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Form 8-K GLACIER BANCORP INC For: Jul 21

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July 21, 2016 4:58 PM EDT


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 21, 2016 

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

MONTANA
000-18911
81-0519541
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

49 Commons Loop, Kalispell, Montana
59901
(Address of principal executive offices)
(Zip Code)

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

Not Applicable
(Former name or former address, if changed since last report)

____________________________________________________________

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))





Item 2.02. Results of Operations and Financial Condition

On July 21, 2016, the Company issued a press release announcing its financial results for the quarter ended June 30, 2016. 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)
Exhibit 99.1 - Press Release dated July 21, 2016, announcing financial results for the quarter ended June 30, 2016.






SIGNATURE

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 21, 2016
GLACIER BANCORP, INC.
 
 
 
 
 
 
By:
/s/ Michael J. Blodnick
 
 
 
Michael J. Blodnick
 
 
 
President and Chief Executive Officer









NEWS RELEASE

FOR IMMEDIATE RELEASE
CONTACT: Michael J. Blodnick
(406) 751-4701
Randy Chesler
(406) 751-4722
Ron J. Copher
(406) 751-7706

GLACIER BANCORP, INC. ANNOUNCES
RESULTS FOR THE QUARTER ENDED JUNE 30, 2016

2nd Quarter 2016 Highlights:
•
Record earnings of $30.5 million for the current quarter, an increase $1.1 million, or 4 percent, over the prior year second quarter net income of $29.3 million.
•
Current quarter diluted earnings per share of $0.40, an increase of 3 percent from the prior year second quarter diluted earnings per share of $0.39.
•
Loan growth of $181 million, or 14 percent annualized for the current quarter.
•
Net interest margin of 4.06 percent as a percentage of earning assets, on a tax equivalent basis, for the current quarter compared to 4.01 percent in the prior quarter.
•
Dividend declared of $0.20 per share, an increase of $0.01 per share, or 5 percent, over the prior year second quarter. The dividend was the 125th consecutive quarterly dividend declared by the Company.
•
The Company successfully completed the second and third phase of the consolidation of its bank divisions’ core database systems into our new “Gold Bank” core database system.
•
The Company announced the signing of a definitive agreement to acquire Treasure State Bank based in Missoula, Montana.

First Half of 2016 Highlights:
•
Net income of $59.1 million for the first half of 2016, an increase of 4 percent over $57.0 million for the same period in the prior year.
•
Diluted earnings per share of $0.78, an increase of 3 percent from the prior year first half diluted earnings per share of $0.76.
•
Loan growth of $300 million, or 12 percent annualized for the for the first half of the current year.
•
Net interest margin of 4.04 percent as a percentage of earning assets, on a tax equivalent basis, for the first six months of the current year compared to 4.00 percent for the same period last year.


1


Financial Highlights
 
At or for the Three Months ended
 
At or for the Six Months ended
(Dollars in thousands, except per share and market data)
Jun 30,
2016
 
Mar 31,
2016
 
Jun 30,
2015
 
Jun 30,
2016
 
Jun 30,
2015
Operating results
 
 
 
 
 
 
 
 
 
Net income
$
30,451

 
28,682

 
29,335

 
59,133

 
57,005

Basic earnings per share
$
0.40

 
0.38

 
0.39

 
0.78

 
0.76

Diluted earnings per share
$
0.40

 
0.38

 
0.39

 
0.78

 
0.76

Dividends declared per share
$
0.20

 
0.20

 
0.19

 
0.40

 
0.37

Market value per share
 
 
 
 
 
 
 
 
 
Closing
$
26.58

 
25.42

 
29.42

 
26.58

 
29.42

High
$
27.68

 
26.34

 
30.08

 
27.68

 
30.08

Low
$
24.31

 
22.19

 
24.76

 
22.19

 
22.27

Selected ratios and other data
 
 
 
 
 
 
 
 
 
Number of common stock shares outstanding
76,171,580

 
76,168,388

 
75,531,258

 
76,171,580

 
75,531,258

Average outstanding shares - basic
76,170,734

 
76,126,251

 
75,530,591

 
76,148,493

 
75,369,366

Average outstanding shares - diluted
76,205,069

 
76,173,417

 
75,565,655

 
76,191,655

 
75,407,621

Return on average assets (annualized)
1.34
%
 
1.28
%
 
1.39
%
 
1.31
%
 
1.37
%
Return on average equity (annualized)
10.99
%
 
10.53
%
 
11.05
%
 
10.76
%
 
10.89
%
Efficiency ratio
56.10
%
 
56.53
%
 
55.91
%
 
56.31
%
 
55.36
%
Dividend payout ratio
50.00
%
 
52.63
%
 
48.72
%
 
51.28
%
 
48.68
%
Loan to deposit ratio
76.92
%
 
74.65
%
 
74.11
%
 
76.92
%
 
74.11
%
Number of full time equivalent employees
2,210

 
2,184

 
2,058

 
2,210

 
2,058

Number of locations
143

 
144

 
135

 
143

 
135

Number of ATMs
167

 
167

 
158

 
167

 
158


KALISPELL, MONTANA, July 21, 2016 - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $30.5 million for the current quarter, an increase of $1.1 million, or 4 percent, from the $29.3 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.40 per share, an increase of $0.01, or 3 percent, from the prior year second quarter diluted earnings per share of $0.39. Included in the current quarter was $1.0 million of acquisition-related expenses, including conversion expenses, and $1.3 million of expenses related to the Company’s consolidation of its bank divisions’ core database systems (Core Consolidation Project or “CCP”) including expenses related to the re-issuance of debit cards with chip technology. The Company has completed the CCP conversion project for six of its thirteen bank divisions and is expecting to complete the project by year end. “It was another very solid quarter on a number of fronts,” said Mick Blodnick, President and Chief Executive Officer.  “Our Banks provided a record quarter for earnings and organic loan production at a time when we are in the midst of the largest internal core data project we have ever undertaken. In addition, our core interest margin remained above 4 percent,” Blodnick said.

Net income for the six months ended June 30, 2016 was $59.1 million, an increase of $2.1 million, or 4 percent, from the $57.0 million of net income for the first six months of the prior year. Diluted earnings per share for the first half of 2016 was $0.78 per share, an increase of $0.02, or 3 percent, from the diluted earnings per share of $0.76 for the first six months of the prior year.

The acquisition of Treasure State Bank marks the Company’s 18th acquisition since 2000 and its sixth announced transaction in the past three years. As of December 31, 2015, Treasure State Bank had total assets of $71.8 million, gross loans of $53.2 million and total deposits of $57.7 million. The Company has received all regulatory approvals

2


for the transaction. “We’re excited to add Treasure State Bank and a group of talented bankers to our Company,” said Blodnick. “This Bank will fit nicely with First Security Bank and we expect it to be an excellent strategic addition.”

