GLACIER BANCORP, INC. - FORM 8-K - EX-99.1 - EXHIBIT

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8-K - 8-K - GLACIER BANCORP, INC.	gbci-06302014x8k.htm

NEWS RELEASE

FOR IMMEDIATE RELEASE

CONTACT: Michael J. Blodnick

(406) 751-4701

Ron J. Copher

(406) 751-7706

GLACIER BANCORP, INC. ANNOUNCES

RESULTS FOR THE QUARTER ENDED JUNE 30, 2014

HIGHLIGHTS:


•	All time record net income of $28.7 million for the current quarter, an increase of 7 percent from the prior quarter net income of $26.7 million and an increase of 26 percent from the prior year second quarter net income of $22.7 million.


•	Current quarter diluted earnings per share of $0.38, an increase of 23 percent from the prior year second quarter diluted earnings per share of $0.31.


•	The loan portfolio increased $115 million, or 3 percent, during the current quarter. Excluding acquisitions, the loan portfolio increased $314 million, or 9 percent, from the prior year second quarter.


•	Non-interest bearing deposits increased $68.7 million, or 5 percent, during the current quarter. Excluding acquisitions, non-interest bearing deposits increased $153 million, or 12 percent, from the prior year second quarter.


•	Current quarter service charges and other fees of $13.5 million, increased $1.3 million, or 11 percent from prior quarter and increased $1.7 million, or 15 percent from the prior year second quarter.


•	Early stage delinquencies (accruing loans 30-89 days past due) decreased $24.3 million to $18.6 million during the current quarter and decreased $3.4 million, or 16 percent, from the prior year second quarter.


•	Dividend declared of $0.17 per share during the current quarter, an increase of $0.01 per share, or 6 percent, over the prior quarter. The dividend was the 117th consecutive quarterly dividend declared by the Company.


•	Announced the definitive agreement to acquire First National Bank of the Rockies, a community bank based in Grand Junction, Colorado, with total assets of $345 million at June 30, 2014.

Results Summary



	Three Months ended							Six Months ended
(Dollars in thousands, except per share data)	June 30, 2014			March 31, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Net income	$	28,677		26,730		22,702		55,407		43,470
Diluted earnings per share	$	0.38		0.36		0.31		0.74		0.60
Return on average assets (annualized)	1.47		%	1.39	%	1.17	%	1.43	%	1.14	%
Return on average equity (annualized)	11.45		%	11.04	%	9.78	%	11.25	%	9.49	%

KALISPELL, MONTANA, July 24, 2014 - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $28.7 million for the current quarter, an increase of $6.0 million, or 26 percent, from the $22.7 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.38 per share, an increase of $0.07, or 23 percent, from the prior year second quarter diluted earnings per share of $0.31. Included in the current quarter non-interest expense was $834 thousand of one-time conversion expenses related to recent acquisitions. “We achieved solid results in the second quarter as a number of earnings metrics approach levels we have not seen since before 2007, driven primarily by improved non interest income and further reduction in credit costs,” said Mick Blodnick, President and Chief Executive Officer. “In addition, in the quarter we announced and are very excited and look forward to the completion in August of the acquisition of First National Bank of the Rockies which will further expand our presence in Western Colorado,” Blodnick said.

Net income for the six months ended June 30, 2014 was $55.4 million, an increase of $11.9 million, from the $43.5 million of net income for the prior year first six months. Diluted earnings per share for the first six months of the current year was $0.74 per share, an increase of $0.14, or 23 percent, from the diluted earnings per share in the prior year first six months.

Asset Summary



										$ Change from
(Dollars in thousands)	Jun 30, 2014			Mar 31, 2014		Dec 31, 2013		Jun 30, 2013		Mar 31, 2014		Dec 31, 2013		Jun 30, 2013
Cash and cash equivalents	$	202,358		161,691		155,657		132,456		40,667		46,701		69,902
Investment securities, available-for-sale	2,559,411			2,669,180		3,222,829		3,721,377		(109,769	)	(663,418	)	(1,161,966	)
Investment securities, held-to-maturity	483,557			481,476		—		—		2,081		483,557		483,557
Total investment securities	3,042,968			3,150,656		3,222,829		3,721,377		(107,688	)	(179,861	)	(678,409	)
Loans receivable
Residential real estate	587,340			580,306		577,589		531,834		7,034		9,751		55,506
Commercial	3,023,915			2,928,995		2,901,283		2,544,787		94,920		122,632		479,128
Consumer and other	592,024			579,328		583,966		596,835		12,696		8,058		(4,811	)
Loans receivable	4,203,279			4,088,629		4,062,838		3,673,456		114,650		140,441		529,823
Allowance for loan and lease losses	(130,636		)	(130,729	)	(130,351	)	(130,883	)	93		(285	)	247
Loans receivable, net	4,072,643			3,957,900		3,932,487		3,542,573		114,743		140,156		530,070
Other assets	572,125			560,476		573,377		600,410		11,649		(1,252	)	(28,285	)
Total assets	$	7,890,094		7,830,723		7,884,350		7,996,816		59,371		5,744		(106,722	)

Total investment securities decreased $108 million, or 3 percent, during the current quarter and decreased $678 million, or 18 percent, from June 30, 2013 as the Company continued to reduce the overall size of the investment portfolio. At June 30, 2014, investment securities represented 39 percent of total assets, down from 41 percent at December 31, 2013 and 47 percent at June 30, 2013.

