GLACIER BANCORP INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[X]		Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

		For the quarterly period ended March 31, 2003

[ ]		Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

		For the transition period from to

COMMISSION FILE 0-18911

GLACIER BANCORP, INC.

(Exact name of registrant as specified in its charter)


DELAWARE		81-0519541

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)


49 Commons Loop, Kalispell, Montana		59901

(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (406) 756-4200

N/A

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

The number of shares of Registrant’s common stock outstanding on May 6th, 2003 was 17,516,770. No preferred shares are issued or outstanding.

TABLE OF CONTENTS


		Consolidated Statements of Financial Condition
		Consolidated Statements of Operations
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income
		Consolidated Statements of Cash Flows
		Notes to Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosure About Market Risk
	Item 4. Controls and Procedures
PART II – OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes in Securities and Use of Proceeds
	Item 3. Defaults upon Senior Securities
	Item 4. Submission of Matters to a Vote of Securities Holders
	Item 5. Other Information
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
CERTIFICATIONS
EXHIBIT 99

GLACIER BANCORP, INC.
Quarterly Report on Form 10-Q

Index


			Page #

Part I.		Financial Information
	Item 1 – Financial Statements
		Consolidated Statements of Financial Condition – March 31, 2003, December 31, 2002 and March 31, 2002 (unaudited)		3
		Consolidated Statements of Operations – Three months ended March 31, 2003 and 2002 (unaudited)		4
		Consolidated Statements of Stockholders’ Equity and Comprehensive Income – Year ended December 31, 2002 and three months ended March 31, 2003 (unaudited)		5
		Consolidated Statements of Cash Flows – Three months ended March 31, 2003 and 2002 (unaudited)		6
		Notes to Consolidated Financial Statements (unaudited)		7
	Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
	Item 3 – Quantitative and Qualitative Disclosure about Market Risk			22
	Item 4 – Controls and Procedures			23
Part II.		Other Information		23
	Item 1 – Legal Proceedings			23
	Item 2 – Changes in Securities and Use of Proceeds			23
	Item 3 – Defaults Upon Senior Securities			23
	Item 4 – Submission of Matters to a Vote of Security Holders			24
	Item 5 – Other Information			24
	Item 6 – Exhibits and Reports on Form 8-K			24
	Signatures			24
	Certifications			25

Glacier Bancorp, Inc.

Consolidated Statements of Financial Condition


				March 31,			December 31,			March 31,
(Unaudited - dollars in thousands, except per share data)				2003			2002			2002

										(Restated - See note 2)
Assets:
	Cash on hand and in banks			$	71,092			74,624			62,677
	Interest bearing cash deposits				15,536			4,753			14,565

		Cash and cash equivalents			86,628			79,377			77,242

	Investments:
		Investment securities, available-for-sale			258,545			260,606			187,031
		Mortgage backed securities, available-for-sale			525,352			479,355			378,841
		Federal Home Loan Bank and Federal Reserve Bank stock, at cost			43,975			42,864			38,038

			Total investments		827,872			782,825			603,910

	Net loans receivable:
		Real estate loans			323,311			361,522			387,659
		Commercial Loans			704,751			673,256			625,287
		Consumer and other loans			284,804			286,819			290,317
		Allowance for loan losses			(21,627	)		(20,944	)		(19,498	)

			Total loans, net		1,291,239			1,300,653			1,283,765

	Premises and equipment, net				48,436			47,215			48,898
	Real estate and other assets owned, net				1,077			1,542			921
	Accrued interest receivable				12,403			13,421			12,489
	Core deposit intangible, net				6,484			6,822			7,900
	Goodwill, net				33,189			33,189			33,736
	Other assets				15,178			16,300			14,943

				$	2,322,506			2,281,344			2,083,804

Liabilities and stockholders’ equity:
	Non-interest bearing deposits			$	307,659			295,016			238,243
	Interest bearing deposits				1,168,443			1,164,907			1,188,634
	Advances from Federal Home Loan Bank of Seattle				500,425			483,660			373,985
	Securities sold under agreements to repurchase				59,518			46,206			31,823
	Other borrowed funds				2,357			15,087			8,146
	Accrued interest payable				5,425			6,090			7,313
	Current income taxes				3,818			815			3,752
	Deferred tax liability				7,839			8,629			1,449
	Trust preferred securities				35,000			35,000			35,000
	Other liabilities				12,244			13,685			12,804

		Total liabilities			2,102,728			2,069,095			1,901,149

	Preferred shares, 1,000,000 shares authorized. None outstanding				—			—			—
	Common stock, $.01 par value per share. 50,000,000 shares authorized				175			173			171
	Paid-in capital				176,560			173,408			169,386
	Retained earnings - substantially restricted				34,244			28,557			11,848
	Accumulated other comprehensive income				8,799			10,111			1,250

		Total stockholders’ equity			219,778			212,249			182,655

				$	2,322,506			2,281,344			2,083,804

	Number of shares outstanding				17,495,616			17,285,818			17,074,413
	Book value per share			$	12.56			12.28			10.70
	Tangible book value per share			$	10.29			9.96			8.26

See accompanying notes to consolidated financial statements

Glacier Bancorp, Inc.

Consolidated Statements of Operations


			Three months ended March 31,

(unaudited - dollars in thousands, except per share data)			2003			2002

						(Restated - See note 2)
Interest income:
	Real estate loans		$	6,252			7,838
	Commercial loans			11,617			11,432
	Consumer and other loans			5,102			5,813
	Investment securities and other			8,637			7,995

		Total interest income		31,608			33,078

Interest expense:
	Deposits			4,947			7,442
	Federal Home Loan Bank of Seattle Advances			4,212			4,185
	Securities sold under agreements to repurchase			158			156
	Trust preferred securities			904			904
	Other borrowed funds			9			24

		Total interest expense		10,230			12,711

Net interest income				21,378			20,367
	Provision for loan losses			841			1,300

		Net interest income after provision for loan losses		20,537			19,067

Non-interest income:
	Service charges and other fees			3,589			3,163
	Miscellaneous loan fees and charges			1,057			987
	Gains on sale of loans			2,244			1,097
	Gains on sale of investments, net			17			—
	Other income			560			602

		Total non-interest income		7,467			5,849

Non-interest expense:
	Compensation, employee benefits and related expenses			7,979			7,782
	Occupancy and equipment expense			2,435			2,301
	Outsourced data processing expense			562			446
	Core deposit intangibles amortization			338			361
	Other expenses			3,569			3,475

		Total non-interest expense		14,883			14,365

Earnings before income taxes				13,121			10,551
	Federal and state income tax expense			4,273			3,654

Net earnings			$	8,848			6,897

Basic earnings per share			$	0.51			0.41
Diluted earnings per share			$	0.50			0.40
Dividends declared per share			$	0.18			0.16
Return on average assets (annualized)				1.58	%		1.33	%
Return on average equity (annualized)				16.41	%		15.09	%
Return on tangible average equity (annualized)				20.08	%		19.63	%
Average outstanding shares - basic				17,413,423			17,014,148
Average outstanding shares - diluted				17,652,805			17,298,634

See accompanying notes to consolidated financial statements.