Asset Summary
 
 
 
 
 
 
 
 
 
$ Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Cash and cash equivalents
$
160,333

 
150,861

 
193,253

 
355,719

 
9,472

 
(32,920
)
 
(195,386
)
Investment securities, available-for-sale
2,487,955

 
2,604,625

 
2,610,760

 
2,361,830

 
(116,670
)
 
(122,805
)
 
126,125

Investment securities, held-to-maturity
680,574

 
691,663

 
702,072

 
593,314

 
(11,089
)
 
(21,498
)
 
87,260

Total investment securities
3,168,529

 
3,296,288

 
3,312,832

 
2,955,144

 
(127,759
)
 
(144,303
)
 
213,385

Loans receivable
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential real estate
672,895

 
685,026

 
688,912

 
635,674

 
(12,131
)
 
(16,017
)
 
37,221

Commercial real estate
2,773,298

 
2,680,691

 
2,633,953

 
2,454,369

 
92,607

 
139,345

 
318,929

Other commercial
1,258,227

 
1,172,956

 
1,099,564

 
1,074,905

 
85,271

 
158,663

 
183,322

Home equity
431,659

 
423,895

 
420,901

 
410,708

 
7,764

 
10,758

 
20,951

Other consumer
242,538

 
234,625

 
235,351

 
231,775

 
7,913

 
7,187

 
10,763

Loans receivable
5,378,617

 
5,197,193

 
5,078,681

 
4,807,431

 
181,424

 
299,936

 
571,186

Allowance for loan and lease losses
(132,386
)
 
(130,071
)
 
(129,697
)
 
(130,519
)
 
(2,315
)
 
(2,689
)
 
(1,867
)
Loans receivable, net
5,246,231

 
5,067,122

 
4,948,984

 
4,676,912

 
179,109

 
297,247

 
569,319

Other assets
624,349

 
606,471

 
634,163

 
602,035

 
17,878

 
(9,814
)
 
22,314

Total assets
$
9,199,442

 
9,120,742

 
9,089,232

 
8,589,810

 
78,700

 
110,210

 
609,632


Total investment securities of $3.169 billion at June 30, 2016 decreased $128 million, or 4 percent, during the current quarter. The decrease in the investment portfolio resulted from the Company redeploying the investment securities portfolio cash flow into the Company’s higher yielding loan portfolio. Investment securities represented 34 percent of total assets at June 30, 2016 compared to 36 percent of total assets at December 31, 2015 and 34 percent at June 30, 2015.

The Company experienced a 14 percent annualized loan growth rate during the current quarter. The loan portfolio increased $181 million, or 3 percent, during the current quarter. The loan category with the largest dollar increase was commercial real estate which increased $92.6 million, or 3 percent. The loan category with the largest percentage increase during the current quarter was other commercial loans which increased $85.3 million, or 7 percent. Included in other commercial loans are agriculture production, municipal, and other commercial and industrial loans, all of which increased during the current quarter. Excluding the acquisition of Cañon National Bank (“Cañon”) in October 2015, the loan portfolio increased $411 million, or 9 percent, since June 30, 2015 with $209 million and $167 million of the increase coming from growth in commercial real estate and other commercial loans, respectively. “For the second consecutive quarter we generated outstanding loan growth that exceeded expectations,” Blodnick said. “The growth was well distributed among all our Banks and gives us confidence that we will exceed our loan growth targets for 2016.”
 

3


Credit Quality Summary
 
At or for the Six Months ended
 
At or for the Three Months ended
 
At or for the Year ended
 
At or for the Six Months ended
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Allowance for loan and lease losses
 
 
 
 
 
 
 
Balance at beginning of period
$
129,697

 
129,697

 
129,753

 
129,753

Provision for loan losses
568

 
568

 
2,284

 
1,047

Charge-offs
(2,532
)
 
(1,163
)
 
(7,001
)
 
(2,598
)
Recoveries
4,653

 
969

 
4,661

 
2,317

Balance at end of period
$
132,386

 
130,071

 
129,697

 
130,519

Other real estate owned
$
24,370

 
22,085

 
26,815

 
26,686

Accruing loans 90 days or more past due
6,194

 
4,615

 
2,131

 
618

Non-accrual loans
45,017

 
53,523

 
51,133

 
56,918

Total non-performing assets 1
$
75,581

 
80,223

 
80,079

 
84,222

Non-performing assets as a percentage of subsidiary assets
0.82
 %
 
0.88
%
 
0.88
%
 
0.98
%
Allowance for loan and lease losses as a percentage of non-performing loans
259
 %
 
224
%
 
244
%
 
227
%
Allowance for loan and lease losses as a percentage of total loans
2.46
 %
 
2.50
%
 
2.55
%
 
2.71
%
Net (recoveries) charge-offs as a percentage of total loans
(0.04
)%
 
—
%
 
0.05
%
 
0.01
%
Accruing loans 30-89 days past due
$
23,479

 
23,996

 
19,413

 
28,474

Accruing troubled debt restructurings
$
50,054

 
53,311

 
63,590

 
64,336

Non-accrual troubled debt restructurings
$
23,822

 
23,879

 
27,057

 
32,664

__________ 
1 As of June 30, 2016, non-performing assets have not been reduced by U.S. government guarantees of $2.3 million.

Non-performing assets at June 30, 2016 were $75.6 million, a decrease of $4.6 million, or 6 percent, during the current quarter and a decrease of $8.6 million, or 10 percent, from a year ago. Early stage delinquencies (accruing loans 30-89 days past due) of $23.4 million at June 30, 2016 decreased $517 thousand from the prior quarter.

The allowance loan and lease losses (“allowance”) as a percent of total loans outstanding at June 30, 2016 was 2.46 percent, a decrease of 9 basis points from 2.55 percent at December 31, 2015 which was driven by loan growth combined with stabilized credit quality. The allowance as a percent of total loans in the current quarter decreased 25 basis points from 2.71 percent at June 30, 2015 which was also the result of loan growth and stabilizing credit quality.


4


Credit Quality Trends and Provision for Loan Losses
(Dollars in thousands)
Provision
for Loan
Losses
 
Net
(Recoveries) Charge-Offs
 
ALLL
as a Percent
of Loans
 
Accruing
Loans 30-89
Days Past Due
as a Percent of
Loans
 
Non-Performing
Assets to
Total Subsidiary
Assets
Second quarter 2016
$
—

 
$
(2,315
)
 
2.46
%
 
0.44
%
 
0.82
%
First quarter 2016
568

 
194

 
2.50
%
 
0.46
%
 
0.88
%
Fourth quarter 2015
411

 
1,482

 
2.55
%
 
0.38
%
 
0.88
%
Third quarter 2015
826

 
577

 
2.68
%
 
0.37
%
 
0.97
%
Second quarter 2015
282

 
(381
)
 
2.71
%
 
0.59
%
 
0.98
%
First quarter 2015
765

 
662

 
2.77
%
 
0.71
%
 
1.07
%
Fourth quarter 2014
191

 
1,070

 
2.89
%
 
0.58
%
 
1.08
%
Third quarter 2014
360

 
364

 
2.93
%
 
0.39
%
 
1.21
%

Net recoveries for the current quarter were $2.3 million compared to net charge-offs of $194 thousand for the prior quarter and net recoveries of $381 thousand from the same quarter last year. The net recoveries and charge-offs continue to trend in the right direction with a fair amount of volatility during the quarters. The Company was fortunate to recover a larger credit during the current quarter that it had been working towards a resolution for some time. There was no current quarter provision for loan losses, compared to $568 thousand in the prior quarter and $282 thousand in the prior year second quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of the loan loss provision. 

Supplemental information regarding credit quality and identification of the Company’s loan portfolio based on regulatory classification is provided in the exhibits at the end of this press release. The regulatory classification of loans is based primarily on collateral type while the Company’s loan segments presented herein are based on the purpose of the loan.


