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

gbci-20200423
0000868671false00008686712020-04-232020-04-23

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): April 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 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 23, 2020, Glacier Bancorp, Inc. ("Company") issued a press release announcing its financial results for the quarter ended March 31, 2020. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The Company also released publicly supplemental information regarding the COVID-19 pandemic and other items regarding the Company’s business, operations, financial results, and financial condition. A copy of the Supplemental Information is attached as Exhibit 99.2 and is incorporated herein in its entirety by reference.

The information in this Item 2.02 and the Exhibits attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or 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 Press Release dated April 23, 2020, announcing financial results for the quarter ended March 31, 2020.

99.2 Press Release Supplement, dated April 23, 2020

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:April 23, 2020GLACIER BANCORP, INC.
/s/ Randall M. Chesler
By:Randall M. Chesler
President and Chief Executive Officer




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Section 2: EX-99.1 (EXHIBIT 99.1)

Document

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NEWS RELEASE
April 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 MARCH 31, 2020

1st Quarter 2020 Highlights:
Net income of $43.3 million for the current quarter, a decrease of $5.8 million, or 12 percent, over the prior year first quarter net income of $49.1 million. The current quarter results include $19.1 million of credit loss expense related to the COVID-19 pandemic and $4.8 million of credit loss expense from the acquisition of State Bank Corp., consistent with the adoption of the current expected credit loss (“CECL”) accounting standard at the beginning of 2020.
Including the impact from CECL, the current quarter diluted earnings per share of $0.46, a decrease of 21 percent from the prior year first quarter diluted earnings per share of $0.58.
The loan portfolio organically grew $124 million, or 5 percent annualized, during the current quarter and increased $450 million, or 5 percent, from the prior year first quarter.
The Company provided Small Business Administration (SBA) Payroll Protection Program (PPP) loans to businesses in its communities. As of April 21, the Company had approved 8,775 PPP loans in the amount of $1.088 billion.
Non-interest bearing deposits organically increased $37.6 million, or 4 percent annualized, during the current quarter and increased $293 million, or 10 percent, from the prior year first quarter.
Non-performing assets as a percentage of assets was 0.26 percent, a 16 basis points decrease from the prior year first quarter.
Early stage delinquencies as a percentage of loans was 0.41 percent, a 3 basis points decrease from the prior year first quarter.
Purchased $723 million of municipal and corporate debt securities in the current quarter.
Declared a quarterly dividend of $0.29 per share. The Company has declared 140 consecutive quarterly dividends and has increased the dividend 45 times.
On February 29, 2020, the Company completed the acquisition of State Bank Corp., the parent company of State Bank of Arizona, a community bank based in Lake Havasu City, Arizona with total assets of $744 million which significantly expanded our Company’s Arizona franchise.
1


Financial Highlights
 At or for the Three Months ended
(Dollars in thousands, except per share and market data)
Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Operating results
Net income$43,339  57,410  49,132  
Basic earnings per share$0.46  0.62  0.58  
Diluted earnings per share$0.46  0.62  0.58  
Dividends declared per share 1
$0.29  0.49  0.26  
Market value per share
Closing$34.01  45.99  40.07  
High$46.10  46.51  45.47  
Low$26.66  38.99  37.58  
Selected ratios and other data
Number of common stock shares outstanding
95,408,27492,289,75084,588,199
Average outstanding shares - basic93,287,67092,243,13384,549,974
Average outstanding shares - diluted93,359,79292,365,02184,614,248
Return on average assets (annualized)1.25 %1.67 %1.67 %
Return on average equity (annualized)8.52 %11.61 %13.02 %
Efficiency ratio52.55 %54.90 %55.37 %
Dividend payout ratio 1
63.04 %79.03 %44.83 %
Loan to deposit ratio88.10 %88.92 %87.14 %
Number of full time equivalent employees
2,9552,8262,634
Number of locations192181169
Number of ATMs247248222
______________________________
1 Includes a special dividend declared of $0.20 per share for the three months ended December 31, 2019.

