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Section 1: 8-K (8-K)

gbci-20200723
0000868671false00008686712020-07-232020-07-23

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): July 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 July 23, 2020, Glacier Bancorp, Inc. ("Company") issued a press release announcing its financial results for the quarter ended June 30, 2020. 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 Press Release dated July 23, 2020, announcing financial results for the quarter ended June 30, 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:July 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
July 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 JUNE 30, 2020

2nd Quarter 2020 Highlights:
Net income of $63.4 million for the current quarter, an increase of $11.1 million, or 21 percent, over the prior year second quarter net income of $52.4 million.
Current quarter diluted earnings per share of $0.66, an increase of 8 percent from the prior year second quarter diluted earnings per share of $0.61.
The Company originated U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) loans for businesses in its communities. The Company funded 15,291 PPP loans in the amount of $1.427 billion.
The loan portfolio organically increased $1.365 billion, or 14 percent, in the current quarter and increased $1.545 billion, or 17 percent, from the prior year second quarter.
Core deposits increased $1.818 billion, or 16 percent, during the current quarter, with non-interest bearing deposit growth of $1.168 billion, or 30 percent.
Debt security income of $25.8 million increased $4.8 million, or 23 percent, over the prior quarter and increased $3.9 million, or 18 percent, over the prior year second quarter.
Gain on sale of loans of $25.9 million, increased $14.0 million, or 118 percent, over the prior quarter and increased $18.1 million, or 233 percent, compared to the prior year second quarter.
Interest expense of $7.2 million decreased $1.3 million, or 15 percent, over the prior quarter and decreased $4.9 million, or 41 percent, compared to the prior year second quarter.
Non-performing assets as a percentage of subsidiary assets was 0.27 percent, which compared to 0.26 percent in the prior quarter and 0.41 percent in the prior year second quarter.
Early stage delinquencies (accruing 30-89 days past due) as a percentage of loans in the current quarter was 0.22 percent, which compared to 0.41 percent in the prior quarter and 0.43 percent in the prior year second quarter.
During the current quarter, S&P Dow Jones Indices selected the Company to transition from the S&P SmallCap 600® to the S&P MidCap 400®.
1


Declared a quarterly dividend of $0.29 per share. The Company has declared 141 consecutive quarterly dividends and has increased the dividend 45 times.
First Half 2020 Highlights:
Net income of $106.8 million for the first half of 2020, an increase of $5.3 million, or 5 percent, over the first half of 2019 net income of $101.5 million.
Diluted earnings per share of $1.13, a decrease of 5 percent from the prior year first six months diluted earnings per share of $1.19.
The loan portfolio organically grew $1.489 billion, or 16 percent, during the first six months of 2020.
Core deposits organically increased $2.0 billion, or 19 percent, during the first half of 2020, with non-interest bearings deposit growth of $1.2 billion, or 33 percent.
Gain on sale of loans of $37.7 million, increased $24.2 million, or 178 percent, compared to the prior year first half.
Dividends declared of $0.58 per share, an increase of $0.05 per share, or 9 percent, over the prior year first six months dividends of $0.53.
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.

Financial Highlights
 At or for the Three Months endedAt or for the Six Months ended
(Dollars in thousands, except per share and market data)
Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
Jun 30,
2020
Jun 30,
2019
Operating results
Net income$63,444  43,339  52,392  106,783  101,524  
Basic earnings per share$0.67  0.46  0.61  1.13  1.19  
Diluted earnings per share$0.66  0.46  0.61  1.13  1.19  
Dividends declared per share 1
$0.29  0.29  0.27  0.58  0.53  
Market value per share
Closing$35.29  34.01  40.55  35.29  40.55  
High$46.54  46.10  43.44  46.54  45.47  
Low$30.30  26.66  38.65  26.66  37.58  
Selected ratios and other data
Number of common stock shares outstanding
95,409,06195,408,27486,637,39495,409,06186,637,394
Average outstanding shares - basic95,405,49393,287,67085,826,29094,346,58285,191,658
Average outstanding shares - diluted95,430,40393,359,79285,858,28694,395,93085,241,238
Return on average assets (annualized)1.57 %1.25 %1.69 %1.42 %1.68 %
Return on average equity (annualized)11.68 %8.52 %12.82 %10.15 %12.91 %
Efficiency ratio49.29 %52.55 %54.50 %50.81 %54.93 %
Dividend payout ratio43.28 %63.04 %44.26 %51.33 %44.54 %
Loan to deposit ratio86.45 %88.10 %90.27 %86.45 %90.27 %
Number of full time equivalent employees
2,9542,9552,7032,9542,703
Number of locations192192175192175
Number of ATMs251247228251228
2



