GBCI - Glacier Bancorp Inc. Announces Results for the Quarter Ended March 31 2022

1st Quarter 2022 Highlights:

• The loan portfolio, excluding the Payroll Protection Program (“PPP”) loans, organically grew $407 million, or 12 percent annualized, in the current quarter.
• Net income of $67.8 million for the current quarter, an increase of $17.1 million, or 34 percent, from the prior quarter net income of $50.7 million.
• Non-interest expense of $130 million, decreased $3.7 million, or 3 percent, over the prior quarter non-interest expense of $134 million. Excluding the $6.2 million of acquisition-related expenses, non-interest expense was $124 million during the current quarter.
• Net interest income, on a tax-equivalent basis, was $190 million in the current quarter. Excluding the PPP loans, net interest income was $187 million which increased $3.2 million, or 2 percent, over the prior quarter net interest income of $184 million.
• Net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 3.20 percent compared to 3.21 percent in the prior quarter. The core net interest margin for the current quarter of 3.07 percent, increased 3 basis points from 3.04 percent in the prior quarter.
• Core deposits increased $383 million, or 7 percent annualized, during the current quarter.
• The Company completed the core system conversion of the Altabank division. This conversion was the largest and most complex in the Company’s history.
• Declared a quarterly dividend of $0.33 per share, an increase of $0.01 per share or 3 percent over the prior quarter regular dividend. The Company has declared 148 consecutive quarterly dividends and has increased the dividend 49 times.

Financial Summary

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¹ Includes a special dividend declared of $0.10 per share for the three 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.

KALISPELL, Mont., April 21, 2022 (GLOBE NEWSWIRE) -- Glacier Bancorp, Inc. (NYSE: GBCI) reported net income of $67.8 million for the current quarter, a decrease of $13.0 million, or 16 percent, from the $80.8 million of net income for the prior year first quarter. Diluted earnings per share for the current quarter was $0.61 per share, a decrease of 28 percent from the prior year first quarter diluted earnings per share of $0.85. The $13.0 million decrease in first quarter earnings over the prior year first quarter was driven primarily by a $15.4 million decrease in the PPP related income, a $12.6 million decrease in gain on the sale of residential loans, an increase of $7.0 million of credit loss expense, and a $6.1 million increase in acquisition-related expenses. For the quarter, the Company experienced a $28.7 million increase, or 18 percent, in net interest income over the prior year first quarter. “The Glacier team started off the year with strong loan growth and earnings momentum,” said Randy Chesler, President and Chief Executive Officer. “While accelerating inflation and higher interest rates may create some economic headwinds, we remain optimistic about the year.”

Asset Summary

Total debt securities of $10.113 billion at March 31, 2022 decreased $257 million, or 2 percent, during the current quarter and increased $3.671 billion, or 57 percent, from the prior year first quarter. During 2020 and 2021, the Company experienced a sizeable increase in the investment portfolio as a result of the excess liquidity from the increase in core deposits. Debt securities represented 39 percent of total assets at March 31, 2022 compared to 40 percent at December 31, 2021 and 33 percent of total assets at March 31, 2021.

During the current quarter, the Company transferred $2.247 billion of available-for-sale (“AFS”) debt securities with a $55.7 million unrealized loss to held-to-maturity (“HTM”) designation after the Company determined it had both the intent and ability to hold such securities until maturity.

The loan portfolio of $13.731 billion at March 31, 2022 increased $299 million, or 2 percent, in the current quarter and increased $2.461 billion, or 22 percent, from the prior year first quarter. Excluding the PPP loans, the loan portfolio increased $407 million, or 12 percent annualized, during the current quarter with the largest dollar increase in commercial real estate which increased $235 million, or 11 percent annualized. Excluding the PPP loans and loans from the acquisition of Altabancorp and its Altabank subsidiary (“Alta”), the loan portfolio increased $1.486 billion, or 14 percent, from the prior year first quarter with the largest dollar increase in commercial real estate loans which increased $988 million, or 15 percent.

Credit Quality Summary

Non-performing assets of $62.5 million at March 31, 2022 decreased $5.2 million, or 8 percent, over the prior quarter. Non-performing assets increased $25.9 million, or 71 percent, over the prior year first quarter primarily as a result of the Alta acquisition and two credit relationships. Non-performing assets as a percentage of subsidiary assets at March 31, 2022 was 0.24 percent compared to 0.26 percent in the prior quarter and 0.19 percent in the prior year first quarter.

