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Section 1: 8-K (8-K)

Document
0000868671false00008686712019-10-172019-10-17

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): October 17, 2019

____________________________________________________________
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 October 17, 2019, the Company issued a press release announcing its financial results for the quarter ended September 30, 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 October 17, 2019, announcing financial results for the quarter ended September 30, 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:October 17, 2019GLACIER BANCORP, INC.
/s/ Randall M. Chesler
By:Randall M. Chesler
President and CEO



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Section 2: EX-99.1 (EXHIBIT 99.1)

Document

400429197_gbcilogostatesmay20191.jpg
NEWS RELEASE
October 17, 2019

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 SEPTEMBER 30, 2019

3rd Quarter 2019 Highlights:
Net income of $51.6 million for the current quarter, an increase of $2.3 million, or 5 percent, over the prior year third quarter net income of $49.3 million including current period acquisition-related expenses of $2.1 million and $5.4 million of stock compensation expense related to the accelerated vesting of stock options from the Heritage Bancorp acquisition.
Including the above acquisition-related expenses, current quarter diluted earnings per share of $0.57, a decrease of 2 percent from the prior year third quarter diluted earnings per share of $0.58.
Net interest margin of 4.42 percent increased 9 basis points compared to 4.33 percent in the prior quarter and increased 16 basis points over the prior year third quarter.
Core deposits organically grew $302 million, or 12 percent annualized, during the current quarter, including non-interest bearing deposit growth of $211 million, or 26 percent annualized.
Current quarter organic loan growth was $84 million, or 4 percent annualized.
Gain on sale of loans of $10.4 million for the current quarter, increased $2.6 million, or 34 percent, compared to the prior quarter and increased $3.1 million, or 43 percent, over the prior year third quarter.
Improving credit quality with non-performing assets as a percentage of subsidiary assets decreasing to 0.40 percent in the current quarter compared to 0.41 percent for the prior quarter and 0.61 percent from the prior year third quarter.
In early September, the Company implemented a balance sheet strategy which resulted in the reduction of $260 million of high cost fixed-rate borrowings with an effective cost of 3.73 percent.
Dividend declared of $0.29 per share, or a 7 percent increase over the prior quarterly dividend of $0.27 per share. The Company has declared 138 consecutive quarterly dividends and has increased the dividend 45 times.
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 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 $677 million at September 30, 2019 to further grow its Arizona presence.

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Year-to-Date 2019 Highlights:
Net income of $153 million for the first nine months of 2019, an increase of $20.9 million, or 16 percent, over the first nine months of 2018 net income of $132 million.
Diluted earnings per share of $1.76, an increase of 11 percent from the prior year first nine months diluted earnings per share of $1.59.
Net interest margin of 4.36 percent for the first nine months of 2019, an increase of 18 basis points from the net interest margin of 4.18 percent for the first nine months of 2018.
Core deposits organically grew $412 million, or 6 percent annualized, for the first nine months of 2019, including non-interest bearing deposit growth of $382 million, or 17 percent annualized.
Organic loan growth was $393 million, or 6 percent annualized, for the first nine months of 2019.
Dividend declared of $0.82 per share, an increase of $0.07 per share, or 9 percent, over the prior year first nine months dividends of $0.75.

Financial Highlights
 At or for the Three Months endedAt or for the Nine Months ended
(Dollars in thousands, except per share and market data)
Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Sep 30,
2019
Sep 30,
2018
Operating results
Net income$51,610  52,392  49,132  49,336  153,134  132,279  
Basic earnings per share$0.57  0.61  0.58  0.58  1.76  1.59  
Diluted earnings per share$0.57  0.61  0.58  0.58  1.76  1.59  
Dividends declared per share$0.29  0.27  0.26  0.26  0.82  0.75  
Market value per share
Closing$40.46  40.55  40.07  43.09  40.46  43.09  
High$42.61  43.44  45.47  46.28  45.47  46.28  
Low$37.70  38.65  37.58  38.37  37.58  35.77  
Selected ratios and other data
Number of common stock shares outstanding
92,180,61886,637,39484,588,19984,521,09392,180,61884,521,093
Average outstanding shares - basic90,294,81185,826,29084,549,97484,518,40786,911,40283,294,111
Average outstanding shares - diluted90,449,19585,858,28684,614,24884,593,12287,082,17883,362,323
Return on average assets (annualized)1.55 %1.69 %1.67 %1.66 %1.63 %1.57 %
Return on average equity (annualized)10.92 %12.82 %13.02 %13.10 %12.17 %12.38 %
Efficiency ratio65.95 %54.50 %55.37 %52.26 %58.82 %55.01 %
Dividend payout ratio50.88 %44.26 %44.83 %44.83 %46.59 %47.17 %
Loan to deposit ratio88.71 %90.27 %87.14 %85.13 %88.71 %85.13 %
Number of full time equivalent employees
2,8022,7032,6342,5722,8022,572
Number of locations182175169164182164
Number of ATMs238228222215238215


