Glacier Bancorp (GBCI) 8-K Results of Operations and Financial Condition

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 SEPTEMBER 30, 2014

HIGHLIGHTS:

• All time record net income of $29.3 million for the current quarter, an increase of 2 percent from the prior quarter net income of $28.7 million and an increase of 14 percent from the prior year third quarter net income of $25.6 million.

• Current quarter diluted earnings per share of $0.40, an increase of 14 percent from the prior year third quarter diluted earnings per share of $0.35.

• Excluding the acquisition, the loan portfolio increased $118 million, or 11 percent annualized, during the current quarter and increased $321 million, or 8 percent, from the prior year third quarter.

• Excluding the acquisition, non-interest bearing deposits increased $51.0 million, or 3 percent, during the current quarter and increased $119 million, or 8 percent, from the prior year third quarter.

• Current quarter net charged-off loans of $364 thousand for the current quarter decreased $1.7 million from the prior year third quarter net charged-off loans of $2.0 million. Net charged-off loans for the the nine months of the current year was 0.03 percent of total loans.

• Dividend declared of $0.17 per share during the current quarter. The dividend was the 118th consecutive quarterly dividend declared by the Company.

• Completed the acquisition of FNBR Holding Corporation and its subsidiary, First National Bank of the Rockies, a community bank based in Grand Junction, Colorado.

Results Summary

	Three Months ended									Nine Months ended
(Dollars in thousands, except per share data)	Sep 30, 2014			Jun 30, 2014		Mar 31, 2014		Sep 30, 2013		Sep 30, 2014		Sep 30, 2013
Net income	$	29,294		28,677		26,730		25,628		84,701		69,098
Diluted earnings per share	$	0.40		0.38		0.36		0.35		1.14		0.95
Return on average assets (annualized)	1.46		%	1.47	%	1.39	%	1.27	%	1.44	%	1.19	%
Return on average equity (annualized)	11.30		%	11.45	%	11.04	%	10.85	%	11.27	%	9.96	%

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KALISPELL, MONTANA, October 23, 2014 - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $29.3 million for the current quarter, an increase of $3.7 million, or 14 percent, from the $25.6 million of net income for the prior year third quarter. Diluted earnings per share for the current quarter was $0.40 per share, an increase of $0.05, or 14 percent, from the prior year third quarter diluted earnings per share of $0.35. Included in the current quarter non-interest expense was $1.4 million of one-time expenses and included in the current quarter non-interest income was a one-time bargain purchase gain of $680 thousand from the FNBR Holding Corporation acquisition. “It was another strong quarter driven by a nice increase to top-line revenue,” said Mick Blodnick, President and Chief Executive Officer. “As we continue to change the mix of our balance sheet by increasing loans and decreasing investments, revenue in the form of interest income has clearly improved. Hopefully this trend continues,” Blodnick said.

Net income for the nine months ended September 30, 2014 was $84.7 million, an increase of $15.6 million, or 23 percent, from the $69.1 million of net income for the same period the prior year. Diluted earnings per share for the first nine months of the current year was $1.14 per share, an increase of $0.19, or 20 percent, from the diluted earnings per share in the prior year first nine months.

On August 31, 2014, the Company completed the acquisition of FNBR Holding Corporation, and its subsidiary, First National Bank of the Rockies (“FNBR”) which has ten community banking offices in Grand Junction, Steamboat Springs, Meeker, Rangely, Craig, Hayden, and Oak Creek, Colorado. The branches of FNBR have been combined with an existing division of Glacier Bank and operate under the name “Bank of the San Juans, division of Glacier Bank.” Cash of $16.7 million was paid and 555,732 shares of the Company’s common stock were issued in the acquisition. The Company incurred $525 thousand of legal and professional expenses in connection with the acquisition during 2014. A bargain purchase gain of $680 thousand resulted from the acquisition which was based on the estimated fair value of the assets acquired and liabilities assumed. The Company’s results of operations and financial condition include the acquisition of FNBR from the acquisition date and the following table provides information on the fair value of selected classifications of assets and liabilities acquired:

(Dollars in thousands)	August 31, 2014
Total assets	$	349,167
Investment securities	157,018
Loans receivable	137,488
Non-interest bearing deposits	80,037
Interest bearing deposits	229,604

