GLACIER BANCORP, INC. - FORM 8-K - EX-99.1 - EXHIBIT

Attached files

file	filename
8-K - 8-K - GLACIER BANCORP, INC.	gbci-12312013x8k.htm

NEWS RELEASE

FOR IMMEDIATE RELEASE

CONTACT: Michael J. Blodnick

(406) 751-4701

Ron J. Copher

(406) 751-7706

GLACIER BANCORP, INC. ANNOUNCES

RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2013

HIGHLIGHTS:


•	Net Income of $26.5 million for the current quarter increased 28 percent from the prior year fourth quarter and net income of $95.6 million for the current year increased 27 percent from the prior year.


•	Dividend declared of $0.16 per share during the current quarter, the third increase since December 2012, totaling 23 percent.


•	Glacier Bancorp, Inc. stock price of $29.79 at December 31, 2013 increased 21 percent from the prior quarter and 103 percent from the prior year.


•	The loan portfolio increased $61.7 million, or 6 percent annualized, during the current quarter. Excluding the acquisitions, the loan portfolio increased $278 million, or 8 percent, during the current year.


•	Transaction deposit accounts of $3.1 billion increased $103 million, or 14 percent annualized, during the current quarter.


•	Current quarter net interest margin, on a tax-equivalent basis, of 3.88 percent, an increase of 32 basis points from the prior quarter net interest margin of 3.56 percent.


•	Interest income for the current quarter of $73.9 million, an increase of 6 percent from the prior quarter, and interest income for the current year of $264 million, an increase of 4 percent from the prior year.

Results Summary



	Three Months ended							Year ended
(Dollars in thousands, except per share data)	December 31, 2013			September 30, 2013		December 31, 2012		December 31, 2013		December 31, 2012
Net income	$	26,546		25,628		20,758		95,644		75,516
Diluted earnings per share	$	0.36		0.35		0.29		1.31		1.05
Return on average assets (annualized)	1.33		%	1.27	%	1.06	%	1.23	%	1.01	%
Return on average equity (annualized)	10.96		%	10.85	%	9.17	%	10.22	%	8.54	%

KALISPELL, MONTANA, January 23, 2014 - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $26.5 million for the current quarter, an increase of $5.8 million, or 28 percent, from the $20.8 million of net income for the prior year fourth quarter. Diluted earnings per share for the current quarter was $0.36 per share, an increase of $0.07, or 24 percent, from the prior year fourth quarter diluted earnings per share of $0.29. “The fourth quarter added to what was a very good year for Glacier Bancorp Inc., as stronger than anticipated loan growth and a much higher net interest margin allowed us to continue to deliver better results,” said Mick Blodnick President and Chief Executive Officer. “In the current quarter we were again fortunate to be able to increase our dividend. This was the third time since December of last year the dividend has been raised. During that period we have increased our dividend by a total of 23 percent,” Blodnick said.

Net income for the year ended December 31, 2013 was $95.6 million, an increase of $20.1 million, or 27 percent, from the $75.5 million of net income for the prior year. Diluted earnings per share for the current year was $1.31 per share, an increase of $0.26, or 25 percent, from the diluted earnings per share in the prior year.

On July 31, 2013, the Company completed the acquisition of North Cascades Bancshares, Inc. (“NCBI”), and its subsidiary, North Cascades National Bank and on May 31, 2013 the Company completed the acquisition of Wheatland Bankshares, Inc., and its subsidiary, First State Bank (“Wheatland”). The Company incurred $427 thousand of expense in connection with the acquisitions in the current quarter and $1.5 million for the year ended December 31, 2013. The Company’s results of operations and financial condition include the acquisition of NCBI and the acquisition of Wheatland from the acquisition dates. The following table provides information on the fair value of selected classifications of assets and liabilities acquired:



	NCBI		Wheatland
(Dollars in thousands)	July 31, 2013		May 31, 2013		Total
Total assets	$	330,028	$	300,541	$	630,569
Investment securities, available-for-sale	48,058		75,643		123,701
Loans receivable	215,986		171,199		387,185
Non-interest bearing deposits	76,105		30,758		106,863
Interest bearing deposits	218,875		224,439		443,314
Federal Home Loan Bank advances	—		5,467		5,467

Asset Summary



								$ Change from		$ Change from
(Dollars in thousands)	December 31, 2013			September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Cash and cash equivalents	$	155,657		254,684		187,040		(99,027	)	(31,383	)
Investment securities, available-for-sale	3,222,829			3,318,953		3,683,005		(96,124	)	(460,176	)
Loans receivable
Residential real estate	577,589			583,817		516,467		(6,228	)	61,122
Commercial	2,901,283			2,828,287		2,278,905		72,996		622,378
Consumer and other	583,966			588,995		602,053		(5,029	)	(18,087	)
Loans receivable	4,062,838			4,001,099		3,397,425		61,739		665,413
Allowance for loan and lease losses	(130,351		)	(130,765	)	(130,854	)	414		503
Loans receivable, net	3,932,487			3,870,334		3,266,571		62,153		665,916
Other assets	573,377			603,959		610,824		(30,582	)	(37,447	)
Total assets	$	7,884,350		8,047,930		7,747,440		(163,580	)	136,910

Investment securities decreased $96 million, or 3 percent, during the current quarter and decreased $460 million, or 12 percent, from December 31, 2012 as the Company continued to reduce the overall size of the investment portfolio. The continued growth in the loan portfolio provides the Company the opportunity to retain higher yielding assets than what the Company could achieve with investment securities. At December 31, 2013, investment securities represented 41 percent of total assets, down from 48 percent at December 31, 2012.