5


Liability Summary
 
 
 
 
 
 
 
 
 
$ Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
1,907,026

 
1,887,004

 
1,918,310

 
1,731,015

 
20,022

 
(11,284
)
 
176,011

NOW and DDA accounts
1,495,952

 
1,448,454

 
1,516,026

 
1,396,997

 
47,498

 
(20,074
)
 
98,955

Savings accounts
926,865

 
879,541

 
838,274

 
751,519

 
47,324

 
88,591

 
175,346

Money market deposit accounts
1,403,028

 
1,411,970

 
1,382,028

 
1,335,625

 
(8,942
)
 
21,000

 
67,403

Certificate accounts
1,017,681

 
1,063,735

 
1,060,650

 
1,146,178

 
(46,054
)
 
(42,969
)
 
(128,497
)
Core deposits, total
6,750,552

 
6,690,704

 
6,715,288

 
6,361,334

 
59,848

 
35,264

 
389,218

Wholesale deposits
338,264

 
325,490

 
229,720

 
197,323

 
12,774

 
108,544

 
140,941

Deposits, total
7,088,816

 
7,016,194

 
6,945,008

 
6,558,657

 
72,622

 
143,808

 
530,159

Repurchase agreements
414,327

 
445,960

 
423,414

 
408,935

 
(31,633
)
 
(9,087
)
 
5,392

Federal Home Loan Bank advances
328,832

 
313,969

 
394,131

 
329,470

 
14,863

 
(65,299
)
 
(638
)
Other borrowed funds
4,926

 
6,633

 
6,602

 
6,665

 
(1,707
)
 
(1,676
)
 
(1,739
)
Subordinated debentures
125,920

 
125,884

 
125,848

 
125,776

 
36

 
72

 
144

Other liabilities
111,962

 
118,422

 
117,579

 
103,856

 
(6,460
)
 
(5,617
)
 
8,106

Total liabilities
$
8,074,783

 
8,027,062

 
8,012,582

 
7,533,359

 
47,721

 
62,201

 
541,424


Non-interest bearing deposits of $1.907 billion at June 30, 2016, increased $20 million, or 1 percent, from the prior quarter which was driven by seasonal fluctuations and a strong inflow of new accounts. Excluding the Cañon acquisition, non-interest bearing deposits increased $86.9 million, or 5 percent, from June 30, 2015. Core interest bearing deposits of $4.844 billion at June 30, 2016, increased $39.8 million, or 1 percent, from the prior quarter. Excluding the Cañon acquisition, core interest bearing deposits at June 30, 2016 increased $65.0 million, or 1 percent, from June 30, 2015. Wholesale deposits (i.e., brokered deposits classified as NOW, DDA, money market deposit and certificate accounts) of $338 million at June 30, 2016 increased $109 million since December 31, 2015 and increased $141 million over the prior year second quarter. A majority of the increase was driven by a need to obtain wholesale deposits necessary for an interest rate swap.

Securities sold under agreements to repurchase (“repurchase agreements”) of $414 million at June 30, 2016 decreased $31.6 million, or 7 percent, from the prior quarter and increased $5.4 million, or 1 percent, from the prior year second quarter. Repurchase agreements fluctuated as certain customers had significant deposit cash flows. Federal Home Loan Bank (“FHLB”) advances of $329 million at June 30, 2016 increased $14.9 million, or 4 percent, during the current quarter to supplement the need for additional borrowings due to the loan growth in excess of deposit growth.


6


Stockholders’ Equity Summary
 
 
 
 
 
 
 
 
 
$ Change from
(Dollars in thousands, except per share data)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Common equity
$
1,104,246

 
1,088,359

 
1,074,661

 
1,051,011

 
15,887

 
29,585

 
53,235

Accumulated other comprehensive income
20,413

 
5,321

 
1,989

 
5,440

 
15,092

 
18,424

 
14,973

Total stockholders’ equity
1,124,659

 
1,093,680

 
1,076,650

 
1,056,451

 
30,979

 
48,009

 
68,208

Goodwill and core deposit intangible, net
(153,608
)
 
(154,396
)
 
(155,193
)
 
(142,344
)
 
788

 
1,585

 
(11,264
)
Tangible stockholders’ equity
$
971,051

 
939,284

 
921,457

 
914,107

 
31,767

 
49,594

 
56,944

Stockholders’ equity to total assets
12.23
%
 
11.99
%
 
11.85
%
 
12.30
%
 
 
 
 
 
 
Tangible stockholders’ equity to total tangible assets
10.73
%
 
10.48
%
 
10.31
%
 
10.82
%
 
 
 
 
 
 
Book value per common share
$
14.76

 
14.36

 
14.15

 
13.99

 
0.40

 
0.61

 
0.77

Tangible book value per common share
$
12.75

 
12.33

 
12.11

 
12.10

 
0.42

 
0.64

 
0.65


Tangible stockholders’ equity of $971 million at June 30, 2016 increased $31.8 million, or 3 percent, from the prior quarter primarily from earnings retention and an increase in accumulated other comprehensive income. The increase in accumulated other comprehensive income was from an increase in unrealized gains on the available-for-sale investment securities portfolio driven by lower interest rates in the current quarter. Tangible stockholders’ equity increased $56.9 million, or 6 percent, from a year ago, the result of earnings retention, an increase in accumulated other comprehensive income and $15.2 million of Company stock issued in connection with the Cañon acquisition; such increases more than offset the increase in goodwill and other intangibles from the Cañon acquisition. At June 30, 2016, the tangible book value per common share was $12.75 an increase of $0.42 per share from $12.33 the prior quarter principally due to earnings retention and the increase in accumulated other comprehensive income. Tangible book value per common share for June 30, 2016, increased $0.65 per share from the prior year second quarter.

Cash Dividend
On June 29, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share. The dividend was payable July 21, 2016 to shareholders of record July 12, 2016. 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 June 30, 2016 
Compared to March 31, 2016 and June 30, 2015

Income Summary
 
Three Months ended
 
$ Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Jun 30,
2015
 
Mar 31,
2016
 
Jun 30,
2015
Net interest income
 
 
 
 
 
 
 
 
 
Interest income
$
86,069

 
84,381

 
78,617

 
1,688

 
7,452

Interest expense
7,424

 
7,675

 
7,369

 
(251
)
 
55

Total net interest income
78,645

 
76,706

 
71,248

 
1,939

 
7,397

Non-interest income
 
 
 
 
 
 
 
 
 
Service charges and other fees
15,772

 
14,681

 
15,062

 
1,091

 
710

Miscellaneous loan fees and charges
1,163

 
1,021

 
1,142

 
142

 
21

Gain on sale of loans
8,257

 
5,992

 
7,600

 
2,265

 
657

(Loss) gain on sale of investments
(220
)
 
108

 
(98
)
 
(328
)
 
(122
)
Other income
1,787

 
2,450

 
2,096

 
(663
)
 
(309
)
Total non-interest income
26,759

 
24,252

 
25,802

 
2,507

 
957

 
$
105,404

 
100,958

 
97,050

 
4,446

 
8,354

Net interest margin (tax-equivalent)
4.06
%
 
4.01
%
 
3.98
%
 
 
 
 

Net Interest Income
In the current quarter, interest income of $86.1 million increased $1.7 million, or 2 percent from the prior quarter and was primarily driven by the increase in interest income from commercial loans. Commercial loan income increased $2.5 million, or 6 percent, during the current quarter with $759 thousand attributable to interest income recovered from loans previously placed on non-accrual. Current quarter interest income increased $7.5 million, or 9 percent, over the prior year second quarter because of increases in interest income on commercial loans which increased $6.3 million, or 15 percent, and increases in investment income which increased $1.1 million, or 5 percent.