Total loans receivable increased by $115 million, or 3 percent, during the current quarter with improvement in all loan categories. “We hoped that once we entered the spring our loan volumes would begin to pick up which they did,” Blodnick said. “The growth this past quarter was well distributed with all of the bank divisions contributing to the success we had increasing our loan portfolio. It’s also encouraging to see that this momentum appears to be carrying over into the third quarter which is important if we hope to reach our goal of 5% loan growth this year,” Blodnick said. The largest dollar and percentage increase was in commercial loans which increased $94.9 million, or 3 percent, during the current quarter which was attributable to increases in loan production and seasonal draws on construction and agricultural lines. The Company was also encouraged by the current quarter increase in the consumer and other loan category since the Company has experienced several quarters of decreases in this loan category, albeit some of the current quarter increase was the result of seasonal fluctuations. Excluding the loans receivable from the acquisition of North Cascades National Bank (“NCB”) at July 31, 2013, the loan portfolio increased $314 million, or 9 percent, since June 30, 2013 of which $294 million came from growth in commercial loans.

Credit Quality Summary



	At or for the Six Months ended			At or for the Three Months ended		At or for the Year ended		At or for the Six Months ended
(Dollars in thousands)	June 30, 2014			March 31, 2014		December 31, 2013		June 30, 2013
Allowance for loan and lease losses
Balance at beginning of period	$	130,351		130,351		130,854		130,854
Provision for loan losses	1,361			1,122		6,887		3,178
Charge-offs	(3,324		)	(1,586	)	(13,643	)	(5,885	)
Recoveries	2,248			842		6,253		2,736
Balance at end of period	$	130,636		130,729		130,351		130,883
Other real estate owned	$	26,338		27,332		26,860		40,713
Accruing loans 90 days or more past due	980			569		604		456
Non-accrual loans	75,147			78,905		81,956		89,355
Total non-performing assets ¹	$	102,465		106,806		109,420		130,524
Non-performing assets as a percentage of subsidiary assets	1.30		%	1.37	%	1.39	%	1.64	%
Allowance for loan and lease losses as a percentage of non-performing loans	172		%	164	%	158	%	146	%
Allowance for loan and lease losses as a percentage of total loans	3.11		%	3.20	%	3.21	%	3.56	%
Net charge-offs as a percentage of total loans	0.03		%	0.02	%	0.18	%	0.09	%
Accruing loans 30-89 days past due	$	18,592		42,862		32,116		22,062
Accruing troubled debt restructurings	$	73,981		77,311		81,110		80,453
Non-accrual troubled debt restructurings	$	35,786		37,113		42,461		45,428

^__________

¹ As of June 30, 2014, non-performing assets have not been reduced by U.S. government guarantees of $4.2 million.

Non-performing assets at June 30, 2014 were $102 million, a decrease of $4.3 million, or 4 percent, during the current quarter and a decrease of $28.1 million, or 21 percent, from a year ago. The largest category of non-performing assets was the land, lot and other construction category (i.e., regulatory classification) which was $49.1 million, or 48 percent, of the non-performing assets at June 30, 2014. The Company has continued to make progress by reducing this category the past few years. The Company experienced a significant decrease in early stage delinquencies (accruing loans 30-89 days past due) during the current quarter. Early stage delinquencies of $18.6 million at June 30, 2014 decreased $24.3 million, or 57 percent, from the prior quarter and decreased $3.4 million, or 16 percent, from the prior year second quarter.

The allowance for loan and lease losses (“allowance”) was $131 million at June 30, 2014 and remained stable compared to the prior quarter and a year ago. The allowance was 3.11 percent of total loans outstanding at June 30, 2014 compared to 3.20 percent at March 31, 2014 and 3.56 percent for the same quarter last year.

Credit Quality Trends and Provision for Loan Losses



(Dollars in thousands)	Provision for Loan Losses		Net Charge-Offs	ALLL as a Percent of Loans		Accruing Loans 30-89 Days Past Due as a Percent of Loans		Non-Performing Assets to Total Subsidiary Assets
Second quarter 2014	$	239	332	3.11	%	0.44	%	1.30	%
First quarter 2014	1,122		744	3.20	%	1.05	%	1.37	%
Fourth quarter 2013	1,802		2,216	3.21	%	0.79	%	1.39	%
Third quarter 2013	1,907		2,025	3.27	%	0.66	%	1.56	%
Second quarter 2013	1,078		1,030	3.56	%	0.60	%	1.64	%
First quarter 2013	2,100		2,119	3.84	%	0.95	%	1.79	%
Fourth quarter 2012	2,275		8,081	3.85	%	0.80	%	1.87	%
Third quarter 2012	2,700		3,499	4.01	%	0.83	%	2.33	%

Another positive trend was the decrease in net-charged off loans which was 0.03 percent of total loans for the first half of 2014 compared to 0.09 percent of total loans for the same period last year. Net charged-off loans for the current quarter totaled $332 thousand, a decrease of $412 thousand, or 55 percent, from the prior quarter and a decrease of $698 thousand, or 68 percent, from the prior year second quarter, respectively. The current quarter provision for loan losses of $239 thousand decreased $883 thousand from the prior quarter and decreased $839 thousand from the prior year second quarter. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of provision for loan loss expense.

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



						$ Change from
(Dollars in thousands)	Jun 30, 2014		Mar 31, 2014	Dec 31, 2013	Jun 30, 2013	Mar 31, 2014		Dec 31, 2013		Jun 30, 2013
Non-interest bearing deposits	$	1,464,938	1,396,272	1,374,419	1,236,104	68,666		90,519		228,834
Interest bearing deposits	4,280,898		4,228,193	4,205,548	4,122,093	52,705		75,350		158,805
Repurchase agreements	315,240		327,322	313,394	300,024	(12,082	)	1,846		15,216
FHLB advances	607,305		686,744	840,182	1,217,445	(79,439	)	(232,877	)	(610,140	)
Other borrowed funds	7,367		8,069	8,387	8,489	(702	)	(1,020	)	(1,122	)
Subordinated debentures	125,633		125,597	125,562	125,490	36		71		143
Other liabilities	78,698		73,566	53,608	58,169	5,132		25,090		20,529
Total liabilities	$	6,880,079	6,845,763	6,921,100	7,067,814	34,316		(41,021	)	(187,735	)