A positive trend for the four consecutive quarters has been the organic loan growth. Loans receivable increased $61.7 million, or 2 percent, during the current quarter, including growth of $73.0 million in commercial loans. Excluding the loans receivable from the acquisitions, the loan portfolio increased $278 million, or 8 percent, during the current year with increases in both residential real estate and commercial loans. Excluding the acquisitions, the largest dollar increase during the current year was in commercial loans which increased $294 million, or 13 percent, of which $200 million of the increase was in commercial real estate loans. The decreases in consumer and other loans was primarily attributable to customers paying off home equity lines of credit as they refinanced their first mortgage.

Credit Quality Summary



	At or for the Year ended			At or for the Nine Months ended		At or for the Year ended
(Dollars in thousands)	December 31, 2013			September 30, 2013		December 31, 2012
Allowance for loan and lease losses
Balance at beginning of period	$	130,854		130,854		137,516
Provision for loan losses	6,887			5,085		21,525
Charge-offs	(13,643		)	(8,962	)	(34,672	)
Recoveries	6,253			3,788		6,485
Balance at end of period	$	130,351		130,765		130,854
Other real estate owned	$	26,860		36,531		45,115
Accruing loans 90 days or more past due	604			174		1,479
Non-accrual loans	81,956			88,293		96,933
Total non-performing assets ¹	$	109,420		124,998		143,527
Non-performing assets as a percentage of subsidiary assets	1.39		%	1.56	%	1.87	%
Allowance for loan and lease losses as a percentage of non-performing loans	158		%	148	%	133	%
Allowance for loan and lease losses as a percentage of total loans	3.21		%	3.27	%	3.85	%
Net charge-offs as a percentage of total loans	0.18		%	0.13	%	0.83	%
Accruing loans 30-89 days past due	$	32,116		26,401		27,097

^__________

¹ As of December 31, 2013, non-performing assets have not been reduced by U.S. government guarantees of $5.4 million.

Non-performing assets at December 31, 2013 were $109 million, a decrease of $15.6 million, or 12 percent, during the current quarter and a decrease of $34.1 million, or 24 percent, from a year ago. The largest category of non-performing assets was the land, lot and other construction category (i.e., regulatory classification) which was $51.6 million, or 47 percent, of the non-performing assets at December 31, 2013. Included in this category was $25.1 million of land development loans and $13.6 million in unimproved land loans at December 31, 2013. The Company has continued to reduce its exposure to land, lot and other construction category over each of the prior two years. The Company’s early stage delinquencies (accruing loans 30-89 days past due) of $32.1 million at December 31, 2013 increased $5.7 million, or 22 percent, from the prior quarter and increased $5.0 million, or 19 percent, from the prior year fourth quarter.

“We made further strides in lowering our non-performing assets as a number of projects were sold or paid off during the current quarter,” said Blodnick. “Net charge-offs have been a pleasant surprise all year as we experienced a significant decline in charge-offs while at the same time recoveries were much better than projected. For the year net charge-offs were back to historical norms after four years at elevated levels,” Blodnick said.

At December 31, 2013, the allowance for loan and lease losses (“allowance”) was $130 million, a decrease of $414 thousand, or less than 1 percent from September 30, 2013, and a decrease of $503 thousand, or less than 1 percent from a year ago. The allowance was 3.21 percent of total loans outstanding at December 31, 2013, a decrease of 64 basis points from 3.85 percent at December 31, 2012. Such difference was primarily attributable to no allowance carried over from the acquisitions as a result of the acquired loans recorded at fair value. Excluding the acquired banks, the allowance was 3.54 percent of total loans outstanding at December 31, 2013, a 31 basis points decrease from the 3.85 percent at December 31, 2012. The allowance was 158 percent of non-performing loans at December 31, 2013, an increase from 148 percent at September 30, 2013 and an increase from 133 percent at December 31, 2012.

Credit Quality Trends and Provision for Loan Losses



(Dollars in thousands)	Provision for Loan Losses		Net Charge-Offs	ALLL as a Percent of Loans		Accruing Loans 30-89 Days Past Due as a Percent of Loans		Non-Performing Assets to Total Subsidiary Assets
Fourth quarter 2013	$	1,802	2,216	3.21	%	0.79	%	1.39	%
Third quarter 2013	1,907		2,025	3.27	%	0.66	%	1.56	%
Second quarter 2013	1,078		1,030	3.56	%	0.60	%	1.64	%
First quarter 2013	2,100		2,119	3.84	%	0.95	%	1.79	%
Fourth quarter 2012	2,275		8,081	3.85	%	0.80	%	1.87	%
Third quarter 2012	2,700		3,499	4.01	%	0.83	%	2.33	%
Second quarter 2012	7,925		7,052	3.99	%	1.41	%	2.69	%
First quarter 2012	8,625		9,555	3.98	%	1.24	%	2.91	%

Net charged-off loans of $2.2 million during the current quarter increased $191 thousand, or 9 percent, compared to the prior quarter and decreased $5.9 million, or 73 percent, from the prior year fourth quarter. The current quarter provision for loan losses of $1.8 million decreased $105 thousand from the prior quarter and decreased $473 thousand from the prior year fourth quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of provision for loan loss expense.

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.