KALISPELL, Mont., Apr 23, 2020 (GLOBE NEWSWIRE) - Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $43.3 million for the current quarter, a decrease of $5.8 million, or 12 percent, from the $49.1 million of net income for the prior year first quarter. Diluted earnings per share for the current quarter was $0.46 per share, a decrease of 21 percent from the prior year first quarter diluted earnings per share of $0.58. “The outbreak of a global pandemic in the first quarter was one of the most difficult operating environments in decades and the Glacier team more than rose to the occasion to lead their teams and their communities through the difficult circumstances,” said Randy Chesler, President and Chief Executive Officer. “The results highlight our exceptionally strong core business and high quality loan portfolio that we believe will weather this current storm and position Glacier to continue to excel over the long haul.”

In response to the rapidly changing COVID-19 pandemic, our Bank division Presidents, the Company's executive and senior management team, and all the front line staff have stepped up to lead the Company and the communities they serve through these uncertain times. The Company seeks to provide the best possible service for customers, while protecting employees and shareholder value. The Company is well positioned to mitigate the potential financial impact of COVID-19 with a strong liquidity and capital position. The Company is confident that, while the full impact of the pandemic is unknown at this time, the strength of the Company and leadership team will ensure continued long-term success.

The Company has implemented several measures to manage through the pandemic, including:
launched a pandemic team that addresses the daily impact to our business;
2


contacted customers to assess their needs and provide funding, flexible repayment options or modifications as necessary;
designated a “command center” that supports employees so they can work with customers to provide the PPP loans;
increased monitoring of credit quality and portfolio risk for industries determined to have elevated risk; and
developed safety measures for the health of our employees including elimination of unnecessary business travel, social distancing precautions, additional wellness and education programs, and preventative cleaning practices.

The Company's first quarter net income results were significantly impacted by adoption of the CECL accounting standard. The Company chose to adopt the standard on January 1, 2020, rather than delay the adoption as allowed by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, since the Company was operationally prepared and already internally reporting under the CECL method. As a result, the following items impacted the results in the first quarter 2020:
a $12.3 million reduction in retained earnings upon adoption of the standard.
a $19.1 million credit loss expense as a result of the COVID-19 pandemic.
an additional $4.8 million credit loss expense due to the State Bank Corp. acquisition.

The current quarter results were also impacted by the following items:
acquisition-related expenses of $2.8 million.
gain of $2.4 million on the sale of a former branch building.

On February 29, 2020, the Company completed the acquisition of 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. Upon closing of the transaction, SBAZ merged into the Company's Foothills Bank division, which expanded the Company's footprint in Arizona to cover all major markets in the state and be a leading community bank in Arizona. During the current quarter, the Company also completed the system core conversion for SBAZ.

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

State Bank
(Dollars in thousands)February 29,
2020
Total assets$744,109  
Debt securities142,174  
Loans receivable451,702  
Non-interest bearing deposits141,620  
Interest bearing deposits461,669  
Borrowings10,904  

3


Asset Summary
$ Change from
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Cash and cash equivalents$273,441  330,961  202,527  (57,520) 70,914  
Debt securities, available-for-sale3,429,890  2,575,252  2,522,322  854,638  907,568  
Debt securities, held-to-maturity203,814  224,611  255,572  (20,797) (51,758) 
Total debt securities3,633,704  2,799,863  2,777,894  833,841  855,810  
Loans receivable
Residential real estate957,830  926,388  884,732  31,442  73,098  
Commercial real estate5,928,303  5,579,307  4,686,082  348,996  1,242,221  
Other commercial2,239,878  2,094,254  1,909,452  145,624  330,426  
Home equity652,942  617,201  562,381  35,741  90,561  
Other consumer309,253  295,660  283,423  13,593  25,830  
Loans receivable10,088,206  9,512,810  8,326,070  575,396  1,762,136  
Allowance for credit losses
(150,190) (124,490) (129,786) (25,700) (20,404) 
Loans receivable, net9,938,016  9,388,320  8,196,284  549,696  1,741,732  
Other assets1,313,223  1,164,855  897,074  148,368  416,149  
Total assets$15,158,384  13,683,999  12,073,779  1,474,385  3,084,605  

Total debt securities of $3.634 billion at March 31, 2020 increased $834 million, or 30 percent, during the current quarter and increased $856 million, or 31 percent, from the prior year first quarter. The current quarter increase in debt securities was the result of acquiring $142 million of debt securities with the SBAZ acquisition and purchasing $723 million of municipal and corporate bonds in March. These additional securities provide a low-risk, stable earnings stream. Debt securities represented 24 percent of total assets at March 31, 2020 compared to 20 percent at December 31, 2019 and 23 percent of total assets at March 31, 2019.