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Asset Summary

										$ Change from
(Dollars in thousands)	Sep 30, 2014			Jun 30, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2014		Dec 31, 2013		Sep 30, 2013
Cash and cash equivalents	$	282,097		202,358		155,657		254,684		79,739		126,440		27,413
Investment securities, available-for-sale	2,398,196			2,559,411		3,222,829		3,318,953		(161,215	)	(824,633	)	(920,757	)
Investment securities, held-to-maturity	482,757			483,557		—		—		(800	)	482,757		482,757
Total investment securities	2,880,953			3,042,968		3,222,829		3,318,953		(162,015	)	(341,876	)	(438,000	)
Loans receivable
Residential real estate	603,806			587,340		577,589		583,817		16,466		26,217		19,989
Commercial	3,248,529			3,023,915		2,901,283		2,828,287		224,614		347,246		420,242
Consumer and other	606,764			592,024		583,966		588,995		14,740		22,798		17,769
Loans receivable	4,459,099			4,203,279		4,062,838		4,001,099		255,820		396,261		458,000
Allowance for loan and lease losses	(130,632		)	(130,636	)	(130,351	)	(130,765	)	4		(281	)	133
Loans receivable, net	4,328,467			4,072,643		3,932,487		3,870,334		255,824		395,980		458,133
Other assets	618,293			572,125		573,377		603,959		46,168		44,916		14,334
Total assets	$	8,109,810		7,890,094		7,884,350		8,047,930		219,716		225,460		61,880

Total investment securities decreased $162 million, or 5 percent, during the current quarter and decreased $438 million, or 13 percent, from September 30, 2013 as the Company continued to reduce the overall size of the investment portfolio. At September 30, 2014, investment securities represented 36 percent of total assets, down from 39 percent at the previous quarter and 41 percent at September 30, 2013.

Excluding the loans receivable from the acquisition of FNBR, the loan portfolio increased by $118 million, or 11 percent annualized, during the current quarter with improvement in all loan categories. “For the second consecutive quarter we produced double digit loan growth on an annualized basis,” Blodnick said. “Currently our loan growth has exceeded our expectations for the year, now we have to continue to work hard and try to maintain this trend through the rest of 2014,” Blodnick said. Excluding the acquisition, the largest dollar and percentage increase was in commercial loans which increased $107 million, or 4 percent, during the current quarter which was attributable to increases in loan production and seasonal draws on construction lines. Excluding the loans receivable from the acquisition, the loan portfolio increased $258 million, or 6 percent, since December 31, 2013 of which $230 million came from growth in commercial loans.

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Credit Quality Summary

	At or for the Nine Months ended			At or for the Six Months ended		At or for the Year ended		At or for the Nine Months ended
(Dollars in thousands)	September 30, 2014			June 30, 2014		December 31, 2013		September 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	1,721			1,361		6,887		5,085
Charge-offs	(5,567		)	(3,324	)	(13,643	)	(8,962	)
Recoveries	4,127			2,248		6,253		3,788
Balance at end of period	$	130,632		130,636		130,351		130,765
Other real estate owned	$	28,374		26,338		26,860		36,531
Accruing loans 90 days or more past due	1,617			980		604		174
Non-accrual loans	68,149			75,147		81,956		88,293
Total non-performing assets 1	$	98,140		102,465		109,420		124,998
Non-performing assets as a percentage of subsidiary assets	1.21		%	1.30	%	1.39	%	1.56	%
Allowance for loan and lease losses as a percentage of non-performing loans	187		%	172	%	158	%	148	%
Allowance for loan and lease losses as a percentage of total loans	2.93		%	3.11	%	3.21	%	3.27	%
Net charge-offs as a percentage of total loans	0.03		%	0.03	%	0.18	%	0.13	%
Accruing loans 30-89 days past due	$	17,570		18,592		32,116		26,401
Accruing troubled debt restructurings	$	74,376		73,981		81,110		86,850
Non-accrual troubled debt restructurings	$	37,482		35,786		42,461		40,917

^__________ 

¹As of September 30, 2014, non-performing assets have not been reduced by U.S. government guarantees of $3.4 million.