KALISPELL, Mont., Oct 17, 2019 (GLOBE NEWSWIRE) - Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $51.6 million for the current quarter, an increase of $2.3 million, or 5 percent, from the $49.3 million of net income for the prior year third quarter. Diluted earnings per share for the current quarter was $0.57 per share, a decrease of 2 percent from the prior year third quarter diluted earnings per share of
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$0.58. Included in the current quarter was acquisition-related expenses of $2.1 million and $5.4 million of stock compensation expense related to the accelerated vesting of stock options from the Heritage acquisition. “We are very pleased with the strong results achieved this quarter even with the expense from the acquisition of Heritage and the impact of the Durbin Amendment. We are especially pleased to see strong deposit growth, good quality loan growth, an expanding core margin and further improving credit performance,” said Randy Chesler, President and Chief Executive Officer. “The Glacier team once again achieved excellent results as we position the Company to continue to excel over the long haul. We are also very excited to welcome the Heritage team, one of the top performing community banks in the country.”

The current quarter results include:
$2.1 million of acquisition-related expenses and $5.4 million of stock compensation expense related to the accelerated vesting of stock options from the Heritage acquisition.

As of July 1, 2019, the Company became subject to the Durbin Amendment to the Dodd-Frank Act, which established limits on the amount of interchange fees that can be charged to merchants for debit card processing. The current quarter impact of the Durbin Amendment was a reduction of $5 million, or 57 percent, of the Company's service charge fee income.

The Company's regulatory assessment and insurance expense decreased $1.3 million, or 68 percent, from the prior quarter as a result of $1.3 million of Small Bank Assessment credits applied by the FDIC. The Company’s remaining credit of $1.6 million will be applied in future quarters in amounts solely determined by the FDIC.
Net income for the first nine months ended September 30, 2019 was $153 million, an increase of $20.9 million, or 16 percent, from the $132 million of net income for the first nine months of the prior year. Diluted earnings per share for the first nine months of the current year was $1.76 per share, an increase of $0.17, or 11 percent, from the diluted earnings per share of $1.59 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 September 30, 2019, SBAZ had total assets of $677 million, gross loans of $413 million and total deposits of $587 million. The acquisition is subject to required regulatory approvals and other customary conditions of closing and is expected to be completed in the fourth quarter of 2019 or early 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.

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.

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 fifteenth Bank division.

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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 assets977,948  $379,155  1,357,103  
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  

Asset Summary
$ Change from
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Cash and cash equivalents$406,384  231,209  203,790  307,104  175,175  202,594  99,280  
Debt securities, available-for-sale2,459,036  2,470,634  2,571,663  2,103,619  (11,598) (112,627) 355,417  
Debt securities, held-to-maturity234,992  252,097  297,915  590,915  (17,105) (62,923) (355,923) 
Total debt securities2,694,028  2,722,731  2,869,578  2,694,534  (28,703) (175,550) (506) 
Loans receivable
Residential real estate936,877  920,715  887,742  862,830  16,162  49,135  74,047  
Commercial real estate5,548,174  4,959,863  4,657,561  4,527,577  588,311  890,613  1,020,597  
Other commercial2,145,257  2,076,605  1,911,171  1,921,955  68,652  234,086  223,302  
Home equity615,781  596,041  544,688  528,404  19,740  71,093  87,377  
Other consumer294,999  288,553  286,387  282,479  6,446  8,612  12,520  
Loans receivable9,541,088  8,841,777  8,287,549  8,123,245  699,311  1,253,539  1,417,843  
Allowance for loan and lease losses
(125,535) (129,054) (131,239) (132,535) 3,519  5,704  7,000  
Loans receivable, net9,415,553  8,712,723  8,156,310  7,990,710  702,830  1,259,243  1,424,843  
Other assets1,202,827  1,009,698  885,806  916,754  193,129  317,021  286,073  
Total assets$13,718,792  12,676,361  12,115,484  11,909,102  1,042,431  1,603,308  1,809,690  

In early September, the Company implemented a balance sheet strategy to increase its net interest income and net interest margin. The strategy included early termination of the Company’s $260 million notional pay-fixed interest rate swaps and corresponding debt along with the sale of $308 million of available-for-sale debt securities. Sale of the investment securities during the quarter resulted in gain of $13.8 million. Offsetting the gain was a $10.0 million loss recognized on the early termination of the interest rate swaps and a $3.5 million write-off of deferred prepayment penalties on FHLB borrowings.

