KALISPELL, Mont., April 27, 2011 /PRNewswire/ --

Glacier Bancorp, Inc. (Nasdaq GS: GBCI) reported net earnings of $10.3 million for the first quarter of 2011, an increase of $215 thousand, or 2 percent, from the $10.1 million for the first quarter of 2010. The diluted earnings per share of $0.14 for the quarter represented a 12.5 percent decrease from the diluted earnings per share of $0.16 for the same quarter of 2010. There were no non recurring income or expense items impacting this quarter's earnings per share. Annualized return on average assets and return on average equity for the first quarter were 0.62 percent and 4.95 percent, respectively, which compares with prior year returns for the first quarter of 0.67 percent and 5.75 percent, respectively.

"First quarter earnings were about what we expected for the first three months of the year. Now hopefully we can begin to build more momentum through the rest of the year," said Mick Blodnick, President and Chief Executive Officer. "However, in order for that to take place we need to see loan demand pick up and have a good selling season to move more of our non performing assets," Blodnick said.

Total assets at March 31, 2011 were $6.910 billion, which is $151 million, or 2 percent greater than total assets of $6.759 billion at December 31, 2010 and $684 million, or 11 percent greater than total assets of $6.226 billion at March 31, 2010.

Investment securities, including interest bearing deposits and federal funds sold, have increased $299 million, or 12 percent, from December 31, 2010 and increased $1.071 billion, or 65 percent, since March 31, 2010. "With tepid loan demand we again this quarter made significant additions to our investment portfolio to help offset further decreases in our interest income," Blodnick said. "This continual low interest rate environment accompanied by a steep yield curve has afforded us the opportunity to apply some leverage to the balance sheet without adding excessive interest rate risk," Blodnick said. The Company continues to purchase investment securities, predominately mortgage-backed securities issued by Freddie Mac and Fannie Mae, with short weighted-average-lives to offset the current lack of loan growth. Additionally this quarter, the Company purchased corporate bonds with bullet maturities in the two to three year maturity range. These security purchases allow the Company to create incremental yield without taking any long-term interest rate risk. The Company also continues to selectively purchase and diversify it's tax-exempt investment securities. Investment securities represent 39 percent of total assets at March 31, 2011 versus 36 percent of total assets at December 31, 2010.

At March 31, 2011, loans receivable were $3.647 billion, a decrease of $102 million, or 3 percent, over loans receivable of $3.749 billion at December 31, 2010. Excluding net charge-offs of $15.8 million and loans transferred to other real estate of $16.7 million, loans decreased $69.5 million, or 2 percent from December 31, 2010. During the past twelve months, gross loans decreased $368 million, or 9 percent, over gross loans of $4.015 billion at March 31, 2010. The largest decrease in dollars was in commercial loans which decreased $189 million, or 7 percent, from March 31, 2010.

Credit Quality

At March 31, 2011, the allowance for loan and lease losses ("allowance") was $140.8 million, an increase of $3.7 million from the prior quarter, but a decrease of $2.8 million from the prior year quarter. The allowance was 3.86 percent of total loans outstanding at March 31, 2011, compared to 3.66 percent at December 31, 2010 and the 3.58 percent at March 31, 2010. The allowance was 76 percent of non-performing loans at March 31, 2011, an increase from 70 percent at prior year end and 69 percent a year ago. Non-performing assets as a percentage of total subsidiary assets at March 31, 2011 were 3.78 percent, down from 3.91 percent as of prior year end, and down from 4.19 percent a year ago. Early stage delinquencies (accruing 30-89 days past due) of $52.4 million at March 31, 2011 increased from the previous quarter's $45.5 million, but declined from $61.3 million for the prior year's quarter. Seasonality affects early stage delinquencies as unemployment increases during the winter months especially in those areas that rely on tourism. The length and depth of the economic slowdown has also continued to pressure delinquencies.

Provision for Loan and Lease Losses

The current quarter provision for loan loss expense was $19.5 million, a decrease of $7.9 million from the prior quarter and a decrease of $1.4 million from the first quarter in 2010. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of additional provision for loan loss expense at each subsidiary bank. Net charged-off loans for the current quarter were $15.8 million compared to $24.5 million for the prior quarter and $20.2 million for the first quarter in 2010. "Although there is still work to do to improve credit quality, a number of trends are moving in the right direction," Blodnick said. "We did see a slight decrease in non performing assets during the quarter even though sales have been extremely slow this winter. In addition, we did move a number of properties and projects to OREO this past quarter which should expedite and facilitate their disposition. Hopefully as the weather improves this spring and summer so will the level of sales activity."