Non-performing assets at September 30, 2014 were $98.1 million and included $5.7 million from the FNBR acquisition. Excluding the acquisition, non-performing assets at September 30, 2014 were $92.5 million, a decrease of $10.0 million, or 10 percent, during the current quarter and a decrease of $32.5 million, or 26 percent, from a year ago. Land, lot and other construction loans (i.e., regulatory classification) continues to be the largest category and, excluding the acquisition, was $47.5 million, or 51 percent, of the non-performing assets at September 30, 2014. The Company has continued to make progress by reducing this category the past few years and, excluding the acquisition, the category decreased $1.6 million, or 3 percent, from the prior quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $17.6 million at September 30, 2014 decreased $1.0 million, or 5 percent, from the prior quarter and decreased $8.8 million, or 33 percent, from the prior year third quarter.

The allowance for loan and lease losses (“allowance”) was $131 million at September 30, 2014 and remained stable compared to the prior quarter and year ago periods. The allowance was 2.93 percent of total loans outstanding at September 30, 2014 compared to 3.11 percent at June 30, 2014 and 3.27 percent for the same quarter last year. Excluding the FNBR acquisition, the allowance was 3.02 percent of total loans outstanding at September 30, 2014, with the decrease from the prior quarter primarily reflecting the growth in the loan portfolio.

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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
Third quarter 2014	$	360	$	364	2.93	%	0.39	%	1.21	%
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	%

Net charged-off loans for the current quarter remained stable from the prior quarter and decreased $1.7 million, or 82 percent, from the prior year third quarter. The current quarter provision for loan losses of $360 thousand increased $121 thousand from the prior quarter and decreased $1.5 million from the prior year third 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)	Sep 30, 2014		Jun 30, 2014	Dec 31, 2013	Sep 30, 2013	Jun 30, 2014		Dec 31, 2013		Sep 30, 2013
Non-interest bearing deposits	$	1,595,971	1,464,938	1,374,419	1,397,401	131,033		221,552		198,570
Interest bearing deposits	4,510,840		4,280,898	4,205,548	4,215,479	229,942		305,292		295,361
Repurchase agreements	367,213		315,240	313,394	314,313	51,973		53,819		52,900
FHLB advances	366,866		607,305	840,182	967,382	(240,439	)	(473,316	)	(600,516	)
Other borrowed funds	7,351		7,367	8,387	8,466	(16	)	(1,036	)	(1,115	)
Subordinated debentures	125,669		125,633	125,562	125,526	36		107		143
Other liabilities	95,420		78,698	53,608	71,556	16,722		41,812		23,864
Total liabilities	$	7,069,330	6,880,079	6,921,100	7,100,123	189,251		148,230		(30,793	)

Excluding the FNBR acquisition, non-interest bearing deposits at September 30, 2014 increased $51.0 million, or 3 percent, during the current quarter, and increased $119 million, or 8 percent, from September 30, 2013. Excluding the acquisition, interest bearing deposits were unchanged from the prior quarter and increased $65.8 million, or 2 percent, from the prior year. 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. Interest bearing deposits of $4.511 billion at September 30, 2014 included $196 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Federal Home Loan Bank (“FHLB”) advances of $367 million at September 30, 2014 decreased $240 million, or 40 percent, during the current quarter and

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decreased $601 million, or 62 percent, from September 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)	Sep 30, 2014			Jun 30, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2014		Dec 31, 2013		Sep 30, 2013
Common equity	$	1,017,805		985,809		953,605		937,824		31,996		64,200		79,981
Accumulated other comprehensive income	22,675			24,206		9,645		9,983		(1,531	)	13,030		12,692
Total stockholders’ equity	1,040,480			1,010,015		963,250		947,807		30,465		77,230		92,673
Goodwill and core deposit intangible, net	(141,323		)	(137,815	)	(139,218	)	(139,934	)	(3,508	)	(2,105	)	(1,389	)
Tangible stockholders’ equity	$	899,157		872,200		824,032		807,873		26,957		75,125		91,284
Stockholders’ equity to total assets	12.83		%	12.80	%	12.22	%	11.78	%
Tangible stockholders’ equity to total tangible assets	11.28		%	11.25	%	10.64	%	10.22	%
Book value per common share	$	13.87		13.56		12.95		12.76		0.31		0.92		1.11
Tangible book value per common share	$	11.98		11.71		11.08		10.87		0.27		0.90		1.11
Market price per share at end of period	$	25.86		28.38		29.79		24.68		(2.52	)	(3.93	)	1.18

Tangible stockholders’ equity of $899 million at September 30, 2014 increased $27.0 million, or 3 percent, from the prior quarter as a result of $15.1 million of Company stock issued in connection with the acquisition of FNBR and earnings retention. Tangible stockholders’ equity increased $91.3 million from a year ago as the result of earnings retention, stock issued in connection with the acquisition, and an increase in accumulated other comprehensive income. Tangible book value per common share of $11.98 increased $0.27 per share from the prior quarter and increased $1.11 per share from the prior year third quarter.

