GBCI - Glacier Bancorp Inc. Announces Results for the Quarter and Period Ended June 30 2023

2nd Quarter 2023 Highlights:

• Net income was $55.0 million for the current quarter, a decrease of $6.2 million, or 10 percent, from the prior quarter net income of $61.2 million. Net income for the current quarter decreased $21.4 million, or 28 percent, from the prior year second quarter net income of $76.4 million.
• Interest income of $247 million in the current quarter increased $15.5 million, or 7 percent, over the prior quarter interest income of $232 million. Interest income in the current quarter increased $47.7 million, or 24 percent, over the prior year second quarter.
• Total deposits and retail repurchase agreements of $21.365 billion at the current quarter end increased $25.5 million, or 12 basis points, during the current quarter.
• The loan portfolio of $15.955 billion, increased $436 million, or 11 percent annualized, during the current quarter.
• The loan yield for the current quarter of 5.12 percent, increased 10 basis points, compared to 5.02 percent in the prior quarter and increased 60 basis points from the prior year second quarter loan yield of 4.52 percent.
• Non-performing assets as a percentage of subsidiary assets was 0.12 percent in the current and prior quarter, compared to 0.16 percent in the prior year second quarter.
• The Company declared a quarterly dividend of $0.33 per share. The Company has declared 153 consecutive quarterly dividends and has increased the dividend 49 times.
  

First Half 2023 Highlights

• Net Income for the first half of 2023 was $116 million, a decrease of $28.0 million, or 19 percent, from the $144 million net income for the first half of the prior year.
• Interest income for the first six months of 2023 was $479 million, an increase of $89.1 million, or 23 percent over the first half of the prior year interest income of $390 million.
• The loan portfolio of $15.955 billion, increased $708 million, or 9 percent annualized, during the first half of the current year. The loan portfolio, excluding the Paycheck Protection Program (“PPP”) loans, increased $1.121 billion, or 17 percent annualized, during the first half of the prior year.
• The loan yield was 5.07 percent for the first half of the current year, an increase of 51 basis points from the first half of the prior year loan yield of 4.56 percent.
• Stockholders’ equity of $2.927 billion increased $83.2 million, or 3 percent, during the first six months of the current year.
• Dividends declared in the first half of 2023 were $0.66 per share.

Financial Summary

KALISPELL, Mont., July 20, 2023 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NYSE: GBCI) reported net income of $55.0 million for the current quarter, a decrease of $21.4 million, or 28 percent, from the $76.4 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.50 per share, a decrease of 28 percent from the prior year second quarter diluted earnings per share of $0.69. The decrease in net income compared to the prior quarter and prior year second quarter is primarily due to the continued increase in funding costs. “The growth in total deposits and repurchase agreements this quarter underscores the effectiveness of our team in successfully meeting the needs of local deposit relationships in this highly competitive environment,” said Randy Chesler, President and Chief Executive Officer. “Our deep local relationships, strong capital position and consistent financial performance helped set the stage for this growth.”

Net income for the six months ended June 30, 2023 was $116 million, a decrease of $28.0 million, or 19 percent, from the $144 million for the first six months in the prior year. Diluted earnings per share for the first half of 2023 was $1.05 per share, a decrease of 19 percent from the prior year first half diluted earnings per share of $1.30.

Asset Summary

Total debt securities of $8.608 billion at June 30, 2023 decreased $255 million, or 3 percent, during the current quarter and decreased $1.390 billion, or 14 percent, from the prior year second quarter. The Company continues to utilize cash flow from the securities portfolio to primarily fund loan growth. Debt securities represented 31 percent of total assets at June 30, 2023, compared to 34 percent at December 31, 2022, and 37 percent at June 30, 2022.

The loan portfolio of $15.955 billion increased $436 million, or 11 percent annualized, during the current quarter with the largest dollar increase in commercial real estate which increased $229 million, or 9 percent annualized. The loan portfolio increased $1.555 billion, or 11 percent, from the prior year second quarter with the largest dollar increase in commercial real estate loans which increased $911 million, or 10 percent.

Credit Quality Summary

Non-performing assets of $32.0 million at June 30, 2023 decreased $11.9 million, or 27 percent, over the prior year second quarter. Non-performing assets as a percentage of subsidiary assets at June 30, 2023 and March 31, 2023 was 0.12 percent compared to 0.16 percent in the prior year second quarter.