KALISPELL, Mont., Jul 23, 2020 (GLOBE NEWSWIRE) - Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $63.4 million for the current quarter, an increase of $11.1 million, or 21 percent, from the $52.4 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.66 per share, an increase of 8 percent from the prior year second quarter diluted earnings per share of $0.61. Included in the current quarter was $3.7 million of acquisition-related expenses. “The Glacier team delivered outstanding results despite the continuing pandemic and the resulting challenging environment. The team did an exceptional job servicing our customers and communities by making over 15,000 Paycheck Protection Program loans for over $1.5 billion,” said Randy Chesler, President and Chief Executive Officer. “We remain confident that our significant liquidity, high quality loan portfolio, strong balance sheet and solid core business, positions us to successfully respond to a full range of future possible economic conditions.”

Net income for the six months ended June 30, 2020 was $106.8 million, an increase of $5.3 million, or 5 percent, from the $101.5 million net income from the first six months of the prior year. Diluted earnings per share for the first half of the current year was $1.13 per share, a decrease of 5 percent, from the diluted earnings per share of $1.19 for the same period last year.

The Company continues to navigate through the coronavirus disease of 2019 (“COVID-19”) pandemic to ensure the safety of its employees and customers along with monitoring credit quality and protecting shareholder value. The Company’s pandemic team remains flexible in responding to the changing conditions in all the markets that it serves.

In order to meet the needs of customers impacted by the pandemic, the Company has contacted customers to assess their needs and provide funding, flexible repayment options or modifications as necessary. During the current quarter, the Company modified 3,054 loans in the amount of $1.515 billion primarily with short-term payment deferrals under six months.

In addition, the Company originated SBA PPP loans for businesses in its communities. The Company funded 15,291 PPP loans in the amount of $1.427 billion during the current quarter. These loans provided an additional $7.3 million of interest income (including net deferred fees and costs) during the current quarter and $8.4 million of deferred compensation costs for a total increase in income of $15.7 million ($11.7 million net of tax).

During the current quarter, S&P Dow Jones Indices selected the Company to transition from the S&P SmallCap 600® to the S&P MidCap 400® effective prior to the opening trading on Monday, June 22, 2020. The S&P MidCap 400® index consists of 400 companies that are chosen with regard to market capitalization, liquidity and industry representation.

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.


3


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  

Asset Summary
$ Change from
(Dollars in thousands)Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Cash and cash equivalents$547,610  273,441  330,961  231,209  274,169  216,649  316,401  
Debt securities, available-for-sale3,533,950  3,429,890  2,575,252  2,470,634  104,060  958,698  1,063,316  
Debt securities, held-to-maturity203,275  203,814  224,611  252,097  (539) (21,336) (48,822) 
Total debt securities3,737,225  3,633,704  2,799,863  2,722,731  103,521  937,362  1,014,494  
Loans receivable
Residential real estate903,198  957,830  926,388  920,715  (54,632) (23,190) (17,517) 
Commercial real estate6,047,692  5,928,303  5,579,307  4,959,863  119,389  468,385  1,087,829  
Other commercial3,547,249  2,239,878  2,094,254  2,076,605  1,307,371  1,452,995  1,470,644  
Home equity654,392  652,942  617,201  596,041  1,450  37,191  58,351  
Other consumer300,847  309,253  295,660  288,553  (8,406) 5,187  12,294  
Loans receivable11,453,378  10,088,206  9,512,810  8,841,777  1,365,172  1,940,568  2,611,601  
Allowance for credit losses
(162,509) (150,190) (124,490) (129,054) (12,319) (38,019) (33,455) 
Loans receivable, net11,290,869  9,938,016  9,388,320  8,712,723  1,352,853  1,902,549  2,578,146  
Other assets1,330,944  1,313,223  1,164,855  1,009,698  17,721  166,089  321,246  
Total assets$16,906,648  15,158,384  13,683,999  12,676,361  1,748,264  3,222,649  4,230,287  

Total debt securities of $3.737 billion at June 30, 2020 increased $104 million, or 3 percent, during the current quarter and increased $1.014 billion, or 37 percent, from the prior year second quarter. Debt securities represented 22 percent of total assets at June 30, 2020 compared to 20 percent at December 31, 2019 and 21 percent of total assets at June 30, 2019.