The loan portfolio of $10.088 billion increased $124 million, or 5 percent annualized, during the current quarter excluding the SBAZ acquisition, with the largest increase in other commercial loans which increased $100 million. Excluding the current year acquisition and the prior year acquisitions of Heritage Bank of Nevada and The First National Bank of Layton, the loan portfolio increased $450 million, or 5 percent, since the prior year first quarter with the largest increase in other commercial loans which increased $201 million, or 11 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 Three Months endedAt or for the Year endedAt or for the Three Months ended
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Allowance for credit losses
Balance at beginning of period$124,490  131,239  131,239  
Impact of adopting CECL3,720  —  —  
Acquisitions49  —  —  
Credit loss expense22,744  57  57  
Charge-offs(2,567) (15,178) (3,341) 
Recoveries1,754  8,372  1,831  
Balance at end of period$150,190  124,490  129,786  
Other real estate owned$4,748  5,142  8,125  
Accruing loans 90 days or more past due6,624  1,412  2,451  
Non-accrual loans28,006  30,883  40,269  
Total non-performing assets$39,378  37,437  50,845  
Non-performing assets as a percentage of subsidiary assets
0.26 %0.27 %0.42 %
Allowance for credit losses as a percentage of non-performing loans
434 %385 %304 %
Allowance for credit losses as a percentage of total loans
1.49 %1.31 %1.56 %
Net charge-offs as a percentage of total loans0.01 %0.07 %0.02 %
Accruing loans 30-89 days past due$41,375  23,192  36,894  
Accruing troubled debt restructurings$44,371  34,055  24,468  
Non-accrual troubled debt restructurings$6,911  3,346  6,747  
U.S. government guarantees included in non-performing assets$3,204  1,786  2,649  

Non-performing assets of $39.4 million at March 31, 2020 increased $1.9 million, or 5 percent, over the prior quarter and decreased $11.5 million, or 23 percent, over the prior year first quarter. Non-performing assets as a percentage of subsidiary assets at March 31, 2020 was 0.26 percent, a decrease of 1 basis point from the prior quarter, and a decrease of 16 basis points from the prior year first quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $41.4 million at March 31, 2020 increased $18.2 million from the prior quarter and increased $4.5 million from the prior year first quarter. Early stage delinquencies as a percentage of loans at March 31, 2020 was 0.41 percent, which was an increase of 17 basis points from prior quarter and a 3 basis points decrease from prior year first quarter.

The Company’s adoption of the CECL accounting standard resulted in a $3.7 million increase in the allowance for credit losses (“allowance”). The allowance as a percentage of total loans outstanding at March 31, 2020 was 1.49 percent, which was an 18 basis point increase compared to the prior quarter. The increase in the allowance during the current quarter was attributable to the Company recognizing $19.1 million of credit loss expense related to COVID-19 and an additional $4.8 million of credit loss expense related to the SBAZ acquisition.

5


Credit Quality Trends and Credit Loss Expense
(Dollars in thousands)Credit Loss ExpenseNet
Charge-Offs
ACL
as a Percent
of Loans
Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans
Non-Performing
Assets to
Total Subsidiary
Assets
First quarter 2020$22,744  $813  1.49 %0.41 %0.26 %
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 %

Net charge-offs for the current quarter were $813 thousand compared to $1.0 million for the prior quarter and $1.5 million from the same quarter last year. The current quarter credit loss expense was $22.7 million compared to $57 thousand in the prior year first quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, economic forecasts and other environmental factors will continue to determine the level of the credit loss expense. 