For additional information regarding credit quality and a breakout of the loan portfolio by regulatory classification, see the exhibits at the end of this press release.

As of March 31, 2011, non-interest bearing deposits of $888 million increased $32 million, or 4 percent, since December 31, 2010 and increased $60 million, or 7 percent, since March 31, 2010. Interest bearing deposits of $3.664 billion at March 31, 2011 include $181 million issued through the Certificate of Deposit Account Registry System ("CDARS"). Interest bearing deposits decreased $2 million, or .1 percent, from the prior quarter, which includes a $3.4 million reduction in wholesale deposits. Interest bearing deposits increased $327 million, or 10 percent from March 31, 2010 which included $184 million from wholesale deposits and CDARS. The increase in non-interest bearing deposits from both the prior quarter end and the same quarter last year was driven by growth in the number of personal and business customers, as well as existing customers retaining cash deposits because of the uncertainty in the current interest rate environment and for liquidity purposes. The decrease in interest bearing deposits from the prior quarter resulted primarily from seasonal decreases that typically occur during the first quarter.

Increases in deposits have reduced the Company's reliance on the amount of borrowings necessary to fund investment security growth. Federal Home Loan Bank advances decreased $5 million, or 1 percent, from December 31, 2010 and increased $157 million, or 20 percent, from March 31, 2010. Repurchase agreements and other borrowed funds were $265 million at March 31, 2011, a decrease of $4.3 million, or 2 percent, from December 31, 2010. Included in Other Liabilities at March 31, 2011 is a $128.9 million obligation for securities purchased in March that will settle in April.

Total stockholders' equity and book value per share increased $1.7 million and $0.02 per share, respectively, from the prior quarter resulting from the increase in accumulated other comprehensive income representing net unrealized gains or losses (net of tax) on the securities portfolio. Tangible stockholder's equity in that same period increased $2.4 million, or $0.04 per share. Total stockholders' equity and book value per share increased $1.4 million and $0.02 per share, respectively, from March 31, 2010, the increase largely the result of higher undivided profits. Tangible stockholders' equity increased $4.5 million, or $0.07 per share since March 31, 2010 resulting in tangible stockholders' equity to tangible assets of 10.12 percent and tangible book value per share of $9.51 as of March 31, 2011.

Cash Dividend

On March 30, 2011, the board of directors declared a cash dividend of $0.13 per share, payable April 21, 2011 to shareholders of record on April 12, 2011. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality and general economic conditions.

Net Interest Income

Net interest income increased $41 thousand from the prior quarter as the reduction in interest expense outpaced the decrease in interest income. The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.91 percent unchanged from the prior quarter. The net interest margin figure includes a 2 basis points reduction from the reversal of interest on non-accrual loans. The decrease in funding expense this past quarter was the result of the Company's banks continuing to aggressively manage their cost of funds. The decrease in interest income for the quarter was due to the continued low interest rate environment and reduction in loan balances which put further pressure on earning assets yields. In addition, premium amortization on Collateralized Mortgage Obligations (CMO's) this quarter increased by $1.2 million putting further pressure on interest income. As mortgage refinance activity continues to drop off, premium amortization should decline in future quarters.

The net interest margin for the current quarter is 52 basis points lower than the 4.43 percent result for the first quarter of 2010. Net interest income for the twelve month period decreased by $2.8 million as the reduction in funding was less than the reduction experienced in interest income. The decrease in interest income was primarily due to a lower yield and volume of loans. In addition, in order to offset the reduction in loans, the Company purchased a significant amount of investment securities with short durations, but much lower yields than the assets they replaced. The decrease in interest expense is primarily attributable to the rate decreases on interest bearing deposits and lower cost borrowings. "We were encouraged that after eight quarters our net interest margin appears to be reaching a level of equilibrium," said Ron Copher, Chief Financial Officer. "However, until interest rates move up or we experience renewed loan demand, the likelihood of our margin increasing in the near term is not anticipated."