Glacier Bancorp, Inc.

Consolidated Statements of Stockholders’ Equity
and Comprehensive Income
Year ended December 31, 2002 and Three months ended March 31, 2003


								Retained
								earnings
								(accumulated			Accumulated			Total
		Common Stock						deficit)			other comp-			stock-
						Paid-in		substantially			rehensive			holders’
(Unaudited - dollars in thousands, except per share data)		Shares		Amount		capital		restricted			income			equity

Balance at December 31, 2001			16,874,422	$	169		167,371		7,687			1,756			176,983
Comprehensive income:
	Net earnings		—		—		—		32,402			—			32,402
	Unrealized gain on securities, net of reclassification adjustment		—		—		—		—			8,355			8,355

Total comprehensive income															40,757

Cash dividends declared ($.67 per share)			—		—		—		(11,532	)		—			(11,532	)
Stock options exercised			411,396		4		4,957		—			—			4,961
Tax benefit from stock related compensation			—		—		1,080		—			—			1,080

Balance at December 31, 2002			17,285,818	$	173		173,408		28,557			10,111			212,249
Comprehensive income:
	Net earnings		—		—		—		8,848			—			8,848
	Unrealized loss on securities, net of reclassification adjustment		—		—		—		—			(1,312	)		(1,312	)

Total comprehensive income															7,536

Cash dividends declared ($.18 per share)			—		—		—		(3,161	)		—			(3,161	)
Stock options exercised			209,798		2		3,152		—			—			3,154

Balance at March 31, 2003			17,495,616	$	175		176,560		34,244			8,799			219,778

See accompanying notes to consolidated financial statements

Glacier Bancorp, Inc.

Consolidated Statements of Cash Flows


				Three months ended March 31,

(Unaudited - dollars in thousands)				2003			2002

							(Restated - See note 2)
OPERATING ACTIVITIES:
	Net cash provided by operating activities			$	31,575			35,128
INVESTING ACTIVITIES:
	Proceeds from sales, maturities and prepayments of investments available-for-sale				48,770			48,112
	Purchases of investments available-for-sale				(97,982	)		(107,544	)
	Principal collected on installment and commercial loans				149,045			139,176
	Installment and commercial loans originated or acquired				(178,524	)		(150,780	)
	Principal collections on mortgage loans				67,195			62,097
	Mortgage loans originated or acquired				(43,620	)		(39,642	)
	Net purchase of FHLB and FRB stock				(475	)		(541	)
	Net (addition) disposal of premises and equipment				(2,252	)		704

		NET CASH USED IN INVESTING ACTIVITIES			(57,843	)		(48,418	)

FINANCING ACTIVITIES:
	Net increase (decrease) in deposits				16,179			(19,188	)
	Net increase in FHLB advances and other borrowed funds				4,035			13,775
	Net increase (decrease) in securities sold under repurchase agreements				13,312			(762	)
	Cash dividends paid to stockholders				(3,161	)		(2,736	)
	Proceeds from exercise of stock options				3,154			2,017

		NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			33,519			(6,894	)

		NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			7,251			(20,184	)
	CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD				79,377			97,426

	CASH AND CASH EQUIVALENTS AT END OF PERIOD			$	86,628			77,242

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
	Cash paid (received) during the period for:		Interest	$	10,896			14,577
			Income taxes	$	(354	)		—

See accompanying notes to consolidated financial statements.

Notes to Consolidated Financial Statements

1) Basis of Presentation:

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of Glacier Bancorp Inc.’s (the “Company”) financial condition as of March 31, 2003, December 31, 2002, and March 31, 2002, stockholders’ equity for the three months ended March 31, 2003 and the year ended December 31, 2002, the results of operations for the three months ended March 31, 2003 and 2002, and cash flows for the three months ended March 31, 2003 and 2002.

The accompanying consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results anticipated for the year ending December 31, 2003. Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

2) Restatement of Prior Period Earnings

In October 2002, the Financial Accounting Standards Board (“FASB”) issued Statement 147, Acquisitions of Certain Other Intangible Assets, an amendment of Statement 72 and 144 and FASB Interpretations 9. Under the provisions of Statement 147, the acquisition of all or part of a financial institution that meets the definition of a business combination will be accounted for by the purchase method in accordance with FASB Statement 141, Business Combinations. Statement 147 provides that long-term customer relationships intangible assets, except for servicing assets, recognized in the acquisition of financial institution, be evaluated for impairment under provisions of Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

The Company has evaluated the goodwill recognized in connection with its branch acquisitions and determined that it meets the criteria of Statement 147, and therefore the unidentifiable intangible asset has been reclassified to goodwill and is subject to Statement 142, Goodwill and Other Intangible Assets. The reclassification was retroactively applied to January 1, 2002, which resulted in the restatement of previously filed financial statements. The impact for the three months ended March 31, 2002, was to increase net earnings by $149,000 and basic and diluted earnings per share by $.01.

3) Organizational Structure:

The Company, headquartered in Kalispell, Montana, is a Delaware corporation incorporated in 1990, pursuant to the reorganization of Glacier Bank, FSB into a bank holding company. The Company is the parent company for nine wholly owned subsidiaries: Glacier Bank (“Glacier”), First Security Bank of Missoula (“First Security”), Western Security Bank (“Western”), Big Sky Western Bank (“Big Sky”), Valley Bank of Helena (“Valley”), Glacier Bank of Whitefish (“Whitefish”), Community First, Inc. (“CFI”), and Glacier Capital Trust I (“Glacier Trust”), all located in Montana, and Mountain West Bank (“Mountain West”) which is located in Idaho and Utah. The Company does not have any off-balance sheet entities.

CFI provides full service brokerage services through Raymond James Financial Services, Inc.