Early stage delinquencies (accruing loans 30-89 days past due) of $24.9 million at June 30, 2023 increased $8.3 million from the prior year second quarter. Early stage delinquencies as a percentage of loans at June 30, 2023 and March 31, 2023 was 0.16 percent, which compared to 0.12 percent from prior year second quarter.

The current quarter credit loss expense of $2.8 million included $5.3 million of credit loss expense from loans and $2.5 million of credit loss benefit from unfunded loan commitments. The allowance for credit losses on loans (“ACL”) as a percentage of total loans outstanding at June 30, 2023 was 1.19 percent, compared to 1.20 percent in the prior quarter and the prior year second quarter.

Credit Quality Trends and Provision for Credit Losses on the Loan Portfolio

Net charge-offs for the current quarter were $2.5 million compared to $2.0 million in the prior quarter and $1.8 million for the prior year second quarter. Net charge-offs of $2.5 million included $1.7 million in deposit overdraft net charge-offs and $773 thousand of net loan charge-offs.

The current quarter provision for credit loss expense for loans was $5.3 million which was a decrease of $1.0 million from the prior quarter and a $6.6 million increase from the prior year second quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, economic forecasts and other environmental factors will continue to determine the level of the provision for credit losses for loans.

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

During the current quarter, the Company continued to focus on its diversified deposit and repurchase agreement product offerings. Total deposits and retail repurchase agreements of $21.365 billion at the current quarter end increased $25.5 million, or 12 basis points, during the current quarter. Non-interest bearing deposits were 33 percent of total core deposits at June 30, 2023 compared to 37 percent at December 31, 2022 and June 30, 2022.

During the current quarter, the Company fully paid off its higher rate Federal Home Loan Bank (“FHLB”) advances. The Company’s liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources. The Company has available liquidity of $15.1 billion including cash, borrowing capacity from the FHLB and Federal Reserve facilities, unpledged securities, brokered deposits, and other sources.

Stockholders’ Equity Summary

Tangible stockholders’ equity was $1.904 billion at June 30, 2023 increased $2.0 million, or 1 basis point, compared to the prior quarter and increased $88.0 million, or 5 percent, from the prior year end, which was primarily due to earnings retention and the decrease in the net unrealized loss (after-tax) on the AFS debt securities. Tangible book value per common share of $17.18 at the current quarter end increased $0.78 per share, or 5 percent, from the prior year end. The tangible book value per common share increased $0.35 per share from the prior year second quarter.

Cash Dividends
On June 28, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share. The current quarter dividend of $0.33 per share was consistent with the dividend declared in the prior quarter and the prior year second quarter. The dividend was payable July 20, 2023 to shareholders of record on July 11, 2023. The dividend was the Company’s 153rd consecutive regular dividend. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Operating Results for Three Months Ended June 30, 2023
Compared to March 31, 2023 , and June 30, 2022

Income Summary

Net Interest Income
The current quarter interest income of $247 million increased $15.5 million, or 7 percent, over the prior quarter and was driven primarily by the increase in the loan portfolio and an increase in loan yields. The current quarter interest income increased $47.7 million, or 24 percent, over the prior year second quarter also due to loan growth and increased loan yields. The loan yield of 5.12 percent in the current quarter increased 10 basis points from the prior quarter loan yield of 5.02 percent and increased 60 basis points from the prior year second quarter loan yield of 4.52 percent.

The current quarter interest expense of $75.4 million increased $29.7 million, or 65 percent, over the prior quarter and increased $69.2 million, or 1,116 percent, over the prior year second quarter primarily the result of an increase in rates on deposits and borrowings. Core deposit cost (including non-interest bearing deposits) was 0.57 percent for the current quarter compared to 0.23 percent in the prior quarter and 0.06 percent for the prior year second quarter. The total cost of funding (including non-interest bearing deposits) was 1.26 percent in the current quarter compared to 0.79 percent in the prior quarter and 0.11 percent in the prior year second quarter which was the result of the increased deposit and borrowing rates.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 2.74 percent compared to 3.08 percent in the prior quarter and 3.23 percent in the prior year second quarter. The core net interest margin, excluding discount accretion, the impact from non-accrual interest and the impact from the PPP loans, was 2.72 percent compared to 3.07 percent in the prior quarter and 3.16 percent in the prior year second quarter. The core net interest margin decreased 35 basis points in the current quarter primarily as a result of increased deposit and borrowing rates.