Excluding $1.427 billion of the PPP loans, the loan portfolio of $11.453 billion decreased $61.6 million, or 61 basis points, during the current quarter. Excluding the PPP loans, the notable changes during the current quarter included other commercial loans which decreased $119 million, or 5 percent, and commercial real estate which increased $119 million or 2 percent. Excluding the PPP loans, the current year SBAZ acquisition and the prior year acquisition of Heritage Bank of Nevada, the loan portfolio increased $118 million, or 1 percent, since the prior year second quarter with the largest increase in commercial real estate loans which increased $204 million, or 4 percent.
4



Credit Quality Summary
At or for the Six Months endedAt or for the Three Months endedAt or for the Year endedAt or for the Six Months ended
(Dollars in thousands)Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Allowance for credit losses
Balance at beginning of period$124,490  124,490  131,239  131,239  
Impact of adopting CECL3,720  3,720  —  —  
Acquisitions49  49  —  —  
Credit loss expense36,296  22,744  57  57  
Charge-offs(5,235) (2,567) (15,178) (6,200) 
Recoveries3,189  1,754  8,372  3,958  
Balance at end of period$162,509  150,190  124,490  129,054  
Other real estate owned$4,743  4,748  5,142  7,281  
Accruing loans 90 days or more past due6,071  6,624  1,412  3,463  
Non-accrual loans35,157  28,006  30,883  41,195  
Total non-performing assets$45,971  39,378  37,437  51,939  
Non-performing assets as a percentage of subsidiary assets
0.27 %0.26 %0.27 %0.41 %
Allowance for credit losses as a percentage of non-performing loans
394 %434 %385 %289 %
Allowance for credit losses as a percentage of total loans
1.42 %1.49 %1.31 %1.46 %
Net charge-offs as a percentage of total loans0.02 %0.01 %0.07 %0.03 %
Accruing loans 30-89 days past due$25,225  41,375  23,192  37,937  
Accruing troubled debt restructurings$41,759  44,371  34,055  25,019  
Non-accrual troubled debt restructurings$8,204  6,911  3,346  6,041  
U.S. government guarantees included in non-performing assets$3,305  3.204  1,786  2,785  

Non-performing assets of $46.0 million at June 30, 2020 increased $6.6 million, or 17 percent, over the prior quarter and decreased $6.0 million, or 11 percent, over the prior year second quarter. Non-performing assets as a percentage of subsidiary assets at June 30, 2020 was 0.27 percent. Excluding the government guaranteed PPP loans, the non-performing assets as a percentage of subsidiary assets at June 30, 2020 was 0.30 percent at June 30, 2020, an increase of 4 basis points from the prior quarter, and a decrease of 11 basis points from the prior year second quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $25.2 million at June 30, 2020 decreased $16.2 million from the prior quarter and decreased $12.7 million from the prior year second quarter. Early stage delinquencies as a percentage of loans at June 30, 2020 was 0.22 percent, which was a decrease of 19 basis points from prior quarter and a 21 basis points decrease from prior year second quarter.

The current quarter credit loss expense was $13.6 million, a decrease of $9.2 million from the prior quarter credit loss expense of $22.7 million. The increase in the ACL during the first six months was primarily attributable to the Company recognizing $37.6 million of credit loss expense related to COVID-19 and an additional $4.8 million of credit loss expense related to the SBAZ acquisition. The allowance for credit losses (“ACL”) as a percentage of total loans outstanding at June 30, 2020 was 1.42 percent, which was a 7 basis points decrease compared to the prior quarter. The decrease was the result of originating $1.427 billion of government guaranteed PPP loans for which no ACL was recorded. Excluding the PPP loans, the ACL as percentage of loans was 1.62 percent, a 13 basis points increase over the prior quarter and was primarily the result of changes in the economic forecast related to COVID-19.

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
Second quarter 2020$13,552  $1,233  1.42 %0.22 %0.27 %
First quarter 202022,744  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 %

Net charge-offs for the current quarter were $1.2 million compared to $813 thousand for the prior quarter and $732 thousand from the same quarter last year. 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. 

COVID-19 Total Loan Modifications and PPP Loans

June 30, 2020
(Dollars in thousands)Number of Loan ModificationsAmount of Loan ModificationsNumber of PPP LoansAmount of PPP LoansLoans
Receivable, Net of PPP Loans
Loan Modifications (Amount) as a Percent of Loans
Receivable, Net of PPP Loans
PPP Loans (Amount) as a Percent of Loans
Receivable, Net of PPP Loans
Residential real estate227  $66,395  —  $—  $903,198  7.35 %— %
Commercial real estate
and other commercial
Real estate rental
and leasing
607  587,609  1,072  62,382  3,244,073  18.11 %1.92 %
Accommodation and
food services
413  395,882  1,373  144,036  644,648  61.41 %22.34 %
Healthcare264  126,808  1,752  263,259  792,272  16.01 %33.23 %
Manufacturing134  49,338  728  69,370  202,151  24.41 %34.32 %
Retail and wholesale
trade
159  46,623  1,532  159,433  476,841  9.78 %33.44 %
Construction122  38,751  2,045  193,606  765,539  5.06 %25.29 %
Other580  192,060  6,789  534,660  2,042,671  9.40 %26.17 %
Home equity and other
consumer
548  11,326  —  —  955,239  1.19 %— %
Total3,054  $1,514,792  15,291  $1,426,746  $10,026,632  15.11 %14.23 %

In response to COVID-19, the Company modified 3,054 loans in the amount of $1.515 billion during the current quarter. These modifications were primarily short-term payment deferrals under six months.

