GBCI - Glacier Bancorp Inc. Announces Results for the Quarter and Year Ended December 31 2022

4th Quarter 2022 Highlights:

• Net income was $79.7 million for the current quarter, an increase of $339 thousand, or 43 basis points, from the prior quarter net income of $79.3 million. Net income for the current quarter increased $29.0 million, or 57 percent, over the prior year fourth quarter net income of $50.7 million.
• The loan portfolio, excluding the Paycheck Protection Program (“PPP”) loans, grew $397 million, or 11 percent annualized, in the current quarter.
• The loan yield for the current quarter of 4.83 percent, increased 16 basis points, compared to 4.67 percent in the prior quarter and increased 13 basis points from the prior year fourth quarter loan yield of 4.70 percent.
• Interest income of $225 million in the current quarter increased $10.7 million, or 5 percent, over the prior quarter interest income of $214 million. Interest income in the current quarter increased $32.3 million, or 17 percent, over the prior year fourth quarter.
• Non-interest expense of $129.0 million, decreased $1.1 million, or 1 percent, over prior quarter, and decreased $5.1 million, or 4 percent over the prior year fourth quarter.
• Non-performing assets as a percentage of subsidiary assets was 0.12 percent in the current quarter compared to 0.13 percent in the prior quarter and 0.26 percent in the prior year fourth quarter.
• The Company declared a quarterly dividend of $0.33 per share. The Company has declared 151 consecutive quarterly dividends and has increased the dividend 49 times.
  

Year 2022 Highlights:

• Record net income of $303 million for 2022 increased $18.4 million, or 6 percent, compared to the prior year net income.
• The loan portfolio, excluding the PPP loans, grew $1.974 billion, or 15 percent annualized, in 2022.
• Interest income of $830 million in the current year increased $149 million, or 22 percent, over the prior year interest income of $681 million.
• Declared regular total dividends in 2022 of $1.32 per share, an increase of $0.05 per share, or 4 percent, over the prior year regular dividends of $1.27.

Financial Summary

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¹ Includes a special dividend declared of $0.10 per share for the three and twelve months ended December 31, 2021.
² Excluding the special dividend, the dividend payout ratio was 69.57 percent for the three months ended December 31, 2021 and 44.25 percent for the twelve months ended December 31, 2021.

KALISPELL, Mont., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NYSE: GBCI) reported net income of $79.7 million for the current quarter, an increase of $29.0 million, or 57 percent, from the $50.7 million of net income for the prior year fourth quarter. Diluted earnings per share for the current quarter was $0.72 per share, an increase of 57 percent from the prior year fourth quarter diluted earnings per share of $0.46. The $29.0 million net income increase over the prior year fourth quarter was driven by a $24.2 million increase in interest income on loans and a $21.8 million decrease in credit loss expense driven by the prior year credit loss expense from the acquisition of Altabancorp and its Altabank subsidiary (“Alta”) on October 1, 2021. Included in the current quarter non-interest expense was a $2.5 million gain on the sale of former branch buildings. “We were pleased to see healthy loan growth, continued strong credit, increasing loan yields and well managed expenses,” said Randy Chesler, President and Chief Executive Officer. “The Glacier team had many important accomplishments in 2022 and is ready and well positioned for 2023.”

Net income for 2022 was $303 million, an increase of $18.4 million, or 6 percent, from the $285 million net income for the prior year. Diluted earnings per share for 2022 was $2.74 per share, a decrease of 4 percent from the prior year earnings per share of $2.86. The $18.4 million increase in net income over the prior year was driven by a $125.9 million increase in net interest income from both organic loan growth and the acquisition of Alta which more than offset the $43.0 million decrease in gain on sale of loans, a $40.0 million decrease in PPP related income, and an $84.0 million increase in non-interest expense from the acquisition of Alta and increased operating expenses.

Asset Summary

Total debt securities of $9.022 billion at December 31, 2022 decreased $489 million, or 5 percent, during the current quarter and decreased $1.348 billion, or 13 percent, from the prior year end. The Company continues to selectively sell debt securities to fund organic loan growth and the reduction in deposits. Debt securities represented 34 percent of total assets at December 31, 2022 compared to 40 percent at December 31, 2021.

