Glacier Bancorp, Inc. Announces Results for the Quarter Ended March 31, 2017

1st Quarter 2017 Highlights:

• Net income of $31.3 million for the current quarter, an increase of $2.6 million, or 9 percent, over the prior year first quarter net income of $28.7 million.
• Current quarter diluted earnings per share of $0.41, an increase of 8 percent from the prior year first quarter diluted earnings per share of $0.38.
• Loan growth of $193 million, or 14 percent annualized, for the current quarter.
• Core deposits increased $99.6 million, or 6 percent annualized, during the current quarter.
• Net interest margin of 4.03 percent as a percentage of earning assets, on a tax equivalent basis, a 2 basis point increase over the 4.01 net interest margin in the first quarter of the prior year.
• Dividend declared of $0.21 per share, an increase of $0.01 per share, or 5 percent, over the prior quarter.  The dividend was the 128th consecutive quarterly dividend.

Financial Highlights

KALISPELL, Mont., April 20, 2017 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (Nasdaq:GBCI) reported net income of $31.3 million for the current quarter, an increase of $2.6 million, or 9 percent, from the $28.7 million of net income for the prior year first quarter.  Diluted earnings per share for the current quarter was $0.41 per share, an increase of $0.03, or 8 percent, from the prior year first quarter diluted earnings per share of $0.38.  “This strong first quarter performance is a great start to 2017 for Glacier Bancorp,” said Randy Chesler, President and Chief Executive Officer.  “Our 13 Bank divisions and the supporting staff groups did an excellent job,” Chesler said.

Asset Summary

Total investment securities of $2.982 billion at March 31, 2017 decreased $119 million, or 4 percent, during the current quarter and decreased $314 million, or 10 percent, from the prior year first 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 31 percent of total assets at March 31, 2017 compared to 33 percent of total assets at December 31, 2016 and 36 percent of total assets at March 31, 2016.

The Company experienced another strong quarter for loan growth with an increase of $193 million, or 14 percent annualized, during the current quarter.  The loan category with the largest increase was other commercial loans which increased $120 million, or 9 percent, and included an increase of $42 million from municipal loans.   Excluding the acquisition of Treasure State Bank (“TSB”), the loan portfolio increased $628 million, or 12 percent, since March 31, 2016 with the primary increase coming from growth in commercial real estate and other commercial loans of $351 million and $281 million, respectively.  “First quarter loan growth was strong, driven by municipal lending growth and broad based activity across our thirteen Bank divisions,” Chesler said.

Credit Quality Summary

Non-performing assets at March 31, 2017 were $71.5 million, with a slight increase from the prior quarter and a decrease of $8.8 million, or 11 percent, from a year ago.  Non-performing assets as a percentage of subsidiary assets at March 31, 2017 was 0.75 percent, which was a decrease of 13 basis points from the prior year first quarter of 0.88 percent.  Early stage delinquencies (accruing loans 30-89 days past due) of $39.2 million at March 31, 2017 increased $13.5 million from the prior quarter and increased $15.2 million from the prior year first quarter with half of the increase from one loan that the Company is currently in the process of evaluating.   The allowance for loan and lease losses (“allowance”) as a percent of total loans outstanding at March 31, 2017 was 2.20 percent, a decrease of 8 basis points from 2.28 percent at December 31, 2016.

Credit Quality Trends and Provision for Loan Losses

Net charge-offs for the current quarter were $1.9 million compared to $4.1 million for the prior quarter and $194 thousand from the same quarter last year.  The quarterly net charge-offs continue to experience a fair amount of volatility on a quarterly basis.  There was $1.6 million of current quarter provision for loan losses, compared to $1.1 million in the prior quarter and $568 thousand in the prior year first 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.

Liability Summary

The Company benefited from the current quarter growth in core deposits which increased $99.6 million, or 6 percent annualized, from the prior quarter.  Excluding the TSB acquisition, core deposits increased $390 million, or 6 percent, from March 31, 2016.  Non-interest bearing deposits of $2.049 billion at March 31, 2017 increased $7.6 million, or 37 basis points, from the prior quarter.  Excluding the TSB acquisition, non-interest bearing deposits increased $149 million, or 8 percent, from March 31, 2016.

Securities sold under agreements to repurchase (“repurchase agreements”) of $497 million at March 31, 2017 increased $23.5 million, or 5 percent, from the prior quarter and increased $51.2 million, or 11 percent, from the prior year first quarter.  Federal Home Loan Bank (“FHLB”) advances of $212 million at March 31, 2017 decreased $40.1 million, or 16 percent, from the prior quarter and decreased $102 million, or 33 percent, from the prior year first quarter due to the increase in deposits.

Stockholders’ Equity Summary

Tangible stockholders’ equity of $976 million at March 31, 2017 increased $19.0 million, or 2 percent, from the prior quarter primarily as a result of earnings retention and an increase in accumulated other comprehensive income.  Tangible stockholders’ equity increased $37.2 million, or 4 percent, from a year ago, the result of earnings retention and $10.5 million of Company stock issued in connection with the TSB acquisition; such increases more than offset the increase in goodwill and other intangibles from the acquisition and the decrease in accumulated other comprehensive income.  Tangible book value per common share at quarter end increased $0.23 per share from the prior quarter and increased $0.41 per share from a year ago.