6


The PPP loan originations generated $53.6 million of SBA processing fees, or an average of 3.75 percent, and $8.4 million of deferred compensation costs for total net deferred fees of $45.2 million. Net deferred fees remaining on the PPP loans at June 30, 2020 were $40.6 million, which will be recognized into interest income over the life of the loans, generally two years, or when the loans are forgiven by the SBA.

COVID-19 Higher Risk Industries - Enhanced Monitoring

June 30, 2020
(Dollars in thousands)Loans
Receivable, Net of PPP Loans
Percent of Total Loans Receivable, Net of PPP LoansAverage
Loan-To-
Value on Loans Receivable, Net of PPP Loans
Amount of Loan ModificationsLoan Modifications as a Percent of Loans
Receivable, Net of PPP Loans
Amount of PPP Loans
Hotel and motel$421,569  4.20 %50.75 %$300,747  71.34 %$36,933  
Restaurant150,515  1.50 %68.97 %76,632  50.91 %93,853  
Travel and tourism20,758  0.21 %52.66 %7,845  37.79 %9,969  
Gaming15,118  0.15 %72.13 %9,214  60.95 %1,084  
Oil and gas22,748  0.23 %57.61 %6,013  26.43 %24,315  
Total$630,708  6.29 %$400,451  63.49 %$166,154  

Excluding the PPP loans, the Company has $631 million, or 6 percent, of its loan portfolio with direct exposure to industries for which it has identified as higher risk, requiring enhanced monitoring. The Company modified 63 percent of the higher risk loans which accounted for 26 percent of the total loan modifications during the current quarter. The Company also originated $166 million in PPP loans to support these customers which was 12 percent of the total PPP loans originated during the current quarter. Although there is limited exposure, the Company is conducting enhanced portfolio reviews and monitoring for potential credit deterioration related to COVID-19.

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.

7


Liability Summary
$ Change from
(Dollars in thousands)Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Deposits
Non-interest bearing deposits$5,043,704  3,875,848  3,696,627  3,265,077  1,167,856  1,347,077  1,778,627  
NOW and DDA accounts3,113,863  2,860,563  2,645,404  2,487,806  253,300  468,459  626,057  
Savings accounts1,756,503  1,578,062  1,485,487  1,412,046  178,441  271,016  344,457  
Money market deposit accounts
2,403,641  2,155,203  1,937,141  1,647,372  248,438  466,500  756,269  
Certificate accounts995,536  1,025,237  958,501  897,625  (29,701) 37,035  97,911  
Core deposits, total13,313,247  11,494,913  10,723,160  9,709,926  1,818,334  2,590,087  3,603,321  
Wholesale deposits68,285  62,924  53,297  144,949  5,361  14,988  (76,664) 
Deposits, total13,381,532  11,557,837  10,776,457  9,854,875  1,823,695  2,605,075  3,526,657  
Repurchase agreements881,227  580,335  569,824  494,651  300,892  311,403  386,576  
Federal Home Loan Bank advances
37,963  513,055  38,611  319,996  (475,092) (648) (282,033) 
Other borrowed funds32,546  32,499  28,820  14,765  47  3,726  17,781  
Subordinated debentures139,917  139,916  139,914  139,912     
Other liabilities229,748  198,098  169,640  164,786  31,650  60,108  64,962  
Total liabilities$14,702,933  13,021,740  11,723,266  10,988,985  1,681,193  2,979,667  3,713,948  

Core deposits of $13.313 billion as of June 30, 2020 increased $1.818 billion or 16 percent, from the prior quarter and was primarily the result of the PPP loan proceeds deposited by customers, increased customer savings rate, and federal stimulus deposits. Excluding current and prior year acquisitions, core deposits increased $2.278 billion, or 23 percent, from the prior year second quarter, with non-interest bearing deposits increasing $1.341 billion, or 41 percent. Non-interest bearing deposits were 38 percent of total core deposits at June 30, 2020 compared to 34 percent of total core deposits at June 30, 2019.

Federal Home Loan Bank (“FHLB”) advances of $38.0 million at June 30, 2020 decreased $475 million from the prior quarter and decreased $282 million from the prior year second quarter. These decreases were the result of the significant increase in core deposits that more than funded the loans and debt security growth. FHLB advances will continue to fluctuate as necessary for balance sheet growth and to supplement liquidity needs of the Company.