Total debt securities of $2.694 billion at September 30, 2019 decreased $28.7 million, or 1 percent, during the current quarter and remained stable compared to the prior year third quarter. Debt securities represented 20 percent of total assets at September 30, 2019 compared to 24 percent of total assets at December 31, 2018 and
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23 percent at September 30, 2018. The level of debt securities will continue to fluctuate as necessary to supplement liquidity needs of the Company.

The loan portfolio of $9.541 billion increased $84 million, or 4 percent annualized, during the current quarter excluding the Heritage acquisition. The loan categories with the largest organic increase was commercial real estate loans which increased $39.6 million, or 1 percent and other commercial loans which increased $37.7 million, or 2 percent. Excluding the FNB and Heritage acquisitions, the loan portfolio increased $557 million, or 7 percent, since September 30, 2018, with the largest increase in commercial real estate loans, which increased $293 million, or 6 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.

Credit Quality Summary
At or for the Nine Months endedAt or for the Six Months endedAt or for the Year endedAt or for the Nine Months ended
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Allowance for loan and lease losses
Balance at beginning of period$131,239  131,239  129,568  129,568  
Provision for loan losses57  57  9,953  8,707  
Charge-offs(12,090) (6,200) (17,807) (11,905) 
Recoveries6,329  3,958  9,525  6,165  
Balance at end of period$125,535  129,054  131,239  132,535  
Other real estate owned$7,148  7,281  7,480  12,399  
Accruing loans 90 days or more past due7,912  3,463  2,018  4,333  
Non-accrual loans40,017  41,195  47,252  55,373  
Total non-performing assets$55,077  51,939  56,750  72,105  
Non-performing assets as a percentage of subsidiary assets
0.40 %0.41 %0.47 %0.61 %
Allowance for loan and lease losses as a percentage of non-performing loans
262 %289 %266 %222 %
Allowance for loan and lease losses as a percentage of total loans
1.32 %1.46 %1.58 %1.63 %
Net charge-offs as a percentage of total loans0.06 %0.03 %0.10 %0.07 %
Accruing loans 30-89 days past due$29,954  37,937  33,567  25,181  
Accruing troubled debt restructurings$32,949  25,019  25,833  35,080  
Non-accrual troubled debt restructurings$6,723  6,041  10,660  12,911  
U.S. government guarantees included in non-performing assets$3,000  2,785  4,811  5,791  

Non-performing assets as a percentage of subsidiary assets at September 30, 2019 was 0.40 percent, a decrease of 1 basis point from the prior quarter, and a decrease of 21 basis points from the prior year third quarter. Non-performing assets of $55.1 million at September 30, 2019 increased $3.1 million, or 6 percent, over the prior quarter and decreased $17.0 million, or 24 percent, over the prior year third quarter. The increase in the current quarter non-performing assets was isolated to a $2.7 million loan. Early stage delinquencies (accruing loans 30-89 days past due) as a percentage of loans at September 30, 2019 was 0.31 percent, which was a decrease of 12 basis points from prior quarter and no change from prior year third quarter. Early stage delinquencies of $30.0 million at September 30, 2019 decreased $8.0 million from the prior quarter and increased $4.8 million
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from the prior year third quarter. The allowance for loan and lease losses (“allowance”) as a percent of total loans outstanding at September 30, 2019 was 1.32 percent, which was a 14 basis points decrease compared to the prior quarter and a decrease of 31 basis points from a year ago. The decrease 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.

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
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 %
Fourth quarter 20172,886  2,894  1.97 %0.57 %0.68 %

Net charge-offs for the current quarter were $3.5 million compared to $732 thousand for the prior quarter and $2.2 million from the same quarter last year. The increase in net charge-offs were primarily centered in one loan with a $1.9 million loss resulting from a negotiated short-sale. There was no current or prior quarter provision for loan losses compared to $3.2 million in the prior year third quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of the loan loss provision. 

