior quarter and an increase of $556 thousand, or 5 percent, from the prior year fourth quarter. The effective tax rate in the current quarter was 18 percent which compares to 19 percent in the prior quarter and prior year fourth quarter.

Efficiency Ratio
The current quarter efficiency ratio was 54.90 percent, a 97 basis points increase from the prior year fourth quarter efficiency ratio of 53.93 as a result of increased operating expenses from acquisitions and the Durbin amendment which outpaced the increase in net interest income.

Operating Results for Year Ended December 31, 2019
Compared to December 31, 2018

Income Summary
Year ended
(Dollars in thousands)Dec 31,
2019
Dec 31,
2018
$ Change% Change
Net interest income
Interest income$546,177  $468,996  $77,181  16 %
Interest expense42,773  35,531  7,242  20 %
Total net interest income503,404  433,465  69,939  16 %
Non-interest income
Service charges and other fees67,934  74,887  (6,953) (9)%
Miscellaneous loan fees and charges5,313  6,805  (1,492) (22)%
Gain on sale of loans34,064  27,134  6,930  26 %
Gain (loss) on sale of investments14,415  (1,113) 15,528  (1,395)%
Other income9,048  11,111  (2,063) (19)%
Total non-interest income130,774  118,824  11,950  10 %
Total Income$634,178  $552,289  $81,889  15 %
Net interest margin (tax-equivalent)4.39 %4.21 %

Net Interest Income
Net interest income of $503 million for 2019 increased $69.9 million, or 16 percent, from prior year and was primarily attributable to a $64.9 million increase in interest income from commercial loans. Interest expense of $42.8 million for 2019 increased $7.2 million, or 20 percent over the prior year as a result of an increase in the amount of deposits and interest rate increases on deposits. The total funding cost (including non-interest bearing deposits) for 2019 was 39 basis points compared to 36 basis points for 2018.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for 2019 was 4.39 percent, an 18 basis points increase from the net interest margin of 4.21 percent for 2018. The increase in the margin was principally due to a shift in earning assets to higher yielding loans along with an increase in yields on the loan portfolio and an increase in non-accrual interest recoveries combined with relatively stable cost of funds and an increase low cost deposits. The current year included $4.4 million in non-accrual interest recoveries compared to $187 thousand in the prior year.

11


Non-interest Income
Non-interest income of $131 million for 2019 increased $12.0 million, or 10 percent, over the last year which was driven by the sale of debt securities from the balance sheet strategy implemented during the current year. Service charges and other fees of $67.9 million for 2019 decreased $7.0 million, or 9 percent, from the prior year. Excluding the impact from the Durbin Amendment, there was an increase in fees during the current year from the increased number of deposit accounts from organic growth and acquisitions. Gain on the sale of loans of $34.1 million for 2019, increased $6.9 million, or 26 percent, compared to the prior year as a result of increased purchase and refinance activity. Other income decreased $2.1 million from the prior year and was the result of a gain of $2.3 million on the sale of a former branch building in the prior year third quarter.

Non-interest Expense Summary
Year ended
(Dollars in thousands)Dec 31,
2019
Dec 31,
2018
$ Change% Change
Compensation and employee benefits$222,753  $195,056  $27,697  14 %
Occupancy and equipment34,497  30,734  3,763  12 %
Advertising and promotions10,621  9,566  1,055  11 %
Data processing17,392  15,911  1,481  %
Other real estate owned1,105  3,221  (2,116) (66)%
Regulatory assessments and insurance3,771  5,075  (1,304) (26)%
Loss on termination of hedging activities13,528  —  13,528  n/m  
Core deposit intangibles amortization8,485  6,270  2,215  35 %
Other expenses62,775  54,294  8,481  16 %
Total non-interest expense$374,927  $320,127  $54,800  17 %
______________________________
n/m - not measurable