Stockholders’ Equity Summary
$ Change from
(Dollars in thousands, except per share data)
Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Common equity$2,073,806  2,036,920  1,920,507  1,643,928  36,886  153,299  429,878  
Accumulated other comprehensive income
129,909  99,724  40,226  43,448  30,185  89,683  86,461  
Total stockholders’ equity
2,203,715  2,136,644  1,960,733  1,687,376  67,071  242,982  516,339  
Goodwill and core deposit intangible, net
(574,088) (576,701) (519,704) (385,533) 2,613  (54,384) (188,555) 
Tangible stockholders’ equity
$1,629,627  1,559,943  1,441,029  1,301,843  69,684  188,598  327,784  
Stockholders’ equity to total assets
13.03 %14.10 %14.33 %13.31 %
Tangible stockholders’ equity to total tangible assets
9.98 %10.70 %10.95 %10.59 %
Book value per common share
$23.10  22.39  21.25  19.48  0.71  1.85  3.62  
Tangible book value per common share
$17.08  16.35  15.61  15.03  0.73  1.47  2.05  

8


Tangible stockholders’ equity of $1.630 billion at June 30, 2020 increased $70 million, or 4 percent, from the prior quarter and was primarily the result of earnings retention and an increase in other comprehensive income. Tangible stockholders’ equity increased $328 million over the prior year second quarter which was the result of $342 million of Company stock issued for the acquisitions of SBAZ and Heritage Bank of Nevada, an increase in other comprehensive income and earnings retention. These increases more than offset the increase in goodwill and core deposit intangible associated with the acquisitions. The current quarter decrease in both the stockholder’s equity to total assets ratio and the tangible stockholders’ equity to total tangible assets ratio was the result of adding $1.427 billion in the PPP loans. Both ratios would have increased if the PPP loans were excluded from total assets. Tangible book value per common share of $17.08 at current quarter end increased $0.73 per share from the prior quarter and increased $2.05 per share from a year ago.

Cash Dividends
On June 24, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.29 per share. The dividend was payable July 16, 2020 to shareholders of record on July 7, 2020. The dividend was the 141st consecutive dividend. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.


Operating Results for Three Months Ended June 30, 2020 
Compared to March 31, 2020 and June 30, 2019

Income Summary
 Three Months ended $ Change from
(Dollars in thousands)Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
Mar 31,
2020
Jun 30,
2019
Net interest income
Interest income$155,404  142,865  132,385  12,539  23,019  
Interest expense7,185  8,496  12,089  (1,311) (4,904) 
Total net interest income148,219  134,369  120,296  13,850  27,923  
Non-interest income
Service charges and other fees
11,366  14,020  20,025  (2,654) (8,659) 
Miscellaneous loan fees and charges1,682  1,285  1,192  397  490  
Gain on sale of loans25,858  11,862  7,762  13,996  18,096  
Gain on sale of investments128  863  134  (735) (6) 
Other income2,190  5,242  1,721  (3,052) 469  
Total non-interest income41,224  33,272  30,834  7,952  10,390  
Total income189,443  167,641  151,130  21,802  38,313  
Net interest margin (tax-equivalent)
4.12 %4.36 %4.33 %

Net Interest Income
The current quarter net interest income of $148 million increased $13.9 million, or 10 percent, over the prior quarter and increased $27.9 million, or 23 percent, from the prior year second quarter. The current quarter interest income of $155 million increased $12.5 million, or 9 percent, over the prior quarter which was driven by an increase debt security income and an increase in income from the PPP loans. The current quarter interest income increased $23.0 million, or 17 percent, over prior year second quarter and was due to an increase in income from commercial loans and an increase in income on debt securities.


9


The current quarter interest expense of $7.2 million decreased $1.3 million, or 15 percent, over the prior quarter primarily as result of a decrease in deposit and borrowing interest rates. Current quarter interest expense decreased $4.9 million, or 41 percent, over prior year second 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 8 basis points to 21 basis points compared to 29 basis points for the prior quarter primarily as a result of a decrease in rates on both deposits and borrowings. The total cost of funding decreased 24 basis points from the prior year second quarter of 45 basis points and was attributable to a decrease in rates and a shift from higher cost borrowings to low cost deposits.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.12 percent compared to 4.36 percent in the prior quarter. The core net interest margin, excluding 3 basis points of discount accretion, 1 basis point of non-accrual interest income reversals, and 11 basis points of income from the PPP loans was 4.21 percent compared to 4.30 in the prior quarter and 4.27 percent in the prior year second quarter. The Company experienced a 9 basis points decrease in the core net interest margin during the current quarter from decreased yields on loans that more than offset the increase in yields on debt securities and the decrease in the cost of funding. The core net interest margin decreased 6 basis points from the prior year second quarter primarily from a decrease in earning asset yields, primarily loan yields, that were more than the decrease in funding costs. The 6 basis points reduction in the cost of core deposit funding is a tribute to the Bank divisions focus on increasing non-interest bearing deposits, while also reducing the cost of interest bearing deposits,” said Ron Copher, Chief Financial Officer. “The reduction in rates paid on repurchase agreements and the current quarter reduction in higher cost FHLB advances contributed to the 8 basis points reduction in the total cost of funding.”