Liability Summary
$ Change from
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Deposits
Non-interest bearing deposits$3,875,848  3,696,627  3,051,119  179,221  824,729  
NOW and DDA accounts2,860,563  2,645,404  2,383,806  215,159  476,757  
Savings accounts1,578,062  1,485,487  1,373,544  92,575  204,518  
Money market deposit accounts
2,155,203  1,937,141  1,689,962  218,062  465,241  
Certificate accounts1,025,237  958,501  896,731  66,736  128,506  
Core deposits, total11,494,913  10,723,160  9,395,162  771,753  2,099,751  
Wholesale deposits62,924  53,297  192,953  9,627  (130,029) 
Deposits, total11,557,837  10,776,457  9,588,115  781,380  1,969,722  
Repurchase agreements580,335  569,824  489,620  10,511  90,715  
Federal Home Loan Bank advances
513,055  38,611  154,683  474,444  358,372  
Other borrowed funds32,499  28,820  14,738  3,679  17,761  
Subordinated debentures139,916  139,914  134,048   5,868  
Other liabilities198,098  169,640  141,725  28,458  56,373  
Total liabilities$13,021,740  11,723,266  10,522,929  1,298,474  2,498,811  

Core deposits of $11.495 billion as of March 31, 2020 increased $168 million or 6 percent annualized, from the prior quarter excluding the acquisition of SBAZ with non-interest bearing deposits increasing $37.6 million, or 4 percent annualized, during the current quarter. Excluding current and prior year acquisitions, core deposits increased $500 million, or 5 percent, from the prior year first quarter with non-interest bearing deposits increasing $293 million, or 10 percent. Non-interest bearing deposits were 34 percent of total core deposits at March 31, 2020, an increase of 2 percent from 32 percent of total core deposits at March 31, 2019.

6


Wholesale deposits of $62.9 million at March 31, 2020 increased $9.6 million from prior quarter and decreased $130 million from the prior year first quarter. Federal Home Loan Bank (FHLB) advances of $513 million at March 31, 2020 increased $474 million from the prior quarter and increased $358 million from the prior year first quarter, such increases were to supplement the current quarter deposit growth used to fund the asset growth, including the additional investment purchases. Wholesale deposits and FHLB advances will continue to fluctuate as necessary for balance sheet growth and to supplement liquidity needs of the Company.

During March of the current quarter, the Company purchased interest rate caps with a notional amount of $131 million (tied to 3 month Libor) to limit interest expense on the Company’s trust preferred subordinated debt. The interest rate caps effectively convert the variable interest expense on the debt to a fixed rate of 3.93 percent when 3 month Libor exceeds 1.88 percent at anytime during the five year term of the interest rate caps.

Stockholders’ Equity Summary
$ Change from
(Dollars in thousands, except per share data)
Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Common equity$2,036,920  1,920,507  1,526,963  116,413  509,957  
Accumulated other comprehensive income
99,724  40,226  23,887  59,498  75,837  
Total stockholders’ equity
2,136,644  1,960,733  1,550,850  175,911  585,794  
Goodwill and core deposit intangible, net
(576,701) (519,704) (337,134) (56,997) (239,567) 
Tangible stockholders’ equity
$1,559,943  1,441,029  1,213,716  118,914  346,227  
Stockholders’ equity to total assets
14.10 %14.33 %12.84 %
Tangible stockholders’ equity to total tangible assets
10.70 %10.95 %10.34 %
Book value per common share
$22.39  21.25  18.33  1.14  4.06  
Tangible book value per common share
$16.35  15.61  14.35  0.74  2.00  

Tangible stockholders’ equity of $1.560 billion at March 31, 2020 increased $119 million, or 8 percent, compared to the prior quarter which was the result of $112 million of Company stock issued for the acquisition of SBAZ and earnings retention; such increases more than offset the increase in goodwill and core deposits associated with the acquisition and the $12.3 million decrease from the adoption of the current expected credit loss model. Tangible book value per common share of $16.35 at current quarter end increased $0.74 per share from the prior quarter and increased $2.00 per share from a year ago.