The current quarter interest expense of $7.4 million decreased $251 thousand, or 3 percent, from the prior quarter and increased $55 thousand from the prior year second quarter. The total cost of funding (including non-interest bearing deposits) for the current quarter was 38 basis points compared to 39 basis points for the prior quarter and 40 basis points in the prior year second quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.06 percent compared to 4.01 percent in the prior quarter. During the current quarter, the earning asset yield increased by 5 basis points and was primarily the result of a 4 basis points increase from the recovery of interest on loans previously placed on non-accrual. The Company’s current quarter net interest margin increased 8 basis points from the prior year second quarter net interest margin of 3.98 percent. The increase was driven by the shift in earning assets from the lower yielding investment securities to higher yielding loans, the current quarter recovery of interest on loans, and lower funding cost. “Excluding the impact of the interest recovery, the Company experienced a stable net interest margin of 4.02 percent for the current quarter. The shift in earning assets from investment securities to the the higher yielding loan portfolio continues to benefit the Company,” said Ron Copher, Chief Financial Officer.



8


Non-interest Income
Non-interest income for the current quarter totaled $26.8 million, an increase of $2.5 million, or 10 percent, from the prior quarter and an increase of $957 thousand, or 4 percent, over the same quarter last year. Service fee income of $15.8 million, increased $1.1 million, or 7 percent, from the prior quarter as a result of seasonal activity, an increase in the number of deposit accounts, and annual vendor incentives. Service fee income for the current quarter increased by $710 thousand, or 5 percent, from the prior year second quarter because of the increased number of deposit accounts. Gain on sale of residential loans for the current quarter increased $2.3 million, or 38 percent, from the prior quarter due to seasonal activity and the low interest rate environment. Gain on sale of residential loans for the current quarter increased $657 thousand, or 9 percent, from the prior year second quarter as the Company benefited from its focus on residential lending and a beneficial interest rate environment for mortgage loans. Included in other income was operating revenue of $40 thousand from other real estate owned (“OREO”) and a gain of $142 thousand from the sale of OREO, a combined total of $182 thousand for the current quarter compared to $214 thousand for the prior quarter and $323 thousand for the prior year second quarter.

Non-interest Expense Summary
 
Three Months ended
 
$ Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Jun 30,
2015
 
Mar 31,
2016
 
Jun 30,
2015
Compensation and employee benefits
$
37,560

 
36,941

 
32,729

 
619

 
4,831

Occupancy and equipment
6,443

 
6,676

 
6,432

 
(233
)
 
11

Advertising and promotions
2,085

 
2,125

 
2,240

 
(40
)
 
(155
)
Data processing
3,938

 
3,373

 
2,971

 
565

 
967

Other real estate owned
214

 
390

 
1,377

 
(176
)
 
(1,163
)
Regulatory assessments and insurance
1,066

 
1,508

 
1,006

 
(442
)
 
60

Core deposit intangibles amortization
788

 
797

 
755

 
(9
)
 
33

Other expenses
12,367

 
10,546

 
12,435

 
1,821

 
(68
)
Total non-interest expense
$
64,461

 
62,356

 
59,945

 
2,105

 
4,516


Compensation and employee benefits for the current quarter increased by $619 thousand, or 2 percent, from the prior quarter as a result of seasonal fluctuations. Compensation and employee benefits for the current quarter increased by $4.8 million, or 15 percent, from the prior year second quarter due to the increased number of employees, including increases from the Cañon acquisition, and annual salary increases. Current quarter occupancy and equipment expense decreased $233 thousand, or 3 percent, from the prior quarter and increased $11 thousand, or 17 basis points, from the prior year second quarter. The current quarter data processing expense increased $565 thousand, or 17 percent, from the prior quarter and increased $967 thousand from the prior year second quarter; such increases primarily from expenses associated with CCP. The current quarter OREO expense of $214 thousand included $145 thousand of operating expense, $24 thousand of fair value write-downs, and $45 thousand of loss from the sales of OREO. Current quarter other expenses of $12.4 million increased $1.8 million, or 17 percent, from the prior quarter and was driven by increases from acquisition-related expenses, including conversion expenses, and costs associated with CCP. Current quarter other expenses remained stable in total compared to the prior year second quarter, however several areas experienced increases or decreases related to acquisitions, CCP, and expenses connected with equity investments in New Market Tax Credit (“NMTC”) projects.


9


Efficiency Ratio
The current quarter efficiency ratio was 56.10 percent, a 43 basis points reduction from the prior quarter efficiency ratio of 56.53 percent which was driven by increases in interest income on commercial loans, service charges and gain on sale of residential loans. The current quarter efficiency ratio of 56.10 percent compared to 55.91 percent in the prior year second quarter. The 19 basis points increase in the efficiency ratio was the result of additional costs associated with CCP, which was greater than the benefits experienced in net interest income and non-interest income.

Operating Results for Six Months ended June 30, 2016
Compared to June 30, 2015

Income Summary
 
Six Months ended
 
$ Change
 
% Change
(Dollars in thousands)
June 30,
2016
 
June 30,
2015
 
Net interest income
 
 
 
 
 
 
 
Interest income
$
170,450

 
$
156,103

 
$
14,347

 
9
 %
Interest expense
15,099

 
14,751

 
348

 
2
 %
Total net interest income
155,351

 
141,352

 
13,999

 
10
 %
Non-interest income
 
 
 
 
 
 
 
Service charges and other fees
30,453

 
28,511

 
1,942

 
7
 %
Miscellaneous loan fees and charges
2,184

 
2,299

 
(115
)
 
(5
)%
Gain on sale of loans
14,249

 
13,030

 
1,219

 
9
 %
(Loss) gain on sale of investments
(112
)
 
(93
)
 
(19
)
 
20
 %
Other income
4,237

 
4,748

 
(511
)
 
(11
)%
Total non-interest income
51,011

 
48,495

 
2,516

 
5
 %
 
$
206,362

 
$
189,847

 
$
16,515

 
9
 %
Net interest margin (tax-equivalent)
4.04
%
 
4.00
%
 
 
 
 

Net Interest Income
Net interest income for the first six months of the current year was $155.4 million, an increase of $14.0 million, or 10 percent, over the same period last year. Interest income for the first six months of the current year increased $14.3 million, or 9 percent, from the prior year first six months and was principally due to an $11.8 million increase in income from commercial loans. Additional increases included $2.0 million in interest income from investment securities and $706 thousand in interest income from residential loans.

Interest expense of $15.1 million for the first half the current year increased $348 thousand, or 2 percent, over the prior year first half. Deposit interest expense for the first six months of the current year increased $1.1 million, or 13 percent, from the prior year first six months and was driven by the increase in wholesale deposits and the additional interest expense for an interest rate swap with a notional $100 million that began its accrual period in December 2015. FHLB interest expense decreased $1.1 million, or 25 percent, which resulted from long-term advances maturing and being replaced by lower rate short-term advances. The total funding cost (including non-interest bearing deposits) for the first six months of 2016 was 39 basis points compared to 41 basis points for the first six months of 2015. 


10


The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first six months of 2016 was 4.04 percent, a 4 basis point increase from the net interest margin of 4.00 percent for the first six months of 2015. The increase in the margin was primarily attributable to a shift in earning assets to higher yielding loans combined with a continued increase in low cost deposits.

Non-interest Income
Non-interest income of $51.0 million for the first half of 2016 increased $2.5 million, or 5 percent, over the same period last year. Service charges and other fees of $30.5 million for the first six months of 2016 increased $1.9 million, or 7 percent, from the same period last year as a result of an increased number of deposit accounts and increases from recent acquisitions. The gain of $14.2 million on the sale of residential loans for the first half of 2016 increased $1.2 million, or 9 percent, from the first half of 2015. Included in other income was operating revenue of $50 thousand from OREO and gains of $345 thousand from the sales of OREO, which totaled $395 thousand for the first half of 2016 compared to $740 thousand for the same period in the prior year.