Excluding the PPP loans, during the current quarter the loan portfolio increased $397 million, or 11 percent annualized, with the largest dollar increase in commercial real estate which increased $214 million, or 9 percent annualized. Excluding the PPP loans, the loan portfolio increased $1.974 billion, or 15 percent, from the prior year fourth quarter with the largest dollar increase in commercial real estate loans which increased $1.166 billion, or 14 percent.

Credit Quality Summary

Non-performing assets of $32.7 million at December 31, 2022 decreased $2.3 million, or 7 percent, over the prior quarter and decreased $34.9 million, or 52 percent, over prior year fourth quarter. Non-performing assets as a percentage of subsidiary assets at December 31, 2022 was 0.12 percent compared to 0.13 percent in the prior quarter and 0.26 percent in the prior year fourth quarter.

Early stage delinquencies (accruing loans 30-89 days past due) of $21.0 million at December 31, 2022 increased $10.0 million from the prior quarter and decreased $29.6 million from the prior year fourth quarter. Early stage delinquencies as a percentage of loans at December 31, 2022 was 14 basis points, which compared to 7 basis points in the prior quarter and 38 basis points from prior year fourth quarter.

The current quarter credit loss expense of $6.1 million included $6.1 million of credit loss expense from loans and $65 thousand of credit loss expense from unfunded loan commitments. The allowance for credit losses on loans (“ACL”) as a percentage of total loans outstanding at December 31, 2022 was 1.20 percent which was the same compared to the prior quarter and a 9 basis points decrease from the prior year end.

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

Net charge-offs for the current quarter of $2.0 million compared to $3.2 million for the prior quarter and $616 thousand from the same quarter last year. Net charge-offs of $2.0 million included $2.1 million in deposit overdraft net charge-offs and $91 thousand of net loan recoveries.

The current quarter provision for credit loss expense for loans was $6.1 million which was a decrease of $2.3 million from the prior quarter. The prior year fourth quarter credit loss expense of $19.3 million on the loan portfolio included $18.1 million of provision for credit loss from the acquisition of Alta to fully fund an allowance for credit losses post-acquisition. Excluding the impact from the acquisition of Alta, the current quarter provision for credit loss expense for loans increased $4.8 million from the prior year fourth 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

Core deposits of $20.575 billion decreased $1.301 billion, or 6 percent, during the current quarter and decreased $737 million, or 3 percent, from the prior year end. Non-interest bearing deposits were 37 percent of total core deposits at December 31, 2022 and December 31, 2021.

Federal Home Loan Bank (“FHLB”) advances increased $1.095 billion during the current quarter and $1.800 billion during 2022 to support liquidity needs from organic loan growth and the decrease in deposits.

Stockholders’ Equity Summary

Tangible stockholders’ equity of $1.816 billion at December 31, 2022 increased $73.6 million, or 4 percent, from the prior quarter which was primarily driven by earnings retention and the decrease in the unrealized loss on the available-for-sale (“AFS”) debt securities during the current quarter. Tangible stockholders’ equity decreased by $324 million from the prior year as a result of an increase in unrealized loss on the AFS debt securities which resulted from the significant increase in interest rates during the current year. Tangible book value per common share of $16.40 at the current quarter end increased $0.67 per share, or 4 percent, from the prior quarter. The tangible book value per common share decreased $2.93 per share, or 15 percent, from the prior year fourth quarter primarily as a result of the increase in the unrealized loss on AFS debt securities.

Cash Dividends
On November 16, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share. The dividend was payable December 15, 2022 to shareholders of record on December 6, 2022. The dividend was the Company’s 151st 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 December 31, 2022
Compared to September 30, 2022 , June 30, 2022 , March 31, 2022 , and December 31, 2021

Income Summary

Net Interest Income
The current quarter net interest income of $204 million decreased $1.3 million, or 1 percent, compared to the prior quarter and increased $16.4 million, or 9 percent, from the prior year fourth quarter. The current quarter interest income of $225 million increased $10.7 million, or 5 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 $32.3 million, or 17 percent, over the prior year fourth quarter due to organic loan growth and increased loan yields, which more than offset the $8.5 million decrease in interest income from the PPP loans.