Cash Dividend
On March 29, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.21 per share, an increase of $0.01 per share, or 5 percent.  The dividend was payable April 20, 2017 to shareholders of record April 11, 2017.  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 March 31, 2017
Compared to December 31, 2016 and March 31, 2016

Income Summary

Net Interest Income
In the current quarter, interest income of $87.6 million decreased $131 thousand, or 15 basis points, from the prior quarter which was primarily attributable to two less days during the current quarter.  Current quarter interest income increased $3.2 million, or 4 percent, over the prior year first quarter.  Current quarter interest income on commercial loans increased $5.5 million, or 12 percent, from the prior year first quarter which more than offset the $1.9 million decrease in investment interest income.

The current quarter interest expense of $7.4 million increased $152 thousand, or 2 percent, from the prior quarter and decreased $309 thousand, or 4 percent, from the prior year first quarter.  The total cost of funding (including non-interest bearing deposits) for the current quarter was 37 basis points compared to 36 basis points for the prior quarter and 39 basis points for the prior year first quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 4.03 percent compared to 4.02 percent in the prior quarter which was attributable to an increase in the earning asset yields from the continuing shift of lower yielding investments to higher yielding loans.  The current quarter net interest margin increased 2 basis points over the prior year first quarter net interest margin of 4.01 percent, due to a 2 basis points decrease in cost of funds and the remix of earning assets to higher yielding loans. “The Bank divisions’ focus on growing core deposits combined with the shift of cash flow from the investment portfolio into higher yielding loans supported the current quarter’s 4.03 percent net interest margin,” said Ron Copher, Chief Financial Officer.

Non-interest Income
Non-interest income for the current quarter totaled $25.7 million, a decrease of $2.3 million, or 8 percent, from the prior quarter and an increase of $1.4 million, or 6 percent, over the same quarter last year.  Service fee income of $15.6 million, increased by $952 thousand, or 6 percent, from the prior year first quarter as a result of the increased number of accounts.  Gain on sale of loans for the current quarter decreased $3.4 million, or 35 percent, from the prior quarter and was driven by the seasonal activity.  Gain on sale of loans for the current quarter increased $366 thousand, or 6 percent, from the prior year first quarter.  Other income of $2.8 million, increased $691 thousand, or 32 percent, over the prior quarter and increased $368 thousand, or 15 percent, over the prior year first quarter principally due to the current quarter gain on sale of other real estate owned (“OREO”).  Other income included a gain of $967 thousand from the sale of OREO and operating revenue of $15 thousand from OREO, a combined total of $982 thousand for the current quarter compared to $481 thousand for the prior quarter and $214 thousand for the prior year first quarter.

Non-interest Expense Summary

The Company consolidated its Bank divisions’ individual core database systems into a single core database and re-issued debit cards with chip technology during 2016 (the Core Consolidation Project or “CCP”).  Expenses related to the CCP were $741 thousand in the fourth quarter of 2016 and $834 thousand during the first quarter of 2016. Excluding CCP expenses, non-interest expense for the current quarter decreased $2.6 million, or 4 percent, over the prior quarter and increased $1.8 million, or 4 percent, over the prior year first quarter.

Compensation and employee benefits for the current quarter increased by $2.3 million, or 6 percent, from the prior year first quarter due to salary increases, vesting of restricted stock awards and the increased number of employees, including increases from the TSB acquisition.  The current quarter OREO expense of $273 thousand included $234 thousand of operating expense, $21 thousand of fair value write-downs, and $18 thousand of loss from the sales of OREO.  The current quarter other expenses decreased $1.5 million over the prior quarter primarily from decreases related to CCP, acquisition related expenses, and expenses connected with equity investments in New Market Tax Credit projects.  Current quarter other expenses decreased $126 thousand, or 1 percent, from the prior year first quarter which was driven by decreased costs from CCP.

Efficiency Ratio
The current quarter efficiency ratio was 55.57 percent, a 49 basis points increase from the prior quarter efficiency ratio of 55.08 percent.  Although there was a reduction in expenses, the decrease in gain on sale of loans during the current quarter drove the increase in the efficiency ratio from the prior quarter.  The current quarter efficiency ratio decreased 96 basis points from the prior year first quarter ratio of 56.53 percent resulting from the increase in interest income on commercial loans, which was greater than the increase in non-interest expense.

Forward-Looking Statements
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning.  These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.  The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio;
• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and profitability;
• changes in the cost and scope of insurance from the FDIC and other third parties;
• 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 reputation of banks and the financial services industry could deteriorate, which could adversely affect the Company's ability to obtain (and maintain) customers;
• competition among financial institutions in the Company's markets may increase significantly;
• the risks presented by continued public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions;
• the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
• consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions who may have greater resources could change the competitive landscape;
• dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank divisions;
• material failure, potential interruption or breach in security of the Company’s systems and technological changes which could expose us to new risks (e.g., cybersecurity), fraud or system failures;
• natural disasters, including fires, floods, earthquakes, and other unexpected events;
• the Company’s success in managing risks involved in the foregoing; and
• the effects of any reputational damage to the Company resulting from any of the foregoing.

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

Conference Call Information
A conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, April 21, 2017.  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 5756292.  To participate on the webcast, log on to: http://edge.media-server.com/m/p/bi5xib4n. 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 5756292 until May 5, 2017.

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. 

Visit our website at www.glacierbancorp.com