Liability Summary



					$ Change from		$ Change from
(Dollars in thousands)	December 31, 2013		September 30, 2013	December 31, 2012	September 30, 2013		December 31, 2012
Non-interest bearing deposits	$	1,374,419	1,397,401	1,191,933	(22,982	)	182,486
Interest bearing deposits	4,205,548		4,215,479	4,172,528	(9,931	)	33,020
Repurchase agreements	313,394		314,313	289,508	(919	)	23,886
FHLB advances	840,182		967,382	997,013	(127,200	)	(156,831	)
Other borrowed funds	8,387		8,466	10,032	(79	)	(1,645	)
Subordinated debentures	125,562		125,526	125,418	36		144
Other liabilities	53,608		71,556	60,059	(17,948	)	(6,451	)
Total liabilities	$	6,921,100	7,100,123	6,846,491	(179,023	)	74,609

Non-interest bearing deposits of $1.374 billion at December 31, 2013 decreased $23.0 million, or 2 percent, during the current quarter. Excluding the acquisitions, non-interest bearing deposits at December 31, 2013 increased $75.6 million, or 6 percent, during the current year. Interest bearing deposits of $4.206 billion at December 31, 2013 included $205 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposit and certificate accounts). Excluding a decrease of $123 million in wholesale deposits during the current quarter, interest bearing deposits at December 31, 2013 increased $113 million, or 3 percent, during the current quarter. Excluding the acquisitions, interest bearing deposits at December 31, 2013 decreased $410 million, or 10 percent, from December 31, 2012 primarily the result of a decrease of $429 million in wholesale deposits. Federal Home Loan Bank (“FHLB”) advances of $840 million at December 31, 2013 decreased $127 million, or 13 percent, during the current quarter and decreased $157 million, or 16 percent, from prior year end and will continue to fluctuate as the need for funding changes.

Stockholders’ Equity Summary



								$ Change from		$ Change from
(Dollars in thousands, except per share data)	December 31, 2013			September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Common equity	$	953,605		937,824		852,987		15,781		100,618
Accumulated other comprehensive income	9,645			9,983		47,962		(338	)	(38,317	)
Total stockholders’ equity	963,250			947,807		900,949		15,443		62,301
Goodwill and core deposit intangible, net	(139,218		)	(139,934	)	(112,274	)	716		(26,944	)
Tangible stockholders’ equity	$	824,032		807,873		788,675		16,159		35,357
Stockholders’ equity to total assets	12.22		%	11.78	%	11.63	%
Tangible stockholders’ equity to total tangible assets	10.64		%	10.22	%	10.33	%
Book value per common share	$	12.95		12.76		12.52		0.19		0.43
Tangible book value per common share	$	11.08		10.87		10.96		0.21		0.12
Market price per share at end of period	$	29.79		24.68		14.71		5.11		15.08

Tangible stockholders’ equity of $824 million at year end increased $16.2 million from the prior quarter and $35.4 million, or 4 percent, from the prior year end. The higher capital levels were the result of $45 million of Company stock issued in connection with the acquisitions and an increase in earnings retention of $51.4 million which were offset by the decrease in accumulated other comprehensive income of $38.3 million. Tangible book value per common share of $11.08 increased $0.12 per share from the prior year end.

Cash Dividend

On November 26, 2013, the Company’s Board of Directors declared a cash dividend of $0.16 per share, payable December 19, 2013 to shareholders of record on December 10, 2013. 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 December 31, 2013

Compared to September 30, 2013 and December 31, 2012

Revenue Summary



	Three Months ended
(Dollars in thousands)	December 31, 2013			September 30, 2013		December 31, 2012
Net interest income
Interest income	$	73,939		69,531		59,666
Interest expense	6,929			7,186		8,165
Total net interest income	67,010			62,345		51,501
Non-interest income
Service charges, loan fees, and other fees	14,695			15,119		12,845
Gain on sale of loans	4,935			7,021		9,164
Loss on sale of investments	—			(403	)	—
Other income	3,372			2,136		3,384
Total non-interest income	23,002			23,873		25,393
	$	90,012		86,218		76,894
Net interest margin (tax-equivalent)	3.88		%	3.56	%	3.05	%



	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	September 30, 2013			December 31, 2012			September 30, 2013		December 31, 2012
Net interest income
Interest income	$	4,408		$	14,273		6	%	24	%
Interest expense	(257		)	(1,236		)	(4	)%	(15	)%
Total net interest income	4,665			15,509			7	%	30	%
Non-interest income
Service charges, loan fees, and other fees	(424		)	1,850			(3	)%	14	%
Gain on sale of loans	(2,086		)	(4,229		)	(30	)%	(46	)%
Loss on sale of investments	403			—			(100	)%	n/m
Other income	1,236			(12		)	58	%	—	%
Total non-interest income	(871		)	(2,391		)	(4	)%	(9	)%
	$	3,794		$	13,118		4	%	17	%

_______

n/m - not measurable

Net Interest Income

The current quarter interest income of $73.9 million increased $4.4 million, or 6 percent, over the prior quarter primarily as a result of the increase in interest income from investments. The current quarter increase in interest income on the investment portfolio was driven by a decrease in premium amortization (net of discount accretion) on the investment securities (“premium amortization”). The Company experienced a decrease in premium amortization for a fourth consecutive quarter, compared to significant increases experienced during the preceding seven quarters. Included in the current quarter’s interest income was $9.0 million of premium amortization on investment securities compares to $15.2 million in the prior quarter. The current quarter’s $6.2 million decrease in premium amortization compared to a decrease of $3.2 million in premium amortization in the prior quarter. The current quarter interest income also increased as a result of increases in interest income on residential real estate loans and commercial loans. The increase in interest income on residential real estate loans during the current quarter resulted from both volume and rate increases and the increase in commercial loan interest income was the result of volume increases.