Cash Dividend

On September 25, 2014, the Company’s Board of Directors declared a cash dividend of $0.17 per share during the current quarter. The dividend is payable October 16, 2014 to shareholders of record on October 7, 2014. The dividend was the 118th 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.

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Operating Results for Three Months Ended September 30, 2014 

Compared to June 30, 2014, March 31, 2014 and September 30, 2013

Revenue Summary

	Three Months ended									$ Change from
(Dollars in thousands)	Sep 30, 2014			Jun 30, 2014		Mar 31, 2014		Sep 30, 2013		Jun 30, 2014		Mar 31, 2014		Sep 30, 2013
Net interest income
Interest income	$	75,690		73,963		74,087		69,531		1,727		1,603		6,159
Interest expense	6,430			6,528		6,640		7,186		(98	)	(210	)	(756	)
Total net interest income	69,260			67,435		67,447		62,345		1,825		1,813		6,915
Non-interest income
Service charges, loan fees, and other fees	15,661			14,747		13,248		15,119		914		2,413		542
Gain on sale of loans	6,000			4,778		3,595		7,021		1,222		2,405		(1,021	)
Loss on sale of investments	(61		)	(48	)	(51	)	(403	)	(13	)	(10	)	342
Other income	2,832			3,027		2,596		2,136		(195	)	236		696
Total non-interest income	24,432			22,504		19,388		23,873		1,928		5,044		559
	$	93,692		89,939		86,835		86,218		3,753		6,857		7,474
Net interest margin (tax-equivalent)	3.99		%	3.99	%	4.02	%	3.56	%

Net Interest Income

Current quarter net interest income of $69.3 million increased $1.8 million during the current quarter. The current quarter interest income of $75.7 million increased $1.7 million, or 2 percent, from the prior quarter. The current quarter increase in interest income was primarily driven by a greater volume of commercial loans which more than offset the reduction in interest income from the investment portfolio.

The current quarter’s interest income increased $6.2 million, or 9 percent, over the prior year third quarter and was primarily attributable to higher interest income on the investment portfolio and commercial loans. Interest income of $22.8 million on investment securities increased $3.3 million, or 17 percent, over the prior year third quarter as a result of a higher yielding mix of investment securities coupled with a reduction of premium amortization (net of discount accretion) on the investment portfolio (“premium amortization”). The current quarter interest income of $37.4 million on commercial loans increased $3.1 million, or 9 percent, over the prior year third quarter as a result of an increased volume of commercial loans.

The current quarter interest expense of $6.4 million decreased $98 thousand, or 2 percent, from the prior quarter and decreased $756 thousand, or 11 percent, from the prior year third quarter. The decrease in interest expense from the prior quarter and the prior year third 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 37 basis points compared to 39 basis points in the prior quarter and 41 basis points for the prior year third quarter. 

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current and prior quarter was 3.99 percent. The 2 basis points decrease in the current quarter yield on earning assets was offset by a 2 basis points decrease in cost of funds.

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The Company’s current quarter net interest margin increased 43 basis points from the prior year third quarter net interest margin of 3.56 percent, such increase was primarily driven by the increased yield on the investment portfolio combined with a significant shift in earning assets to the higher yielding loan portfolio. “The Bank divisions continued focus on increasing the number of checking accounts along with growth in deposit balances at reduced rates has helped maintain the net interest margin at 4.00 percent for the first nine months of the year,” said Ron Copher, Chief Financial Officer. 

Non-interest Income

Non-interest income for the current quarter totaled $24.4 million, an increase of $1.9 million over the prior quarter and an increase of $559 thousand over the same quarter last year. The Company continued to benefit from the increased number of deposit accounts which was reflected in the $914 thousand, or 6 percent, increase in service charge fee income from the prior quarter and the $542 thousand, or 4 percent, increase from the prior year third quarter, respectively. Gain of $6.0 million on the sale of residential loans in the current quarter was an increase of $1.2 million, or 26 percent, from the prior quarter. Gain on the sale of the residential loans in the current quarter decreased $1.0 million, or 15 percent, from the prior year third quarter as a result of the reduction in refinance activity. Included in other income was operating revenue of $38 thousand from other real estate owned (“OREO”) and gain of $368 thousand from the sale of OREO, a combined total of $406 thousand for the current quarter compared to $615 thousand for the prior quarter and $433 thousand for the prior year third quarter.

