Glacier Bancorp, Inc. Announces Results for the Quarter Ended March 31, 2019

1st Quarter 2019 Highlights:

• Net income of $49.1 million for the current quarter, an increase of $10.5 million, or 27 percent, over the prior year first quarter net income of $38.6 million.
• Current quarter diluted earnings per share of $0.58, an increase of 21 percent from the prior year first quarter diluted earnings per share of $0.48.
• Current quarter loan growth was $38.5 million, or 2 percent annualized.
• Core deposits grew $70.1 million, or 3 percent annualized, during the current quarter with non-interest bearing deposit growth of $49.9 million, or 7 percent annualized.
• Continued credit quality improvement with non-performing assets declining $5.9 million, or 10 percent from the prior quarter.
• Net interest margin of 4.34 percent as a percentage of earning assets, on a tax equivalent basis, a 4 basis points increase over the prior quarter, and a 24 basis points increase over the prior year first quarter net interest margin of 4.10 percent.
• Declared and paid a quarterly dividend of $0.26 per share.  The dividend was the 136th consecutive quarterly dividend declared by the Company.
• On January 16, 2019, the Company announced the signing of a definitive agreement to acquire FNB Bancorp, the holding company for The First National Bank of Layton, a community bank based in Layton, Utah, with total assets of $335 million.
• On April 3, 2019, the Company announced the signing of a definitive agreement to acquire Heritage Bancorp, the bank holding company for Heritage Bank of Nevada, a community bank based in Reno, Nevada, with total assets of $830 million.

Financial Highlights

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1} Includes a special dividend declared of $0.30 per share for the three months ended December 31, 2018.

KALISPELL, Mont., April 18, 2019 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NASDAQ:GBCI) reported net income of $49.1 million for the current quarter, an increase of $10.5 million, or 27 percent, from the $38.6 million of net income for the prior year first quarter.  Diluted earnings per share for the current quarter was $0.58 per share, an increase of 21 percent from the prior year first quarter diluted earnings per share of $0.48.  Included in the current quarter was $214 thousand of acquisition-related expenses.  “The Glacier team delivered a great first quarter with solid business performance and the announcement of two acquisitions totaling over $1.1 billion in assets.  We continue to selectively grow the business and are pleased to see the continued improvement in our credit quality,” said Randy Chesler, President and Chief Executive Officer.  “We are all very excited about the prospect of First National Bank of Layton and Heritage Bank joining the Glacier family.”

On January 16, 2019, the Company announced the signing of a definitive agreement to acquire FNB Bancorp, the holding company for The First National Bank of Layton, a community bank based in Layton, Utah (collectively, “FNB”).  FNB provides banking services to individuals and businesses throughout Utah with six banking offices located in Layton, Bountiful, Clearfield, and Draper.  As of December 31, 2018, FNB had total assets of $335 million, total loans of $243 million and total deposits of $285 million.  The acquisition has received the required regulatory approvals, is subject to other customary conditions of closing and is expected to be completed during the second quarter of 2019. Upon closing of the transaction, FNB will become the Company’s fifteenth Bank Division.

On April 3, 2019, the Company announced the signing of a definitive agreement to acquire Heritage Bancorp, the bank holding company for Heritage Bank of Nevada, a community bank based in Reno, Nevada (collectively, “Heritage”).  Heritage provides banking services to individuals and businesses throughout Northern Nevada with seven banking offices located in Carson City, Gardnerville, Reno and Sparks.  As of December 31, 2018, Heritage had total assets of $830 million, total loans of $596 million and total deposits of $720 million.  The acquisition is subject to required regulatory approvals and other customary conditions of closing and is expected to be completed during the third quarter of 2019.  Upon closing of the transaction, Heritage will become the Company’s sixteenth  Bank Division.

Asset Summary

Total debt securities of $2.778 billion at March 31, 2019 decreased $91.7 million, or 3 percent, during the current quarter and decreased $11.4 million, or 41 basis points, from the prior year first quarter.   Debt securities represented 23 percent of total assets at March 31, 2019 compared to 24 percent of total assets at December 31, 2018 and March 31, 2018.

The loan portfolio of $8.326 billion increased $38.5 million, or 2 percent annualized, during the current quarter.  The loan category with the largest dollar increase was commercial real estate loans which increased $28.5 million, or 61 basis points.  The loan category with the largest percentage increase was home equity loans which increased $17.7 million, or 3 percent.  The loan portfolio increased $656 million, or 9 percent, since March 31, 2018, with the largest increase in commercial real estate loans, which increased $435 million, or 10 percent.