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Liability Summary
$ Change from
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Deposits
Non-interest bearing deposits$3,772,766  3,265,077  3,001,178  3,103,112  507,689  771,588  669,654  
NOW and DDA accounts2,592,483  2,487,806  2,391,307  2,346,050  104,677  201,176  246,433  
Savings accounts1,472,465  1,412,046  1,346,790  1,345,163  60,419  125,675  127,302  
Money market deposit accounts
1,940,517  1,647,372  1,684,284  1,722,975  293,145  256,233  217,542  
Certificate accounts955,765  897,625  901,484  932,461  58,140  54,281  23,304  
Core deposits, total10,733,996  9,709,926  9,325,043  9,449,761  1,024,070  1,408,953  1,284,235  
Wholesale deposits134,629  144,949  168,724  151,421  (10,320) (34,095) (16,792) 
Deposits, total10,868,625  9,854,875  9,493,767  9,601,182  1,013,750  1,374,858  1,267,443  
Repurchase agreements558,752  494,651  396,151  408,754  64,101  162,601  149,998  
Federal Home Loan Bank advances
8,707  319,996  440,175  155,328  (311,289) (431,468) (146,621) 
Other borrowed funds14,808  14,765  14,708  9,944  43  100  4,864  
Subordinated debentures139,913  139,912  134,051  134,055   5,862  5,858  
Other liabilities174,586  164,786  120,778  107,227  9,800  53,808  67,359  
Total liabilities$11,765,391  10,988,985  10,599,630  10,416,490  776,406  1,165,761  1,348,901  

As a result of the Bank's continued focus on stable and steady low cost deposits, in particular non-interest bearing deposits, the Company experienced a strong quarter in deposit growth. Excluding the acquisitions, core deposits of $10.734 billion as of September 30, 2019 increased $302 million, or 12 percent annualized, from the prior quarter and increased $287 million, or 3 percent, from the prior year third quarter. Non-interest bearing deposits organically increased $211 million, or 26 percent annualized, over the prior quarter and increased $280 million, or 9 percent, over the prior year third quarter. Non-interest bearing deposits were 35 percent of total deposits at the end of the third quarter, an increase of 2 percent from 33 percent at the end of the prior quarter and a 3 percent increase from 32 percent at the end of the prior year third quarter.

During the current quarter, the Company reduced its FHLB advances by $311 million. The Company utilized proceeds from the sale of debt securities and deposit growth to pay down this funding. As of September 30, 2019, the Company had $8.7 million of FHLB advances, and these advances will 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)
Sep 30,
2019
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Common equity$1,905,306  1,643,928  1,525,281  1,522,329  261,378  380,025  382,977  
Accumulated other comprehensive income (loss)
48,095  43,448  (9,427) (29,717) 4,647  57,522  77,812  
Total stockholders’ equity
1,953,401  1,687,376  1,515,854  1,492,612  266,025  437,547  460,789  
Goodwill and core deposit intangible, net
(522,274) (385,533) (338,828) (340,508) (136,741) (183,446) (181,766) 
Tangible stockholders’ equity
$1,431,127  1,301,843  1,177,026  1,152,104  129,284  254,101  279,023  
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Stockholders’ equity to total assets
14.24 %13.31 %12.51 %12.53 %
Tangible stockholders’ equity to total tangible assets
10.84 %10.59 %9.99 %9.96 %
Book value per common share
$21.19  19.48  17.93  17.66  1.71  3.26  3.53  
Tangible book value per common share
$15.53  15.03  13.93  13.63  0.50  1.60  1.90  

Tangible stockholders’ equity of $1.431 billion at September 30, 2019 increased $129 million, or 10 percent, compared to the prior quarter which was the result of $229 million of Company stock issued for the acquisition of Heritage and earnings retention, these increases more than offset the increase in goodwill and core deposits associated with the acquisition. Tangible stockholders’ equity increased $279 million, or 24 percent, over the prior year third quarter which was the result of earnings retention, an increase in other comprehensive income, and the impact from the acquisitions which was offset by a decrease of $25.5 million from the cumulative-effect adjustments related to the adoption of new accounting standards. Tangible book value per common share of $15.53 at current quarter end increased $0.50 per share from the prior quarter and increased $1.90 per share from a year ago.