The following abbreviated organizational chart illustrates the various relationships:

(ORG CHART)

4) Ratios:

Returns on average assets and average equity were calculated based on daily averages.

5) Cash Dividend Declared:

On March 14, 2003, the Board of Directors declared a $.18 per share quarterly cash dividend to stockholders of record on April 8, 2003, payable on April 17, 2003.

6) Computation of Earnings Per Share:

Basic earnings per common share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares if dilutive outstanding stock options were exercised, using the treasury stock method.

The following schedule contains the data used in the calculation of basic and diluted earnings per share.


	Three		Three
	months ended		months ended
	March 31, 2003		March 31, 2002

Net earnings available to common stockholders	$	8,848,098		6,896,831
Average outstanding shares - basic		17,413,423		17,014,148
Add: Dilutive stock options		239,382		284,486

Average outstanding shares - diluted		17,652,805		17,298,634

Basic earnings per share	$	0.51		0.41

Diluted earnings per share	$	0.50		0.40

7) Investments:

A comparison of the amortized cost and estimated fair value of the Company’s investment securities, available for sale, is as follows.

INVESTMENTS AS OF MARCH 31, 2003


													Estimated
			Weighted			Amortized		Gross Unrealized					Fair
(Dollars in thousands)			Yield			Cost		Gains		Losses			Value

U.S. Government and Federal Agencies
	maturing after ten years			3.17	%		1,039		10		(2	)		1,047

				3.17	%		1,039		10		(2	)		1,047

State and Local Governments and other issues:
	maturing within one year			5.86	%		5,162		119		—			5,281
	maturing one year through five years			4.54	%		5,994		111		(97	)		6,008
	maturing five years through ten years			5.40	%		3,066		116		—			3,182
	maturing after ten years			5.38	%		235,851		7,959		(783	)		243,027

				5.37	%		250,073		8,305		(880	)		257,498

Mortgage-Backed Securities				5.48	%		69,580		2,412		(2	)		71,990
Real Estate Mortgage Investment Conduits				3.97	%		448,646		5,370		(654	)		453,362
FHLB and FRB stock, at cost				6.17	%		43,975		—		—			43,975

		Total Investments		4.65	%	$	813,313		16,097		(1,538	)		827,872

INVESTMENTS AS OF DECEMBER 31, 2002


													Estimated
			Weighted			Amortized		Gross Unrealized					Fair
(Dollars in thousands)			Yield			Cost		Gains		Losses			Value

U.S. Government and Federal Agencies
	maturing after ten years			3.45	%	$	1,086		10		(2	)		1,094

				3.45	%		1,086		10		(2	)		1,094

State and Local Governments and other issues:
	maturing within one year			5.81	%		3,144		53		—			3,197
	maturing one year through five years			5.20	%		10,037		227		(98	)		10,166
	maturing five years through ten years			5.44	%		2,457		101		—			2,558
	maturing after ten years			5.44	%		236,620		8,046		(1,075	)		243,591

				5.43	%		252,258		8,427		(1,173	)		259,512

Mortgage-Backed Securities				5.39	%		81,043		2,440		(82	)		83,401
Real Estate Mortgage Investment Conduits				4.63	%		388,927		7,208		(181	)		395,954
FHLB and FRB stock, at cost				6.17	%		42,864		—		—			42,864

		Total Investments		5.06	%	$	766,178		18,085		(1,438	)		782,825

Interest income includes tax-exempt interest for the three months ended March 31, 2003 and 2002 of $2,590,000 and $1,489,000, respectively.

Gross proceeds from sales of investment securities for the three months ended March 31, 2003 and 2002 were $2,031,000, and $0, respectively, resulting in gross gains of approximately $17,000, and $0, respectively. The cost of any investment sold is determined by specific identification.

8) Loans

The following table summarizes the Company’s loan portfolio. The loans mature or are repriced at various times.


		At						At
		03/31/03						12/31/2002
TYPE OF LOAN
(Dollars in Thousands)		Amount			Percent			Amount			Percent
Real Estate Loans:
	Residential first mortgage loans	$	286,379			22.2	%	$	310,205			23.8	%
	Loans held for sale		37,509			2.9	%		51,987			4.0	%

	Total		323,888			25.1	%		362,192			27.8	%
Commercial Loans:
	Real estate		427,420			33.1	%		397,803			30.6	%
	Other commercial loans		278,544			21.6	%		276,675			21.3	%

	Total		705,964			54.7	%		674,478			51.9	%
Installment and Other Loans:
	Consumer loans		106,158			8.2	%		112,893			8.7	%
	Home equity loans		178,728			13.8	%		174,033			13.4	%

	Total		284,886			22.0	%		286,926			22.1	%
	Net deferred loan fees, premiums and discounts		(1,872	)		-0.1	%		(1,999	)		-0.2	%
	Allowance for Losses		(21,627	)		-1.7	%		(20,944	)		-1.6	%

Net Loans		$	1,291,239			100.0	%	$	1,300,653			100.0	%

The following table sets forth information regarding the Company’s non-performing assets at the dates indicated:


NONPERFORMING ASSETS				At			At
(Dollars in Thousands)				3/31/2003			12/31/2002

Non-accrual loans:
		Mortgage loans		$	2,341			2,476
		Commercial loans			5,283			5,157
		Consumer loans			416			409

			Total	$	8,040			8,042
Accruing Loans 90 days or more overdue:
		Mortgage loans			140			846
		Commercial loans			654			968
		Consumer loans			116			184

			Total	$	910			1,998
Real estate and other assets owned, net					1,076			1,542

Total non-performing loans, and real estate and other assets owned, net				$	10,026			11,582

	As a percentage of total assets				0.43	%		0.51	%
Interest Income (1)				$	140			596

(1) This is the amount of interest that would have been recorded on loans accounted for on a non-performing basis for the three months ended March 31, 2003 and the year ended December 31, 2002, if such loans had been current for the entire period.