The current quarter interest income of $73.9 million also increased $14.3 million, or 24 percent, over the prior year fourth quarter and was driven by the increase in interest income on the investment portfolio and the increase in interest income on commercial loans. Interest income on investment securities of $23.5 million increased $9.6 million, or 69 percent, over the prior year fourth quarter as premium amortization decreased $14.3 million. The latest quarters interest income on commercial loans of $34.7 million increased $5.0 million, or 17 percent, over the prior year fourth quarter as a result of increased volume of commercial loans.

In the fourth quarter, interest expense of $6.9 million decreased $257 thousand, or 4 percent, from the prior quarter and decreased $1.2 million, or 15 percent, from the prior year fourth quarter. The decrease in interest expense from the prior quarter and the prior year quarter was the result of decreases in deposit interest rates and a decrease in the volume of borrowings. The cost of total funding (including non-interest bearing deposits) for the current quarter was 40 basis points compared to 41 basis points for the prior quarter and 48 basis points for the prior year fourth quarter.

This quarter’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.88 percent, an increase of 32 basis points from the prior quarter net interest margin of 3.56 percent. The increase in the net interest margin was driven by the increasing yield on the investment securities and a shift in the earning assets from investment securities to the higher yielding loan portfolio. The current quarter increase in the investment securities yield was primarily attributable to a decrease in the premium amortization which was consistent with the prior quarter. Of the 69 basis points increase in yield on the investment securities during the current quarter, 61 basis points was due to the decrease in premium amortization. The premium amortization in the current quarter accounted for a 51 basis points reduction in the net interest margin compared to a 82 basis points reduction in the prior quarter and 128 basis points reduction in the net interest margin in the prior year fourth quarter. “Growth in the Bank's loan portfolio throughout the year was significant to the improvement in the net interest income and net interest margin for the current quarter and 2013,” said Ron Copher, Chief Financial Officer. “The reduction in premium amortization from investment securities over the course of 2013 was also a significant factor.”

Non-interest Income

Non-interest income for the current quarter totaled $23.0 million, a decrease of $871 thousand over the prior quarter and a decrease of $2.4 million over the same quarter last year. Service charge fee income decreased $424 thousand, or 3 percent, from the prior quarter due to seasonal activity. Service charge fee income increased $1.9 million, or 14 percent, from the prior year fourth quarter which was driven by increases in deposit accounts and changes in internal deposit processing. A gain of $4.9 million on the sale of loans in the current quarter was a reduction of $2.1 million, or 30 percent, from the prior quarter and a decrease of $4.2 million, or 46 percent, from the prior year fourth quarter. The Company continued to experience a slowdown in refinance activity as mortgage rates moved up, although, the decrease in gain on sale of loans was more than offset by the decrease in premium amortization on investment securities, both of which were attributable to the continuing slowdown of refinance activity. Other income of $3.4 million for the current quarter increased $1.2 million, or 58 percent, from the prior quarter primarily as a result of an increase in income related to other real estate owned (“OREO”). Included in other income was operating revenue of $153 thousand from OREO and a gain of $1.4 million on the sales of OREO, the combined total of $1.6 million for the most recent quarter compared to $433 thousand for the prior quarter and $910 thousand for the prior year fourth quarter.

Non-interest Expense Summary



	Three Months ended
(Dollars in thousands)	December 31, 2013		September 30, 2013	December 31, 2012
Compensation and employee benefits	$	27,258	27,469	24,083
Occupancy and equipment	6,723		6,421	6,043
Advertising and promotions	1,847		1,897	1,478
Outsourced data processing	1,623		1,232	889
Other real estate owned	2,295		1,049	3,570
Regulatory assessments and insurance	1,519		1,677	1,637
Core deposit intangibles amortization	717		693	491
Other expense	11,052		9,930	9,817
Total non-interest expense	$	53,034	50,368	48,008



	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	September 30, 2013			December 31, 2012			September 30, 2013		December 31, 2012
Compensation and employee benefits	$	(211	)	$	3,175		(1	)%	13	%
Occupancy and equipment	302			680			5	%	11	%
Advertising and promotions	(50		)	369			(3	)%	25	%
Outsourced data processing	391			734			32	%	83	%
Other real estate owned	1,246			(1,275		)	119	%	(36	)%
Regulatory assessments and insurance	(158		)	(118		)	(9	)%	(7	)%
Core deposit intangibles amortization	24			226			3	%	46	%
Other expense	1,122			1,235			11	%	13	%
Total non-interest expense	$	2,666		$	5,026		5	%	10	%

Non-interest expense of $53.0 million for the current quarter increased by $2.7 million, or 5 percent, from the prior quarter and increased by $5.0 million, or 10 percent, from the prior year fourth quarter. Compensation and employee benefits increased by $3.2 million, or 13 percent, from the prior year fourth quarter primarily as a result of the acquisitions. Occupancy and equipment expense increased $302 thousand, or 5 percent, from the prior quarter

and increased $680 thousand, or 11 percent, from the prior year fourth quarter as a result of the acquisitions. Outsourced data processing expense increased $391 thousand, or 32 percent, from the prior quarter and increased $734 thousand, or 83 percent, from the prior year fourth quarter again as a result of the acquired banks’ outsourced data processing expense. OREO expense increased $1.2 million, or 119 percent, from the prior quarter and decreased $1.3 million, or 36 percent, from the prior year fourth quarter. The current quarter OREO expense of $2.3 million included $679 thousand of operating expense, $1.3 million of fair value write-downs, and $341 thousand of loss on sale of OREO. OREO expense will fluctuate as the Company continues to work through non-performing loans and dispose of foreclosed properties. Other expense increased by $1.1 million, or 11 percent, over the prior quarter primarily as a result of increases in loan repurchase losses and debit card fraud losses which were partially offset by decreases in professional and outside services expenses. Other expense increased $1.2 million, or 13 percent, from the prior year fourth quarter primarily from debit card fraud losses and other deposit account related losses.