Non-interest Expense Summary
 
Six Months ended
 
$ Change
 
% Change
(Dollars in thousands)
June 30,
2016
 
June 30,
2015
 
Compensation and employee benefits
$
74,501

 
$
64,973

 
$
9,528

 
15
 %
Occupancy and equipment
13,119

 
12,492

 
627

 
5
 %
Advertising and promotions
4,210

 
4,167

 
43

 
1
 %
Data processing
7,311

 
5,522

 
1,789

 
32
 %
Other real estate owned
604

 
2,135

 
(1,531
)
 
(72
)%
Regulatory assessments and insurance
2,574

 
2,311

 
263

 
11
 %
Core deposit intangible amortization
1,585

 
1,486

 
99

 
7
 %
Other expenses
22,913

 
22,356

 
557

 
2
 %
Total non-interest expense
$
126,817

 
$
115,442

 
$
11,375

 
10
 %

Compensation and employee benefits for the first six months of 2016 increased $9.5 million, or 15 percent, from the same period last year due to expenses related to CCP, the increased number of employees including from the acquired banks, and annual salary increases. Occupancy and equipment expense of $13.1 million for the first half of 2016 increased $627 thousand, or 5 percent. Outsourced data processing expense increased $1.8 million, or 32 percent, from the prior year first six months as a result of additional costs from CCP. OREO expense of $604 thousand in the first six months of 2016 decreased $1.5 million, or 72 percent, from the first six months of the prior year. OREO expense for the first six months of 2016 included $281 thousand of operating expenses, $79 thousand of fair value write-downs, and $244 thousand of loss from the sales of OREO.

Provision for Loan Losses
The provision for loan losses was $568 thousand for the first six months of 2016, a decrease of $479 thousand, or 46 percent, from the same period in the prior year. Net recovery of loans during the first six months of 2016 was $2.1 million compared to net charge-offs of $281 thousand from the first six months of 2015.

Efficiency Ratio
The efficiency ratio was 56.31 percent for the first six months of 2016 and 55.36 percent for the first six months of 2015. Although there were increases in both net interest income and non-interest income, such increases were outpaced by the increases in CCP expenses and compensation expenses which contributed to the higher efficiency ratio in 2016.


11


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;
•
legislative or regulatory changes, including increased banking and consumer protection regulation that adversely affect the Company’s business;
•
ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;
•
costs or difficulties related to the completion and integration of acquisitions;
•
the goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings and capital;
•
reduced demand for banking products and services;
•
the 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;
•
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;
•
potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks, fraud or system failures; and
•
the Company’s success in managing risks involved in 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 22, 2016. The conference call will be accessible by telephone and through the Internet. Interested individuals are invited to listen to the call by telephone at 877-561-2748 and the conference ID is 41356911. To participate on the webcast, log on to: http://edge.media-server.com/m/p/grb9rbne. If you are unable to participate during the live webcast, the call will be archived on our Web site, www.glacierbancorp.com, or by calling 855-859-2056 with the ID 41356911 until August 5, 2016.


12


About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 88 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and  is the parent company for Glacier Bank, Kalispell and Bank divisions First Security Bank of Missoula; Valley Bank of Helena; Big Sky Western Bank, Bozeman; Western Security Bank, Billings; and First Bank of Montana, Lewistown, all operating in Montana; as well as Mountain West Bank, Coeur d’Alene operating in Idaho, Utah and Washington; Citizens Community Bank, Pocatello, operating in Idaho; 1st Bank, Evanston, operating in Wyoming and Utah;  First Bank of Wyoming, Powell and First State Bank, Wheatland, each operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and Bank of the San Juans, Durango, operating in Colorado.


13


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

(Dollars in thousands, except per share data)
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
June 30,
2015
Assets
 
 
 
 
 
 
 
Cash on hand and in banks
$
147,748

 
104,222

 
117,137

 
120,783

Federal funds sold
—

 
1,400

 
6,080

 
—

Interest bearing cash deposits
12,585

 
45,239

 
70,036

 
234,936

Cash and cash equivalents
160,333

 
150,861

 
193,253

 
355,719

Investment securities, available-for-sale
2,487,955

 
2,604,625

 
2,610,760

 
2,361,830

Investment securities, held-to-maturity
680,574

 
691,663

 
702,072

 
593,314

Total investment securities
3,168,529

 
3,296,288

 
3,312,832

 
2,955,144

Loans held for sale
74,140

 
40,484

 
56,514

 
53,201

Loans receivable
5,378,617

 
5,197,193

 
5,078,681

 
4,807,431

Allowance for loan and lease losses
(132,386
)
 
(130,071
)
 
(129,697
)
 
(130,519
)
Loans receivable, net
5,246,231

 
5,067,122

 
4,948,984

 
4,676,912

Premises and equipment, net
177,911

 
192,951

 
194,030

 
186,858

Other real estate owned
24,370

 
22,085

 
26,815

 
26,686

Accrued interest receivable
47,554

 
47,363

 
44,524

 
44,563

Deferred tax asset
46,488

 
55,773

 
58,475

 
56,571

Core deposit intangible, net
12,970

 
13,758

 
14,555

 
11,501

Goodwill
140,638

 
140,638

 
140,638

 
130,843

Non-marketable equity securities
24,791

 
24,199

 
27,495

 
24,914

Other assets
75,487

 
69,220

 
71,117

 
66,898

Total assets
$
9,199,442

 
9,120,742

 
9,089,232

 
8,589,810

Liabilities
 
 
 
 
 
 
 
Non-interest bearing deposits
$
1,907,026

 
1,887,004

 
1,918,310

 
1,731,015

Interest bearing deposits
5,181,790

 
5,129,190

 
5,026,698

 
4,827,642

Securities sold under agreements to repurchase
414,327

 
445,960

 
423,414

 
408,935

FHLB advances
328,832

 
313,969

 
394,131

 
329,470

Other borrowed funds
4,926

 
6,633

 
6,602

 
6,665

Subordinated debentures
125,920

 
125,884

 
125,848

 
125,776

Accrued interest payable
3,486

 
3,608

 
3,517

 
3,790

Other liabilities
108,476

 
114,814

 
114,062

 
100,066

Total liabilities
8,074,783

 
8,027,062

 
8,012,582

 
7,533,359

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
762

 
762

 
761

 
755

Paid-in capital
737,379

 
736,664

 
736,368

 
720,073

Retained earnings - substantially restricted
366,105

 
350,933

 
337,532

 
330,183

Accumulated other comprehensive income
20,413

 
5,321

 
1,989

 
5,440

Total stockholders’ equity
1,124,659

 
1,093,680

 
1,076,650

 
1,056,451

Total liabilities and stockholders’ equity
$
9,199,442

 
9,120,742

 
9,089,232

 
8,589,810



14


Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

 
Three Months ended
 
Six Months ended
(Dollars in thousands, except per share data)
June 30,
2016
 
March 31,
2016
 
June 30,
2015
 
June 30,
2016
 
June 30,
2015
Interest Income
 
 
 
 
 
 
 
 
 
Investment securities
$
23,037

 
23,883

 
21,959

 
46,920

 
44,918

Residential real estate loans
8,124

 
8,285

 
7,942

 
16,409

 
15,703

Commercial loans
47,002

 
44,503

 
40,698

 
91,505

 
79,720

Consumer and other loans
7,906

 
7,710

 
8,018

 
15,616

 
15,762

Total interest income
86,069

 
84,381

 
78,617

 
170,450

 
156,103

Interest Expense
 
 
 
