Glacier Bancorp, Inc. Announces Results for Quarter Ended March 31, 2010

KALISPELL, Mont. , April 22 /PRNewswire-FirstCall/ --  

HIGHLIGHTS:

• Net earnings for the quarter of $10.070 million.
• Diluted earnings per share of $0.16.
• Raised $146 million in capital from the sale of 10.291 million common shares at a price of $14.75 in an equity offering.
• Provision for loan losses was $21 million for the quarter and the allowance for loan losses was 3.53 percent of loans.
• Deposits, excluding acquisitions, increased $634 million from first quarter of prior year.
• Dividend declared of $0.13 per share.

Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net earnings of $10.070 million for the first quarter of 2010, a decrease of $5.709 million, or 36 percent, from the $15.779 million net earnings reported for the first quarter of 2009.  The diluted earnings per share of $0.16 for the quarter represented a 38 percent decrease from the diluted earnings per share of $0.26 for the same quarter of 2009. Annualized return on average assets and return on average equity for the first quarter were 0.67 percent and 5.75 percent, respectively, which compares with prior year returns for the first quarter of 1.15 percent and 9.27 percent, respectively.

"We continue to grind through the current operating environment making incremental progress as we move forward," said Mick Blodnick, President and Chief Executive Officer.  "Our earnings for the quarter were about what we expected.  Nonetheless, they are considerably below what we deem to be satisfactory and acceptable.  So, we need to continue to work to improve these earnings and our overall performance," Blodnick said.

Total assets at March 31, 2010 were $6.226 billion, which is $34 million, or 1 percent, greater than total assets of $6.192 billion at December 31, 2009.  Total assets increased $645 million, or 12 percent, from March 31, 2009, of which $272 million, including $161 million in loans related to the acquisition of First National Bank & Trust ("First National") in October 2009.  At March 31, 2010, total loans were $4.072 billion, a decrease of $58 million over total loans of $4.130 billion at December 31, 2009 and a decrease of $89 million over total loans at March 31, 2009.  Loan originations have slowed, which was the basis for the decrease in all loan categories including a decrease of $24 million, or 3 percent, in residential real estate loans, a decrease of $15 million, or 2 percent in consumer loans, and a decrease of $20 million, or 1 percent, in commercial loans since December 31, 2009.

Investment securities, including interest bearing deposits in other financial institutions and federal funds sold, have increased $125 million, or 8 percent, from December 31, 2009 and increased $714 million, or 71 percent, from March 31, 2009.  The Company continues to purchase investment securities as loan originations slow and therefore investment securities represented 28 percent of total assets at March 31, 2010 versus 18 percent of total assets at March 31, 2009.

As of March 31, 2010, non-interest bearing deposits increased $18 million, or 2 percent, since December 31, 2009 and increased $85 million, or 11 percent, since March 31, 2009.  Interest bearing deposits of $3.337 billion at March 31, 2010 includes $249 million issued through the Certificate of Deposit Account Registry System.  Interest bearing deposits increased $47 million, or 1 percent, from December 31, 2009 and $786 million, or 31 percent from March 31, 2009.  The increase in non-interest bearing deposits and interest bearing deposits from March 31, 2009 includes $39 million and $197 million, respectively, from the First National acquisition.  

As a result of the deposit growth, borrowings have been reduced.  There were no Federal Reserve Bank borrowings through the Term Auction Facility program ("TAF") at March 31, 2010.  TAF borrowings totaled $225 million at December 31, 2009 and $1.005 billion at March 31, 2009.  Federal Home Loan Bank ("FHLB") advances increased $13 million, or 2 percent, from December 31, 2009 and increased $577 million, or 256 percent, from March 31, 2009.  Repurchase agreements and other borrowed funds were $249 million at March 31, 2010, an increase of $23 million from December 31, 2009 and an increase of $43 million, or 21 percent, from March 31, 2009.  

Total stockholders' equity and book value per share increased $156 million and $0.57 per share, respectively, from March 31, 2009, such increases largely the result of the $146 million in net proceeds from the Company's March equity offering of $10.291 million shares.  Tangible stockholders' equity has increased $156 million, or 30 percent, since March 31, 2009, with tangible stockholders' equity to tangible assets at 11.19 percent and 9.65 percent as of March 31, 2010 and March 31, 2009, respectively.  Accumulated other comprehensive income, representing net unrealized gains (net of tax) on investment securities, increased $5.9 million since December 31, 2009 and $13 million from March 31, 2009.  "In March, we completed a very successful secondary offering," Blodnick said.  "Demand for Glacier Bancorp, Inc. shares was strong and we were very pleased with the investor interest we received.  As a result of the offering, we have brought our capital ratios to all time historic highs and are in a great position to take advantage of what we feel will be some exciting and rewarding opportunities the next couple of years."

Operating Results for Three Months Ended March 31, 2010

Compared to December 31, 2009 and March 31, 2009

Net Interest Income

Net interest income for the current quarter decreased $4.3 million, or 7 percent, with interest income decreasing $4.7 million, or 6 percent, compared to the prior quarter.  The decrease in interest income for the current quarter was primarily the result of fewer days and a decrease in interest rates on investments and loans.  Net interest income for the current quarter decreased $0.9 million, or 1 percent, with interest expense decreasing $1.3 million, or 8 percent, over the same period in 2009.  The decrease in total interest expense from the prior year first quarter is attributable to rate decreases in interest bearing deposits and borrowings.  The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 4.43 percent which is 27 basis points lower than the 4.70 percent achieved for the prior quarter, and 49 basis points lower than the 4.92 percent result for the first quarter of 2009.  "Although the funding costs have remained stable, the softening of loan demand and reinvestment into lower yielding investment securities along with higher levels of assets on non-accrual loans has caused a compression of the net interest margin," said Ron Copher, Chief Financial Officer.