Efficiency Ratio

The efficiency ratio for the current quarter was 54 percent compared to 56 percent for the prior year fourth quarter. The decrease in the efficiency ratio was primarily driven by the increase in net interest income which exceeded the increase non-interest expense.

Operating Results for Year ended December 31, 2013

Compared to December 31, 2012

Revenue Summary



	Year ended
(Dollars in thousands)	December 31, 2013			December 31, 2012			$ Change			% Change
Net interest income
Interest income	$	263,576		$	253,757		$	9,819		4	%
Interest expense	28,758			35,714			(6,956		)	(19	)%
Total net interest income	234,818			218,043			16,775			8	%
Non-interest income
Service charges, loan fees, and other fees	54,460			49,706			4,754			10	%
Gain on sale of loans	28,517			32,227			(3,710		)	(12	)%
Loss on sale of investments	(299		)	—			(299		)	n/m
Other income	10,369			9,563			806			8	%
Total non-interest income	93,047			91,496			1,551			2	%
	$	327,865		$	309,539		$	18,326		6	%
Net interest margin (tax-equivalent)	3.48		%	3.37		%

_______

n/m - not measurable

Net Interest Income

Net interest income for 2013 increased $16.8 million, or 8 percent, over last year. Interest income for the current year increased $9.8 million, or 4 percent, from the prior year and was principally due to the increased volume of commercial loans in addition to the decrease in premium amortization on investment securities, which were partially reduced by the decrease in yields on the loan portfolio. Interest income was reduced by $64.1 million in premium amortization on investment securities during the current year which was a decrease of $7.9 million from the prior year.

Interest expense for 2013 decreased $7.0 million, or 19 percent, from the prior year and was primarily attributable to the decreases in interest rates on interest bearing deposits and borrowings. The funding cost (including non-interest bearing deposits) for the current year was 42 basis points compared to 55 basis points for the prior year.

The net interest margin, on a tax-equivalent basis, for 2013 was 3.48 percent, an 11 basis points increase from the net interest margin of 3.37 percent for 2012. The increase in the net interest margin was driven by the decreased interest rates on deposits and borrowings. The net interest margin was further supported by the continued shift in earning assets from investment securities to the higher yielding loan portfolio and the increased yield on the investment securities. The increased yield on investment securities was driven by lower premium amortization on investment securities. The premium amortization for 2013 accounted for a 90 basis points reduction in the net interest margin, which was a decrease of 14 basis points compared to the 104 basis points reduction in the net interest margin for last year.

Non-interest Income

Non-interest income of $93.0 million for 2013 increased $1.6 million, or 2 percent, over last year. Service charge fee income increased $4.8 million, or 10 percent, from the prior year which was driven by increases in the number of deposit accounts and changes in internal deposit processing. Gains of $28.5 million on the sale of loans for the current year decreased $3.7 million, or 12 percent, from the prior year as a result of the slowdown in refinance activity. Other income for the current year increased $806 thousand, or 8 percent, over the the prior year. Included in other income was operating revenue of $400 thousand from OREO and gains of $3.1 million on the sale of OREO, which combined totaled $3.5 million for the current year compared to $2.4 million for the prior year.

Non-interest Expense Summary



	Year ended
(Dollars in thousands)	December 31, 2013		December 31, 2012	$ Change		% Change
Compensation and employee benefits	$	104,221	95,373	8,848		9	%
Occupancy and equipment	24,875		23,837	1,038		4	%
Advertising and promotions	6,913		6,413	500		8	%
Outsourced data processing	4,493		3,324	1,169		35	%
Other real estate owned	7,196		18,964	(11,768	)	(62	)%
Regulatory assessments and insurance	6,362		7,313	(951	)	(13	)%
Core deposit intangibles amortization	2,401		2,110	291		14	%
Other expense	38,856		36,087	2,769		8	%
Total non-interest expense	$	195,317	193,421	1,896		1	%

Compensation and employee benefits for 2013 increased $8.8 million, or 9 percent, from the same period last year. Outsourced data processing expense increased $1.2 million, or 35 percent, from the prior year primarily from the acquired banks outsourced data processing expense. OREO expense of $7.2 million in the current year decreased $11.8 million, or 62 percent, from the prior year. The OREO expense for the current year included $2.7 million of operating expenses, $3.6 million of fair value write-downs, and $880 thousand of loss on sale of OREO. Other expense for the current year increased by $2.8 million, or 8 percent, from the prior year and was attributable to the legal and professional expenses associated with the acquisitions, debit card fraud losses and deposit account losses.

Provision for loan losses

The provision for loan losses was $6.9 million for 2013, a decrease of $14.6 million, or 68 percent, from the same period in the prior year. Net charged-off loans during the current year were $7.4 million, a decrease of $20.8 million from the prior year.