Early stage delinquencies (accruing loans 30-89 days past due) of $16.1 million at March 31, 2022 decreased $34.5 million from the prior quarter with a large portion of the decrease primarily isolated to a single credit relationship. Early stage delinquencies decreased $28.5 million from the prior year first quarter. Early stage delinquencies as a percentage of loans at March 31, 2022 was 0.12 percent, which was a decrease of 26 basis points from prior quarter and an 28 basis points increase from prior year first quarter.

The current quarter credit loss expense of $7.0 million included $4.3 million of credit loss from loans and $2.7 million of credit loss from unfunded loan commitments.

The allowance for credit losses on loans (“ACL”) as a percentage of total loans outstanding at March 31 2022 was 1.28 percent which was a 1 basis point decrease compared to the prior quarter and an 11 basis points decrease from the prior year first quarter.

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

The current quarter provision for credit loss expense for loans was $4.3 million which was a decrease of $15.0 million from the prior quarter, which was driven by the prior quarter acquisition of Alta and the requirement to fully fund an allowance for credit loses on loans post-acquisition. Current quarter provision for credit loss expense increased $3.9 million from the prior year first quarter provision for credit loss expense of $489 thousand.

Net charge-offs for the current quarter were $850 thousand compared to $616 thousand for the prior quarter and $2.3 million from the same quarter last year. 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.

PPP Loans

The Company continued to actively work with its PPP loan customers to obtain forgiveness from the SBA during the current quarter. The Company received $108 million in PPP loan forgiveness during the current quarter. As of March 31, 2022, the Company had $60.7 million of PPP loans remaining.

In the current quarter, the Company recognized $3.3 million of interest income (including deferred fees and costs) from the PPP loans. The income recognized in the current quarter included $3.0 million acceleration of net deferred fees in interest income resulting from the SBA forgiveness of loans. Net deferred fees remaining on the balance of the PPP loans at March 31, 2022 was $1.9 million, which will be recognized into interest income over the remaining life of the loans or when the loans are forgiven in whole or in part by the SBA.

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 $21.694 billion increased $383 million, or 7 percent annualized, during the current quarter and non-interest bearing deposits increased $211 million, or 11 percent annualized, during the current quarter. Excluding the Alta acquisition, core deposits increased $2.354 billion, or 15 percent, from the prior year first quarter. During 2020 and 2021, the Company experienced unprecedented increases in core deposits as a result of increased customer savings and federal stimulus. During the current quarter, the Company continued to experience a slowing of the deposit growth rates. Non-interest bearing deposits were 37 percent of total core deposits at March 31, 2022 and December 31, 2021 compared to 38 percent at March 31, 2021.

Stockholders’ Equity Summary

Tangible stockholders’ equity of $1.899 billion at Mach 31, 2022 decreased $241 million, or 11 percent, from the prior quarter which was primarily driven by a decrease in the unrealized gain on the AFS debt securities during the current quarter which was driven by an increase in interest rates. Tangible stockholders’ equity at March 31, 2022 increased $171 million, or 10 percent, from the prior year first quarter which largely was the result of $840 million of Company common stock issued for the acquisition of Alta, despite the increase in goodwill and core deposit intangibles associated with the Alta acquisition and a decrease in the unrealized gain on the AFS debt securities. Tangible book value per common share of $17.15 at the current quarter end decreased $2.18 per share, or 11 percent, from the prior quarter and decreased $0.95 per share, or 5 percent, from a year ago primarily as a result of the decrease in unrealized gain on AFS debt securities.

Cash Dividends
On March 30, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.33 per share, an increase of $0.01 per share or 3 percent over the prior quarter regular dividend. The dividend was payable April 21, 2022 to shareholders of record on April 12, 2022. The dividend was the 148th consecutive 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, 2022
Compared to December 31, 2021, and March 31, 2021

Income Summary

Net Interest Income
The current quarter net interest income of $186 million decreased $2.1 million, or 1 percent, compared to the prior quarter and increased $28.7 million, or 18 percent, from the prior year first quarter. The current quarter interest income of $191 million decreased $2.3 million, or 1 percent, over the prior quarter and was driven by the decrease of $5.3 million in interest income from the PPP loans. The current quarter interest income increased $29.0 million over the prior year first quarter primarily due to $30.2 million of interest income from Altabank division which more than offset the $10.2 million decrease in interest income from the PPP loans.