Non-interest bearing deposits of $1.465 billion at June 30, 2014 increased $68.7 million, or 5 percent, during the current quarter. Excluding the NCB acquisition, non-interest bearing deposits at June 30, 2014 increased $153 million, or 12 percent, since June 30, 2013. Interest bearing deposits of $4.281 billion at June 30, 2014 included $215 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Excluding an increase of $37.0 million in wholesale deposits during the current quarter, interest bearing deposits at June 30, 2014 increased $15.7 million, or 39 basis points. Excluding the NCB acquisition and a $157 million decrease in wholesale deposits, interest bearing deposits at June 30, 2014 increased $96.7 million, or 3 percent, from June 30, 2013. In addition to the increase in deposit balances, the Company has benefited from a higher than expected increase in the number of checking accounts during the current year. Federal Home Loan Bank (“FHLB”) advances of $607 million at June 30, 2014 decreased $79 million, or 12 percent, during the current quarter and decreased $610 million, or 50 percent, from June 30, 2013 as the need for borrowings continued to decrease concurrent with the increase in deposits.

Stockholders’ Equity Summary



										$ Change from
(Dollars in thousands, except per share data)	Jun 30, 2014			Mar 31, 2014		Dec 31, 2013		Jun 30, 2013		Mar 31, 2014		Dec 31, 2013		Jun 30, 2013
Common equity	$	985,809		969,672		953,605		905,620		16,137		32,204		80,189
Accumulated other comprehensive income	24,206			15,288		9,645		23,382		8,918		14,561		824
Total stockholders’ equity	1,010,015			984,960		963,250		929,002		25,055		46,765		81,013
Goodwill and core deposit intangible, net	(137,815		)	(138,508	)	(139,218	)	(126,771	)	693		1,403		(11,044	)
Tangible stockholders’ equity	$	872,200		846,452		824,032		802,231		25,748		48,168		69,969
Stockholders’ equity to total assets	12.80		%	12.58	%	12.22	%	11.62	%
Tangible stockholders’ equity to total tangible assets	11.25		%	11.00	%	10.64	%	10.19	%
Book value per common share	$	13.56		13.23		12.95		12.63		0.33		0.61		0.93
Tangible book value per common share	$	11.71		11.37		11.08		10.91		0.34		0.63		0.80
Market price per share at end of period	$	28.38		29.07		29.79		22.19		(0.69	)	(1.41	)	6.19

Total stockholders’ equity eclipsed $1 billion for the first time ever ending the quarter at $1.010 billion. Tangible stockholders’ equity of $872 million at June 30, 2014 increased $25.7 million, or 3 percent, from the prior quarter which was driven by earnings retention and an increase in accumulated other comprehensive income. Tangible stockholders’ equity increased $70.0 million from a year ago as the result of $16.7 million of Company stock issued in connection with the acquisition of NCB and an increase in earnings retention. Tangible book value per common share of $11.71 increased $0.34 per share from the prior quarter and increased $0.80 per share from the prior year second quarter.

Cash Dividend

On June 25, 2014, the Company’s Board of Directors declared a cash dividend of $0.17 per share, an increase of $0.01 per share, or 6 percent, from the prior quarter. The dividend is payable July 17, 2014 to shareholders of record on July 8, 2014. The dividend was the 117th consecutive quarterly dividend declared by the Company and future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Operating Results for Three Months Ended June 30, 2014

Compared to March 31, 2014 and June 30, 2013

Revenue Summary



	Three Months ended
(Dollars in thousands)	June 30, 2014			March 31, 2014		June 30, 2013
Net interest income
Interest income	$	73,963		74,087		62,151
Interest expense	6,528			6,640		7,185
Total net interest income	67,435			67,447		54,966
Non-interest income
Service charges, loan fees, and other fees	14,747			13,248		12,971
Gain on sale of loans	4,778			3,595		7,472
(Loss) gain on sale of investments	(48		)	(51	)	241
Other income	3,027			2,596		2,538
Total non-interest income	22,504			19,388		23,222
	$	89,939		86,835		78,188
Net interest margin (tax-equivalent)	3.99		%	4.02	%	3.30	%



	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	March 31, 2014			June 30, 2013			March 31, 2014		June 30, 2013
Net interest income
Interest income	$	(124	)	$	11,812		—	%	19	%
Interest expense	(112		)	(657		)	(2	)%	(9	)%
Total net interest income	(12		)	12,469			—	%	23	%
Non-interest income
Service charges, loan fees, and other fees	1,499			1,776			11	%	14	%
Gain on sale of loans	1,183			(2,694		)	33	%	(36	)%
(Loss) gain on sale of investments	3			(289		)	(6	)%	(120	)%
Other income	431			489			17	%	19	%
Total non-interest income	3,116			(718		)	16	%	(3	)%
	$	3,104		$	11,751		4	%	15	%

Net Interest Income

Net interest income declined by $12 thousand for the quarter to $67.4 million. The current quarter interest income of $74.0 million decreased $124 thousand, or less than 1 percent, from the prior quarter. This decrease was primarily driven by the reduction in the investment portfolio and offset in part by the increase in interest income on commercial loans. The premium amortization (net of discount accretion) on the investment securities (“premium amortization”) included in the current quarter interest income was $7.0 million compared to $7.6 million in the prior quarter. The premium amortization appears to have stabilized following reductions over the prior six consecutive quarters.

The current quarter’s interest income increased $11.8 million, or 19 percent, over the prior year second quarter and was primarily attributable to higher interest income on the investment portfolio and commercial loans. Interest income on investment securities of $23.9 million increased $6.5 million, or 38 percent, over the prior year second quarter as a result of the premium amortization decreasing $11.4 million. The current quarter interest income on commercial loans of $35.3 million increased $5.4 million, or 18 percent, over the prior year quarter as a result of an increased volume of commercial loans.