Non-interest Expense Summary

	Three Months ended					$ Change from
(Dollars in thousands)	Sep 30, 2014		Jun 30, 2014	Mar 31, 2014	Sep 30, 2013	Jun 30, 2014		Mar 31, 2014		Sep 30, 2013
Compensation and employee benefits	$	30,142	28,988	28,634	27,469	1,154		1,508		2,673
Occupancy and equipment	6,961		6,733	6,613	6,421	228		348		540
Advertising and promotions	2,141		1,948	1,777	1,897	193		364		244
Outsourced data processing	1,472		2,032	1,288	1,232	(560	)	184		240
Other real estate owned	602		566	507	1,049	36		95		(447	)
Regulatory assessments and insurance	1,435		1,028	1,592	1,677	407		(157	)	(242	)
Core deposit intangibles amortization	692		693	710	693	(1	)	(18	)	(1	)
Other expense	10,793		10,685	8,949	9,930	108		1,844		863
Total non-interest expense	$	54,238	52,673	50,070	50,368	1,565		4,168		3,870

Compensation and employee benefits increased by $1.2 million, or 4 percent, from the prior quarter due to the increased number of employees from the FNBR acquisition and additional benefit costs. Compensation and employee benefits increased by $2.7 million from the prior year third quarter because of the increased number of employees from the FNBR acquisition and the North Cascades Bank acquisition at July 31, 2013 along with additional benefit costs and salary increases. Occupancy and equipment expense increased $540 thousand, or 8 percent, from the prior year third quarter as a result of increases in equipment expense related to the Company’s expansion of information and technology infrastructure. Advertising and promotion expense increased $193 thousand, or 10 percent, compared to the prior quarter and increased $244 thousand, or 13 percent, from the prior year third quarter primarily from the FNBR acquisition and recent marketing promotions at a number of the Bank divisions. Outsourced data processing expense decreased $560 thousand, or 28 percent, from the prior quarter as a result of conversion related expenses in the second quarter of 2014. Outsourced data processing expense increased $240 thousand, or 19 percent, from the prior year third quarter because of the acquired banks’ outsourced data processing expense and from an increase in technology infrastructure. The current quarter OREO expense of $602 thousand included $362 thousand of operating expense, $65 thousand of fair value write-downs, and $175 thousand

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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.

Efficiency Ratio

The efficiency ratio for the current quarter and the prior year third quarter was 54 percent. The increases in non-interest expense were more than offset by the increases in net interest income resulting in a comparable efficiency ratio.

Operating Results for Nine Months ended September 30, 2014

Compared to September 30, 2013

Revenue Summary

	Nine Months ended
(Dollars in thousands)	September 30, 2014			September 30, 2013			$ Change			% Change
Net interest income
Interest income	$	223,740		$	189,637		$	34,103		18	%
Interest expense	19,598			21,829			(2,231		)	(10	)%
Total net interest income	204,142			167,808			36,334			22	%
Non-interest income
Service charges, loan fees, and other fees	43,656			39,765			3,891			10	%
Gain on sale of loans	14,373			23,582			(9,209		)	(39	)%
Loss on sale of investments	(160		)	(299		)	139			(46	)%
Other income	8,455			6,997			1,458			21	%
Total non-interest income	66,324			70,045			(3,721		)	(5	)%
	$	270,466		$	237,853		$	32,613		14	%
Net interest margin (tax-equivalent)	4.00		%	3.34		%

Net Interest Income

Net interest income for the first nine months of the current year was $204 million, an increase of $36.3 million, or 22 percent, over the same period last year. Interest income for the first nine months of the current year increased $34.1 million, or 18 percent, from the prior year first nine months and was principally due to the decrease in premium amortization on investment securities and increased income from commercial loans. Interest income benefited from a reduction by $33.8 million in premium amortization on investment securities during the first nine months of the current year compared the same period last year. Current year interest income on commercial loans increased $14.9 million, or 16 percent, from the first nine months of the prior year and was primarily the result of an increased volume of commercial loans.