The current quarter interest expense of $5.0 million decreased $242 thousand, or 5 percent, over the prior quarter. Interest expense increased $221 thousand, or 5 percent, over the prior year first quarter primarily the result of an increase in deposit balances. The total cost of funding (including non-interest bearing deposits) was 9 basis points in the current and prior quarters compared to 12 basis points in the prior year first quarter which was driven by the decrease in rates on deposits and borrowings.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 3.20 percent compared to 3.21 percent in the prior quarter and 3.74 in the prior year first quarter. The core net interest margin, excluding 8 basis points of discount accretion, 1 basis point from non-accrual interest and 4 basis points increase from the PPP loans, was 3.07 percent compared to 3.04 in the prior quarter and 3.56 percent in the prior year first quarter. The core net interest margin increased 3 basis points in the current quarter as a result of increased investment yields that more than offset the decrease in the core loan yields. The core net interest margin decreased 49 basis points from the prior first quarter due to the decrease in core loan yields.

Non-interest Income
Non-interest income for the current quarter totaled $33.6 million which was a decrease of $799 thousand, or 2 percent, over the prior quarter and a decrease of $6.6 million, or 16 percent, over the same quarter last year. Gain on the sale of residential loans of $9.0 million for the current quarter decreased $2.4 million, or 21 percent, compared to the prior quarter and decreased $12.6 million, or 58 percent, from the prior year first quarter. The current quarter mortgage activity was lower than prior periods as a result reduced mortgage purchase and refinance activity after the historic highs the Company recently experienced.

Non-interest Expense Summary

Total non-interest expense of $130 million for the current quarter decreased $3.7 million, or 2.8 percent, over the prior quarter which was driven by a $2.0 million decrease in acquisition-related expenses during the current quarter. Acquisition-related expenses was $6.2 million in the current quarter compared to $8.2 million in the prior quarter and $104 thousand in the prior year first quarter. “Excluding current quarter acquisition-related expense, non-interest expense was $124 million. For the quarter, the Bank divisions have been excellent in controlling non-interest expenses,” said Ron Copher, Chief Financial Officer.

Total non-interest expense increased $33.7 million, or 35 percent, over the prior year first quarter which was primarily driven by the acquisition of Alta. Excluding $17.5 million of non-interest expense from the Altabank division, $5.2 million from deferred compensation on the PPP loans in the prior year, and acquisition-related expenses, non-interest expense increased $4.9 million, or 5 percent, from the prior year first quarter. The increase includes $1.7 million from compensation and employee benefits driven by the increased number of employees, annual salary increases and $1.0 million increased expenses associated with equity investment in tax credits.

Federal and State Income Tax Expense
Tax expense during the first quarter of 2022 was $14.0 million, an increase of $4.7 million, or 51 percent, compared to the prior quarter and a decrease of $5.5 million, or 28 percent, from the prior year first quarter. The effective tax rate in the current quarter was 17.1 percent compared to 15.5 percent in the prior quarter with the increase driven by higher taxable income. The effective tax rate in the current quarter of 17.1 percent compared to 19.4 percent in the prior year first quarter with the decrease in the current quarter attributable to lower taxable income.

Efficiency Ratio
The efficiency ratio was 57.11 percent in the current quarter compared to 57.68 percent in the prior quarter and 46.75 in the prior year first quarter. Excluding acquisition-related expenses, the efficiency ratio would have been 54.33 percent in the current quarter compared to 54.09 percent in the prior quarter and 46.70 percent in the prior year first quarter. The increase in the efficiency ratio from the prior year first quarter was driven by the decrease in gain on the sale of residential loans, the decrease in income from the PPP loans and 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 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 on 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 and overall profitability;
• legislative or regulatory changes, such as the those signaled by the Biden Administration, as well as increased banking and consumer protection regulation that 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; 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 22, 2022. The conference call will be accessible by telephone and webcast. Interested individuals are invited to listen to the call by dialing 877-561-2748 and conference ID 8258327. To participate on the webcast, log on to: https://edge.media-server.com/mmc/p/oshci2jh. 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 8258327 by April 29, 2022.

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.
Unaudited Condensed Consolidated Statements of Financial Condition

Glacier Bancorp, Inc.
Unaudited Condensed Consolidated Statements of Operations

Glacier Bancorp, Inc.
Average Balance Sheets

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1} Includes tax effect of $1.4 million and $1.4 million on tax-exempt municipal loan and lease income for the three months ended March 31, 2022 and December 31, 2021, respectively.
² Total loans are gross of the allowance for credit losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.
³ Includes tax effect of $3.3 million and $3.2 million on tax-exempt debt securities income for the three months ended March 31, 2022 and December 31, 2021, respectively.
⁴ Includes tax effect of $225 thousand on federal income tax credits for the three months ended March 31, 2022 and December 31, 2021, respectively.
⁵ Wholesale deposits include brokered deposits classified as NOW, DDA, money market deposit and certificate accounts with contractual maturities.

Glacier Bancorp, Inc.
Average Balance Sheets (continued)