 
 
 
 
 
 
Deposits
4,560

 
4,795

 
4,112

 
9,355

 
8,259

Securities sold under agreements to repurchase
275

 
318

 
232

 
593

 
473

Federal Home Loan Bank advances
1,665

 
1,652

 
2,217

 
3,317

 
4,412

Federal funds purchased and other borrowed funds
14

 
18

 
15

 
32

 
42

Subordinated debentures
910

 
892

 
793

 
1,802

 
1,565

Total interest expense
7,424

 
7,675

 
7,369

 
15,099

 
14,751

Net Interest Income
78,645

 
76,706

 
71,248

 
155,351

 
141,352

Provision for loan losses
—

 
568

 
282

 
568

 
1,047

Net interest income after provision for loan losses
78,645

 
76,138

 
70,966

 
154,783

 
140,305

Non-Interest Income
 
 
 
 
 
 
 
 
 
Service charges and other fees
15,772

 
14,681

 
15,062

 
30,453

 
28,511

Miscellaneous loan fees and charges
1,163

 
1,021

 
1,142

 
2,184

 
2,299

Gain on sale of loans
8,257

 
5,992

 
7,600

 
14,249

 
13,030

(Loss) gain on sale of investments
(220
)
 
108

 
(98
)
 
(112
)
 
(93
)
Other income
1,787

 
2,450

 
2,096

 
4,237

 
4,748

Total non-interest income
26,759

 
24,252

 
25,802

 
51,011

 
48,495

Non-Interest Expense
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
37,560

 
36,941

 
32,729

 
74,501

 
64,973

Occupancy and equipment
6,443

 
6,676

 
6,432

 
13,119

 
12,492

Advertising and promotions
2,085

 
2,125

 
2,240

 
4,210

 
4,167

Data processing
3,938

 
3,373

 
2,971

 
7,311

 
5,522

Other real estate owned
214

 
390

 
1,377

 
604

 
2,135

Regulatory assessments and insurance
1,066

 
1,508

 
1,006

 
2,574

 
2,311

Core deposit intangibles amortization
788

 
797

 
755

 
1,585

 
1,486

Other expenses
12,367

 
10,546

 
12,435

 
22,913

 
22,356

Total non-interest expense
64,461

 
62,356

 
59,945

 
126,817

 
115,442

Income Before Income Taxes
40,943

 
38,034

 
36,823

 
78,977

 
73,358

Federal and state income tax expense
10,492

 
9,352

 
7,488

 
19,844

 
16,353

Net Income
$
30,451

 
28,682

 
29,335

 
59,133

 
57,005


15


Glacier Bancorp, Inc.
Average Balance Sheets

 
Three Months ended
 
June 30, 2016
 
June 30, 2015
(Dollars in thousands)
Average
Balance
 
Interest &
Dividends
 
Average
Yield/
Rate
 
Average
Balance
 
Interest &
Dividends
 
Average
Yield/
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
Residential real estate loans
$
731,432

 
$
8,124

 
4.44
%
 
$
688,214

 
$
7,942

 
4.62
%
Commercial loans 1
3,902,007

 
47,956

 
4.94
%
 
3,439,432

 
41,343

 
4.82
%
Consumer and other loans
666,212

 
7,906

 
4.77
%
 
627,847

 
8,018

 
5.12
%
Total loans 2
5,299,651

 
63,986

 
4.86
%
 
4,755,493

 
57,303

 
4.83
%
Tax-exempt investment securities 3
1,348,520

 
19,274

 
5.72
%
 
1,315,849

 
19,022

 
5.78
%
Taxable investment securities 4
1,915,740

 
10,686

 
2.23
%
 
1,848,222

 
9,655

 
2.09
%
Total earning assets
8,563,911

 
93,946

 
4.41
%
 
7,919,564

 
85,980

 
4.35
%
Goodwill and intangibles
153,981

 
 
 
 
 
142,781

 
 
 
 
Non-earning assets
390,457

 
 
 
 
 
391,562

 
 
 
 
Total assets
$
9,108,349

 
 
 
 
 
$
8,453,907

 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
1,853,649

 
$
—

 
—
%
 
$
1,693,414

 
$
—

 
—
%
NOW and DDA accounts
1,494,950

 
271

 
0.07
%
 
1,343,474

 
258

 
0.08
%
Savings accounts
901,367

 
108

 
0.05
%
 
744,845

 
84

 
0.05
%
Money market deposit accounts
1,398,230

 
540

 
0.16
%
 
1,336,889

 
513

 
0.15
%
Certificate accounts
1,033,866

 
1,558

 
0.61
%
 
1,153,143

 
1,784

 
0.62
%
Wholesale deposits 5
326,364

 
2,083

 
2.57
%
 
215,138

 
1,473

 
2.75
%
FHLB advances
392,835

 
1,665

 
1.68
%
 
315,104

 
2,217

 
2.78
%
Repurchase agreements and other borrowed funds
498,643

 
1,199

 
0.97
%
 
497,638

 
1,040

 
0.84
%
Total funding liabilities
7,899,904

 
7,424

 
0.38
%
 
7,299,645

 
7,369

 
0.40
%
Other liabilities
94,220

 
 
 
 
 
89,751

 
 
 
 
Total liabilities
7,994,124

 
 
 
 
 
7,389,396

 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Common stock
762

 
 
 
 
 
755

 
 
 
 
Paid-in capital
736,876

 
 
 
 
 
719,730

 
 
 
 
Retained earnings
365,385

 
 
 
 
 
329,781

 
 
 
 
Accumulated other comprehensive income
11,202

 
 
 
 
 
14,245

 
 
 
 
Total stockholders’ equity
1,114,225

 
 
 
 
 
1,064,511

 
 
 
 
Total liabilities and stockholders’ equity
$
9,108,349

 
 
 
 
 
$
8,453,907

 
 
 
 
Net interest income (tax-equivalent)
 
 
$
86,522

 
 
 
 
 
$
78,611

 
 
Net interest spread (tax-equivalent)
 
 
 
 
4.03
%
 
 
 
 
 
3.95
%
Net interest margin (tax-equivalent)
 
 
 
 
4.06
%
 
 
 
 
 
3.98
%
__________ 
1 
Includes tax effect of $954 thousand and $645 thousand on tax-exempt municipal loan and lease income for the three months ended June 30, 2016 and 2015, respectively.
2 
Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
3 
Includes tax effect of $6.6 million and $6.4 million on tax-exempt investment securities income for the three months ended June 30, 2016 and 2015, respectively.
4 
Includes tax effect of $352 thousand and $362 thousand on federal income tax credits for the three months ended June 30, 2016 and 2015, respectively.
5 
Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.