The current quarter interest expense of $6.5 million decreased $112 thousand, or 2 percent, from the prior quarter and decreased $657 thousand, or 9 percent, from the prior year second quarter. The decrease in interest expense from the prior quarter and the prior year second quarter was the result of decreases in deposit interest rates and in the volume of borrowings. The cost of total funding (including non-interest bearing deposits) for the current quarter was 39 basis points compared to 40 basis points in the prior quarter and 43 basis points for the prior year second quarter.

The Company’s current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.99 percent, a decrease of 3 basis points from the prior quarter net interest margin of 4.02 percent. Similar to the prior quarter, the current quarter yield on the investment portfolio increased and there was a continuing shift in earning assets from investment securities to the higher yielding loan portfolio. The yield on the loans declined slightly causing the lower net interest margin.

The Company’s current quarter net interest margin increased 69 basis points from the prior year second quarter net interest margin of 3.30 percent, such increase was primarily driven by the increased yield on the investment portfolio coupled with the significant shift in earning assets to the higher yielding loan portfolio. “We continue to work hard to change the mix of our asset base by reducing the size of our investment portfolio and replacing it with greater loan totals,” said Ron Copher, Chief Financial Officer. “If we can maintain the present pace of loan volume through the second half of the year, the net interest margin should stabilize at or near its current level,” Copher said.

Non-interest Income

Non-interest income for the current quarter totaled $22.5 million, an increase of $3.1 million over the prior quarter and a decrease of $718 thousand over the same quarter last year. The Company has benefited from the increased volume and the increased number of deposit accounts which was reflected in the $1.5 million, or 11 percent, increase in service charge fee income from the prior quarter and the $1.8 million, or 14 percent, increase from the prior year second quarter, respectively. The gain of $4.8 million on the sale of residential loans in the current quarter was an increase of $1.2 million, or 33 percent, from the prior quarter and was attributable to seasonal increases. The gain on the sale of the residential loans in the current quarter decreased $2.7 million, or 36 percent, from the prior year second quarter when the Company experienced a slowdown in refinance activity which continued through the second half of 2013 and the first half of 2014. Included in other income was operating revenue of $34 thousand from other real estate owned (“OREO”) and gain of $581 thousand from the sales of OREO, a combined total of $615 thousand for the most recent quarter compared to $811 thousand for the prior quarter and $715 thousand for the prior year second quarter.

Non-interest Expense Summary



	Three Months ended
(Dollars in thousands)	June 30, 2014		March 31, 2014	June 30, 2013
Compensation and employee benefits	$	28,988	28,634	24,917
Occupancy and equipment	6,733		6,613	5,906
Advertising and promotions	1,948		1,777	1,621
Outsourced data processing	2,032		1,288	813
Other real estate owned	566		507	2,968
Regulatory assessments and insurance	1,028		1,592	1,525
Core deposit intangibles amortization	693		710	505
Other expense	10,685		8,949	10,226
Total non-interest expense	$	52,673	50,070	48,481



	$ Change from			$ Change from			% Change from		% Change from
(Dollars in thousands)	March 31, 2014			June 30, 2013			March 31, 2014		June 30, 2013
Compensation and employee benefits	$	354		$	4,071		1	%	16	%
Occupancy and equipment	120			827			2	%	14	%
Advertising and promotions	171			327			10	%	20	%
Outsourced data processing	744			1,219			58	%	150	%
Other real estate owned	59			(2,402		)	12	%	(81	)%
Regulatory assessments and insurance	(564		)	(497		)	(35	)%	(33	)%
Core deposit intangibles amortization	(17		)	188			(2	)%	37	%
Other expense	1,736			459			19	%	4	%
Total non-interest expense	$	2,603		$	4,192		5	%	9	%

Compensation and employee benefits increased by $4.1 million, or 16 percent, from the prior year second quarter due to the increased number of employees from the NCB acquisition and First State Bank (“FSB”) acquisition at May 31, 2013 along with additional benefit costs. Occupancy and equipment expense increased $827 thousand, or 14 percent, from the prior year second quarter as a result of the acquisitions and increases in equipment expense related to the Company’s expansion of information and technology infrastructure. Advertising and promotion expense increased $327 thousand, or 20 percent, compared to the prior year second quarter primarily from recent marketing promotions at a number of the Bank divisions. Outsourced data processing expense increased $744 thousand, or 58 percent, from the prior quarter and increased $1.2 million, or 150 percent, from the prior year second quarter because of the acquired banks’ outsourced data processing expense and conversion related expenses. The current quarter OREO expense of $566 thousand included $429 thousand of operating expense, $98 thousand of fair value write-downs, and $39 thousand of loss on sale of OREO. OREO expense may fluctuate as the Company continues to work through non-performing assets and dispose of foreclosed properties. Other expense increased $1.7 million, or 19 percent, from the prior quarter primarily from expenses connected with New Market Tax Credit investments.

Efficiency Ratio

The efficiency ratio for the current quarter was 55 percent compared to 56 percent for the prior year second quarter. The improvement in the efficiency ratio was principally due to the increase in net interest income which exceeded the increase in non-interest expense.

Operating Results for Six Months ended June 30, 2014

Compared to June 30, 2013

Revenue Summary



	Six Months ended
(Dollars in thousands)	June 30, 2014			June 30, 2013			$ Change			% Change
Net interest income
Interest income	$	148,050		$	120,106		$	27,944		23	%
Interest expense	13,168			14,643			(1,475		)	(10	)%
Total net interest income	134,882			105,463			29,419			28	%
Non-interest income
Service charges, loan fees, and other fees	27,995			24,646			3,349			14	%
Gain on sale of loans	8,373			16,561			(8,188		)	(49	)%
(Loss) gain on sale of investments	(99		)	104			(203		)	(195	)%
Other income	5,623			4,861			762			16	%
Total non-interest income	41,892			46,172			(4,280		)	(9	)%
	$	176,774		$	151,635		$	25,139		17	%
Net interest margin (tax-equivalent)	4.01		%	3.23		%

Net Interest Income

Net interest income for the first six months of the current year was $135 million, an increase of $29.4 million, or 28 percent, over the same period last year. Interest income for the first six months of the current year increased $27.9 million, or 23 percent, from the prior year first six months and was principally due to the decrease in premium amortization on investment securities and an increase income from commercial loans. Interest income was reduced by $14.6 million in premium amortization on investment securities during the first half of the current year compared to $39.8 million for the same period last year. Current year interest income on commercial loans increased $11.8 million, or 20 percent, from the first half of last year and was primarily the result of an increased volume of commercial loans.