Credit Quality Summary

The current quarter had continued improvement in non-performing assets which ended the current quarter at $50.8 million, which was a decrease of $5.9 million, or 10 percent, from the prior quarter and a decrease of $23.1 million, or 31 percent, from the prior year first quarter.  Non-performing assets as a percentage of subsidiary assets at March 31, 2019 was 0.42 percent, a decrease of 5 basis points from the prior quarter, and a decrease of 22 basis points from the prior year first quarter.  Early stage delinquencies (accruing loans 30-89 days past due) of $36.9 million at March 31, 2019 increased $3.3 million from prior quarter and decreased $8.1 million from prior year first quarter.  Early stage delinquencies as a percentage of loans at March 31, 2019 was 0.44 percent, which was an increase of 3 basis points from prior quarter and was a decrease of 15 basis points from prior year first quarter.  The allowance for loan and lease losses (“allowance”) as a percent of total loans outstanding at March 31, 2019 was 1.56 percent, which was a 2 basis points decrease compared to the prior quarter and a decrease of 10 basis points from a year ago with such decreases reflective of the stabilizing credit quality.

Credit Quality Trends and Provision for Loan Losses

Net charge-offs for the current quarter were $1.5 million compared to $2.5 million for the prior quarter and $2.8 million from the same quarter last year.  Current quarter provision for loan losses was $57 thousand, compared to $1.2 million in the prior quarter and $795 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

Core deposits of $9.395 billion as of March 31, 2019 increased $70.1 million, or 3 percent annualized, from the prior quarter and increased $122 million, or 1 percent, from the prior year first quarter.  Non-interest bearing deposits increased $49.9 million, or 2 percent, over the prior quarter and increased $240 million, or 9 percent, over the prior year first quarter.

Federal Home Loan Bank (“FHLB”) advances of $155 million at March 31, 2019, decreased $285 million over the prior quarter and was stable over the prior year first quarter.  FHLB advances and wholesale deposits will continue to fluctuate to supplement liquidity needs as necessary during the year.

Stockholders’ Equity Summary

Tangible stockholders’ equity of $1.214 billion at March 31, 2019 increased $36.7 million compared to the prior quarter which was primarily the result of an increase in other comprehensive income and earnings retention, which was partially offset by a decrease of $25.5 million from the cumulative-effect adjustments related to the adoption of new accounting standards.  Tangible stockholders’ equity increased $104 million over the prior year first quarter which was the result of earnings retention and an increase in other comprehensive income, which was partially offset by the adoption of the accounting standards.  Tangible book value per common share at quarter end increased $0.42 per share from the prior quarter and increased $1.22 per share from a year ago.

Cash Dividends
On March 27, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.26 per share.  The dividend was payable April 18, 2019 to shareholders of record on April 9, 2019.  The dividend was the 136th consecutive quarterly dividend.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Operating Results for Three Months Ended March 31, 2019
Compared to December 31, 2018, and March 31, 2018

Income Summary

Net Interest Income
The current quarter net interest income of $115 million was stable compared to the prior quarter and increased $19.9 million, or 21 percent, from the prior year first quarter.  The increase in net interest income over the prior year first quarter was primarily driven by interest rate increases and an increase in commercial loans.  Interest income on commercial loans increased $1.3 million, or 2 percent, from the prior quarter and increased $18.0 million, or 28 percent, from the prior year first quarter.

The current quarter interest expense of $10.9 million increased $1.5 million, or 16 percent, over the prior quarter which was primarily driven by seasonal fluctuations in core deposits, which were supplemented using higher cost borrowings.  As deposits increased during the current quarter, FHLB advances were reduced by $285 million to $155 million, the same amount at the end of the prior year first quarter.  The current quarter interest expense increased $3.1 million, or 40 percent, from the prior year first quarter and was primarily due to the increased amount of deposits and other funding.  The cost of core deposits for the current quarter was 19 basis points compared to 17 basis points for the prior quarter and 15 basis points in the prior year first quarter.  The total cost of funding (including non-interest bearing deposits) for the current quarter was 43 basis points compared to 36 basis points for the prior quarter and 35 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 4.34 percent compared to 4.30 percent in the prior quarter.  The 4 basis points increase in the net interest margin was primarily the result of increased yields on the loan portfolio.  The current quarter net interest margin included 2 basis points from the recovery of interest on loans previously placed on non-accrual.  The current quarter net interest margin increased 24 basis points over the prior year first quarter net interest margin of 4.10 percent.  The increase in the margin from the prior year first quarter resulted from the remix of earning assets to higher yielding loans, increased yields on the loan portfolio which more than offset the increase in funding costs.  “The current quarter net interest margin expansion reflects the 10 basis points higher yield on earnings assets, while the cost of core deposit funding increased 2 basis points,” said Ron Copher, Chief Financial Officer.