Cash Dividends
On March 25, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share. The dividend was payable April 16, 2020 to shareholders of record on April 7, 2020. The dividend was the 140th consecutive dividend. 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 March 31, 2020 
Compared to December 31, 2019 and March 31, 2019

Income Summary
 Three Months ended $ Change from
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Net interest income
Interest income$142,865  145,281  126,116  (2,416) 16,749  
Interest expense8,496  8,833  10,904  (337) (2,408) 
Total net interest income134,369  136,448  115,212  (2,079) 19,157  
Non-interest income
Service charges and other fees
14,020  14,756  18,015  (736) (3,995) 
Miscellaneous loan fees and charges1,285  1,379  967  (94) 318  
Gain on sale of loans11,862  10,135  5,798  1,727  6,064  
Gain on sale of investments863  257  213  606  650  
Other income5,242  1,890  3,481  3,352  1,761  
Total non-interest income33,272  28,417  28,474  4,855  4,798  
Total income$167,641  164,865  143,686  2,776  23,955  
Net interest margin (tax-equivalent)
4.36 %4.45 %4.34 %

Net Interest Income
The current quarter net interest income of $134 million decreased $2.1 million, or 2 percent, over the prior quarter and increased $19.2 million, or 17 percent, from the prior year first quarter. The current quarter interest income of $143 million decreased $2.4 million, or 2 percent, over the prior quarter which was driven primarily by a decrease in loan interest rates. The current quarter interest income increased $16.7 million, or 13 percent, over prior year first quarter and was attributable to an increase in interest income on commercial loans due to an increase in loans, which increased $15.1 million, or 18 percent, from the prior year first quarter.

The current quarter interest expense of $8.5 million decreased $337 thousand, or 4 percent, over the prior quarter as a result of a decrease in interest rates. Current quarter interest expense decreased $2.4 million, or 22 percent, over prior year first quarter which was due to the decrease in higher cost FHLB advances. During the current quarter, the total cost of funding (including non-interest bearing deposits) declined 1 basis point to 29 basis points compared to 30 basis points for the prior quarter and 43 basis points for the prior year first quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.36 percent compared to 4.45 percent in the prior quarter. The core net interest margin, excluding $1.2 million, or 4 basis points, of discount accretion and $655 thousand, or 2 basis points, of non-accrual interest recoveries, was 4.30 percent compared to 4.33 in the prior quarter and 4.26 percent in the prior year first quarter. The Company experienced a 3 basis points decrease in the core net interest margin during the current quarter from decreased yields on loans that more than offset the decrease in the cost of funding. The core net interest margin increased 4 basis points from the prior year first quarter primarily the result of a decrease in funding cost and reduced reliance on higher cost wholesale funding. “We were pleased that the core net interest margin remained stable during the current quarter compared to the prior quarter,” said Ron Copher, Chief Financial Officer.              

Non-interest Income
Non-interest income for the current quarter totaled $33.3 million which was an increase of $4.9 million, or 17
8


percent, over the prior quarter and an increase of $4.8 million, or 17 percent, over the same quarter last year. Service charges and other fees of $14.0 million for the current quarter decreased $4.0 million, or 22 percent, from the prior year first quarter due to the Company's decrease in interchange fees as a result of the Durbin Amendment that more than offset the increased transaction activity. 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 $11.9 million for the current quarter increased $1.7 million, or 17 percent, compared to the prior quarter and increased $6.1 million, or 105 percent, from the prior year first quarter principally due to the increased refinance activity driven by the decrease in interest rates. Other income of $5.2 million increased $3.4 million from the prior quarter and increased $1.8 million from the prior year first quarter, primarily as a result of a $2.4 million gain on the sale of a former branch building in the current quarter.

Non-interest Expense Summary
 Three Months ended $ Change from
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Compensation and employee benefits$59,660  55,543  52,728  4,117  6,932  
Occupancy and equipment9,219  9,149  8,437  70  782  
Advertising and promotions2,487  2,747  2,388  (260) 99  
Data processing5,282  4,972  3,892  310  1,390  
Other real estate owned112  609  139  (497) (27) 
Regulatory assessments and insurance1,090  45  1,285  1,045  (195) 
Core deposit intangibles amortization2,533  2,566  1,694  (33) 839  
Other expenses11,545  19,621  12,267  (8,076) (722) 
Total non-interest expense$91,928  95,252  82,830  (3,324) 9,098  