The following table illustrates the loan loss experience:


				Three months ended			Year ended
ALLOWANCE FOR LOAN LOSS				March 31,			December 31,
(Dollars in Thousands)				2003			2002

Balance at beginning of period				$	20,944			18,654
	Charge offs:
		Residential real estate			(124	)		(887	)
		Commercial loans			(32	)		(2,522	)
		Consumer loans			(227	)		(1,328	)

			Total charge offs	$	(383	)		(4,737	)

	Recoveries:
		Residential real estate			61			276
		Commercial loans			79			326
		Consumer loans			85			680

			Total recoveries	$	225			1,282

	Chargeoffs, net of recoveries				(158	)		(3,455	)
	Provision				841			5,745

Balance at end of period				$	21,627			20,944

Ratio of net charge offs to average loans outstanding during the period					0.01	%		0.26	%

The following table summarizes the allocation of the allowance for loan losses:


		March 31, 2003					December 31, 2002

				Percent					Percent
				of loans in					of loans in
(Dollars in thousands)		Allowance		category			Allowance		category

Residential first mortgage		$	2,029		24.6	%		2,334		27.4	%
Commercial real estate			7,170		32.5	%		7,088		30.1	%
Other commercial			8,023		21.2	%		7,670		20.9	%
Consumer			4,405		21.7	%		3,852		21.6	%

	Totals	$	21,627		100.0	%		20,944		100.0	%

9) Intangible Assets

The following table sets forth information regarding the Company’s core deposit intangibles and mortgage servicing rights as of March 31, 2003:


		Core Deposit			Mortgage
(Dollars in thousands)		Intangible			Servicing Rights (1)		Total

	Gross carrying value	$	9,836
	Accumulated Amortization		(3,352	)

	Net carrying value	$	6,484			1,833		8,317

Weighted-Average amortization period
	(Period in years)		10.0			8.6		9.7
Aggregate Amortization Expense
	For the three months ended March 31, 2003	$	338			167		505
	For the three months ended March 31, 2002	$	361			91		452
Estimated Amortization Expense
	For the year ended December 31, 2003	$	1,219			323		1,542
	For the year ended December 31, 2004		1,011			307		1,318
	For the year ended December 31, 2005		847			292		1,139
	For the year ended December 31, 2006		779			276		1,055
	For the year ended December 31, 2007		766			260		1,026

(1) The mortgage servicing rights are included in other assets and the gross carrying value and accumulated amortization are not readily available

10) Deposits

The following table illustrates the amounts outstanding for deposits greater than $100,000 at March 31, 2003, according to the time remaining to maturity:


		Certificates		Demand
(Dollars in thousands)		of Deposit		Deposits		Totals

Within three months		$	17,286		401,730		419,016
Three to six months			24,087		—		24,087
Seven to twelve months			13,159		—		13,159
Over twelve months			22,324		—		22,324

	Totals	$	76,856		401,730		478,586

11) Advances and Other Borrowings

The following chart illustrates the average balances and the maximum outstanding month-end balances for Federal Home Loan Bank of Seattle (FHLB) advances and repurchase agreements:


		As of and			As of and
		for the three			for the twelve
		months ended			months ended
(Dollars in thousands)		March 31, 2003			December 31, 2002

FHLB Advances
	Amount outstanding at end of period	$	500,425			483,660
	Average balance	$	490,510			409,168
	Maximum outstanding at any month-end	$	500,425			483,660
	Weighted average interest rate		3.48	%		4.15	%
Repurchase Agreements:
	Amount outstanding at end of period	$	59,518			46,206
	Average balance	$	55,849			35,479
	Maximum outstanding at any month-end	$	59,518			46,206
	Weighted average interest rate		1.15	%		1.46	%

12) Stockholders’ Equity:

The Federal Reserve Board has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. The following table illustrates the Federal Reserve Board’s capital adequacy guidelines and the Company’s compliance with those guidelines as of March 31, 2003:


CONSOLIDATED
		Tier 1 (Core)			Tier 2 (Total)			Leverage
(Dollars in thousands)		Capital			Capital			Capital

GAAP Capital		$	219,778			219,778			219,778
Less: Goodwill and intangibles			(39,673	)		(39,673	)		(39,673	)
	Accumulated other comprehensive gain on AFS securities		(8,799	)		(8,799	)		(8,799	)
Plus: Allowance for loan losses			—			19,289			—
	Trust preferred securities		35,000			35,000			35,000
	Other adjustments		—			144			—

Regulatory capital computed		$	206,306			225,739			206,306

Risk weighted assets		$	1,543,129			1,543,129

Total average assets								$	2,222,750

Capital as % of defined assets			13.37	%		14.63	%		9.28	%
Regulatory “well capitalized” requirement			6.00	%		10.00	%		5.00	%

Excess over “well capitalized” requirement			7.37	%		4.63	%		4.28	%

13) Comprehensive Earnings:

The Company’s only component of other comprehensive earnings is the unrealized gains and losses on available-for-sale securities.


			For the three months
			ended March 31,
Dollars in thousands			2003			2002

Net earnings			$	8,848			6,897
Unrealized holding loss arising during the period				(2,119	)		(834	)
Tax benefit				797			328

	Net after tax			(1,322	)		(506	)
Reclassification adjustment for gains included in net income				17			—
Tax expense				(7	)		—

	Net after tax			10			—
	Net unrealized loss on securities			(1,312	)		(506	)

		Total comprehensive earnings	$	7,536			6,391

14) Stock Based Compensation

The exercise price of all options granted has been equal to the fair market value of the underlying stock at the date of grant and, accordingly, no compensation cost has been recognized for its stock options in the financial statements. Had the company determined compensation cost based on the fair value of the option itself at the grant date for its stock options under FASB Statement 123, Accounting for Stock-Based Compensation, the Company’s net income would have been reduced to the pro forma amounts indicated below:


		Three months ended March 31,

		2003			2002

Net earnings (in thousands):	As reported	$	8,848			6,897
	Compensation cost		(187	)		(144	)

	Pro forma		8,661			6,753

Basic earnings per share:	As reported		0.51			0.41
	Compensation cost		(0.01	)		(0.01	)

	Pro forma		0.50			0.40

Diluted earnings per share:	As reported		0.50			0.40
	Compensation cost		(0.01	)		(0.01	)

	Pro forma		0.49			0.39

15) Segment Information

The Company evaluates segment performance internally based on individual bank charters, and thus the operating segments are so defined. The following schedule provides selected financial data for the Company’s operating segments. Centrally provided services to the Banks are allocated based on estimated usage of those services. The operating segment identified as “Other” includes the Parent, non-bank units, and eliminations of transactions between segments.