Interest expense for the first six months of the current year decreased $1.5 million, or 10 percent, from the prior year first six months and was primarily attributable to the decreases in certificate of deposit interest rates and decreases in the volume of borrowings and wholesale deposits. The funding cost (including non-interest bearing deposits) for the first six months of 2014 was 39 basis points compared to 44 basis points for the first six months of 2013.

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first six months of 2014 was 4.01 percent, a 78 basis points increase from the net interest margin of 3.23 percent for the first six months of 2013. The increase in the net interest margin was due to the increased yield on the investment portfolio combined with the shift in earning assets to the higher yielding loan portfolio. The premium amortization for the first six months of 2014 accounted for a 43 basis points reduction in the net interest margin, which was a decrease of 68 basis points compared to the 111 basis points reduction in the net interest margin for the same period last year.

Non-interest Income

Non-interest income of $41.9 million for the first half of 2014 decreased $4.3 million, or 9 percent, over the same period last year. The gains of $8.4 million on the sale of residential loans for the first half of 2014 decreased $8.2 million, or 49 percent, from the first half of 2013 as a consequence of the slowdown in refinance activity. Service charges and other fees of $28.0 million for the first six months of 2014 increased $3.3 million, or 14 percent, from the same period last year. Included in other income was operating revenue of $98 thousand from OREO and gains of $1.3 million from the sales of OREO, which totaled $1.4 million for the first half of 2014 compared to $1.4 million for the same period in the prior year.

Non-interest Expense Summary



	Six Months ended
(Dollars in thousands)	June 30, 2014		June 30, 2013	$ Change		% Change
Compensation and employee benefits	$	57,622	49,494	8,128		16	%
Occupancy and equipment	13,346		11,731	1,615		14	%
Advertising and promotions	3,725		3,169	556		18	%
Outsourced data processing	3,320		1,638	1,682		103	%
Other real estate owned	1,073		3,852	(2,779	)	(72	)%
Regulatory assessments and insurance	2,620		3,166	(546	)	(17	)%
Core deposit intangibles amortization	1,403		991	412		42	%
Other expense	19,634		17,874	1,760		10	%
Total non-interest expense	$	102,743	91,915	10,828		12	%

Compensation and employee benefits for the first six months of 2014 increased $8.1 million, or 16 percent, from the same period last year due to the increased number of employees from the acquired banks, additional benefit costs and annual salary increases. Occupancy and equipment expense increased $1.6 million, or 14 percent, as a result of the acquisitions and increases in equipment expense related to additional information and technology infrastructure. Outsourced data processing expense increased $1.7 million, or 103 percent, from the prior year first six months as a result of the acquired banks outsourced data processing expense and general increases in data processing expense. OREO expense of $1.1 million in the first six months of 2014 decreased $2.8 million, or 72 percent, from the first six months of the prior year. OREO expense for the first six months of 2014 included $714 thousand of operating expenses, $151 thousand of fair value write-downs, and $208 thousand of loss on sale of OREO. Other expense for the first half of 2014 increased by $1.8 million, or 10 percent, from the first half of the prior year primarily from debit card expenses and other deposit account related charges.

Provision for loan losses

The provision for loan losses was $1.4 million for the first six months of 2014, a decrease of $1.8 million, or 57 percent, from the same period in the prior year. Net charged-off loans during the first six months of 2014 was $1.1 million, a decrease of $2.1 million from the first six months of 2013.

Efficiency Ratio

The efficiency ratio was 54 percent for the first six months of 2014 and 55 percent for the first six months of 2013. The improvement in the efficiency ratio resulted from net interest income outpacing the increase in non-interest expense and the decrease in non-interest income.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 72 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and is the parent company for Glacier Bank, Kalispell and Bank divisions First Security Bank of Missoula; Valley Bank of Helena; Big Sky Western Bank, Bozeman; Western Security Bank, Billings; and First Bank of Montana, Lewistown, all operating in Montana; as well as Mountain West Bank, Coeur d’Alene operating in Idaho, Utah and Washington; Citizens Community Bank, Pocatello, operating in Idaho; 1st Bank, Evanston, operating in Wyoming and Utah; First Bank of Wyoming, Powell and First State Bank, Wheatland, each operating in Wyoming; North Cascades Bank, Chelan, operating in Washington; and Bank of the San Juans, Durango, operating in Colorado.

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 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 a slow recovery in the housing and real estate markets in its geographic areas;


•	increased loan delinquency rates;


•	the risks presented by a slow economic recovery which could adversely affect credit quality, loan collateral values, OREO 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 completion and integration of acquisitions;


•	the goodwill the Company has recorded in connection with acquisitions could become additionally impaired, which may have an adverse impact on 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 the Company’s common stock and the ability to raise additional capital in the future;


•	consolidation in the financial services industry in the Company’s markets resulting in the creation of larger financial institutions which may have greater resources could change the competitive landscape;


•	dependence on the CEO, the senior management team and the Presidents of the Bank divisions;


•	potential interruption or breach in security of the Company’s systems; 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 it later becomes aware that actual results are likely to differ materially from those expressed in such forward-looking statement.