Non-interest Income
Non-interest income for the current quarter totaled $29.1 million which was an increase of $1.2 million, or 4 percent, over the prior quarter which was primarily driven by an increase in service charges and gain on the sale of residential loans. Gain on the sale of residential loans of $3.5 million for the current quarter increased $1.1 million, or 47 percent, compared to the prior quarter and decreased $1.5 million, or 29 percent, from the prior year second quarter. Service charges and other fees of $19.0 million in the current quarter increased $1.2 million, or 7 percent, over the prior quarter and increased $1.7 million, or 10 percent, over the prior year second quarter.

Non-interest Expense Summary

Total non-interest expense of $131 million for the current quarter decreased $4.4 million, or 3 percent, over the prior quarter and increased $1.1 million, or 1 percent, over the prior year second quarter. Compensation and employee benefits expense of $78.8 million for the current quarter decreased $2.7 million, or 3 percent, from the prior quarter and decreased $1.0 million, or 1 percent, over the prior year second quarter which was driven primarily by decreases in accrued expenses for employee benefits. Regulatory assessments and insurance of $5.3 million, increased $2.2 million, or 72 percent, over the prior year second quarter and was primarily due to the FDIC uniformly increasing all depository institutions premiums beginning in the prior quarter. “The current quarter reduction in non-interest expense is primarily due to reductions in compensation and related benefits as the Company continues to closely monitor staffing levels and improve operating efficiencies,” said Ron Copher, Chief Financial Officer.

Federal and State Income Tax Expense
Tax expense during the second quarter of 2023 was $12.7 million, a decrease of $303 thousand, or 2 percent, compared to the prior quarter and a decrease of $4.6 million, or 27 percent, from the prior year second quarter. The effective tax rate in the current quarter was 18.8 percent compared to 16.9 percent in the prior quarter and 18.5 percent in the prior year second quarter.

Efficiency Ratio
The efficiency ratio was 62.73 percent in the current quarter compared to 60.39 percent in the prior quarter and 55.74 percent in the prior year second quarter. The increase the from prior quarter and prior year second quarter was primarily attributable to the increase in interest expense in the current quarter.

Operating Results for Six Months Ended June 30, 2023
Compared to June 30, 2022

Income Summary

Net Interest Income
Net-interest income of $358 million for the first half of 2023 decreased $20.8 million, or 5 percent, over the same period of 2022 and was primarily driven by increased interest expense. Interest income of $479 million for the first six months in the current year increased $89.1 million, or 23 percent, from the same period in the prior year and was primarily attributable to the increase in the loan portfolio and an increase in loan yields. The loan yield was 5.07 percent for the first half of the current year, an increase of 51 basis points from the first half of the prior year loan yield of 4.56 percent.

Interest expense of $121.1 million for the first half of 2023 increased $110 million, or 985 percent, over the same period in the prior year and was the result of increased borrowings and higher interest rates on borrowings and deposits. Core deposit cost (including non-interest bearing deposits) was 0.40 percent for the first half of 2023 compared to 0.06 percent for the same period in 2022. The total funding cost (including non-interest bearing deposits) for the first six months of the current year was 1.03 percent, which was an increase of 93 basis points over the prior year first half of 0.10 percent.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during the first half of 2023 was 2.91 percent, a 30 basis points decrease from the net interest margin of 3.21 percent for the same period in the prior year. The core net interest margin, excluding discount accretion, the impact from non-accrual interest and the impact from the PPP loans, was 2.90 percent, which was a 21 basis points decrease from the core margin of 3.11 percent in the prior year.

Non-interest Income
Non-interest income of $57.0 million for the first half of 2023 decreased $4.9 million, or 8 percent, over the same period last year and was principally due to the decrease in gain on sale of residential loans which was partially offset by the increase in service charges and other fees.
Non-interest Expense Summary

Total non-interest expense of $266 million for the first six months of 2023 increased $5.8 million, or 2 percent, over the same period in the prior year. Regulatory assessments and insurance of $10.2 million for the first half of 2023 increased $4.1 million, or 66 percent, over the prior year and was primarily due to the FDIC uniformly increasing all depository institutions premiums beginning in 2023. Other expense of $43.3 million for the first half of 2023 decreased $2.5 million, or 5 percent, from the first half of the prior year and was primarily due to the decrease in acquisition-related expenses along with changes in several miscellaneous categories. Acquisition-related expenses were $563 thousand in the first half of the current year compared to $8.3 million in the same period of last year.