Cash Dividends
On September 25, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share, and increase of $0.02 per share, or 7 percent. The dividend was payable October 17, 2019 to shareholders of record on October 8, 2019. The Company has declared 138 consecutive quarterly dividends and has increased the dividend 45 times. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.


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

Income Summary
 Three Months ended $ Change from
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Net interest income
Interest income$142,395  132,385  126,116  122,905  10,010  16,279  19,490  
Interest expense10,947  12,089  10,904  9,160  (1,142) 43  1,787  
Total net interest income131,448  120,296  115,212  113,745  11,152  16,236  17,703  
Non-interest income
Service charges and other fees
15,138  20,025  18,015  19,504  (4,887) (2,877) (4,366) 
Miscellaneous loan fees and charges1,775  1,192  967  1,807  583  808  (32) 
Gain on sale of loans10,369  7,762  5,798  7,256  2,607  4,571  3,113  
Gain (loss) on sale of investments13,811  134  213  (367) 13,677  13,598  14,178  
Other income1,956  1,721  3,481  4,216  235  (1,525) (2,260) 
Total non-interest income43,049  30,834  28,474  32,416  12,215  14,575  10,633  
Total income174,497  151,130  143,686  146,161  23,367  30,811  28,336  
Net interest margin (tax-equivalent)
4.42 %4.33 %4.34 %4.26 %

Net Interest Income
The current quarter net interest income of $131 million increased $11.1 million, or 9 percent, over the prior quarter and increased $17.7 million, or 16 percent, from the prior year third quarter. The increase in net interest income over the prior quarter and prior year third quarter was primarily driven by an increase in interest income on commercial loans. Interest income on commercial loans increased $9.2 million, or 10 percent, from the prior quarter and increased $16.6 million, or 21 percent, from the prior year third quarter.

The current quarter interest expense of $10.9 million decreased $1.1 million, or 9 percent, over the prior quarter which was driven primarily by the decrease in FHLB advances during the current quarter. The current quarter interest expense increased $1.8 million, or 20 percent, from the prior year third quarter and was primarily due to the increased amount of deposits, increased rates on deposits and an increase in repurchase agreements. During the quarter, the total cost of funding (including non-interest bearing deposits) declined 6 basis points to 39 basis points compared to 45 basis points for the prior quarter and 36 basis points for the prior year third quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.42 percent compared to 4.33 percent in the prior quarter. The core net interest margin, excluding $736 thousand, or 2 basis points, of discount accretion and $1.5 million, or 5 basis points, of non-accrual interest, was 4.35 percent compared to 4.27 in the prior quarter and 4.18 percent in the prior year third quarter. The Company experienced an increase in the core net interest margin during the quarter from the reduction of FHLB borrowings, an increase in low cost deposits and the continued shift from lower yielding investments to higher yielding loans. “The increase in net interest margin reflects the success our Bank divisions had in growing low cost core deposits, particularly non-interest bearing deposits,” said Ron Copher, Chief Financial Officer. “In addition, the balance sheet strategy executed in the third quarter allowed the Company to reduce high cost fixed-rate funding which will continue to have a positive impact on earnings and margin.”              



9


Non-interest Income
Non-interest income for the current quarter totaled $43.0 million which was an increase of $12.2 million, or 40 percent, over the prior quarter and an increase of $10.6 million, or 33 percent, over the same quarter last year. Service charges and other fees of $15.1 million for the current quarter decreased $4.9 million, or 24 percent, from the prior quarter and decreased $4.4 million, or 22 percent, from the prior year third quarter due to the Company's decrease in interchange fee as a result of the Durbin Amendment. Gain on the sale of loans of $10.4 million for the current quarter, increased $2.6 million, or 34 percent, compared to the prior quarter and increased $3.1 million, or 43 percent, over the prior year third quarter as a result of increased purchase and refinance activity. The Company sold $308 million of securities and recognized gain of $13.8 million, an increase of $13.7 million from the prior quarter. Other income decreased $2.3 million from the prior year third quarter 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
 Three Months ended $ Change from
(Dollars in thousands)Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Compensation and employee benefits$62,509  51,973  52,728  49,927  10,536  9,781  12,582  
Occupancy and equipment8,731  8,180  8,437  7,914  551  294  817  
Advertising and promotions2,719  2,767  2,388  2,432  (48) 331  287  
Data processing4,466  4,062  3,892  3,752  404  574  714  
Other real estate owned166  191  139  2,674  (25) 27  (2,508) 
Regulatory assessments and insurance593  1,848  1,285  1,277  (1,255) (692) (684) 
Core deposit intangibles amortization2,360  1,865  1,694  1,735  495  666  625  
Other expenses29,131  15,284  12,267  13,118  13,847  16,864  16,013  
Total non-interest expense110,675  86,170  82,830  82,829  24,505  27,845  27,846  