Efficiency Ratio

The efficiency ratio was 55 percent for 2013 and 54 percent for 2012. Although there was an increase net interest income during the current year over the prior year, it was not enough to offset the increase in non-interest expense, excluding OREO expense, resulting in the increased efficiency ratio.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 72 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, operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and Bank of the San Juans, Durango, operating in Colorado.

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, including as a result of a slow recovery in the housing and real estate markets in its geographic areas;


•	increased loan delinquency rates;


•	the risks presented by a slow economic recovery, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations;


•	changes in market interest rates, which could adversely affect the Company’s net interest income and profitability;


•	legislative or regulatory changes 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 additionally impaired, which may have an adverse impact on earnings and capital;


•	reduced demand for banking products and services;


•	the risks presented by public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital in the future;


•	competition from other financial services companies in the Company’s markets;


•	loss of services from the CEO and senior management team;


•	potential interruption or breach in security of the Company’s systems; 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.

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition



(Dollars in thousands, except per share data)	December 31, 2013			September 30, 2013		December 31, 2012
Assets
Cash on hand and in banks	$	109,995		130,285		123,270
Federal funds sold	10,527			23,135		—
Interest bearing cash deposits	35,135			101,264		63,770
Cash and cash equivalents	155,657			254,684		187,040
Investment securities, available-for-sale	3,222,829			3,318,953		3,683,005
Loans held for sale	46,738			61,505		145,501
Loans receivable	4,062,838			4,001,099		3,397,425
Allowance for loan and lease losses	(130,351		)	(130,765	)	(130,854	)
Loans receivable, net	3,932,487			3,870,334		3,266,571
Premises and equipment, net	167,671			168,633		158,989
Other real estate owned	26,860			36,531		45,115
Accrued interest receivable	41,898			44,261		37,770
Deferred tax asset	43,549			47,957		20,394
Core deposit intangible, net	9,512			10,228		6,174
Goodwill	129,706			129,706		106,100
Non-marketable equity securities	52,192			52,192		48,812
Other assets	55,251			52,946		41,969
Total assets	$	7,884,350		8,047,930		7,747,440
Liabilities
Non-interest bearing deposits	$	1,374,419		1,397,401		1,191,933
Interest bearing deposits	4,205,548			4,215,479		4,172,528
Securities sold under agreements to repurchase	313,394			314,313		289,508
Federal Home Loan Bank advances	840,182			967,382		997,013
Other borrowed funds	8,387			8,466		10,032
Subordinated debentures	125,562			125,526		125,418
Accrued interest payable	3,505			3,568		4,675
Other liabilities	50,103			67,988		55,384
Total liabilities	6,921,100			7,100,123		6,846,491
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	744			743		719
Paid-in capital	690,918			689,751		641,737
Retained earnings - substantially restricted	261,943			247,330		210,531
Accumulated other comprehensive income	9,645			9,983		47,962
Total stockholders’ equity	963,250			947,807		900,949
Total liabilities and stockholders’ equity	$	7,884,350		8,047,930		7,747,440
Number of common stock shares issued and outstanding	74,373,296			74,307,951		71,937,222

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations



	Three Months ended					Year ended
(Dollars in thousands, except per share data)	December 31, 2013		September 30, 2013		December 31, 2012	December 31, 2013		December 31, 2012
Interest Income
Residential real estate loans	$	7,919	7,320		7,831	29,525		30,850
Commercial loans	34,662		34,291		29,661	127,450		121,425
Consumer and other loans	7,869		8,447		8,287	32,089		35,096
Investment securities	23,489		19,473		13,887	74,512		66,386
Total interest income	73,939		69,531		59,666	263,576		253,757
Interest Expense
Deposits	3,286		3,398		4,135	13,870		18,183
Securities sold under agreements to repurchase	221		209		311	867		1,308
Federal Home Loan Bank advances	2,581		2,730		2,851	10,610		12,566
Federal funds purchased and other borrowed funds	46		54		53	206		229
Subordinated debentures	795		795		815	3,205		3,428
Total interest expense	6,929		7,186		8,165	28,758		35,714
Net Interest Income	67,010		62,345		51,501	234,818		218,043
Provision for loan losses	1,802		1,907		2,275	6,887		21,525
Net interest income after provision for loan losses	65,208		60,438		49,226	227,931		196,518
Non-Interest Income
Service charges and other fees	13,363		13,711		11,621	49,478		45,343
Miscellaneous loan fees and charges	1,332		1,408		1,224	4,982		4,363
Gain on sale of loans	4,935		7,021		9,164	28,517		32,227
Loss on sale of investments	—		(403	)	—	(299	)	—
Other income	3,372		2,136		3,384	10,369		9,563
Total non-interest income	23,002		23,873		25,393	93,047		91,496
Non-Interest Expense
Compensation and employee benefits	27,258		27,469		24,083	104,221		95,373
Occupancy and equipment	6,723		6,421		6,043	24,875		23,837
Advertising and promotions	1,847		1,897		1,478	6,913		6,413
Outsourced data processing	1,623		1,232		889	4,493		3,324
Other real estate owned	2,295		1,049		3,570	7,196		18,964
Regulatory assessments and insurance	1,519		1,677		1,637	6,362		7,313
Core deposit intangibles amortization	717		693		491	2,401		2,110
Other expense	11,052		9,930		9,817	38,856		36,087
Total non-interest expense	53,034		50,368		48,008	195,317		193,421
Income Before Income Taxes	35,176		33,943		26,611	125,661		94,593
Federal and state income tax expense	8,630		8,315		5,853	30,017		19,077
Net Income	$	26,546	25,628		20,758	95,644		75,516
Basic earnings per share	$	0.36	0.35		0.29	1.31		1.05
Diluted earnings per share	$	0.36	0.35		0.29	1.31		1.05
Dividends declared per share	$	0.16	0.15		0.14	0.60		0.53
Average outstanding shares - basic	74,341,256		73,945,523		71,937,222	73,191,713		71,928,570
Average outstanding shares - diluted	74,417,361		74,021,871		71,937,286	73,260,278		71,928,656

Glacier Bancorp, Inc.