Total non-interest expense of $92.0 million for the current quarter decreased $3.3 million, or 3 percent, over the prior quarter and increased $9.1 million, or 11 percent, over the prior year first quarter. Compensation and employee benefits increased by $4.1 million, or 7 percent, from the prior quarter as result of increased employees from the SBAZ acquisition and annual salary increases and benefit adjustments. Compensation and employee benefits increased $6.9 million, or 13 percent, from the prior year first quarter primarily due to an increased number of employees driven by current and prior year acquisitions. Occupancy and equipment expense increased $782 thousand, or 9 percent, over the prior year first quarter primarily as a result of increased costs from acquisitions. Data processing expense increased $310 thousand, or 6 percent, over the prior quarter and increased $1.4 million, or 36 percent, over the prior year first quarter as a result of the current and prior year acquisitions. Regulatory assessment and insurance increased $1.0 million from the prior quarter as a result of a decrease in the amount of Small Bank Assessment credits applied by the FDIC. The Company received $530 thousand of Small Bank Assessment credits during the current quarter compared to $1.3 million in the prior quarter. Regulatory assessment and insurance decreased $195 thousand, or 15 percent, over prior year first quarter and was driven by the current quarter FDIC credits which offset the increased cost from organic and acquisition growth. Other expenses of $11.5 million, decreased $8.1 million, or 41 percent, from the prior quarter and was due to a $3.6 million decrease in expense related to unfunded loan commitments, a $1.6 million decrease in acquisition-related expenses and smaller decreases in several other categories. The current quarter decrease in expense related to unfunded loan commitments was driven by a decreased loss rate on certain portfolio segments, primarily the construction segments. Other expenses included acquisition-related expenses of $2.8 million in the current quarter compared to $4.4 million in the prior quarter and $214 thousand in the prior year first quarter.

9


Federal and State Income Tax Expense
Tax expense during the first quarter of 2020 was $9.6 million, a decrease of $2.6 million, or 21 percent, compared to the prior quarter and a decrease of $2.0 million, or 17 percent, from the prior year first quarter. The effective tax rate in the current quarter was 18 percent which compares to 18 percent in the prior quarter and 19 percent prior year first quarter.

Efficiency Ratio
The current quarter efficiency ratio was 52.55 percent, a 235 basis points decrease from the prior quarter efficiency ratio of 54.90 percent which was due to controlling costs, a decrease in expense related to unfunded loan commitments and the increase in non-interest income. The current quarter efficiency ratio decreased 282 basis points from the prior year first quarter efficiency ratio of 55.37 percent which was driven by the increased commercial loan interest income and gain on sale of loans which more than offset decreases in service fee income from the Durbin amendment and increased operating costs.

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, such as the recently adopted CARES Act addressing the economic effects of the COVID-19 pandemic, as well as 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;
10


the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources could change the competitive landscape;
dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank divisions;
material failure, potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks (e.g., cybersecurity), fraud or system failures;
natural disasters, including fires, floods, earthquakes, and other unexpected events;
the Company’s success in managing risks involved in the foregoing; and
the effects of any reputational damage to the Company resulting from any of the foregoing.

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

Conference Call Information
A conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, April 24, 2020. The conference call will be accessible by telephone and webcast. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 8916519. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/nimct5u3. 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 8916519 by May 8, 2020.

In connection with this Earnings Release, we are also providing Supplemental Information for investors.

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 (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).



11


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition
(Dollars in thousands, except per share data)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Assets
Cash on hand and in banks$204,373  198,639  139,333  
Federal funds sold—  —  115  
Interest bearing cash deposits69,068  132,322  63,079  
Cash and cash equivalents273,441  330,961  202,527  
Debt securities, available-for-sale3,429,890  2,575,252  2,522,322  
Debt securities, held-to-maturity203,814  224,611  255,572  
Total debt securities3,633,704  2,799,863  2,777,894  
Loans held for sale, at fair value94,619  69,194  29,389  
Loans receivable10,088,206  9,512,810  8,326,070  
Allowance for credit losses(150,190) (124,490) (129,786) 
Loans receivable, net9,938,016  9,388,320  8,196,284  
Premises and equipment, net324,230  310,309  277,619  
Other real estate owned4,748  5,142  8,125  
Accrued interest receivable68,525  56,047  57,367  
Deferred tax asset—  2,037  12,554  
Core deposit intangible, net63,346  63,286  47,548  
Goodwill513,355  456,418  289,586  
Non-marketable equity securities30,597  11,623  16,435  
Bank-owned life insurance121,685  109,428  82,819  
Other assets92,118  81,371  75,632  
Total assets$15,158,384  13,683,999  12,073,779  
Liabilities
Non-interest bearing deposits$3,875,848  3,696,627  3,051,119  
Interest bearing deposits7,681,989  7,079,830  6,536,996  
Securities sold under agreements to repurchase580,335  569,824  489,620  
FHLB advances513,055  38,611  154,683  
Other borrowed funds32,499  28,820  14,738  
Subordinated debentures139,916  139,914  134,048  
Accrued interest payable4,713  4,686  4,709  
Deferred tax liability15,210  —  —  
Other liabilities178,175  164,954  137,016  
Total liabilities13,021,740  11,723,266  10,522,929  
Commitments and Contingent Liabilities
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
954  923  846  
Paid-in capital1,491,651  1,378,534  1,051,299  
Retained earnings - substantially restricted544,315  541,050  474,818  
Accumulated other comprehensive income99,724  40,226  23,887  
Total stockholders’ equity2,136,644  1,960,733  1,550,850  
Total liabilities and stockholders’ equity$15,158,384  13,683,999  12,073,779  