Non-interest Income

Non-interest income for the current quarter totaled $16 million, a decrease of $10 million and $1.2 million over the prior quarter and prior year first quarter, respectively.  The prior quarter other income had a $3.5 million one-time bargain purchase gain from the acquisition of First National.  Excluding the bargain purchase gain and gain on investments, non-interest income decreased $3.4 million, or 18 percent, from the prior quarter, and decreased $1.5 million, or 9 percent, over the same period in 2009.  Fee income decreased $1.6 million, or 13 percent, during the quarter primarily from a decrease in non-sufficient-funds fee income, compared to an increase of $467 thousand, or 5 percent, over the same period last year.  Gain on sale of loans decreased $2.2 million, or 36 percent, over the prior quarter, and $2.3 million, or 37 percent, over the same period last year, primarily the result of a significant reduction in re-finance activity and a slowing of residential loans originated and sold in the secondary market.  Net gain on sale of investments was $314 thousand for the current quarter 2010 compared to $3.3 million for the previous quarter, a 91 percent decrease.  

Non-interest Expense

Non-interest expense for the current quarter decreased by $2.4 million, or 5 percent from the prior quarter and increased $2.3 million, or 6 percent, from the prior year first quarter.  Compensation and employee benefits decreased $588 thousand, or 3 percent, from the prior year first quarter, resulting from a decrease in commission and bonus expense as loan originations slow.  The number of full-time equivalent employees increased from 1,643 to 1651 during the quarter, and increased from 1,610 since the end of the first 2009 first quarter.  

Occupancy and equipment expense decreased $182 thousand, or 3 percent, from the prior quarter and increased $53 thousand, or 1 percent, from the prior quarter and the prior year first quarter, respectively.  Advertising and promotion expense increased $157 thousand, or 11 percent, from prior quarter and decreased $132 thousand, or 8 percent, from the first quarter of 2009.  Foreclosed asset expenses, losses and write-downs decreased $1.1 million, or 31 percent, and increased $1.8 million, or 346 percent, from the prior quarter and the prior year first quarter, respectively.  Federal Deposit Insurance Corporation ("FDIC") premiums increased $260 thousand, or 13 percent, and increased $1.0 million, or 88 percent, from the prior quarter and the prior year first quarter, respectively, as the FDIC increased premiums.  The decrease of $1.4 million, or 16 percent, in other expense from the prior quarter includes $313 thousand in legal and outside service expenses, the majority of which relate to the acquisition of First National, $201 thousand in supplies and printing, $361 thousand in checking account losses.   "The banks continue to do a great job of controlling their discretionary expenses," Blodnick said.  "Compensation and benefit expenses continue to be well managed."

Efficiency Ratio

The efficiency ratio (non-interest expense / net interest income plus non-interest income) was 55 percent for the quarter, compared to 51 percent for the 2009 first quarter.  The increase in the efficiency ratio from the prior year is the result of the increase in other expenses primarily from FDIC insurance premiums and foreclosed asset expenses, losses and write-downs combined with the slowing of residential loans originated and sold on the secondary market.

Allowance for Loan and Lease Losses and Non-performing Assets

At March 31, 2010, the allowance for loan and lease losses was $143.6 million, an increase of $59.8 million, or 71 percent, from a year ago.  The allowance was 3.53 percent of total loans outstanding at March 31, 2010, up from 3.46 percent at the prior quarter end, and up from 2.01 percent at March 31, 2009.  The allowance was 54 percent of non-performing assets at March 31, 2010, down from 55 percent for the prior quarter end and down from 72 percent a year ago.  Non-performing assets as a percentage of total bank assets at March 31, 2010 were at 4.19 percent, up from 4.13 percent as of prior quarter end, and up from 1.97 percent at March 31, 2009.  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.  

The current quarter provision for loan loss expense was $21 million, a decrease of $16 million from prior quarter and an increase of $5 million from the same quarter in 2009.  Net charged-off loans for the current quarter were $20 million compared to $19 million for the prior quarter and $9 million for the same quarter in 2009.  For the quarter, the provision covered net charge-offs 1.0 times. "As we have been predicting, we did end the quarter with a higher level of non-performing assets, although it was the smallest increase in non-performing assets in the last seven quarters," Blodnick said.  "In addition, early stage delinquencies showed a significant decrease during the quarter.  Hopefully, we are beginning to see stabilization taking place in non-performing assets and we can start to witness some reduction in the second half of the year, if not sooner."

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.

Cash Dividend

On March 31, 2010, the board of directors declared a cash dividend of $.13 per share, payable April 22, 2010 to shareholders of record on April 13, 2010.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality and general economic conditions.

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 Montana banks - Glacier Bank of Kalispell, First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, First Bank of Montana of Lewistown; Mountain West Bank in Idaho, Utah and Washington; 1st Bank in Wyoming and Utah; First National Bank & Trust in Wyoming; Citizens Community Bank in Idaho; and Bank of the San Juans in Colorado.

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 recorded in connection with acquisitions could become impaired, which may have an adverse impact on the Company's earnings and capital;
• reduced demand for banking products and services;
• the risks presented by public stock market volatility, which could adversely affect the Company's stock value and the ability to raise capital in the future;
• competition from other financial services companies in our markets; 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

SOURCE Glacier Bancorp, Inc.