Average Balance Sheet



	Three Months ended						Year ended
	December 31, 2013						December 31, 2013
(Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate		Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	645,567	7,919		4.91	%	$	623,433	29,525		4.74	%
Commercial loans	2,812,421		34,662		4.89	%	2,542,255		127,450		5.01	%
Consumer and other loans	579,440		7,869		5.39	%	586,649		32,089		5.47	%
Total loans ¹	4,037,428		50,450		4.96	%	3,752,337		189,064		5.04	%
Tax-exempt investment securities ²	1,159,889		16,567		5.71	%	1,064,457		61,924		5.82	%
Taxable investment securities ³	2,217,332		12,386		2.23	%	2,525,317		33,112		1.31	%
Total earning assets	7,414,649		79,403		4.25	%	7,342,111		284,100		3.87	%
Goodwill and intangibles	139,609						125,315
Non-earning assets	336,999						338,866
Total assets	$	7,891,257					$	7,806,292
Liabilities
Non-interest bearing deposits	$	1,357,572	—		—	%	$	1,244,332	—		—	%
NOW accounts	1,052,779		333		0.13	%	999,288		1,217		0.12	%
Savings accounts	591,528		76		0.05	%	540,495		276		0.05	%
Money market deposit accounts	1,167,104		588		0.20	%	1,075,625		2,169		0.20	%
Certificate accounts	1,122,565		2,095		0.74	%	1,114,010		9,039		0.81	%
Wholesale deposits ⁴	291,009		194		0.26	%	434,249		1,169		0.27	%
FHLB advances	840,860		2,581		1.22	%	971,554		10,610		1.09	%
Repurchase agreements, federal funds purchased and other borrowed funds	441,260		1,062		0.95	%	431,046		4,278		0.99	%
Total funding liabilities	6,864,677		6,929		0.40	%	6,810,599		28,758		0.42	%
Other liabilities	66,015						59,497
Total liabilities	6,930,692						6,870,096
Stockholders’ Equity
Common stock	743						732
Paid-in capital	690,164						667,107
Retained earnings	256,451						239,138
Accumulated other comprehensive income	13,207						29,219
Total stockholders’ equity	960,565						936,196
Total liabilities and stockholders’ equity	$	7,891,257					$	7,806,292
Net interest income (tax-equivalent)			$	72,474					$	255,342
Net interest spread (tax-equivalent)					3.85	%					3.45	%
Net interest margin (tax-equivalent)					3.88	%					3.48	%

^__________


¹	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.


²	Includes tax effect of $5.1 million and $19.0 million on tax-exempt investment security income for the three months and year ended December 31, 2013, respectively.


³	Includes tax effect of $381 thousand and $1.5 million on investment security tax credits for the three months and year ended December 31, 2013, respectively.


⁴	Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts.

Glacier Bancorp, Inc.

Loan Portfolio by Regulatory Classification



	Loans Receivable, by Loan Type							% Change from		% Change from
(Dollars in thousands)	December 31, 2013			September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Custom and owner occupied construction	$	50,352		40,187		40,327		25	%	25	%
Pre-sold and spec construction	34,217			38,702		34,970		(12	)%	(2	)%
Total residential construction	84,569			78,889		75,297		7	%	12	%
Land development	73,132			75,282		80,132		(3	)%	(9	)%
Consumer land or lots	109,175			111,331		104,229		(2	)%	5	%
Unimproved land	50,422			51,986		53,459		(3	)%	(6	)%
Developed lots for operative builders	15,951			15,082		16,675		6	%	(4	)%
Commercial lots	12,585			15,707		19,654		(20	)%	(36	)%
Other construction	103,807			99,868		56,109		4	%	85	%
Total land, lot, and other construction	365,072			369,256		330,258		(1	)%	11	%
Owner occupied	811,479			815,401		710,161		—	%	14	%
Non-owner occupied	588,114			541,688		452,966		9	%	30	%
Total commercial real estate	1,399,593			1,357,089		1,163,127		3	%	20	%
Commercial and industrial	523,354			528,792		420,459		(1	)%	24	%
Agriculture	279,959			283,801		145,890		(1	)%	92	%
1st lien	733,406			738,842		738,854		(1	)%	(1	)%
Junior lien	73,348			76,277		82,083		(4	)%	(11	)%
Total 1-4 family	806,754			815,119		820,937		(1	)%	(2	)%
Multifamily residential	123,154			113,880		93,328		8	%	32	%
Home equity lines of credit	298,119			298,935		319,779		—	%	(7	)%
Other consumer	130,758			128,374		109,019		2	%	20	%
Total consumer	428,877			427,309		428,798		—	%	—	%
Other	98,244			88,469		64,832		11	%	52	%
Total loans receivable, including loans held for sale	4,109,576			4,062,604		3,542,926		1	%	16	%
Less loans held for sale ¹	(46,738		)	(61,505	)	(145,501	)	(24	)%	(68	)%
Total loans receivable	$	4,062,838		4,001,099		3,397,425		2	%	20	%

_______

¹ Loans held for sale are primarily 1st lien 1-4 family loans.