Provision for Credit Losses
The provision for credit loss expense was $8.2 million for the first half of 2023 increased $2.7 million, or 50 percent, over the same period of the prior year. The provision for credit loss expense for the first half of 2023 included provision for credit loss expense of $11.5 million on the loan portfolio and credit loss benefit of $3.3 million on the unfunded loan commitments. Net charge-offs during the first half of the current year were $4.4 million compared to $2.7 million during the same period of the prior year.

Federal and State Income Tax Expense
Tax expense of $25.2 million for the first half of 2023 decreased $6.2 million, or 20 percent, over the first six months of the prior year. The effective tax rate for first half of 2023 was 17.8 percent compared to 17.8 percent for the first half of 2022.

Efficiency Ratio
The efficiency ratio was 61.52 percent for the first six months of 2023 compared to 56.42 percent for the same period last year. The increase from the prior year was primarily attributable to the increase in interest expense in the current year.

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 the Company’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 other comparable words or phrases of a future or forward-looking nature. 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 based on assumptions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results (express or implied) or other expectations in the forward-looking statements, including those made in this news release:

• risks associated with lending and potential adverse changes in the credit quality of the Company’s loan portfolio;
• changes in monetary and fiscal policies, including interest rate policies of the Federal Reserve Board, which could adversely affect the Company’s net interest income and margin, the fair value of its financial instruments, profitability, and stockholders’ equity;
• legislative or regulatory changes, including increased banking and consumer protection regulations, that may adversely affect the Company’s business;
• risks related to overall economic conditions, including the impact on the economy of a rising interest rate environment, inflationary pressures, and geopolitical instability, including the war in Ukraine;
• risks associated with the Company’s ability to negotiate, complete, and successfully integrate any future acquisitions;
• costs or difficulties related to the completion and integration of acquisitions;
• impairment of the goodwill recorded by the Company in connection with acquisitions, which may have an adverse impact on earnings and capital;
• reduction in demand for banking products and services, whether as a result of changes in customer behavior, economic conditions, banking environment, or competition;
• deterioration of the reputation of banks and the financial services industry, which could adversely affect the Company's ability to obtain and maintain customers;
• changes in the competitive landscape, including as may result from new market entrants or further consolidation in the financial services industry, resulting in the creation of larger competitors with greater financial resources;
• 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 through acquisitions;
• risks associated with dependence on the Chief Executive Officer, the senior management team and the Presidents of Glacier Bank’s divisions;
• material failure, potential interruption or breach in security of the Company’s systems or changes in technological which could expose the Company to cybersecurity risks, fraud, system failures, or direct liabilities;
• risks related to natural disasters, including droughts, fires, floods, earthquakes, pandemics, and other unexpected events;
• success in managing risks involved in the foregoing; and
• effects of any reputational damage to the Company resulting from any of the foregoing.

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

Conference Call Information
A conference call for investors is scheduled for 11:00 a.m. Eastern Time on Friday, July 21, 2023. Please note that our conference call host no longer offers a general dial-in number. Investors who would like to join the call may now register by following this link to obtain dial-in instructions: https://register.vevent.com/register/BI19db5b01086643a5bde0e9f301e797ea. To participate via the webcast, log on to: https://edge.media-server.com/mmc/p/6gianovu. If you are unable to participate during the live webcast, the call will be archived on our website, www.glacierbancorp.com.

About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. (NYSE: GBCI), a member of the Russell 2000® and the S&P MidCap 400® indices, is the parent company for Glacier Bank and its Bank divisions located across its eight state Western U.S. footprint: Altabank (American Fork, UT), Bank of the San Juans (Durango, CO), Citizens Community Bank (Pocatello, ID), Collegiate Peaks Bank (Buena Vista, CO), First Bank of Montana (Lewistown, MT), First Bank of Wyoming (Powell, WY), First Community Bank Utah (Layton, UT), First Security Bank (Bozeman, MT), First Security Bank of Missoula (Missoula, MT), First State Bank (Wheatland, WY), Glacier Bank (Kalispell, MT), Heritage Bank of Nevada (Reno, NV), Mountain West Bank (Coeur d’Alene, ID), North Cascades Bank (Chelan, WA), The Foothills Bank (Yuma, AZ), Valley Bank of Helena (Helena, MT), and Western Security Bank (Billings, MT).