Non-interest Income
Non-interest income for the current quarter totaled $41.2 million which was an increase of $8.0 million, or 24 percent, over the prior quarter and an increase of $10.4 million, or 34 percent, over the same quarter last year. Service charges and other fees of $11.4 million for the current quarter decreased $2.7 million, or 19 percent, from the prior quarter as a result of decreased overdraft activity as customers received federal stimulus funds and had decreased activity during the second quarter of 2020. Service charges and other fees decreased $8.7 million from the prior year second quarter due to the decrease in overdraft activity and the decrease in interchange fees as a result of the Durbin Amendment. As of July 1, 2019, the Company became subject to the Durbin Amendment which established limits on the amount of interchange fees that can be charged to merchants for debit card processing. Gain on the sale of loans of $25.9 million for the current quarter increased $14.0 million, or 118 percent, compared to the prior quarter and increased $18.1 million, or 233 percent, from the prior year second quarter due to the significant increase in refinance activity driven by the decrease in interest rates. Other income of $2.2 million decreased $3.1 million, or 58 percent, from the prior quarter primarily as a result of a $2.4 million gain on the sale of a former branch building in the prior quarter.

10


Non-interest Expense Summary
 Three Months ended $ Change from
(Dollars in thousands)Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
Mar 31,
2020
Jun 30,
2019
Compensation and employee benefits$57,981  59,660  51,973  (1,679) 6,008  
Occupancy and equipment9,357  9,219  8,180  138  1,177  
Advertising and promotions2,138  2,487  2,767  (349) (629) 
Data processing5,042  5,282  4,062  (240) 980  
Other real estate owned75  112  191  (37) (116) 
Regulatory assessments and insurance1,037  1,090  1,848  (53) (811) 
Core deposit intangibles amortization2,613  2,533  1,865  80  748  
Other expenses19,898  11,545  15,284  8,353  4,614  
Total non-interest expense$98,141  91,928  86,170  6,213  11,971  

Total non-interest expense of $98.1 million for the current quarter increased $6.2 million, or 7 percent, over the prior quarter and increased $12.0 million, or 14 percent, over the prior year second quarter. Compensation and employee benefits decreased by $1.7 million, or 3 percent, from the prior quarter and included a decrease of $8.4 million from deferring compensation on originating the PPP loans with offsetting increases in commission expense and increases in compensation expense as result of increased employees from the SBAZ acquisition. Compensation and employee benefits increased $6.0 million, or 12 percent, from the prior year second quarter primarily due to an increased number of employees driven by acquisitions and organic growth which more than offset the impact from originating the PPP loans. Occupancy and equipment expense increased $1.2 million, or 14 percent, over the prior year second quarter primarily as a result of increased costs from acquisitions. Data processing expense increased $980 thousand, or 24 percent, over the prior year second quarter as a result of the current and prior year acquisitions along with general cost increases. Regulatory assessment and insurance decreased $811 thousand from the prior year second quarter primarily due to an accrual adjustment for the State of Montana regulatory semi-annual assessment which was waived for the first half of 2020. Other expenses of $19.9 million, increased $8.4 million, or 72 percent, from the prior quarter and was largely due to a $6.9 million increase in expense related to unfunded loan commitments. In the current quarter, there was a $3.4 million expense related to unfunded loan commitments compared to the prior quarter which had a $3.5 million reversal of expense related to unfunded loan commitments. The current quarter unfunded loan commitment expense reflects changes in the economic forecast related to COVID-19. Other expenses increased $4.6 million, or 30 percent, from the prior year second quarter and was due to the increase in expense related to unfunded loan commitments and $1.9 million increase in acquisition-related expenses. Other expenses included acquisition-related expenses of $3.7 million in the current quarter compared to $2.8 million in the prior quarter and $1.8 million in the prior year second quarter.

Federal and State Income Tax Expense
Tax expense during the second quarter of 2020 was $14.3 million, an increase of $4.7 million, or 49 percent, compared to the prior quarter and an increase of $1.7 million, or 14 percent, from the prior year second quarter. The effective tax rate in the current and prior quarter was 18 percent which compares 19 percent prior year second quarter.