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification



	Non-performing Assets, by Loan Type				Non- Accruing Loans	Accruing Loans 90 Days or More Past Due	Other Real Estate Owned
(Dollars in thousands)	December 31, 2013		September 30, 2013	December 31, 2012	December 31, 2013	December 31, 2013	December 31, 2013
Custom and owner occupied construction	$	1,248	1,270	1,343	1,248	—	—
Pre-sold and spec construction	828		1,157	1,603	403	—	425
Total residential construction	2,076		2,427	2,946	1,651	—	425
Land development	25,062		25,834	31,471	15,213	—	9,849
Consumer land or lots	2,588		3,500	6,459	1,759	—	829
Unimproved land	13,630		14,977	19,121	12,194	—	1,436
Developed lots for operative builders	2,215		2,284	2,393	1,504	—	711
Commercial lots	2,899		2,978	1,959	300	—	2,599
Other construction	5,167		5,776	5,105	178	—	4,989
Total land, lot and other construction	51,561		55,349	66,508	31,148	—	20,413
Owner occupied	14,270		19,224	15,662	12,426	—	1,844
Non-owner occupied	4,301		5,453	4,621	2,908	—	1,393
Total commercial real estate	18,571		24,677	20,283	15,334	—	3,237
Commercial and industrial	6,400		7,452	5,970	6,238	160	2
Agriculture	3,529		2,488	6,686	3,064	—	465
1st lien	17,630		20,959	25,739	14,983	434	2,213
Junior lien	4,767		5,648	6,660	4,767	—	—
Total 1-4 family	22,397		26,607	32,399	19,750	434	2,213
Multifamily residential	—		—	253	—	—	—
Home equity lines of credit	4,544		5,599	8,041	4,469	—	75
Other consumer	342		399	441	302	10	30
Total consumer	4,886		5,998	8,482	4,771	10	105
Total	$	109,420	124,998	143,527	81,956	604	26,860

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification (continued)



	Accruing 30-89 Days Delinquent Loans, by Loan Type				% Change from		% Change from
(Dollars in thousands)	December 31, 2013		September 30, 2013	December 31, 2012	September 30, 2013		December 31, 2012
Custom and owner occupied construction	$	202	—	5	n/m		3,940	%
Pre-sold and spec construction	—		772	893	(100	)%	(100	)%
Total residential construction	202		772	898	(74	)%	(78	)%
Land development	—		917	191	(100	)%	(100	)%
Consumer land or lots	1,716		504	762	240	%	125	%
Unimproved land	615		311	422	98	%	46	%
Developed lots for operative builders	8		9	422	(11	)%	(98	)%
Commercial lots	—		68	11	(100	)%	(100	)%
Total land, lot and other construction	2,339		1,809	1,808	29	%	29	%
Owner occupied	5,321		7,261	5,523	(27	)%	(4	)%
Non-owner occupied	2,338		2,509	2,802	(7	)%	(17	)%
Total commercial real estate	7,659		9,770	8,325	(22	)%	(8	)%
Commercial and industrial	3,542		4,176	1,905	(15	)%	86	%
Agriculture	1,366		725	912	88	%	50	%
1st lien	12,386		5,142	7,352	141	%	68	%
Junior lien	482		881	732	(45	)%	(34	)%
Total 1-4 family	12,868		6,023	8,084	114	%	59	%
Multifamily Residential	1,075		226	—	376	%	n/m
Home equity lines of credit	1,999		1,770	4,164	13	%	(52	)%
Other consumer	1,066		1,130	1,001	(6	)%	6	%
Total consumer	3,065		2,900	5,165	6	%	(41	)%
Total	$	32,116	26,401	27,097	22	%	19	%

_______

n/m - not measurable

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)	December 31, 2013			September 30, 2013		December 31, 2012	December 31, 2013	December 31, 2013
Custom and owner occupied construction	$	(51	)	(1	)	24	—	51
Pre-sold and spec construction	(10		)	128		2,489	187	197
Total residential construction	(61		)	127		2,513	187	248
Land development	(383		)	(97	)	3,035	664	1,047
Consumer land or lots	843			486		4,003	1,232	389
Unimproved land	715			435		636	770	55
Developed lots for operative builders	(81		)	(36	)	1,802	74	155
Commercial lots	248			250		362	254	6
Other construction	(473		)	(130	)	—	—	473
Total land, lot and other construction	869			908		9,838	2,994	2,125
Owner occupied	350			271		1,312	1,513	1,163
Non-owner occupied	397			375		597	516	119
Total commercial real estate	747			646		1,909	2,029	1,282
Commercial and industrial	3,096			1,382		2,651	4,386	1,290
Agriculture	53			21		125	53	—
1st lien	681			347		5,257	980	299
Junior lien	106			145		3,464	352	246
Total 1-4 family	787			492		8,721	1,332	545
Multifamily residential	(39		)	(31	)	43	—	39
Home equity lines of credit	1,606			1,516		2,124	1,918	312
Other consumer	324			109		262	731	407
Total consumer	1,930			1,625		2,386	2,649	719
Other	8			4		1	13	5
Total	$	7,390		5,174		28,187	13,643	6,253

Visit our website at www.glacierbancorp.com

Attached files

Stock widget

Investing forum

GLACIER BANCORP, INC. Reports

Also read