The current quarter interest expense of $21.0 million increased $12.0 million, or 132 percent, over the prior quarter and increased $15.8 million, or 304 percent, over the prior year fourth quarter primarily the result of an increase in borrowings to fund the Company’s loan growth and reduction in deposits. Core deposit cost (including non-interest bearing deposits) was 8 basis points for the current quarter compared to 6 basis points in the prior quarter and 7 basis points for the prior year fourth quarter. The total cost of funding (including non-interest bearing deposits) was 35 basis points in the current quarter compared to 15 basis points in the prior quarter and 9 basis points in the prior year fourth quarter which was the result of the increased borrowings 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 3.30 percent compared to 3.34 percent in the prior quarter and 3.21 percent in the prior year fourth quarter. The core net interest margin, excluding discount accretion, the impact from non-accrual interest and the impact from the PPP loans, was 3.27 percent compared to 3.29 percent in the prior quarter and 3.04 percent in the prior year fourth quarter. The core net interest margin decreased 2 basis points in the current quarter as a result of increased borrowing costs. The core loan yield of 4.79 percent in the current quarter increased 19 basis points from the prior quarter core loan yield of 4.60 percent and increased 36 basis points from the prior year fourth quarter core loan yield of 4.43 percent. “The Bank divisions have been excellent in pricing loans at higher yields as interest rates have increased,” said Ron Copher, Chief Financial Officer.

Non-interest Income
Non-interest income for the current quarter totaled $28.5 million which was a decrease of $1.9 million, or 6 percent, over the prior quarter and a decrease of $5.9 million, or 17 percent, over the same quarter last year which was primarily driven by the decrease in gain on sale of residential loans. Gain on the sale of residential loans of $2.2 million for the current quarter decreased $1.7 million, or 43 percent, compared to the prior quarter and decreased $9.3 million, or 81 percent, from the prior year fourth quarter. The current quarter mortgage activity was lower than prior periods as a result of the continued reduction in residential purchase and refinance activity as mortgage rates continued to rise.

Non-interest Expense Summary

Total non-interest expense of $129 million for the current quarter decreased $1.1 million, or 1 percent, over the prior quarter. Excluding a current quarter $2.5 million gain on the sale of former branch buildings included in other expenses, total non-interest expense was $131 million for the current quarter which increased $1.1 million or 1 percent, over the prior quarter which was driven by several miscellaneous category increases.

Total non-interest expense for the current quarter decreased $5.1 million, or 4 percent over the prior year fourth quarter. Compensation and employee benefit expense of $79.8 million increased $2.1 million, or 3 percent, over the prior year fourth quarter primarily from annual salary increases and benefit adjustments which more than offset the decrease in commission expense resulting from the slowing of mortgage loan sales. Other expense of $20.7 million for the current quarter decreased $8.0 million or 28 percent from the prior year fourth quarter and was the result of the decrease in acquisition-related expenses and the current quarter gain on the sale of the former branch buildings. Acquisition-related expenses was $804 thousand in the current quarter compared to $892 thousand in the prior quarter and $8.2 million in the prior year fourth quarter.

Federal and State Income Tax Expense
Tax expense during the fourth quarter of 2022 was $17.8 million, a decrease of $232 thousand, or 1 percent, compared to the prior quarter and an increase of $8.5 million, or 92 percent, from the prior year fourth quarter. The effective tax rate in the current quarter was 18.2 percent compared to 18.5 percent in the prior quarter and 15.5 percent in the prior year fourth quarter.

Efficiency Ratio
The efficiency ratio was 53.18 percent in the current quarter compared to 52.76 percent in the prior quarter and 57.68 percent in the prior year fourth quarter. Excluding acquisition-related expenses, the efficiency ratio would have been 52.84 percent in the current quarter compared to 52.39 percent in the prior quarter and 54.09 percent in the prior year fourth quarter.

Operating Results for Year Ended December 31, 2022
Compared to December 31, 2021

Income Summary

Net Interest Income
Net-interest income of $788 million for 2022 increased $126 million, or 19 percent, over 2021. Interest income of $830 million for the current year increased $149 million, or 22 percent, from the prior year and was primarily attributable to the acquisition of Alta and organic loan growth.