Non-interest Income

Non-interest income for the quarter totaled $17.4 million, a decrease of $8.6 million over the prior quarter end and an increase of $1.2 million over the same quarter last year. Service charge fee income of $11.2 million decreased $1.0 million, or 8 percent, during the quarter. The decrease from the prior quarter was primarily due to seasonal factors and a shorter number of days in the quarter. Gain on sale of loans decreased $5.1 million, or 52 percent, over the prior quarter primarily the result of the dramatic drop off in refinances. Gain on sale of loans increased $1 million, or 21 percent, over the prior year's first quarter which was positively impacted by the first time home buyer tax credit. Net gain on the sale of investments was $124 thousand for the current quarter compared to $2.2 million for the previous quarter and $314 thousand for the prior year's first quarter. Such sales were executed with the proceeds used to purchase additional securities that enable the investment portfolio to perform well across varying interest rate scenarios. Other income of $1.4 million for the current quarter is a decrease of $323 thousand from the prior quarter. In the prior quarter there was a $194 thousand gain on 1^st Bank's merchant card servicing portfolio that accounted for a majority of the difference.

Non-interest Expense

Non-interest expense of $42.5 million for the quarter decreased by $3.3 million, or 7 percent, from the prior quarter and increased $515 thousand, or 1 percent, from the prior year first quarter. During the quarter all the major expense categories decreased with the exception of FDIC premiums which increased as a result of higher deposit levels. Compensation and employee benefits increased by $247 thousand, or 1 percent, to $21.6 million from the prior year first quarter. The Company and all eleven banks continue to closely manage this expense and control the number of full time equivalents.

Occupancy and equipment expense decreased $337 thousand, or 5 percent, from the prior quarter and increased $6 thousand, or .1 percent, from the prior year first quarter. Advertising and promotion expense decreased $199 thousand, or 12 percent, from the prior quarter and decreased $108 thousand, or 7 percent, from the first quarter of 2010. Other real estate owned expense of $2.1 million decreased $748 thousand, or 26 percent, from the prior quarter and decreased $219 thousand, or 9 percent, from prior year first quarter. The current quarter other real estate owned expense of $2.1 million included $881 thousand of operating expenses, $758 thousand of fair value write-downs, and $453 thousand of loss on sale of other real estate owned. FDIC premiums increased $201 thousand, or 9 percent, from prior quarter and increased $124 thousand, or 6 percent, from the prior year first quarter, the result of the increased amount of dollars on deposit. Other expenses decreased $1.2 million, or 14 percent, from the prior quarter and increased $479 thousand, or 1 percent, from the prior year first quarter.

Efficiency Ratio

The efficiency ratio is calculated as non-interest expense before other real estate owned expenses, core deposit intangible amortization, and non-recurring expense items as a percentage of fully taxable-equivalent net interest income and non-interest income, excluding gains and losses on sale of investment securities, other real estate owned income, and non-recurring income items. The efficiency ratio for the quarter was 52 percent compared to 50 percent for the prior year first quarter. The increase resulted from continuing pressure on net interest income in the current low interest rate environment.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional multi-bank holding company providing commercial banking services in 60 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and conducts its operations principally through eleven community bank subsidiaries. These subsidiaries include: six banks domiciled in Montana - Glacier Bank of Kalispell, First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, and First Bank of Montana of Lewistown; two banks domiciled in Idaho - Mountain West Bank of Coeur d'Alene and Citizens Community Bank of Pocatello; two banks domiciled in Wyoming - 1st Bank of Evanston and First National Bank & Trust of Powell; and one bank domiciled in Colorado - Bank of the San Juans of Durango.

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

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company's portfolio, including as a result of declines in the housing and real estate markets in its geographic areas;
• increased loan delinquency rates;
• the risks presented by a continued economic downturn, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations;
• changes in market interest rates, which could adversely affect the Company's net interest income and profitability;
• legislative or regulatory changes that adversely affect the Company's business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;
• costs or difficulties related to the integration of acquisitions;
• the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital;
• reduced demand for banking products and services;
• the risks presented by public stock market volatility, which could adversely affect the market price of our common stock and our ability to raise additional capital in the future;
• competition from other financial services companies in our markets;  
• loss of services from the senior management team; and
• the Company's success in managing risks involved in the foregoing.

The Company does not undertake any obligation to publicly correct or update any forward-looking statement if we later become aware that it is not likely to be achieved.

Visit our website at www.glacierbancorp.com