Non-interest Income
Non-interest income for the current quarter totaled $28.5 million which was comparable to the prior quarter and an increase of $2.4 million, or 9 percent, over the same quarter last year.  Service charges and other fees of $18.0 million for the current quarter decreased $1.7 million, or 9 percent, from the prior quarter due to seasonality.  Service charges and other fees for the current quarter increased $1.1 million, or 7 percent, from the prior year first quarter which was due to the increased number of accounts from organic growth and acquisitions.  Other income increased $1.3 million from the prior quarter and increased $1.5 million over the prior year first quarter.

Non-interest Expense Summary

Total non-interest expense of $82.8 million for the current quarter increased $1.0 million, or 1 percent, over the prior quarter and increased $9.2 million, or 13 percent, over the prior year first quarter.  Compensation and employee benefits increased by $2.3 million, or 5 percent, from the prior quarter primarily from annual salary increases and benefit adjustments.  Compensation and employee benefits increased by $7.0 million, or 15 percent, from the prior year first quarter principally due to the increased number of employees driven by organic growth and the prior year first quarter acquisitions.  Occupancy and equipment expense increased $1.2 million, or 16 percent, over the prior year first quarter as a result of the prior year first quarter acquisitions and general cost increases.  Other expenses of $12.3 million, decreased $1.7 million, or 12 percent, from the prior quarter which was driven by decreases in several categories including acquisition-related expenses and expenses connected with equity investments in New Market Tax Credit projects.  Other expenses increased $106 thousand, or 87 basis points, from the prior year first quarter and included a decrease of $1.6 million in acquisition-related expenses which was offset by a general increase in costs from organic growth and the prior year first quarter acquisitions.  Acquisition-related expenses were $214 thousand during the current quarter compared to $520 thousand in the prior quarter and $1.8 million in the prior year first quarter.

Federal and State Income Tax Expense
Tax expense during the first quarter of 2019 was $11.7 million, with no change from the prior quarter and an increase of $3.3 million, or 39 percent, from the prior year first quarter.  The effective tax rate in the current and prior quarter was 19 percent which compares to 18 percent in the prior year first quarter.

Efficiency Ratio
The current quarter efficiency ratio was 55.37 percent, a 144 basis points increase from the prior quarter efficiency ratio of 53.93 percent and was driven by increased operating costs combined with a slight decrease in net interest income.  The current quarter efficiency ratio decreased 243 basis points from the prior year first quarter efficiency ratio of 57.80 percent and was driven by the increase in net interest income that more than offset the increased operating costs.

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

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio;
• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the FederalReserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and profitability;
• changes in the cost and scope of insurance from the Federal Deposit Insurance Corporation and other third parties;
• legislative or regulatory changes, including increased banking and consumer protection regulation that adversely affect the Company’s business, both generally and as a result of the Company exceeding $10 billion in total consolidated assets;
• ability to complete pending or prospective future acquisitions;
• costs or difficulties related to the completion and integration of acquisitions;
• the goodwill the Company has recorded in connection with acquisitions could become impaired, which may have an adverse impact on earnings and capital;
• reduced demand for banking products and services;
• the reputation of banks and the financial services industry could deteriorate, which could adversely affect the Company's ability to obtain (and maintain) customers;
• competition among financial institutions in the Company's markets may increase significantly;
• the risks presented by continued public stock market volatility, which could adversely affect the market price of the Company’s common stock and the ability to raise additional capital or grow the Company through acquisitions;
• the projected business and profitability of an expansion or the opening of a new branch could be lower than expected;
• 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 19, 2019. The conference call will be accessible by telephone and through the internet. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 4067719. To participate on the webcast, log on to:https://edge.media-server.com/m6/p/hd6quiqa. If you are unable to participate during the live webcast, the call will be archived on our website, www.glacierbancorp.com, or by calling 855-859-2056 with the ID 4067719 by May 3, 2019.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is the parent company for Glacier Bank, Kalispell and its bank divisions: First Security Bank of Missoula; Valley Bank of Helena; Western Security Bank, Billings; First Bank of Montana, Lewistown; and First Security Bank, Bozeman, all located in Montana; as well as Mountain West Bank, Coeur d’Alene, operating in Idaho, Utah and Washington; First Bank, Powell, operating in Wyoming and Utah; Citizens Community Bank, Pocatello, operating in Idaho; Bank of the San Juans, Durango; and Collegiate Peaks Bank, Buena Vista both operating in Colorado; First State Bank, Wheatland, operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and The Foothills Bank, Yuma, operating in Arizona.

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

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

Glacier Bancorp, Inc.
Average Balance Sheets

Glacier Bancorp, Inc.
Loan Portfolio by Regulatory Classification

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

Glacier Bancorp, Inc.
Credit Quality Summary by Regulatory Classification

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Credit Quality Summary by Regulatory Classification (continued)

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

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