Total non-interest expense of $111 million for the current quarter increased $24.5 million, or 28 percent, over the prior quarter and increased $27.8 million, or 34 percent, over the prior year third quarter. Compensation and employee benefits increased by $10.5 million, or 20 percent, from the prior quarter and increased $12.6 million, or 25 percent from the prior year third quarter due to the $5.4 million of stock compensation expense related to the Heritage acquisition and an increased number of employees driven by acquisition and organic growth. Occupancy and equipment expense increased $551 thousand or 7 percent, over the prior quarter and increased $817 thousand, or 10 percent, over the prior year third quarter primarily as a result of the current year acquisitions. Data processing expense increased $404 thousand or 10 percent, over the prior quarter and increased $714 thousand, or 19 percent, over the prior year third quarter primarily as a result of the current year acquisitions. Regulatory assessment and insurance decreased $1.3 million, or 68 percent, from the prior quarter as a result of $1.3 million of Small Bank Assessment credits applied by the FDIC during the current quarter. Other expenses of $29.1 million, increased $13.8 million, or 91 percent, from the prior quarter and was primarily driven by the a $3.5 million loss on the pay down of FHLB debt and a $10.0 million loss on the termination of cash flow hedges. Acquisition-related expenses were $2.1 million during the current quarter compared to $1.8 million in the prior quarter and $1.3 million in the prior year third quarter.

Federal and State Income Tax Expense
Tax expense during the third quarter of 2019 was $12.2 million, a decrease of $356 thousand, or 3 percent, compared to the prior quarter and an increase of $1.4 million, or 13 percent, from the prior year third quarter. The effective tax rate in the current and prior quarter was 19 percent which compares to 18 percent in the prior year third quarter.

10


Efficiency Ratio
The current quarter efficiency ratio was 65.95 percent. Excluding the $10.0 million loss recognized on the termination of the interest rate swaps, the $3.5 million write-off of the deferred prepayment penalties on FHLB advances, and the $5.4 million of accelerated stock compensation expense the efficiency ratio would have been 54.41 percent, which was a decrease of 9 basis points from the prior quarter efficiency ratio of 54.50 percent and an increase of 215 basis points from the prior year third quarter efficiency ratio of 52.26 percent. The lower efficiency ratio in the prior year third quarter included a gain of $2.3 million recognized on the sale of a former branch building.

Operating Results for Nine Months Ended September 30, 2019
Compared to September 30, 2018

Income Summary
Nine Months ended
(Dollars in thousands)Sep 30,
2019
Sep 30,
2018
$ Change% Change
Net interest income
Interest income$400,896  $343,686  $57,210  17 %
Interest expense33,940  26,095  7,845  30 %
Total net interest income366,956  317,591  49,365  16 %
Non-interest income
Service charges and other fees53,178  55,179  (2,001) (4)%
Miscellaneous loan fees and charges3,934  5,527  (1,593) (29)%
Gain on sale of loans23,929  21,495  2,434  11 %
Gain (loss) on sale of investments14,158  (756) 14,914  (1,973)%
Other income7,158  8,885  (1,727) (19)%
Total non-interest income102,357  90,330  12,027  13 %
$469,313  $407,921  $61,392  15 %
Net interest margin (tax-equivalent)4.36 %4.18 %

Net Interest Income
Net interest income for the first nine months of 2019 increased $49.4 million, or 16 percent, from the first nine months of 2018 and was primarily attributable to a $46.9 million increase in interest income from commercial loans. Interest expense of $33.9 million for the first nine months of 2019 increased $7.8 million, or 30 percent over the prior year same period as a result of increased deposits and borrowings combined with interest rate increases. The total funding cost (including non-interest bearing deposits) for the first nine months of 2019 was 42 basis points compared to 36 basis points for the first nine months of 2018.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first nine months of 2019 was 4.36 percent, an 18 basis points increase from the net interest margin of 4.18 percent for the first nine months of 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 combined with relatively stable cost of funds and reduction in higher cost FHLB advances.