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition



(Dollars in thousands, except per share data)	June 30, 2014			March 31, 2014		December 31, 2013		June 30, 2013
Assets
Cash on hand and in banks	$	130,114		116,267		109,995		105,272
Federal funds sold	2,852			14,055		10,527		6,375
Interest bearing cash deposits	69,392			31,369		35,135		20,809
Cash and cash equivalents	202,358			161,691		155,657		132,456
Investment securities, available-for-sale	2,559,411			2,669,180		3,222,829		3,721,377
Investment securities, held-to-maturity	483,557			481,476		—		—
Total investment securities	3,042,968			3,150,656		3,222,829		3,721,377
Loans held for sale	56,021			36,133		46,738		95,495
Loans receivable	4,203,279			4,088,629		4,062,838		3,673,456
Allowance for loan and lease losses	(130,636		)	(130,729	)	(130,351	)	(130,883	)
Loans receivable, net	4,072,643			3,957,900		3,932,487		3,542,573
Premises and equipment, net	167,741			166,757		167,671		161,918
Other real estate owned	26,338			27,332		26,860		40,713
Accrued interest receivable	41,765			41,274		41,898		43,593
Deferred tax asset	34,505			39,997		43,549		35,115
Core deposit intangible, net	8,109			8,802		9,512		7,262
Goodwill	129,706			129,706		129,706		119,509
Non-marketable equity securities	52,715			52,192		52,192		49,752
Other assets	55,225			58,283		55,251		47,053
Total assets	$	7,890,094		7,830,723		7,884,350		7,996,816
Liabilities
Non-interest bearing deposits	$	1,464,938		1,396,272		1,374,419		1,236,104
Interest bearing deposits	4,280,898			4,228,193		4,205,548		4,122,093
Securities sold under agreements to repurchase	315,240			327,322		313,394		300,024
Federal Home Loan Bank advances	607,305			686,744		840,182		1,217,445
Other borrowed funds	7,367			8,069		8,387		8,489
Subordinated debentures	125,633			125,597		125,562		125,490
Accrued interest payable	3,163			3,173		3,505		3,824
Other liabilities	75,535			70,393		50,103		54,345
Total liabilities	6,880,079			6,845,763		6,921,100		7,067,814
Stockholders’ Equity
Preferred shares, $0.01 par value per share, 1,000,000 shares authorized, none issued or outstanding	—			—		—		—
Common stock, $0.01 par value per share, 117,187,500 shares authorized	745			745		744		736
Paid-in capital	692,343			692,196		690,918		672,035
Retained earnings - substantially restricted	292,721			276,731		261,943		232,849
Accumulated other comprehensive income	24,206			15,288		9,645		23,382
Total stockholders’ equity	1,010,015			984,960		963,250		929,002
Total liabilities and stockholders’ equity	$	7,890,094		7,830,723		7,884,350		7,996,816
Number of common stock shares issued and outstanding	74,467,908			74,465,666		74,373,296		73,564,900

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations



	Three Months ended						Six Months ended
(Dollars in thousands, except per share data)	June 30, 2014			March 31, 2014		June 30, 2013	June 30, 2014		June 30, 2013
Interest Income
Residential real estate loans	$	7,220		7,087		7,026	14,307		14,286
Commercial loans	35,267			35,042		29,865	70,309		58,497
Consumer and other loans	7,583			7,643		7,909	15,226		15,773
Investment securities	23,893			24,315		17,351	48,208		31,550
Total interest income	73,963			74,087		62,151	148,050		120,106
Interest Expense
Deposits	3,061			3,089		3,474	6,150		7,186
Securities sold under agreements to repurchase	192			210		210	402		437
Federal Home Loan Bank advances	2,447			2,514		2,648	4,961		5,299
Federal funds purchased and other borrowed funds	48			53		54	101		106
Subordinated debentures	780			774		799	1,554		1,615
Total interest expense	6,528			6,640		7,185	13,168		14,643
Net Interest Income	67,435			67,447		54,966	134,882		105,463
Provision for loan losses	239			1,122		1,078	1,361		3,178
Net interest income after provision for loan losses	67,196			66,325		53,888	133,521		102,285
Non-Interest Income
Service charges and other fees	13,547			12,219		11,818	25,766		22,404
Miscellaneous loan fees and charges	1,200			1,029		1,153	2,229		2,242
Gain on sale of loans	4,778			3,595		7,472	8,373		16,561
(Loss) gain on sale of investments	(48		)	(51	)	241	(99	)	104
Other income	3,027			2,596		2,538	5,623		4,861
Total non-interest income	22,504			19,388		23,222	41,892		46,172
Non-Interest Expense
Compensation and employee benefits	28,988			28,634		24,917	57,622		49,494
Occupancy and equipment	6,733			6,613		5,906	13,346		11,731
Advertising and promotions	1,948			1,777		1,621	3,725		3,169
Outsourced data processing	2,032			1,288		813	3,320		1,638
Other real estate owned	566			507		2,968	1,073		3,852
Regulatory assessments and insurance	1,028			1,592		1,525	2,620		3,166
Core deposit intangibles amortization	693			710		505	1,403		991
Other expense	10,685			8,949		10,226	19,634		17,874
Total non-interest expense	52,673			50,070		48,481	102,743		91,915
Income Before Income Taxes	37,027			35,643		28,629	72,670		56,542
Federal and state income tax expense	8,350			8,913		5,927	17,263		13,072
Net Income	$	28,677		26,730		22,702	55,407		43,470
Basic earnings per share	$	0.38		0.36		0.31	0.74		0.60
Diluted earnings per share	$	0.38		0.36		0.31	0.74		0.60
Dividends declared per share	$	0.17		0.16		0.15	0.33		0.29
Average outstanding shares - basic	74,467,576			74,437,393		72,480,019	74,452,568		72,224,263
Average outstanding shares - diluted	74,499,660			74,480,818		72,548,172	74,491,459		72,282,104

Glacier Bancorp, Inc.