Interest expense for the first nine months of the current year decreased $2.2 million, or 10 percent, from the prior year first nine months and was primarily attributable to the decreases in interest rates on certificate of deposits and lower volume of borrowings. The funding cost (including non-interest bearing deposits) for the first nine months of 2014 was 39 basis points compared to 43 basis points for the first nine months of 2013. 

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The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first nine months of 2014 was 4.00 percent, a 66 basis points increase from the net interest margin of 3.34 percent for the first nine 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 nine months of 2014 accounted for a 42 basis points reduction in the net interest margin, which was a decrease of 61 basis points compared to the 103 basis points reduction in the net interest margin for the same period last year. 

Non-interest Income

Non-interest income of $66.3 million for the first nine months of 2014 decreased $3.7 million, or 5 percent, over the same period last year. Gain of $14.4 million on the sale of residential loans for the first nine months of 2014 decreased $9.2 million, or 39 percent, from the first nine months of 2013 as a consequence of the slowdown in refinance activity. Service charges and other fees of $43.7 million for the first nine months of 2014 increased $3.9 million, or 10 percent, from the same period last year. Included in other income was operating revenue of $136 thousand from OREO and gain of $1.7 million from the sale of OREO, which combined totaled $1.8 million for the first nine months of 2014 compared to $1.9 million for the same period in the prior year.

Non-interest Expense Summary

	Nine Months ended
(Dollars in thousands)	September 30, 2014		September 30, 2013		$ Change			% Change
Compensation and employee benefits	$	87,764	$	76,963	$	10,801		14	%
Occupancy and equipment	20,307		18,152		2,155			12	%
Advertising and promotions	5,866		5,066		800			16	%
Outsourced data processing	4,792		2,870		1,922			67	%
Other real estate owned	1,675		4,901		(3,226		)	(66	)%
Regulatory assessments and insurance	4,055		4,843		(788		)	(16	)%
Core deposit intangibles amortization	2,095		1,684		411			24	%
Other expense	30,427		27,804		2,623			9	%
Total non-interest expense	$	156,981	$	142,283	$	14,698		10	%

Compensation and employee benefits for the first nine months of 2014 increased $10.8 million, or 14 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 $2.2 million, or 12 percent, as a result of the acquisitions and increases in equipment expense related to additional information and technology infrastructure. Outsourced data processing expense increased $1.9 million, or 67 percent, from the prior year first nine months as a result of the acquired banks outsourced data processing expense, conversion related expenses and general increases in data processing expense. OREO expense of $1.7 million in the first nine months of 2014 decreased $3.2 million, or 66 percent, from the same period last year. OREO expense for the first nine months of 2014 included $1.1 million of operating expenses, $217 thousand of fair value write-downs, and $383 thousand of loss on sale of OREO. Other expense for the first nine months of 2014 increased by $2.6 million, or 9 percent, from the first nine months of the prior year primarily from debit card expenses and other deposit account related charges.

10

Provision for loan losses

The provision for loan losses was $1.7 million for the first nine months of 2014, a decrease of $3.4 million, or 66 percent, from the same period in the prior year. Net charged-off loans during the first nine months of 2014 was $1.4 million, a decrease of $3.7 million from the first nine months of 2013.

Efficiency Ratio

The efficiency ratio was 54 percent for the first nine months of 2014 and 55 percent for the first nine 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 79 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;

11

• 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.