11


Non-interest Income
Non-interest income of $102.4 million for the first nine months of 2019 increased $12.0 million, or 13 percent, over the same period 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 $53.2 million for 2019 year to date decreased $2.0 million, or 4 percent, from the same period prior year and although there was an increase in fees from increased number of deposit accounts from organic growth and acquisitions, the impact of the Durbin Amendment overshadowed such increases. Gain on the sale of loans of $23.9 million for the first nine months of 2019, increased $2.4 million, or 11 percent, compared to the prior year as a result of increased purchase and refinance activity. Other income decreased $1.7 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
Nine Months ended
(Dollars in thousands)Sep 30,
2019
Sep 30,
2018
$ Change% Change
Compensation and employee benefits$167,210  $144,671  $22,539  16 %
Occupancy and equipment25,348  22,850  2,498  11 %
Advertising and promotions7,874  7,132  742  10 %
Data processing12,420  11,960  460  %
Other real estate owned496  2,957  (2,461) (83)%
Regulatory assessments and insurance3,726  3,812  (86) (2)%
Core deposit intangibles amortization5,919  4,539  1,380  30 %
Other expenses56,682  40,330  16,352  41 %
Total non-interest expense$279,675  $238,251  $41,424  17 %

Total non-interest expense of $280 million for the first nine months of 2019 increased $41.4 million, or 17 percent, over the prior year same period. Compensation and employee benefits for the first nine months of 2019 increased $22.5 million, or 16 percent, from the same period last year due to the $5.4 million of stock compensation expense related to the Heritage acquisition, the increased number of employees from acquisitions and organic growth, and annual salary increases. Occupancy and equipment expense for the first nine months of 2019 increased $2.5 million, or 11 percent from the prior year as a result of increased cost from acquisitions and general cost increases. Other expenses of $56.7 million, increased $16.4 million, or 41 percent, from the prior year and was primarily driven by a $3.5 million write-off of prepayment penalties on FHLB borrowings and a $10.0 million loss recognized on the early termination of the interest rate swaps.

Provision for Loan Losses
The provision for loan losses was $57 thousand for the first nine months of 2019, a decrease of $8.6 million from the same period in the prior year. Net charge-offs during the first nine months of 2019 were $5.8 million compared to $5.7 million during the same period in 2018.

Federal and State Income Tax Expense
Tax expense of $36.4 million in the first nine months of 2019 increased $7.8 million, or 27 percent, over the prior year same period. The effective tax rate year-to-date in 2019 was 19 percent compared to 18 percent in the prior year same period.

Efficiency Ratio
The efficiency ratio was 58.82 percent for the first nine months of 2019. Excluding the $10.0 million loss recognized on the termination of the interest rate swaps, the $3.5 million write-off of the deferred prepayment penalties on FHLB advances, and the $5.4 million of accelerated stock compensation expense, the efficiency
12


ratio would have been 54.74 percent, which was a 27 basis points improvement from the efficiency ratio of 55.01 percent for the first nine months of 2018.

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;
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.