		Three months ended and as of March 31, 2003

				First				Mountain
(Dollars in thousands)		Glacier		Security		Western		West		Big Sky

Revenues from external customers		$	9,080		8,360		6,162		7,056		3,094
Intersegment revenues			51		—		—		—		—
Expenses			6,539		5,961		4,846		5,730		2,374
Intercompany eliminations			—		—		—		—		—

	Net income	$	2,592		2,399		1,316		1,326		720

	Total Assets	$	507,853		490,927		404,824		412,816		186,439


									Total
		Valley		Whitefish		Other			Consolidated

Revenues from external customers			3,246		2,017		60			39,075
Intersegment revenues			33		—		11,158			11,242
Expenses			2,566		1,502		709			30,227
Intercompany eliminations			—		—		(11,242	)		(11,242	)

	Net income		713		515		(733	)		8,848

	Total Assets		187,375		134,972		(2,700	)		2,322,506


		Three months ended and as of March 31, 2002

				First				Mountain
(Dollars in thousands)		Glacier		Security		Western		West		Big Sky

Revenues from external customers		$	9,157		8,482		6,852		5,950		3,219
Intersegment revenues			101		7		6		—		—
Expenses			6,970		6,620		5,662		5,200		2,608
Intercompany eliminations			—		—		—		—		—

	Net income	$	2,288		1,869		1,196		750		611

	Total Assets	$	476,844		434,346		392,493		346,081		166,766


									Total
		Valley		Whitefish		Other			Consolidated

Revenues from external customers			3,147		2,055		65			38,927
Intersegment revenues			19		—		8,873			9,006
Expenses			2,616		1,594		760			32,030
Intercompany eliminations			—		—		(9,006	)		(9,006	)

	Net income		550		461		(828	)		6,897

	Total Assets		165,601		117,891		(16,218	)		2,083,804

16) Rate/Volume Analysis

Net interest income can be evaluated from the perspective of relative dollars of change in each period. Interest income and interest expense, which are the components of net interest income, are shown in the following table on the basis of the amount of any increases (or decreases) attributable to changes in the dollar levels of the Company’s interest-earning assets and interest-bearing liabilities (“Volume”) and the yields earned and rates paid on such assets and liabilities (“Rate”). The change in interest income and interest expense attributable to changes in both volume and rates has been allocated proportionately to the change due to volume and the change due to rate.


			Three Months Ended March 31,
			2003 vs. 2002
			Increase (Decrease) due to:

(Dollars in Thousands)			Volume			Rate			Net

Interest Income
Real Estate Loans			$	(1,287	)		(299	)		(1,586	)
Commercial Loans				1,252			(1,067	)		185
Consumer and Other Loans				(166	)		(545	)		(711	)
Investment Securities				2,802			(2,160	)		642

		Total Interest Income		2,601			(4,071	)		(1,470	)
Interest Expense
NOW Accounts				4			(101	)		(97	)
Savings Accounts				13			(100	)		(87	)
Money Market Accounts				145			(684	)		(539	)
Certificates of Deposit				(580	)		(1,192	)		(1,772	)
FHLB Advances				1,388			(1,361	)		27
Other Borrowings and
	Repurchase Agreements			257			(270	)		(13	)

		Total Interest Expense		1,227			(3,708	)		(2,481	)

Net Interest Income			$	1,374			(363	)		1,011

17) Average Balance Sheet

The following schedule provides (i) the total dollar amount of interest and dividend income of the Company for earning assets and the resultant average yield; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rate; (iii) net interest and dividend income; (iv) interest rate spread; and (v) net interest margin. Non-accrual loans are included in the average balance of the loans.


			For the Three months ended 3-31-03							For the Three months ended 3-31-02

					Interest		Average					Interest		Average
AVERAGE BALANCE SHEET			Average		and		Yield/			Average		and		Yield/
(Dollars in Thousands)			Balance		Dividends		Rate			Balance		Dividends		Rate

ASSETS
	Real Estate Loans		$	336,018		6,252		7.44	%	$	402,041		7,838		7.80	%
	Commercial Loans			687,118		11,617		6.86	%		619,317		11,432		7.49	%
	Consumer and Other Loans			283,807		5,102		7.29	%		292,149		5,813		8.07	%

		Total Loans		1,306,943		22,971		7.13	%		1,313,507		25,083		7.74	%
	Tax -Exempt Investment Securities (1)			204,221		2,590		5.07	%		114,455		1,489		5.21	%
	Investment Securities			593,105		6,047		4.08	%		475,975		6,506		5.47	%

		Total Earning Assets		2,104,269		31,608		6.01	%		1,903,937		33,078		6.95	%

	Non-Earning Assets			165,927							165,708

		TOTAL ASSETS	$	2,270,196						$	2,069,645

LIABILITIES AND STOCKHOLDERS’ EQUITY
	NOW Accounts		$	206,086		119		0.23	%	$	201,484		215		0.43	%
	Savings Accounts			129,495		152		0.48	%		123,398		242		0.79	%
	Money Market Accounts			360,443		1,175		1.32	%		332,262		1,713		2.09	%
	Certificates of Deposit			467,744		3,501		3.04	%		525,475		5,272		4.07	%
	FHLB Advances			490,510		4,212		3.48	%		368,352		4,185		4.61	%
	Repurchase Agreements and Other Borrowed Funds			94,863		1,071		4.58	%		76,621		1,084		5.73	%

		Total Interest Bearing Liabilities		1,749,141		10,230		2.37	%		1,627,592		12,711		3.17	%

		Non-interest Bearing Deposits		274,226							228,533
		Other Liabilities		28,203							30,646

		Total Liabilities		2,051,570							1,886,771

	Common Stock			174							170
	Paid-In Capital			175,070							167,750
	Retained Earnings			32,616							11,461
	Accumulated Other
		Comprehensive Earnings		10,766							3,493

		Total Stockholders’ Equity		218,626							182,874

		TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,270,196						$	2,069,645

	Net Interest Income				$	21,378						$	20,367

	Net Interest Spread							3.64	%						3.78	%
	Net Interest Margin on average earning assets							4.12	%						4.28	%
	Return on Average Assets							1.58	%						1.33	%
	Return on Average Equity							16.41	%						15.09	%

(1) Excludes tax effect on non-taxable investment security income

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Financial Condition

This section discusses the changes in Statement of Financial Condition items from March 31, 2002 and December 31, 2002, to March 31, 2003.