12

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition

(Dollars in thousands, except per share data)	September 30, 2014			June 30, 2014		December 31, 2013		September 30, 2013
Assets
Cash on hand and in banks	$	109,947		130,114		109,995		130,285
Federal funds sold	488			2,852		10,527		23,135
Interest bearing cash deposits	171,662			69,392		35,135		101,264
Cash and cash equivalents	282,097			202,358		155,657		254,684
Investment securities, available-for-sale	2,398,196			2,559,411		3,222,829		3,318,953
Investment securities, held-to-maturity	482,757			483,557		—		—
Total investment securities	2,880,953			3,042,968		3,222,829		3,318,953
Loans held for sale	65,598			56,021		46,738		61,505
Loans receivable	4,459,099			4,203,279		4,062,838		4,001,099
Allowance for loan and lease losses	(130,632		)	(130,636	)	(130,351	)	(130,765	)
Loans receivable, net	4,328,467			4,072,643		3,932,487		3,870,334
Premises and equipment, net	178,509			167,741		167,671		168,633
Other real estate owned	28,374			26,338		26,860		36,531
Accrued interest receivable	42,981			41,765		41,898		44,261
Deferred tax asset	44,452			34,505		43,549		47,957
Core deposit intangible, net	11,617			8,109		9,512		10,228
Goodwill	129,706			129,706		129,706		129,706
Non-marketable equity securities	52,868			52,715		52,192		52,192
Other assets	64,188			55,225		55,251		52,946
Total assets	$	8,109,810		7,890,094		7,884,350		8,047,930
Liabilities
Non-interest bearing deposits	$	1,595,971		1,464,938		1,374,419		1,397,401
Interest bearing deposits	4,510,840			4,280,898		4,205,548		4,215,479
Securities sold under agreements to repurchase	367,213			315,240		313,394		314,313
Federal Home Loan Bank advances	366,866			607,305		840,182		967,382
Other borrowed funds	7,351			7,367		8,387		8,466
Subordinated debentures	125,669			125,633		125,562		125,526
Accrued interest payable	3,058			3,163		3,505		3,568
Other liabilities	92,362			75,535		50,103		67,988
Total liabilities	7,069,330			6,880,079		6,921,100		7,100,123
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	750			745		744		743
Paid-in capital	707,821			692,343		690,918		689,751
Retained earnings - substantially restricted	309,234			292,721		261,943		247,330
Accumulated other comprehensive income	22,675			24,206		9,645		9,983
Total stockholders’ equity	1,040,480			1,010,015		963,250		947,807
Total liabilities and stockholders’ equity	$	8,109,810		7,890,094		7,884,350		8,047,930
Number of common stock shares issued and outstanding	75,024,092			74,467,908		74,373,296		74,307,951

13

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months ended							Nine Months ended
(Dollars in thousands, except per share data)	September 30, 2014			June 30, 2014		September 30, 2013		September 30, 2014		September 30, 2013
Interest Income
Residential real estate loans	$	7,950		7,220		7,320		22,257		21,606
Commercial loans	37,387			35,267		34,291		107,696		92,788
Consumer and other loans	7,559			7,583		8,447		22,785		24,220
Investment securities	22,794			23,893		19,473		71,002		51,023
Total interest income	75,690			73,963		69,531		223,740		189,637
Interest Expense
Deposits	3,027			3,061		3,398		9,177		10,584
Securities sold under agreements to repurchase	225			192		209		627		646
Federal Home Loan Bank advances	2,356			2,447		2,730		7,317		8,029
Federal funds purchased and other borrowed funds	34			48		54		135		160
Subordinated debentures	788			780		795		2,342		2,410
Total interest expense	6,430			6,528		7,186		19,598		21,829
Net Interest Income	69,260			67,435		62,345		204,142		167,808
Provision for loan losses	360			239		1,907		1,721		5,085
Net interest income after provision for loan losses	68,900			67,196		60,438		202,421		162,723
Non-Interest Income
Service charges and other fees	14,319			13,547		13,711		40,085		36,115
Miscellaneous loan fees and charges	1,342			1,200		1,408		3,571		3,650
Gain on sale of loans	6,000			4,778		7,021		14,373		23,582
Loss on sale of investments	(61		)	(48	)	(403	)	(160	)	(299	)
Other income	2,832			3,027		2,136		8,455		6,997
Total non-interest income	24,432			22,504		23,873		66,324		70,045
Non-Interest Expense
Compensation and employee benefits	30,142			28,988		27,469		87,764		76,963
Occupancy and equipment	6,961			6,733		6,421		20,307		18,152
Advertising and promotions	2,141			1,948		1,897		5,866		5,066
Outsourced data processing	1,472			2,032		1,232		4,792		2,870
Other real estate owned	602			566		1,049		1,675		4,901
Regulatory assessments and insurance	1,435			1,028		1,677		4,055		4,843
Core deposit intangibles amortization	692			693		693		2,095		1,684
Other expense	10,793			10,685		9,930		30,427		27,804
Total non-interest expense	54,238			52,673		50,368		156,981		142,283
Income Before Income Taxes	39,094			37,027		33,943		111,764		90,485
Federal and state income tax expense	9,800			8,350		8,315		27,063		21,387
Net Income	$	29,294		28,677		25,628		84,701		69,098
Basic earnings per share	$	0.40		0.38		0.35		1.14		0.95
Diluted earnings per share	$	0.40		0.38		0.35		1.14		0.95
Dividends declared per share	$	0.17		0.17		0.15		0.50		0.44
Average outstanding shares - basic	74,631,317			74,467,576		73,945,523		74,512,806		72,804,321
Average outstanding shares - diluted	74,676,124			74,499,660		74,021,871		74,554,263		72,869,475

14

Glacier Bancorp, Inc.