Average Balance Sheet



	Three Months ended						Six Months ended
	June 30, 2014						June 30, 2014
(Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate		Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	619,720	7,220		4.66	%	$	614,655	14,307		4.66	%
Commercial loans	2,934,715		35,267		4.82	%	2,908,530		70,309		4.87	%
Consumer and other loans	580,128		7,583		5.24	%	578,386		15,226		5.31	%
Total loans ¹	4,134,563		50,070		4.86	%	4,101,571		99,842		4.91	%
Tax-exempt investment securities ²	1,197,586		16,890		5.64	%	1,194,649		33,658		5.63	%
Taxable investment securities ³	1,998,096		12,558		2.51	%	2,049,494		25,622		2.50	%
Total earning assets	7,330,245		79,518		4.35	%	7,345,714		159,122		4.37	%
Goodwill and intangibles	138,187						138,542
Non-earning assets	334,187						325,952
Total assets	$	7,802,619					$	7,810,208
Liabilities
Non-interest bearing deposits	$	1,387,554	—		—	%	$	1,358,805	—		—	%
NOW accounts	1,093,724		270		0.10	%	1,095,567		604		0.11	%
Savings accounts	634,706		81		0.05	%	631,843		161		0.05	%
Money market deposit accounts	1,192,876		619		0.21	%	1,190,215		1,219		0.21	%
Certificate accounts	1,138,736		1,971		0.69	%	1,135,798		3,955		0.70	%
Wholesale deposits ⁴	201,848		120		0.24	%	175,280		211		0.24	%
FHLB advances	666,819		2,447		1.45	%	745,882		4,961		1.32	%
Repurchase agreements, federal funds purchased and other borrowed funds	428,308		1,020		0.96	%	433,972		2,057		0.96	%
Total funding liabilities	6,744,571		6,528		0.39	%	6,767,362		13,168		0.39	%
Other liabilities	53,166						49,497
Total liabilities	6,797,737						6,816,859
Stockholders’ Equity
Common stock	745						744
Paid-in capital	692,157						691,893
Retained earnings	289,984						282,466
Accumulated other comprehensive income	21,996						18,246
Total stockholders’ equity	1,004,882						993,349
Total liabilities and stockholders’ equity	$	7,802,619					$	7,810,208
Net interest income (tax-equivalent)			$	72,990					$	145,954
Net interest spread (tax-equivalent)					3.96	%					3.98	%
Net interest margin (tax-equivalent)					3.99	%					4.01	%

^__________


¹	Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.


²	Includes tax effect of $5.2 million and $10.3 million on tax-exempt investment security income for the three and six months ended June 30, 2014.


³	Includes tax effect of $371 thousand and $743 thousand on investment security tax credits for the three and six months ended June 30, 2014.


⁴	Wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts.

Glacier Bancorp, Inc.

Loan Portfolio by Regulatory Classification



	Loans Receivable, by Loan Type												% Change from
(Dollars in thousands)	Jun 30, 2014			Mar 31, 2014			Dec 31, 2013			Jun 30, 2013			Mar 31, 2014		Dec 31, 2013		Jun 30, 2013
Custom and owner occupied construction	$	51,497		$	44,333		$	50,352		$	35,529		16	%	2	%	45	%
Pre-sold and spec construction	34,114			34,786			34,217			36,967			(2	)%	—	%	(8	)%
Total residential construction	85,611			79,119			84,569			72,496			8	%	1	%	18	%
Land development	81,589			82,275			73,132			77,080			(1	)%	12	%	6	%
Consumer land or lots	101,042			104,308			109,175			100,549			(3	)%	(7	)%	—	%
Unimproved land	51,457			49,871			50,422			50,492			3	%	2	%	2	%
Developed lots for operative builders	15,123			15,984			15,951			15,105			(5	)%	(5	)%	—	%
Commercial lots	17,238			15,609			12,585			16,987			10	%	37	%	1	%
Other construction	112,081			84,214			103,807			90,735			33	%	8	%	24	%
Total land, lot, and other construction	378,530			352,261			365,072			350,948			7	%	4	%	8	%
Owner occupied	816,859			812,727			811,479			753,692			1	%	1	%	8	%
Non-owner occupied	617,693			611,093			588,114			475,991			1	%	5	%	30	%
Total commercial real estate	1,434,552			1,423,820			1,399,593			1,229,683			1	%	2	%	17	%
Commercial and industrial	549,143			523,071			523,354			470,178			5	%	5	%	17	%
Agriculture	288,555			269,886			279,959			238,136			7	%	3	%	21	%
1st lien	757,954			726,471			733,406			718,793			4	%	3	%	5	%
Junior lien	73,130			71,012			73,348			77,359			3	%	—	%	(5	)%
Total 1-4 family	831,084			797,483			806,754			796,152			4	%	3	%	4	%
Multifamily residential	152,169			143,438			123,154			107,437			6	%	24	%	42	%
Home equity lines of credit	309,282			298,073			298,119			304,859			4	%	4	%	1	%
Other consumer	134,414			131,030			130,758			123,947			3	%	3	%	8	%
Total consumer	443,696			429,103			428,877			428,806			3	%	3	%	3	%
Other	95,960			106,581			98,244			75,115			(10	)%	(2	)%	28	%
Total loans receivable, including loans held for sale	4,259,300			4,124,762			4,109,576			3,768,951			3	%	4	%	13	%
Less loans held for sale ¹	(56,021		)	(36,133		)	(46,738		)	(95,495		)	55	%	20	%	(41	)%
Total loans receivable	$	4,203,279		$	4,088,629		$	4,062,838		$	3,673,456		3	%	3	%	14	%

_______

¹ Loans held for sale are primarily 1st lien 1-4 family loans.