												$ change from			$ change from
			March 31,			December 31,			March 31,			December 31,			March 31,
Assets ($ in thousands)			2003			2002			2002			2002			2002

Cash on hand and in banks			$	71,092			74,624			62,677			(3,532	)		8,415
Investment securities and interest bearing deposits				843,408			787,578			618,475			55,830			224,933
Loans:
	Real estate			323,311			361,522			387,659			(38,211	)		(64,348	)
	Commercial			704,751			673,256			625,287			31,495			79,464
	Consumer			284,804			286,819			290,317			(2,015	)		(5,513	)

		Total loans		1,312,866			1,321,597			1,303,263			(8,731	)		9,603
	Allowance for loan losses			(21,627	)		(20,944	)		(19,498	)		(683	)		(2,129	)

		Total loans net of allowance for loan losses		1,291,239			1,300,653			1,283,765			(9,414	)		7,474

Other assets				116,767			118,489			118,887			(1,722	)		(2,120	)

	Total Assets		$	2,322,506			2,281,344			2,083,804			41,162			238,702

At March 31, 2003 total assets were $2.323 billion which is $239 million greater than the March 31, 2002 assets of $2.084 billion, or 11 percent, of which $41 million of the increase occurred during the first quarter of 2003.

Total loans, net of the allowance for loan losses, have increased $7 million from March 31, 2002 and decreased $9 million from December 31, 2002. With interest rates at the lowest level in decades the past year, a large number of real estate loans have been refinanced, which coupled with our decision to sell the majority of the real estate loan production, has resulted in a reduction in real estate loans of $64 million, of which $38 million of the decrease occurred during the first quarter of 2003. Since March 31, 2002 Commercial loans have increased $79 million, or 13 percent, and continue to be the focus of our lending. Approximately 40 percent, or $31 million, of the increase in commercial loans has occurred since December 31, 2002. Consumer loans over the last twelve months have declined $6 million with a significant portion of the decline attributed to the planned runoff in the WesterFed auto dealer originated consumer loans. Home-equity loans continue to be the primary source of our consumer loan originations and have increased approximately 15 percent from a year ago. Home equity loans comprise 63 percent of consumer loans at March 31, 2003.

Investment securities, including interest bearing deposits in other financial institutions, have increased $225 million since March 31, 2002 and $56 million from December 31, 2002. The cash received from the reduction in real estate loans has been redeployed in mortgage related investment securities with characteristics that result in less interest rate risk than retaining 30 year loans. Additional investments were made to use funding liquidity that exceeds loan growth opportunities.

The Company typically sells a majority of mortgage loans originated, retaining servicing only on loans sold to certain lenders. The sale of loans in the secondary mortgage market reduces the Company’s risk of holding long- term, fixed rate loans in the loan portfolio. The Company has also been active in generating commercial SBA loans. A portion of some of those loans are sold to other investors. The amount of loans sold and serviced for others on March 31, 2003 was approximately $237 million.


								$ change from		$ change from
		March 31,		December 31,		March 31,		December 31,		March 31,
Liabilities ($ in thousands)		2003		2002		2002		2002		2002

Deposits - non-interest bearing		$	307,659		295,016		238,243		12,643		69,416
Deposits - interest bearing			1,168,443		1,164,907		1,188,634		3,536		(20,191	)
Advances from Federal Home Loan Bank			500,425		483,660		373,985		16,765		126,440
Other borrowed funds			61,875		61,293		39,969		582		21,906
Other liabilities			29,326		29,219		25,318		107		4,008
Trust preferred securities			35,000		35,000		35,000		—		—

	Total liabilities	$	2,102,728		2,069,095		1,901,149		33,633		201,579

Total deposits have increased $49 million from the March 31, 2002 balances and $16 million from December 31, 2002. There was a significant increase of $69 million, or 29 percent, in non-interest bearing deposits, of which $13 million occurred during the first quarter 2003. This growth in low cost stable funding gives us increased flexibility in managing our asset mix. Interest-bearing deposits are down $20 million, or 2 percent, most of which was a reduction in certificates of deposit. The small increase of $4 million in interest-deposits since December 31, 2002 is attributable to the seasonal fluctuation in deposits. Federal home loan bank advances, other borrowed funds, and repurchase agreements, have also increased $148 million from March 31, 2002 and $17 million from December 31, 2002 as we continue to take advantage of these funding sources.

Pending Acquisition and additional location

On April 24, 2003, a definitive agreement to acquire Pend Oreille Bank, which operates from two locations in Sandpoint, Idaho and one location in Newport, Washington, was signed. The bank is approximately $65 million in total assets with deposits of $57 million. These locations will become additional branches of Mountain West Bank, the Company’s Idaho based subsidiary. The transaction is all cash in the amount of $10.4 million. It is expected that the acquisition, which is scheduled to close as early as June 30, 2003, will be immediately accretive to earnings.

Mountain West Bank opened an additional location in the growing Boise market bringing the total locations in the Boise, Nampa area to five.

Liquidity and Capital Resources

The objective of liquidity management is to maintain cash flows adequate to meet current and future needs for credit demand, deposit withdrawals, maturing liabilities and corporate operating expenses. The principal source of the Company’s cash revenues is the dividends received from the Company’s banking subsidiaries. The payment of dividends is subject to government regulation, in that regulatory authorities may prohibit banks and bank holding companies from paying dividends which would constitute an unsafe or unsound banking practice. The subsidiaries source of funds is generated by deposits, principal and interest payments on loans, sale of loans and securities, short and long-term borrowings, and net income. In addition, all seven banking subsidiaries are members of the FHLB. As of March 31, 2003, the Company had $776 million of available FHLB line of which $500 million was utilized. Accordingly, management of the Company has a wide range of versatility in managing the liquidity and asset/liability mix for each individual institution as well as the Company as a whole. During 2003, all seven financial institutions maintained liquidity and regulatory capital levels in excess of regulatory requirements and operational needs.

Commitments

In the normal course of business, there are various outstanding commitments to extend credit, such as letters of credit and unadvanced loan commitments, which are not reflected in the accompanying consolidated financial statements. Management does not anticipate any material losses as a result of these transactions.


											$ change from			$ change from
Stockholders’ equity		March 31,			December 31,			March 31,			December 31,			March 31,
($ in thousands except per share data)		2003			2002			2002			2002			2002

Common equity		$	210,979			202,138			181,405			8,841			29,574
Net unrealized gain on securities			8,799			10,111			1,250			(1,312	)		7,549

	Total stockholders’ equity	$	219,778			212,249			182,655			7,529			37,123

Stockholders’ equity to total assets			9.46	%		9.30	%		8.77	%
Tangible equity to total assets			7.89	%		7.68	%		6.91	%
Book value per common share		$	12.56			12.28			10.70			0.28			1.86
Tangible book value per common share		$	10.29			9.96			8.26			0.33			2.03
Market price per share at end of quarter		$	26.76			23.56			23.19			3.20			3.57

Each of the equity ratios and book value per share amounts have increased substantially from the prior year, primarily the result of earnings retention, stock options exercised, and net unrealized gains on securities. Our equity to asset ratio is near historic highs for the Company which creates challenges for effective deployment of capital to maintain an appropriate return on equity. The Company declared a 10 percent stock dividend, payable in common stock on May 22, 2003 to shareholders of record on May 13, 2003.