13


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, October 18, 2019. 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 8397567. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/ysgi28yh. 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 8397567 by November 1, 2019.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is the parent company for Glacier Bank, Kalispell 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 (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), 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)Sep 30,
2019
Jun 30,
2019
Dec 31,
2018
Sep 30,
2018
Assets
Cash on hand and in banks$233,623  181,526  161,782  171,394  
Interest bearing cash deposits172,761  49,683  42,008  135,710  
Cash and cash equivalents406,384  231,209  203,790  307,104  
Debt securities, available-for-sale2,459,036  2,470,634  2,571,663  2,103,619  
Debt securities, held-to-maturity234,992  252,097  297,915  590,915  
Total debt securities2,694,028  2,722,731  2,869,578  2,694,534  
Loans held for sale, at fair value100,441  54,711  33,156  50,649  
Loans receivable9,541,088  8,841,777  8,287,549  8,123,245  
Allowance for loan and lease losses(125,535) (129,054) (131,239) (132,535) 
Loans receivable, net9,415,553  8,712,723  8,156,310  7,990,710  
Premises and equipment, net307,590  296,915  241,528  239,006  
Other real estate owned7,148  7,281  7,480  12,399  
Accrued interest receivable63,294  58,567  54,408  62,248  
Deferred tax asset—  3,371  23,564  37,264  
Core deposit intangible, net65,852  54,646  49,242  50,973  
Goodwill456,422  330,887  289,586  289,535  
Non-marketable equity securities10,427  23,031  27,871  16,502  
Bank-owned life insurance108,814  93,543  82,320  81,850  
Other assets82,839  86,746  76,651  76,328  
Total assets$13,718,792  12,676,361  12,115,484  11,909,102  
Liabilities
Non-interest bearing deposits$3,772,766  3,265,077  3,001,178  3,103,112  
Interest bearing deposits7,095,859  6,589,798  6,492,589  6,498,070  
Securities sold under agreements to repurchase558,752  494,651  396,151  408,754  
FHLB advances8,707  319,996  440,175  155,328  
Other borrowed funds14,808  14,765  14,708  9,944  
Subordinated debentures139,913  139,912  134,051  134,055  
Accrued interest payable4,435  5,091  4,252  4,065  
Other liabilities170,151  159,695  116,526  103,162  
Total liabilities11,765,391  10,988,985  10,599,630  10,416,490  
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
922  866  845  845  
Paid-in capital1,375,785  1,139,289  1,051,253  1,050,463  
Retained earnings - substantially restricted528,599  503,773  473,183  471,021  
Accumulated other comprehensive income (loss)48,095  43,448  (9,427) (29,717) 
Total stockholders’ equity1,953,401  1,687,376  1,515,854  1,492,612  
Total liabilities and stockholders’ equity$13,718,792  12,676,361  12,115,484  11,909,102  

15


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

 Three Months endedNine Months ended
(Dollars in thousands, except per share data)Sep 30,
2019
Jun 30,
2019
Mar 31,
2019
Sep 30,
2018
Sep 30,
2019
Sep 30,
2018
Interest Income
Debt securities$21,357  21,892  21,351  21,971  64,600  64,483  
Residential real estate loans12,156  11,410  10,779  10,356  34,345  29,290  
Commercial loans97,224  88,043  83,539  80,587  268,806  221,926  
Consumer and other loans11,658  11,040  10,447  9,991  33,145  27,987  
Total interest income142,395  132,385  126,116  122,905  400,896  343,686  
Interest Expense
Deposits6,214  5,624  5,341  4,837  17,179  13,370  
Securities sold under agreements to repurchase
999  886  802  570  2,687  1,541  
Federal Home Loan Bank advances2,035  3,847  3,055  2,132  8,937  6,734  
Other borrowed funds
47  38  38  63  123  105  
Subordinated debentures1,652  1,694  1,668  1,558  5,014  4,345  
Total interest expense10,947  12,089  10,904  9,160  33,940  26,095  
Net Interest Income131,448  120,296  115,212  113,745  366,956  317,591  
Provision for loan losses—  —  57  3,194  57  8,707  
Net interest income after provision for loan losses
131,448  120,296  115,155  110,551  366,899  308,884  
Non-Interest Income
Service charges and other fees15,138  20,025  18,015  19,504  53,178  55,179  
Miscellaneous loan fees and charges1,775  1,192  967  1,807  3,934  5,527  
Gain on sale of loans10,369  7,762  5,798  7,256  23,929  21,495  
Gain (loss) on sale of debt securities13,811  134  213  (367) 14,158  (756) 
Other income1,956  1,721  3,481  4,216  7,158  8,885  
Total non-interest income43,049  30,834  28,474  32,416  102,357  90,330  
Non-Interest Expense
Compensation and employee benefits62,509  51,973  52,728  49,927  167,210  144,671  
Occupancy and equipment8,731  8,180  8,437  7,914  25,348  22,850  
Advertising and promotions2,719  2,767  2,388  2,432  7,874  7,132  
Data processing4,466  4,062  3,892  3,752  12,420  11,960  
Other real estate owned166  191  139  2,674  496  2,957  
Regulatory assessments and insurance
593  1,848  1,285  1,277  3,726  3,812  
Core deposit intangibles amortization2,360  1,865  1,694  1,735  5,919  4,539  
Other expenses29,131  15,284  12,267  13,118  56,682  40,330  
Total non-interest expense110,675  86,170  82,830  82,829  279,675  238,251  
Income Before Income Taxes63,822  64,960  60,799  60,138  189,581  160,963  
Federal and state income tax expense12,212  12,568  11,667  10,802  36,447  28,684  
Net Income$51,610