Total non-interest expense of $375 million for 2019 increased $54.8 million, or 17 percent, over the prior year. Compensation and employee benefits for 2019 increased $27.7 million, or 14 percent, from the prior year due to the increased number of employees from acquisitions and organic growth, a $5.4 million of stock compensation expense related to the Heritage acquisition and annual salary increases. Occupancy and equipment expense for 2019 increased $3.8 million, or 12 percent from the prior year as a result of increased cost from acquisitions and general cost increases. Data processing expense increased $1.5 million or 9 percent, over the prior year primarily as a result of increased costs from acquisitions. Regulatory assessment and insurance decreased $1.3 million, or 26 percent, from the prior year and included $2.5 million of Small Bank Assessment credits applied by the FDIC during the current year. Other expenses of $62.8 million in the current year, increased $8.5 million, or 16 percent, from the prior year and was primarily driven an increase in acquisition-related expenses, increased costs from acquisitions and general cost increases. Other expenses included acquisition-related expenses of $8.5 million in 2019 compared to $6.6 million in the prior year.

Provision for Loan Losses
The provision for loan losses was $57 thousand for 2019, a decrease of $9.9 million from prior year. Net charge-offs during the 2019 were $6.8 million compared to $8.3 million during 2018.


12


Federal and State Income Tax Expense
Tax expense of $48.7 million in 2019 increased $8.3 million, or 21 percent, over the prior year. The effective tax rate in 2019 was 19 percent compared to 18 percent in the prior year.

Efficiency Ratio
The efficiency ratio for the year ended December 31, 2019 was 57.78 percent. Excluding the $10.0 million loss recognized on the termination of the interest rate swaps, the $3.5 million write-off of the remaining unamortized deferred prepayment penalties on FHLB advances, and the $5.4 million of accelerated stock compensation expense, the efficiency ratio would have been 54.79 percent, which was an increase of 6 basis points from the efficiency ratio of 54.73 percent for 2018. The increase in the efficiency ratio was driven by the decrease in interchange fees from the Durbin Amendement that outpaced the increase in net interest income.

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, both generally and as a result of the Company exceeding $10 billion in total consolidated assets;
ability to complete pending or prospective future acquisitions;
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;
13


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 24, 2020. 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 9735109. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/eq5tpgz. 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 9735109 by February 7, 2020.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is the parent company for Glacier Bank and its Bank divisions: Bank of the San Juans (Durango, CO), Citizens Community Bank (Pocatello, ID), Collegiate Peaks Bank (Buena Vista, CO), First Bank of Montana (Lewistown, MT), First Bank of Wyoming (Powell, WY), First Community Bank Utah (Layton, UT), First Security Bank of Bozeman (Bozeman, MT), First Security Bank of Missoula (Missoula, MT), First State Bank (Wheatland, WY), Glacier Bank (Kalispell, MT), Heritage Bank of Nevada (Reno, NV), Mountain West Bank (Coeur d’Alene, ID), North Cascades Bank (Chelan, WA), The Foothills Bank (Yuma, AZ), Valley Bank of Helena (Helena, MT), and Western Security Bank (Billings, MT).