	March 31,			December 31,			March 31,

Credit quality information ($ in thousands)	2003			2002			2003

Allowance for loan losses	$	21,627			20,944			19,498
Non-performing assets	$	10,026			11,582			12,766
Allowance as a percentage of non performing assets		215.71	%		180.83	%		152.73	%
Non-performing assets as a percentage of total assets		0.43	%		0.51	%		0.61	%
Allowance as a percentage of total loans		1.65	%		1.58	%		1.50	%
Net charge-offs as a percentage of loans		0.012	%		0.261	%		0.035	%

Allowance for Loan Loss and Non-Performing Assets

Non-performing assets as a percentage of total assets at March 31, 2003 were ..43 percent, a decrease from .61 percent at March 31, 2002 and .51 percent at December 31, 2002. This compares to the Peer Group average of .62 percent at December 31, 2002, the most recent information available. The reserve for loan losses was 216 percent of non-performing assets at March 31, 2003, up from 153 percent a year ago and 181 percent from December 31, 2002.

With the continuing change in loan mix from residential real estate to commercial and consumer loans, which historically have greater credit risk, the Company has increased the balance in the reserve for loan losses account. The reserve balance has increased $2.129 million, or 11 percent, to $21.627 million, which is 1.65 percent of total loans outstanding, up from 1.50 percent a year ago and 1.58 percent from December 31, 2002. The first quarter provision expense for loan losses was $841 thousand, a decrease of $459 thousand from the same quarter in 2002.

Critical Accounting Policies

Companies may apply certain critical accounting policies requiring management to make subjective or complex judgments, often as a result of the need to estimate the effect of matters that are inherently uncertain. The Company considers its only critical accounting policy to be the allowance for loan losses. The allowance for loan losses is established through a provision for loan losses charged against earnings. The balance of

allowance for loan losses are maintained at the amount management believes will be adequate to absorb known and inherent losses in the loan portfolio. The appropriate balance of allowance for loan losses is determined by applying estimated loss factors to the credit exposure from outstanding loans. Estimated loss factors are based on subjective measurements including management’s assessment of the internal risk classifications, changes in the nature of the loan portfolio, industry concentrations and the impact of current local, regional and national economic factors on the quality of the loan portfolio. Changes in these estimates and assumptions are reasonably possible and may have a material impact on the Company’s consolidated financial statements, results of operation or liquidity.

Results of Operations – The three months ended March 31, 2003 compared to the three months ended March 31, 2002.


			Three months ended March 31,
Revenue summary
($ in thousands)			2003			2002			$ change			% change

Net interest income			$	21,378			20,367			1,011			5.0	%
Fees and other revenue:
	Service charges, loan fees, and other fees			4,646			4,150			496			12.0	%
	Gain on sale of loans			2,244			1,097			1,147			104.6	%
	Other income			577			602			(25	)		-4.2	%

		Total non-interest income		7,467			5,849			1,618			27.7	%

	Total revenue		$	28,845			26,216			2,629			10.0	%

Tax equivilent net interest margin				4.26	%		4.39	%

Net Interest Income

Net interest income for the quarter increased $1.011 million, or 5 percent, over the same period in 2002. Total interest income is $1.470 million, or 4 percent lower that the same quarter in 2002, while total interest expense is $2.481 million or 19 percent lower. Lower interest rates were the main reason for the reduction in interest income and interest expense. The increase in non-interest bearing deposits also resulted in reduced interest expense. The net interest margin as a percentage of earning assets, on a tax equivalent basis, decreased from 4.4 percent for the 2002 quarter to 4.3 percent in 2003. We recorded increased amortization of premiums in 2003 on mortgage backed securities, resulting from prepayments due to the continuing low interest rates. The additional amortization expense accounted for most of the reduction in the net interest margin. We continue to invest in short term securities with low yields rather than extending maturities to obtain higher current yields with corresponding interest rate risk. This also results in lower current interest margins.

Non-interest Income

Fee income increased 12 percent over the same period last year, driven primarily by increased deposit account activity, increases in service fee income, and interchange fees on electronic check cards. The increase in gain on sale of loans reflects the low level of mortgage interest rates and resulting purchase and refinancing activity. Other income was lower in the current years’ quarter by $25 thousand.


		Three months ended March 31,
Non-interest expense summary
($ in thousands)		2003		2002		$ change			% change

Compensation and employee benefits		$	7,979		7,782		197			2.5	%
Occupancy and equipment expense			2,435		2,301		134			5.8	%
Outsourced data processing expense			562		446		116			26.0	%
Core deposit intangible amortization			338		361		(23	)		-6.4	%
Other expenses			3,569		3,475		94			2.7	%

	Total non-interest expense	$	14,883		14,365		518			3.6	%

Non-interest Expense

Non-interest expense increased by $518 thousand, or 4 percent, from the same quarter of 2002. Compensation and benefit expense increased $197 thousand, or 3 percent from the first quarter of 2002. Occupancy and equipment expense increased $134 thousand, or 6 percent, and outsourced data processing expense increased by $116 thousand, or 26 percent. Other expenses increased $94 thousand, or 3 percent. The increased expenses were primarily the result of increases in the volume of transactions handled. The outsourced data processing expense is expected to decrease as Mountain West Bank is converting its core processing to the Company’s in-house data system in the second quarter of 2003. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 52 percent for the 2003 quarter which is an improvement over the 55 percent for the 2002 quarter.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Market Risk:

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices such as interest rates, foreign currency exchange rates, commodity prices, and equity prices. The Company’s primary market risk exposure is interest rate risk. The ongoing monitoring and management of this risk is an important component of the Company’s asset/liability management process which is governed by policies established by its Board of Directors that are reviewed and approved annually. The Board of Directors delegates responsibility for carrying out the asset/liability management policies to the Asset/Liability Committee (ALCO). In this capacity ALCO develops guidelines and strategies impacting the Company’s asset/liability management related activities based upon estimated market risk sensitivity, policy limits and overall market interest rate levels/trends.