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification



	Non-performing Assets, by Loan Type					Non- Accrual Loans	Accruing Loans 90 Days or More Past Due	Other Real Estate Owned
(Dollars in thousands)	Jun 30, 2014		Mar 31, 2014	Dec 31, 2013	Jun 30, 2013	Jun 30, 2014	Jun 30, 2014	Jun 30, 2014
Custom and owner occupied construction	$	1,196	1,227	1,248	1,291	1,196	—	—
Pre-sold and spec construction	609		663	828	1,319	229	—	380
Total residential construction	1,805		1,890	2,076	2,610	1,425	—	380
Land development	23,718		24,555	25,062	26,004	14,821	—	8,897
Consumer land or lots	2,804		3,169	2,588	5,475	1,992	—	812
Unimproved land	12,421		12,965	13,630	15,611	11,529	—	892
Developed lots for operative builders	2,186		2,157	2,215	2,093	1,558	—	628
Commercial lots	2,787		2,842	2,899	3,185	282	—	2,505
Other construction	5,156		5,168	5,167	5,532	167	—	4,989
Total land, lot and other construction	49,072		50,856	51,561	57,900	30,349	—	18,723
Owner occupied	14,595		14,625	14,270	16,503	13,192	—	1,403
Non-owner occupied	3,956		3,563	4,301	5,091	2,914	39	1,003
Total commercial real estate	18,551		18,188	18,571	21,594	16,106	39	2,406
Commercial and industrial	5,850		5,030	6,400	7,103	5,083	532	235
Agriculture	3,506		3,484	3,529	6,146	3,173	31	302
1st lien	17,240		17,457	17,630	22,543	12,655	300	4,285
Junior lien	1,146		4,947	4,767	5,819	1,132	14	—
Total 1-4 family	18,386		22,404	22,397	28,362	13,787	314	4,285
Multifamily residential	729		156	—	253	729	—	—
Home equity lines of credit	4,289		4,434	4,544	6,107	4,242	47	—
Other consumer	277		364	342	449	253	17	7
Total consumer	4,566		4,798	4,886	6,556	4,495	64	7
Total	$	102,465	106,806	109,420	130,524	75,147	980	26,338

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification (continued)



	Accruing 30-89 Days Delinquent Loans, by Loan Type								% Change from
(Dollars in thousands)	Jun 30, 2014		Mar 31, 2014		Dec 31, 2013		Jun 30, 2013		Mar 31, 2014		Dec 31, 2013		Jun 30, 2013
Custom and owner occupied construction	$	—	$	277	$	202	$	—	(100	)%	(100	)%	n/m
Pre-sold and spec construction	144		101		—		—		43	%	n/m		n/m
Total residential construction	144		378		202		—		(62	)%	(29	)%	n/m
Consumer land or lots	267		504		1,716		338		(47	)%	(84	)%	(21	)%
Unimproved land	899		420		615		341		114	%	46	%	164	%
Developed lots for operative builders	—		1,163		8		146		(100	)%	(100	)%	(100	)%
Total land, lot and other construction	1,166		2,087		2,339		825		(44	)%	(50	)%	41	%
Owner occupied	6,125		9,099		5,321		7,297		(33	)%	15	%	(16	)%
Non-owner occupied	1,665		2,901		2,338		2,247		(43	)%	(29	)%	(26	)%
Total commercial real estate	7,790		12,000		7,659		9,544		(35	)%	2	%	(18	)%
Commercial and industrial	2,528		6,192		3,542		3,844		(59	)%	(29	)%	(34	)%
Agriculture	497		2,710		1,366		169		(82	)%	(64	)%	194	%
1st lien	2,408		15,018		12,386		2,807		(84	)%	(81	)%	(14	)%
Junior lien	536		503		482		980		7	%	11	%	(45	)%
Total 1-4 family	2,944		15,521		12,868		3,787		(81	)%	(77	)%	(22	)%
Multifamily Residential	689		1,535		1,075		—		(55	)%	(36	)%	n/m
Home equity lines of credit	1,839		1,506		1,999		3,138		22	%	(8	)%	(41	)%
Other consumer	938		933		1,066		755		1	%	(12	)%	24	%
Total consumer	2,777		2,439		3,065		3,893		14	%	(9	)%	(29	)%
Other	57		—		—		—		n/m		n/m		n/m
Total	$	18,592	$	42,862	$	32,116	$	22,062	(57	)%	(42	)%	(16	)%

_______

n/m - not measurable

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification (continued)



	Net Charge-Offs (Recoveries), Year-to-Date Period Ending, By Loan Type									Charge-Offs	Recoveries
(Dollars in thousands)	Jun 30, 2014			Mar 31, 2014		Dec 31, 2013		Jun 30, 2013		Jun 30, 2014	Jun 30, 2014
Custom and owner occupied construction	$	—		—		(51	)	(1	)	—	—
Pre-sold and spec construction	(39		)	(16	)	(10	)	(16	)	—	39
Total residential construction	(39		)	(16	)	(61	)	(17	)	—	39
Land development	(333		)	93		(383	)	(76	)	127	460
Consumer land or lots	97			(69	)	843		290		300	203
Unimproved land	(126		)	(5	)	715		233		25	151
Developed lots for operative builders	(117		)	(17	)	(81	)	(11	)	9	126
Commercial lots	(3		)	(2	)	248		251		—	3
Other construction	—			—		(473	)	(128	)	—	—
Total land, lot and other construction	(482		)	—		869		559		461	943
Owner occupied	(7		)	(18	)	350		(306	)	47	54
Non-owner occupied	(184		)	(185	)	397		268		50	234
Total commercial real estate	(191		)	(203	)	747		(38	)	97	288
Commercial and industrial	1,343			1,038		3,096		823		1,655	312
Agriculture	—			—		53		21		—	—
1st lien	298			(199	)	681		287		457	159
Junior lien	91			38		106		56		275	184
Total 1-4 family	389			(161	)	787		343		732	343
Multifamily residential	1			1		(39	)	(31	)	12	11
Home equity lines of credit	(120		)	51		1,606		1,346		82	202
Other consumer	175			34		324		141		284	109
Total consumer	55			85		1,930		1,487		366	311
Other	—			—		8		2		1	1
Total	$	1,076		744		7,390		3,149		3,324	2,248

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