14


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

(Dollars in thousands, except per share data)Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Assets
Cash on hand and in banks$198,639  233,623  161,782  
Interest bearing cash deposits132,322  172,761  42,008  
Cash and cash equivalents330,961  406,384  203,790  
Debt securities, available-for-sale2,575,252  2,459,036  2,571,663  
Debt securities, held-to-maturity224,611  234,992  297,915  
Total debt securities2,799,863  2,694,028  2,869,578  
Loans held for sale, at fair value69,194  100,441  33,156  
Loans receivable9,512,810  9,541,088  8,287,549  
Allowance for loan and lease losses(124,490) (125,535) (131,239) 
Loans receivable, net9,388,320  9,415,553  8,156,310  
Premises and equipment, net310,309  307,590  241,528  
Other real estate owned5,142  7,148  7,480  
Accrued interest receivable56,047  63,294  54,408  
Deferred tax asset2,037  —  23,564  
Core deposit intangible, net63,286  65,852  49,242  
Goodwill456,418  456,422  289,586  
Non-marketable equity securities11,623  10,427  27,871  
Bank-owned life insurance109,428  108,814  82,320  
Other assets81,371  82,839  76,651  
Total assets$13,683,999  13,718,792  12,115,484  
Liabilities
Non-interest bearing deposits$3,696,627  3,772,766  3,001,178  
Interest bearing deposits7,079,830  7,095,859  6,492,589  
Securities sold under agreements to repurchase569,824  558,752  396,151  
FHLB advances38,611  8,707  440,175  
Other borrowed funds28,820  14,808  14,708  
Subordinated debentures139,914  139,913  134,051  
Accrued interest payable4,686  4,435  4,252  
Other liabilities164,954  170,151  116,526  
Total liabilities11,723,266  11,765,391  10,599,630  
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
923  922  845  
Paid-in capital1,378,534  1,375,785  1,051,253  
Retained earnings - substantially restricted541,050  528,599  473,183  
Accumulated other comprehensive income (loss)40,226  48,095  (9,427) 
Total stockholders’ equity1,960,733  1,953,401  1,515,854  
Total liabilities and stockholders’ equity$13,683,999  13,718,792  12,115,484  

15


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

 Three Months endedYear ended
(Dollars in thousands, except per share data)Dec 31,
2019
Sep 30,
2019
Dec 31,
2018
Dec 31,
2019
Dec 31,
2018
Interest Income
Debt securities$20,904  21,357  22,016  85,504  86,499  
Residential real estate loans12,554  12,156  10,751  46,899  40,041  
Commercial loans100,301  97,224  82,238  369,107  304,164  
Consumer and other loans11,522  11,658  10,305  44,667  38,292  
Total interest income145,281  142,395  125,310  546,177  468,996  
Interest Expense
Deposits6,101  6,214  4,989  23,280  18,359  
Securities sold under agreements to repurchase
1,007  999  707  3,694  2,248  
Federal Home Loan Bank advances86  2,035  2,146  9,023  8,880  
Other borrowed funds
92  47  (10) 215  95  
Subordinated debentures1,547  1,652  1,604  6,561  5,949  
Total interest expense8,833  10,947  9,436  42,773  35,531  
Net Interest Income136,448  131,448  115,874  503,404  433,465  
Provision for loan losses—  —  1,246  57  9,953  
Net interest income after provision for loan losses
136,448  131,448  114,628  503,347  423,512  
Non-Interest Income
Service charges and other fees14,756  15,138  19,708  67,934  74,887  
Miscellaneous loan fees and charges1,379  1,775  1,278  5,313  6,805  
Gain on sale of loans10,135  10,369  5,639  34,064  27,134  
Gain (loss) on sale of debt securities257  13,811  (357) 14,415  (1,113) 
Other income1,890  1,956  2,226  9,048  11,111  
Total non-interest income28,417  43,049  28,494  130,774  118,824  
Non-Interest Expense
Compensation and employee benefits55,543  62,509  50,385  222,753  195,056  
Occupancy and equipment9,149  8,731  7,884  34,497  30,734  
Advertising and promotions2,747  2,719  2,434  10,621  9,566  
Data processing4,972  4,466  3,951  17,392  15,911  
Other real estate owned609  166  264  1,105  3,221  
Regulatory assessments and insurance
45  593  1,263  3,771  5,075  
Loss on termination of hedging activities—  13,528  —  13,528  —  
Core deposit intangibles amortization2,566  2,360  1,731  8,485  6,270  
Other expenses19,621  15,603  13,964  62,775  54,294  
Total non-interest expense95,252  110,675  81,876  374,927  320,127  
Income Before Income Taxes69,613  63,822  61,246  259,194  222,209  
Federal and state income tax expense12,203  12,212  11,647  48,650  40,331  
Net Income$57,410  51,610  49,599  210,544  181,878  

16


Glacier Bancorp, Inc.
Average Balance Sheets

Three Months ended
 December 31, 2019September 30, 2019
(Dollars in thousands)Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Assets