12


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

 Three Months ended
(Dollars in thousands, except per share data)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Interest Income
Debt securities$21,014  20,904  21,351  
Residential real estate loans11,526  12,554  10,779  
Commercial loans98,684  100,301  83,539  
Consumer and other loans11,641  11,522  10,447  
Total interest income142,865  145,281  126,116  
Interest Expense
Deposits5,581  6,101  5,341  
Securities sold under agreements to repurchase
989  1,007  802  
Federal Home Loan Bank advances346  86  3,055  
Other borrowed funds
128  92  38  
Subordinated debentures1,452  1,547  1,668  
Total interest expense8,496  8,833  10,904  
Net Interest Income134,369  136,448  115,212  
Credit loss expense22,744  —  57  
Net interest income after credit loss expense
111,625  136,448  115,155  
Non-Interest Income
Service charges and other fees14,020  14,756  18,015  
Miscellaneous loan fees and charges1,285  1,379  967  
Gain on sale of loans11,862  10,135  5,798  
Gain on sale of debt securities863  257  213  
Other income5,242  1,890  3,481  
Total non-interest income33,272  28,417  28,474  
Non-Interest Expense
Compensation and employee benefits59,660  55,543  52,728  
Occupancy and equipment9,219  9,149  8,437  
Advertising and promotions2,487  2,747  2,388  
Data processing5,282  4,972  3,892  
Other real estate owned112  609  139  
Regulatory assessments and insurance
1,090  45  1,285  
Core deposit intangibles amortization2,533  2,566  1,694  
Other expenses11,545  19,621  12,267  
Total non-interest expense91,928  95,252  82,830  
Income Before Income Taxes52,969  69,613  60,799  
Federal and state income tax expense9,630  12,203  11,667  
Net Income$43,339  57,410  49,132  