Interest Rate Risk:

Interest rate risk represents the sensitivity of earnings to changes in market interest rates. As interest rates change, the interest income and expense streams associated with the Company’s financial instruments also change thereby impacting net interest income (NII), the primary component of the Company’s earnings. ALCO utilizes the results of a detailed and dynamic simulation model to quantify the estimated exposure of NII to sustained interest rate changes. While ALCO routinely monitors simulated NII sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate risk. The simulation model captures the impact of changing interest rates on the interest income received and interest expense paid on all assets and liabilities reflected on the Company’s statement of financial condition. This sensitivity analysis is compared to ALCO policy limits which specify a maximum tolerance level for NII exposure over a one year horizon, assuming no balance sheet growth, given a 200 or 100 basis point (bp) upward and downward shift in interest rates. A parallel and pro rata shift in rates over a 12-month period is assumed as a benchmark. Other non-parallel rate movement scenarios are also modeled to determine the potential impact on net interest income. The following reflects the Company’s NII sensitivity analysis as of December 31, 2002, the most recent information available, as compared to the 10% Board approved policy limit (dollars in thousands). There have been no significant changes in operation or the market that would materially affect the estimated

sensitivity. The table illustrates the estimated change in net interest income over a twelve month period based on the three months activity ended March 31, 2003.


Interest Rate Sensitivity	+200 bp			-100 bp

Estimated sensitivity		-1.37	%		0.46	%
Estimated increase (decrease) in net interest income	$	(1,188	)		399

The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of assets and liability cashflows, and others. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to: prepayment/refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, and other internal/external variables. Furthermore, the sensitivity analysis does not reflect actions that ALCO might take in responding to or anticipating changes in interest rates.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within 90 days before the filing date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports we file or submit under the Exchange act.

Changes in Internal Controls

There have not been any significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. We are not aware of any significant deficiencies or material weaknesses, therefore no corrective actions were taken.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no pending material legal proceedings to which the registrant or its subsidiaries are a party.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Securities Holders

None

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits


Exhibit 99		–		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002

(b)

Current Report on Form 8-K


None

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		GLACIER BANCORP, INC.

May 12, 2003		/s/ Michael J. Blodnick

		Michael J. Blodnick
		President/CEO

May 12, 2003		/s/ James H. Strosahl

		James H. Strosahl
		Executive Vice President/CFO

CERTIFICATIONS

I, Michael J. Blodnick, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

May 12, 2003

/s/ Michael J. Blodnick

Michael J. Blodnick

President/CEO

I, James H. Strosahl, certify that:

May 12, 2003

/s/ James H. Strosahl

James H. Strosahl

Executive Vice President/CFO

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1)		Basis of Presentation:

		In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of Glacier Bancorp Inc.’s (the “Company”) financial condition as of March 31, 2003, December 31, 2002, and March 31, 2002, stockholders’ equity for the three months ended March 31, 2003 and the year ended December 31, 2002, the results of operations for the three months ended March 31, 2003 and 2002, and cash flows for the three months ended March 31, 2003 and 2002.

		The accompanying consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results anticipated for the year ending December 31, 2003. Certain reclassifications have been made to the 2002 financial statements to conform to the 2003 presentation.

2)		Restatement of Prior Period Earnings

		In October 2002, the Financial Accounting Standards Board (“FASB”) issued Statement 147, Acquisitions of Certain Other Intangible Assets, an amendment of Statement 72 and 144 and FASB Interpretations 9. Under the provisions of Statement 147, the acquisition of all or part of a financial institution that meets the definition of a business combination will be accounted for by the purchase method in accordance with FASB Statement 141, Business Combinations. Statement 147 provides that long-term customer relationships intangible assets, except for servicing assets, recognized in the acquisition of financial institution, be evaluated for impairment under provisions of Statement 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

		The Company has evaluated the goodwill recognized in connection with its branch acquisitions and determined that it meets the criteria of Statement 147, and therefore the unidentifiable intangible asset has been reclassified to goodwill and is subject to Statement 142, Goodwill and Other Intangible Assets. The reclassification was retroactively applied to January 1, 2002, which resulted in the restatement of previously filed financial statements. The impact for the three months ended March 31, 2002, was to increase net earnings by $149,000 and basic and diluted earnings per share by $.01.

3)		Organizational Structure:

		The Company, headquartered in Kalispell, Montana, is a Delaware corporation incorporated in 1990, pursuant to the reorganization of Glacier Bank, FSB into a bank holding company. The Company is the parent company for nine wholly owned subsidiaries: Glacier Bank (“Glacier”), First Security Bank of Missoula (“First Security”), Western Security Bank (“Western”), Big Sky Western Bank (“Big Sky”), Valley Bank of Helena (“Valley”), Glacier Bank of Whitefish (“Whitefish”), Community First, Inc. (“CFI”), and Glacier Capital Trust I (“Glacier Trust”), all located in Montana, and Mountain West Bank (“Mountain West”) which is located in Idaho and Utah. The Company does not have any off-balance sheet entities.

		CFI provides full service brokerage services through Raymond James Financial Services, Inc.

4)		Ratios:

		Returns on average assets and average equity were calculated based on daily averages.

5)		Cash Dividend Declared:

		On March 14, 2003, the Board of Directors declared a $.18 per share quarterly cash dividend to stockholders of record on April 8, 2003, payable on April 17, 2003.

6)		Computation of Earnings Per Share:

		Basic earnings per common share is computed by dividing net earnings by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares if dilutive outstanding stock options were exercised, using the treasury stock method.

		The following schedule contains the data used in the calculation of basic and diluted earnings per share.

7)		Investments:

		A comparison of the amortized cost and estimated fair value of the Company’s investment securities, available for sale, is as follows.

		Interest income includes tax-exempt interest for the three months ended March 31, 2003 and 2002 of $2,590,000 and $1,489,000, respectively.

		Gross proceeds from sales of investment securities for the three months ended March 31, 2003 and 2002 were $2,031,000, and $0, respectively, resulting in gross gains of approximately $17,000, and $0, respectively. The cost of any investment sold is determined by specific identification.

13)		Comprehensive Earnings:

		The Company’s only component of other comprehensive earnings is the unrealized gains and losses on available-for-sale securities.

1.		I have reviewed this quarterly report on Form 10-Q of Glacier Bancorp, Inc.;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a)		designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)		evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)		presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

	a)		all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and