Interest expense of $41.3 million for 2022 increased $22.7 million, or 122 percent over the prior year and was the result of increased borrowings and higher interest rates. Core deposit cost (including non-interest bearing deposits) was 7 basis points for both 2022 and 2021. The total funding cost (including non-interest bearing deposits) for 2022 was 18 basis points, which increased 8 basis points compared to 10 basis points in 2021 driven by the increased borrowing rates.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, during 2022 was 3.27 percent, a 15 basis points decrease from the net interest margin of 3.42 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 3.20 percent which was a 4 basis point decrease from the core margin of 3.24 percent in the prior year.

Non-interest Income
Non-interest income of $120.7 million for 2022 decreased $24.1 million, or 17 percent, over the same period last year and was principally due to the $43.0 million, or 68 percent, decrease in gain on sale of residential loans. Service charges and other fees of $72.1 million for 2022 increased $12.8 million, or 22 percent, from the prior year same period as a result of additional fees from increased customer accounts, transaction activity and the acquisition of Alta. Miscellaneous loan fees and charges increased $3.3 million, or 28 percent, primarily driven by increases in credit card interchange fees due to increased activity and the acquisition of Alta.

Non-interest Expense Summary

Total non-interest expense of $519 million for 2022 increased $84.0 million, or 19 percent, over the prior year and was primarily driven by the increased costs from the acquisition of Alta. Total non-interest expense for Altabank division in 2022 was $75.5 million, an increase of $56.7 million over prior year non-interest expense of $18.9 million as a result of the acquisition occurring in the fourth quarter of 2021. Excluding the increase from the Altabank division, compensation and employee benefits increased $22.0 million, or 8 percent, over the prior year which was driven by annual salary increases and a reduction in deferred compensation from loan originations which more than offset the decrease in commission expense resulting from the slowing of mortgage loan sales. Data processing expense of $30.8 million for 2022, increased $7.4 million, or 31 percent, and was driven by increases from the Altabank division and expenses associated with technology infrastructure improvements. Other expenses of $87.5 million for 2022, increased $16.9 million, or 24 percent, from the prior year which was driven by increased costs from the Altabank division, general operating cost increases, and outside services associated with technology infrastructure improvements. Acquisition-related expenses were $10.0 million in the current year compared to $9.8 million in the prior year.

Provision for Credit Losses

The provision for credit loss expense was $19.9 million for 2022, including provision for credit loss expense of $17.4 million on the loan portfolio and credit loss expense of $2.5 million on unfunded loan commitments. The prior year credit loss expense of $16.4 million on the loan portfolio included $18.1 million of provision for credit loss from the acquisition of Alta to fully fund an allowance for credit losses post-acquisition. Excluding the impact from the acquisition of Alta, the provision for credit loss expense of $17.4 million on the loan portfolio in the current year increased $19.1 million over the prior year which was primarily attributable to organic loan growth during the current year. Net charge-offs during the current year were $7.8 million compared to $2.3 million during the prior year.

Federal and State Income Tax Expense
Tax expense of $67.1 for 2022 increased $2.4 million, or 4 percent, over the prior year. The effective tax rate for 2022 was 18.1 percent compared to 18.5 percent in the prior year.

Efficiency Ratio
The efficiency ratio was 54.64 percent for 2022 compared to 51.35 percent for last year. Excluding the impact from the PPP loans and acquisition related expenses, the efficiency ratio was 53.88 in 2022 compared to 53.07 in 2021.

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 the negative version of those words 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 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 (express or implied) 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 in 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 Federal Reserve System or the Federal Reserve Board, which could adversely affect the Company’s net interest income and margin, overall profitability, and stockholders’ equity;
• legislative or regulatory changes, as well as increased banking and consumer protection regulation, that may adversely affect the Company’s business;
• 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;
• the effects from military action in Ukraine, including the broader impacts to financial markets and economic conditions; 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, January 27, 2023. 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/BIc0df24de0cb44359909dc4a7bbc51bb5. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/2jvw627b. 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).

Glacier Bancorp, Inc.
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