16


Glacier Bancorp, Inc.
Average Balance Sheets (continued)

 
Six Months ended
 
June 30, 2016
 
June 30, 2015
(Dollars in thousands)
Average
Balance
 
Interest &
Dividends
 
Average
Yield/
Rate
 
Average
Balance
 
Interest &
Dividends
 
Average
Yield/
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
Residential real estate loans
$
728,851

 
$
16,409

 
4.50
%
 
$
670,058

 
$
15,703

 
4.69
%
Commercial loans 1
3,825,968

 
93,291

 
4.90
%
 
3,361,582

 
80,948

 
4.86
%
Consumer and other loans
660,025

 
15,616

 
4.76
%
 
618,900

 
15,762

 
5.14
%
Total loans 2
5,214,844

 
125,316

 
4.83
%
 
4,650,540

 
112,413

 
4.87
%
Tax-exempt investment securities 3
1,350,601

 
38,656

 
5.72
%
 
1,309,049

 
37,515

 
5.73
%
Taxable investment securities 4
1,957,370

 
22,148

 
2.26
%
 
1,876,372

 
20,409

 
2.18
%
Total earning assets
8,522,815

 
186,120

 
4.39
%
 
7,835,961

 
170,337

 
4.38
%
Goodwill and intangibles
154,385

 
 
 
 
 
141,759

 
 
 
 
Non-earning assets
390,675

 
 
 
 
 
385,605

 
 
 
 
Total assets
$
9,067,875

 
 
 
 
 
$
8,363,325

 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
$
1,858,519

 
$
—

 
—
%
 
$
1,655,981

 
$
—

 
—
%
NOW and DDA accounts
1,480,065

 
564

 
0.08
%
 
1,327,491

 
526

 
0.08
%
Savings accounts
882,565

 
212

 
0.05
%
 
729,456

 
173

 
0.05
%
Money market deposit accounts
1,402,474

 
1,092

 
0.16
%
 
1,320,538

 
1,030

 
0.16
%
Certificate accounts
1,052,460

 
3,123

 
0.60
%
 
1,159,279

 
3,627

 
0.63
%
Wholesale deposits 5
330,745

 
4,364

 
2.65
%
 
217,746

 
2,903

 
2.69
%
FHLB advances
350,438

 
3,317

 
1.87
%
 
307,581

 
4,412

 
2.85
%
Repurchase agreements and other borrowed funds
510,104

 
2,427

 
0.96
%
 
500,710

 
2,080

 
0.84
%
Total funding liabilities
7,867,370

 
15,099

 
0.39
%
 
7,218,782

 
14,751

 
0.41
%
Other liabilities
95,461

 
 
 
 
 
88,952

 
 
 
 
Total liabilities
7,962,831

 
 
 
 
 
7,307,734

 
 
 
 
Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
Common stock
761

 
 
 
 
 
754

 
 
 
 
Paid-in capital
736,637

 
 
 
 
 
715,949

 
 
 
 
Retained earnings
358,461

 
 
 
 
 
321,936

 
 
 
 
Accumulated other comprehensive income
9,185

 
 
 
 
 
16,952

 
 
 
 
Total stockholders’ equity
1,105,044

 
 
 
 
 
1,055,591

 
 
 
 
Total liabilities and stockholders’ equity
$
9,067,875

 
 
 
 
 
$
8,363,325

 
 
 
 
Net interest income (tax-equivalent)
 
 
$
171,021

 
 
 
 
 
$
155,586

 
 
Net interest spread (tax-equivalent)
 
 
 
 
4.00
%
 
 
 
 
 
3.97
%
Net interest margin (tax-equivalent)
 
 
 
 
4.04
%
 
 
 
 
 
4.00
%
__________ 
1 
Includes tax effect of $1.8 million and $1.2 million on tax-exempt municipal loan and lease income for the six months ended June 30, 2016 and 2015, respectively.
2 
Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
3 
Includes tax effect of $13.2 million and $12.3 million on tax-exempt investment securities income for the six months ended June 30, 2016 and 2015, respectively.
4 
Includes tax effect of $704 thousand and $724 thousand on federal income tax credits for the six months ended June 30, 2016 and 2015, respectively.
5 
Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts.


17


Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification

 
Loans Receivable, by Loan Type
 
% Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Custom and owner occupied construction
$
78,525

 
$
68,893

 
$
75,094

 
$
56,460

 
14
 %
 
5
 %
 
39
 %
Pre-sold and spec construction
59,530

 
59,220

 
50,288

 
45,063

 
1
 %
 
18
 %
 
32
 %
Total residential construction
138,055

 
128,113

 
125,382

 
101,523

 
8
 %
 
10
 %
 
36
 %
Land development
61,803

 
59,539

 
62,356

 
78,059

 
4
 %
 
(1
)%
 
(21
)%
Consumer land or lots
95,247

 
93,922

 
97,270

 
98,365

 
1
 %
 
(2
)%
 
(3
)%
Unimproved land
70,396

 
73,791

 
73,844

 
76,726

 
(5
)%
 
(5
)%
 
(8
)%
Developed lots for operative builders
13,845

 
12,973

 
12,336

 
13,673

 
7
 %
 
12
 %
 
1
 %
Commercial lots
26,084

 
23,558

 
22,035

 
20,047

 
11
 %
 
18
 %
 
30
 %
Other construction
206,343

 
166,378

 
156,784

 
126,966

 
24
 %
 
32
 %
 
63
 %
Total land, lot, and other construction
473,718

 
430,161

 
424,625

 
413,836

 
10
 %
 
12
 %
 
14
 %
Owner occupied
927,237

 
944,411

 
938,625

 
874,651

 
(2
)%
 
(1
)%
 
6
 %
Non-owner occupied
835,272

 
806,856

 
774,192

 
718,024

 
4
 %
 
8
 %
 
16
 %
Total commercial real estate
1,762,509

 
1,751,267

 
1,712,817

 
1,592,675

 
1
 %
 
3
 %
 
11
 %
Commercial and industrial
705,011

 
664,855

 
649,553

 
635,259

 
6
 %
 
9
 %
 
11
 %
Agriculture
421,097

 
372,616

 
367,339

 
374,258

 
13
 %
 
15
 %
 
13
 %
1st lien
867,918

 
841,848

 
856,193

 
802,152

 
3
 %
 
1
 %
 
8
 %
Junior lien
64,248

 
63,162

 
65,383

 
67,019

 
2
 %
 
(2
)%
 
(4
)%
Total 1-4 family
932,166

 
905,010

 
921,576

 
869,171

 
3
 %
 
1
 %
 
7
 %
Multifamily residential
198,583

 
197,267

 
201,542

 
195,674

 
1
 %
 
(1
)%
 
1
 %
Home equity lines of credit
388,939

 
379,866

 
372,039

 
356,077

 
2
 %
 
5
 %
 
9
 %
Other consumer
156,568

 
150,047

 
150,469

 
147,427

 
4
 %
 
4
 %
 
6
 %
Total consumer
545,507

 
529,913

 
522,508

 
503,504

 
3
 %
 
4
 %
 
8
 %
Other
276,111

 
258,475

 
209,853

 
174,732

 
7
 %
 
32
 %
 
58
 %
Total loans receivable, including loans held for sale
5,452,757

 
5,237,677

 
5,135,195

 
4,860,632

 
4
 %
 
6
 %
 
12
 %
Less loans held for sale 1
(74,140
)
 
(40,484
)
 
(56,514
)
 
(53,201
)
 
83
 %
 
31
 %
 
39
 %
Total loans receivable
$
5,378,617

 
$
5,197,193

 
$
5,078,681

 
$
4,807,431

 
3
 %
 
6
 %
 
12
 %
_______
1 Loans held for sale are primarily 1st lien 1-4 family loans.