13


Glacier Bancorp, Inc.
Average Balance Sheets

Three Months ended
 March 31, 2020March 31, 2019
(Dollars in thousands)Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Average
Balance
Interest &
Dividends
Average
Yield/
Rate
Assets
Residential real estate loans$980,647  $11,526  4.70 %$917,324  $10,779  4.70 %
Commercial loans 1
7,809,482  99,956  5.15 %6,524,190  84,613  5.26 %
Consumer and other loans926,924  11,641  5.05 %839,011  10,447  5.05 %
Total loans 2
9,717,053  123,123  5.10 %8,280,525  105,839  5.18 %
Tax-exempt debt securities 3
930,601  9,409  4.04 %960,569  9,950  4.14 %
Taxable debt securities 4
2,059,581  13,772  2.67 %1,845,677  13,729  2.98 %
Total earning assets12,707,235  146,304  4.63 %11,086,771  129,518  4.74 %
Goodwill and intangibles539,431  337,963  
Non-earning assets690,338  520,353  
Total assets$13,937,004  $11,945,087  
Liabilities
Non-interest bearing deposits$3,672,959  $—  — %$2,943,770  $—  — %
NOW and DDA accounts2,675,152  915  0.14 %2,320,928  961  0.17 %
Savings accounts1,518,809  239  0.06 %1,359,807  234  0.07 %
Money market deposit accounts2,031,799  1,624  0.32 %1,690,305  1,010  0.24 %
Certificate accounts965,908  2,595  1.08 %905,005  2,014  0.90 %
Total core deposits10,864,627  5,373  0.20 %9,219,815  4,219  0.19 %
Wholesale deposits 5
57,110  208  1.46 %169,361  1,122  2.69 %
FHLB advances108,672  346  1.26 %352,773  3,055  3.46 %
Repurchase agreements and other borrowed funds
712,787  2,569  1.45 %556,325  2,508  1.83 %
Total funding liabilities11,743,196  8,496  0.29 %10,298,274  10,904  0.43 %
Other liabilities147,361  116,143  
Total liabilities11,890,557  10,414,417  
Stockholders’ Equity
Common stock933  846  
Paid-in capital1,417,004  1,051,261  
Retained earnings562,951  471,626  
Accumulated other comprehensive income
65,559  6,937  
Total stockholders’ equity2,046,447  1,530,670  
Total liabilities and stockholders’ equity
$13,937,004  $11,945,087  
Net interest income (tax-equivalent)$137,808  $118,614  
Net interest spread (tax-equivalent)4.34 %4.31 %
Net interest margin (tax-equivalent)4.36 %4.34 %
______________________________
1 Includes tax effect of $1.3 million and $1.1 million on tax-exempt municipal loan and lease income for the three months ended March 31, 2020 and 2019, respectively.
2 Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
3 Includes tax effect of $1.9 million and $2.0 million on tax-exempt debt securities income for the three months ended March 31, 2020 and 2019, respectively.
4 Includes tax effect of $266 thousand and $293 thousand on federal income tax credits for the three months ended March 31, 2020 and 2019, respectively.
5 Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.

14


Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification

 Loans Receivable, by Loan Type% Change from
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Dec 31,
2019
Mar 31,
2019
Custom and owner occupied construction
$172,238  $143,479  $126,820  20 %36 %
Pre-sold and spec construction180,799  180,539  135,137  — %34 %
Total residential construction
353,037  324,018  261,957  %35 %
Land development101,644  101,592  126,417  — %(20)%
Consumer land or lots121,082  125,759  125,818  (4)%(4)%
Unimproved land65,355  62,563  75,113  %(13)%
Developed lots for operative builders
32,661  17,390  16,171  88 %102 %
Commercial lots59,023  46,408  35,511  27 %66 %
Other construction453,403  478,368  454,965  (5)%— %
Total land, lot, and other construction
833,168  832,080  833,995  — %— %
Owner occupied1,813,284  1,667,526  1,367,530  %33 %
Non-owner occupied2,200,664  2,017,375  1,662,390  %32 %
Total commercial real estate
4,013,948  3,684,901  3,029,920  %32 %
Commercial and industrial1,151,817  991,580  922,124  16 %25 %
Agriculture694,444  701,363  641,146  (1)%%
1st lien1,213,232  1,186,889  1,102,920  %10 %
Junior lien49,071  53,571  54,964  (8)%(11)%
Total 1-4 family1,262,303  1,240,460  1,157,884  %%
Multifamily residential352,379  342,498  268,156  %31 %
Home equity lines of credit656,953  617,900  557,895  %18 %
Other consumer180,832  174,643  163,568  %11 %
Total consumer837,785  792,543  721,463  %16 %
States and political subdivisions566,953  533,023  398,848  %42 %
Other116,991  139,538  119,966  (16)%(2)%
Total loans receivable, including
  loans held for sale
10,182,825  9,582,004  8,355,459  %22 %
Less loans held for sale 1
(94,619) (69,194) (29,389) 37 %222 %
Total loans receivable$10,088,206  $9,512,810  $8,326,070  %21 %
______________________________
1 Loans held for sale are primarily 1st lien 1-4 family loans.

15


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification

 
Non-performing Assets, by Loan Type
Non-
Accrual
Loans
Accruing
Loans 90
Days
or More Past
Due
Other
Real Estate
Owned
(Dollars in thousands)Mar 31,
2020
Dec 31,
2019
Mar 31,
2019
Mar 31,
2020
Mar 31,
2020
Mar 31,
2020
Custom and owner occupied construction