11


Efficiency Ratio
The current quarter efficiency ratio was 49.29 percent. Excluding the $15.7 million impact from the PPP loans, the efficiency ratio would have been 55.73 percent, which was a 318 basis points increase from the prior quarter efficiency ratio of 52.55 percent and was primarily due to an increase in expenses related to unfunded loan commitments and increases in compensation that were greater than the increase in gain on sale of loans. Excluding the impact of the PPP loans, the current quarter efficiency ratio increased 123 basis points from the prior year second quarter efficiency ratio of 54.50 percent which was driven by the increased compensation costs and decreases in service fee income from the Durbin Amendment that outpaced the increases in commercial loan interest income and gain on sale of loans.

Operating Results for Six Months Ended June 30, 2020
Compared to June 30, 2019

Income Summary
Six Months ended
(Dollars in thousands)Jun 30,
2020
Jun 30,
2019
$ Change% Change
Net interest income
Interest income$298,269  $258,501  $39,768  15 %
Interest expense15,681  22,993  (7,312) (32)%
Total net interest income282,588  235,508  47,080  20 %
Non-interest income
Service charges and other fees25,386  38,040  (12,654) (33)%
Miscellaneous loan fees and charges2,967  2,159  808  37 %
Gain on sale of loans37,720  13,560  24,160  178 %
Gain on sale of investments991  347  644  186 %
Other income7,432  5,202  2,230  43 %
Total non-interest income74,496  59,308  15,188  26 %
$357,084  $294,816  $62,268  21 %
Net interest margin (tax-equivalent)4.23 %4.33 %

Net Interest Income
Net-interest income of $283 million for the first half of 2020 increased $47.1 million, or 20 percent, over the first half of 2019. Interest income of $298 million for the first six months of 2020 increased $39.8 million, or 15 percent, from the first six months of 2019 and was primarily attributable to a $33.4 million increase in income from commercial loans. Interest expense of $15.7 million for the first six months of 2020 decreased $7.3 million, or 32 percent over the prior year same period primarily as a result of decreased higher cost FHLB advances and the decrease in the cost of deposits and borrowings. The total funding cost (including non-interest bearing deposits) for the first six months of 2020 was 25 basis points compared to 44 basis points for the first six months of 2019.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first six months of 2020 was 4.23 percent, a 10 basis points decrease from the net interest margin of 4.33 percent for the first six months of 2019. The core net interest margin, excluding 3 basis points of discount accretion and 6 basis points of income from the PPP loans was 4.26 which was the same as the prior year first half core margin. The Company has benefited this year with a reduction in higher cost FHLB advances and decreases in interest rates that has lowered the cost of funds, the combination of which offset the decrease in yields on the earning assets.
12



Non-interest Income
Non-interest income of $74.5 million for the first six months of 2020 increased $15.2 million, or 26 percent, over the same period last year. Service charges and other fees of $25.4 million for 2020 year to date decreased $12.7 million, or 33 percent, from the same period prior year as a result of a decrease in overdraft activity and the impact of the Durbin Amendment. Gain on the sale of loans of $37.7 million for the first six months of 2020, increased $24.2 million, or 178 percent, compared to the prior year as a result of increased refinance activity. Other income increased $2.2 million from the prior year and was the result of a gain of $2.4 million on the sale of a former branch building in the first quarter of 2020.

Non-interest Expense Summary
Six Months ended
(Dollars in thousands)Jun 30,
2020
Jun 30,
2019
$ Change% Change
Compensation and employee benefits$117,641  $104,701  $12,940  12 %
Occupancy and equipment18,576  16,617  1,959  12 %
Advertising and promotions4,625  5,155  (530) (10)%
Data processing10,324  7,954  2,370  30 %
Other real estate owned187  330  (143) (43)%
Regulatory assessments and insurance2,127  3,133  (1,006) (32)%
Core deposit intangibles amortization5,146  3,559  1,587  45 %
Other expenses31,443  27,551  3,892  14 %
Total non-interest expense$190,069  $169,000  $21,069  12 %

Total non-interest expense of $190 million for the first six months of 2020 increased $21.1 million, or 12 percent, over the prior year same period. Compensation and employee benefits for the first six months of 2020 increased $12.9 million, or 12 percent, from the same period last year due to the increased number of employees from acquisitions and organic growth and annual salary increases which more than offset the deferral of compensation cost from the PPP loans. Occupancy and equipment expense for the first six months of 2020 increased $2.0 million, or 12 percent from the prior year primarily from increased cost from acquisitions. Data processing expense for the first six months of 2020 increased $2.4 million, or 30 percent, from the prior year as a result of recent acquisitions along with general cost increases. Regulatory assessments and insurance decreased $1.0 million from the prior year primarily as a result of the State of Montana waiving the first semi-annual regulatory assessment of 2020 and Small Bank Assessment credits applied by the FDIC in the first quarter of 2020. Other expenses of $31.4 million, increased $3.9 million, or 14 percent, from the prior year and was primarily driven by an increase in acquisition-related expenses which were $6.5 million in the current year first half compared to $2.0 million in the prior year first half.