18


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)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Jun 30,
2016
 
Jun 30,
2016
 
Jun 30,
2016
Custom and owner occupied construction
$
390

 
995

 
1,016

 
1,079

 
390

 
—

 
—

Pre-sold and spec construction
—

 
—

 
—

 
18

 
—

 
—

 
—

Total residential construction
390

 
995

 
1,016

 
1,097

 
390

 
—

 
—

Land development
12,830

 
18,190

 
17,582

 
20,405

 
2,128

 
—

 
10,702

Consumer land or lots
1,656

 
1,751

 
2,250

 
2,647

 
823

 
—

 
833

Unimproved land
12,147

 
11,651

 
12,328

 
12,580

 
8,109

 
—

 
4,038

Developed lots for operative builders
176

 
457

 
488

 
848

 
1

 
—

 
175

Commercial lots
1,979

 
1,333

 
1,521

 
2,050

 
217

 
—

 
1,762

Other construction
—

 
—

 
4,236

 
4,244

 
—

 
—

 
—

Total land, lot and other construction
28,788

 
33,382

 
38,405

 
42,774

 
11,278

 
—

 
17,510

Owner occupied
10,503

 
12,130

 
10,952

 
13,057

 
8,620

 
—

 
1,883

Non-owner occupied
4,055

 
4,354

 
3,446

 
3,179

 
3,378

 
—

 
677

Total commercial real estate
14,558

 
16,484

 
14,398

 
16,236

 
11,998

 
—

 
2,560

Commercial and industrial
7,123

 
6,046

 
3,993

 
5,805

 
5,789

 
1,313

 
21

Agriculture
3,979

 
3,220

 
3,281

 
2,769

 
2,544

 
1,435

 
—

1st lien
11,332

 
11,041

 
10,691

 
9,867

 
6,171

 
1,261

 
3,900

Junior lien
1,489

 
1,111

 
668

 
739

 
1,349

 
—

 
140

Total 1-4 family
12,821

 
12,152

 
11,359

 
10,606

 
7,520

 
1,261

 
4,040

Multifamily residential
432

 
432

 
113

 
—

 
432

 
—

 
—

Home equity lines of credit
5,413

 
5,432

 
5,486

 
4,742

 
4,898

 
382

 
133

Other consumer
275

 
280

 
228

 
164

 
168

 
1

 
106

Total consumer
5,688

 
5,712

 
5,714

 
4,906

 
5,066

 
383

 
239

Other
1,802

 
1,800

 
1,800

 
29

 
—

 
1,802

 
—

Total
$
75,581

 
80,223

 
80,079

 
84,222

 
45,017

 
6,194

 
24,370



19


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)

 
Accruing 30-89 Days Delinquent Loans,  by Loan Type
 
% Change from
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
Custom and owner occupied construction
$
375

 
$
—

 
$
462

 
$
—

 
n/m

 
(19
)%
 
n/m

Pre-sold and spec construction
304

 
304

 
181

 
—

 
—
 %
 
68
 %
 
n/m

Total residential construction
679

 
304

 
643

 
—

 
123
 %
 
6
 %
 
n/m

Land development
37

 
198

 
447

 
—

 
(81
)%
 
(92
)%
 
n/m

Consumer land or lots
676

 
796

 
166

 
158

 
(15
)%
 
307
 %
 
328
 %
Unimproved land
879

 
1,284

 
774

 
755

 
(32
)%
 
14
 %
 
16
 %
Developed lots for operative builders
166

 
—

 
—

 
—

 
n/m

 
n/m

 
n/m

Commercial lots
—

 
—

 
—

 
66

 
n/m

 
n/m

 
(100
)%
Other construction
—

 
—

 
337

 
—

 
n/m

 
(100
)%
 
n/m

Total land, lot and other construction
1,758

 
2,278

 
1,724

 
979

 
(23
)%
 
2
 %
 
80
 %
Owner occupied
2,975

 
4,552

 
2,760

 
4,727

 
(35
)%
 
8
 %
 
(37
)%
Non-owner occupied
5,364

 
1,466

 
923

 
8,257

 
266
 %
 
481
 %
 
(35
)%
Total commercial real estate
8,339

 
6,018

 
3,683

 
12,984

 
39
 %
 
126
 %
 
(36
)%
Commercial and industrial
4,956

 
4,907

 
1,968

 
6,760

 
1
 %
 
152
 %
 
(27
)%
Agriculture
804

 
659

 
1,014

 
353

 
22
 %
 
(21
)%
 
128
 %
1st lien
2,667

 
5,896

 
6,272

 
2,891

 
(55
)%
 
(57
)%
 
(8
)%
Junior lien
1,251

 
759

 
1,077

 
335

 
65
 %
 
16
 %
 
273
 %
Total 1-4 family
3,918

 
6,655

 
7,349

 
3,226

 
(41
)%
 
(47
)%
 
21
 %
Multifamily Residential
—

 
—

 
662

 
671

 
n/m

 
(100
)%
 
(100
)%
Home equity lines of credit
2,253

 
2,528

 
1,046

 
2,464

 
(11
)%
 
115
 %
 
(9
)%
Other consumer
736

 
607

 
1,227

 
996

 
21
 %
 
(40
)%
 
(26
)%
Total consumer
2,989

 
3,135

 
2,273

 
3,460

 
(5
)%
 
32
 %
 
(14
)%
Other
36

 
40

 
97

 
41

 
(10
)%
 
(63
)%
 
(12
)%
Total
$
23,479

 
$
23,996

 
$
19,413

 
$
28,474

 
(2
)%
 
21
 %
 
(18
)%
_______
n/m - not measurable


20


Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification (continued)

 
Net Charge-Offs (Recoveries), Year-to-Date
Period Ending, By Loan Type
 
Charge-Offs
 
Recoveries
(Dollars in thousands)
Jun 30,
2016
 
Mar 31,
2016
 
Dec 31,
2015
 
Jun 30,
2015
 
Jun 30,
2016
 
Jun 30,
2016
Pre-sold and spec construction
$
(37
)
 
(28
)
 
(53
)
 
(23
)
 
—

 
37

Land development
(2,342
)
 
(100
)
 
(288
)
 
(807
)
 
27

 
2,369

Consumer land or lots
(351
)
 
(240
)
 
66

 
(77
)
 
25

 
376

Unimproved land
(46
)
 
(34
)
 
(325
)
 
(86
)
 
—

 
46

Developed lots for operative builders
(54
)
 
(12
)
 
(85
)
 
(98
)
 
—

 
54

Commercial lots
21

 
23

 
(26
)
 
(3
)
 
24

 
3

Other construction
—

 
—

 
(1
)
 
(1
)
 
—

 
—

Total land, lot and other construction
(2,772
)
 
(363
)
 
(659
)
 
(1,072
)
 
76

 
2,848

Owner occupied
(51
)
 
(27
)
 
247

 
271

 
8

 
59

Non-owner occupied
(3
)
 
(1
)
 
93

 
109

 
—

 
3

Total commercial real estate
(54
)
 
(28
)
 
340

 
380

 
8

 
62

Commercial and industrial
(112
)
 
69

 
1,389

 
1,007

 
590

 
702

Agriculture
(1
)
 
(1
)
 
50

 
(7
)
 
—

 
1

1st lien
245

 
47

 
834

 
(49
)
 
315

 
70

Junior lien
(56
)
 
(15
)
 
(125
)
 
(129
)
 
68

 
124

Total 1-4 family
189

 
32

 
709

 
(178
)
 
383

 
194

Multifamily residential
229

 
229

 
(318
)
 
(29
)
 
229

 
—

Home equity lines of credit
(25
)
 
179

 
740

 
206

 
145

 
170

Other consumer
149

 
95

 
143

 
(3
)
 
255

 
106

Total consumer
124

 
274

 
883

 
203

 
400

 
276

Other
313

 
10

 
(1
)
 
—

 
846

 
533

Total
$
(2,121
)
 
194

 
2,340

 
281

 
2,532

 
4,653

















Visit our website at www.glacierbancorp.com

21

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