Credit Loss Expense
The credit loss expense was $36.3 million for the first six months of 2020, an increase of $36.2 million from the same period in the prior year, this increase was primarily attributable to changes in the economic forecast related to COVID-19. Net charge-offs during the first six months of 2020 were $2.0 million compared to $2.2 million during the same period in 2019.



13


Federal and State Income Tax Expense
Tax expense of $23.9 million in the first six months of 2020 decreased $299 thousand, or 1 percent, over the prior year same period. The effective tax rate year-to-date in 2020 was 18 percent compared to 19 percent in the prior year same period.

Efficiency Ratio
The efficiency ratio was 50.81 percent for the six months of 2020. Excluding the $15.7 million impact from the PPP loans, the efficiency ratio would have been 54.21 percent, which was an improvement of 71 basis points from the prior year efficiency ratio of 54.93 percent which was the result of increases in gain on sale of loans and commercial loan interest income that more than offset the decreases in service fee income from the Durbin Amendment and increases in compensation expenses.

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;
the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
14


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, July 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 1773226. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/i7pytzz9. 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 1773226 by August 7, 2020.


About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. (NASDAQ:GBCI), a member of the Russell 2000® and the S&P MidCap 400® indices, 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).



15


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Financial Condition
(Dollars in thousands, except per share data)Jun 30,
2020
Mar 31,
2020
Dec 31,
2019
Jun 30,
2019
Assets
Cash on hand and in banks$212,681  204,373  198,639  181,526  
Interest bearing cash deposits334,929  69,068  132,322  49,683  
Cash and cash equivalents547,610  273,441  330,961  231,209  
Debt securities, available-for-sale3,533,950  3,429,890  2,575,252  2,470,634  
Debt securities, held-to-maturity203,275  203,814  224,611  252,097  
Total debt securities3,737,225  3,633,704  2,799,863  2,722,731  
Loans held for sale, at fair value115,345  94,619  69,194  54,711  
Loans receivable11,453,378  10,088,206  9,512,810  8,841,777  
Allowance for credit losses(162,509) (150,190) (124,490) (129,054) 
Loans receivable, net11,290,869  9,938,016  9,388,320  8,712,723  
Premises and equipment, net326,005  324,230  310,309  296,915  
Other real estate owned4,743  4,748  5,142  7,281  
Accrued interest receivable77,363  68,525  56,047  58,567  
Deferred tax asset—  —  2,037  3,371  
Core deposit intangible, net60,733  63,346  63,286  54,646  
Goodwill513,355  513,355  456,418  330,887  
Non-marketable equity securities11,592  30,597  11,623  23,031  
Bank-owned life insurance122,388  121,685  109,428  93,543  
Other assets99,420  92,118  81,371  86,746  
Total assets$16,906,648  15,158,384  13,683,999  12,676,361  
Liabilities
Non-interest bearing deposits$5,043,704  3,875,848  3,696,627  3,265,077  
Interest bearing deposits8,337,828  7,681,989  7,079,830  6,589,798  
Securities sold under agreements to repurchase881,227  580,335  569,824  494,651  
FHLB advances37,963  513,055  38,611  319,996  
Other borrowed funds32,546  32,499  28,820  14,765  
Subordinated debentures139,917  139,916  139,914  139,912  
Accrued interest payable4,211  4,713  4,686  5,091  
Deferred tax liability25,213  15,210  —  
Other liabilities200,324  178,175  164,954  159,695  
Total liabilities14,702,933  13,021,740  11,723,266  10,988,985  
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  954  923  866  
Paid-in capital1,492,817  1,491,651  1,378,534  1,139,289  
Retained earnings - substantially restricted580,035  544,315  541,050  503,773  
Accumulated other comprehensive income129,909  99,724  40,226  43,448  
Total stockholders’ equity2,203,715  2,136,644  1,960,733  1,687,376  
Total liabilities and stockholders’ equity$16,906,648  15,158,384  13,683,999  12,676,361  

16


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

 Three Months endedSix Months ended
(Dollars in thousands, except per share data)Jun 30,
2020
Mar 31,
2020
Jun 30,
2019
Jun 30,
2020
Jun 30,
2019
Interest Income