Average Balance Sheet

	Three Months ended						Nine Months ended
	September 30, 2014						September 30, 2014
(Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate		Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	653,633	$	7,950	4.87	%	$	627,790	$	22,257	4.73	%
Commercial loans	3,087,020		37,387		4.80	%	2,968,681		107,696		4.85	%
Consumer and other loans	592,904		7,559		5.06	%	583,279		22,785		5.22	%
Total loans 1	4,333,557		52,896		4.84	%	4,179,750		152,738		4.89	%
Tax-exempt investment securities 2	1,203,419		16,920		5.62	%	1,197,604		50,577		5.63	%
Taxable investment securities 3	1,910,212		11,438		2.40	%	2,002,557		37,061		2.47	%
Total earning assets	7,447,188		81,254		4.33	%	7,379,911		240,376		4.35	%
Goodwill and intangibles	137,605						138,226
Non-earning assets	352,991						335,064
Total assets	$	7,937,784					$	7,853,201
Liabilities
Non-interest bearing deposits	$	1,506,748	—		—	%	$	1,408,661	—		—	%
NOW accounts	1,131,401		264		0.09	%	1,107,643		868		0.10	%
Savings accounts	673,823		89		0.05	%	645,990		250		0.05	%
Money market deposit accounts	1,221,917		593		0.19	%	1,200,899		1,813		0.20	%
Certificate accounts	1,137,852		1,948		0.68	%	1,136,490		5,903		0.69	%
Wholesale deposits 4	222,603		133		0.24	%	191,228		343		0.24	%
FHLB advances	488,487		2,356		1.89	%	659,141		7,317		1.46	%
Repurchase agreements, federal funds purchased and other borrowed funds	459,299		1,047		0.90	%	442,507		3,104		0.94	%
Total funding liabilities	6,842,130		6,430		0.37	%	6,792,559		19,598		0.39	%
Other liabilities	66,960						55,382
Total liabilities	6,909,090						6,847,941
Stockholders’ Equity
Common stock	746						745
Paid-in capital	697,407						693,751
Retained earnings	306,200						290,464
Accumulated other comprehensive income	24,341						20,300
Total stockholders’ equity	1,028,694						1,005,260
Total liabilities and stockholders’ equity	$	7,937,784					$	7,853,201
Net interest income (tax-equivalent)			$	74,824					$	220,778
Net interest spread (tax-equivalent)					3.96	%					3.96	%
Net interest margin (tax-equivalent)					3.99	%					4.00	%

^__________ 

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 $15.5 million on tax-exempt investment security income for the three and nine months ended September 30, 2014.

³  Includes tax effect of $372 thousand and $1.1 million on investment security tax credits for the three and nine months ended September 30, 2014.

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

15

Glacier Bancorp, Inc.

Loan Portfolio by Regulatory Classification

	Loans Receivable, by Loan Type												% Change from
(Dollars in thousands)	Sep 30, 2014			Jun 30, 2014			Dec 31, 2013			Sep 30, 2013			Jun 30, 2014		Dec 31, 2013		Sep 30, 2013
Custom and owner occupied construction	$	59,121		$	51,497		$	50,352		$	40,187		15	%	17	%	47	%
Pre-sold and spec construction	44,085			34,114			34,217			38,702			29	%	29	%	14	%
Total residential construction	103,206			85,611			84,569			78,889			21	%	22	%	31	%
Land development	88,507			81,589			73,132			75,282			8	%	21	%	18	%
Consumer land or lots	99,003			101,042			109,175			111,331			(2	)%	(9	)%	(11	)%
Unimproved land	66,684			51,457			50,422			51,986			30	%	32	%	28	%
Developed lots for operative builders	15,471			15,123			15,951			15,082			2	%	(3	)%	3	%
Commercial lots	16,050			17,238			12,585			15,707			(7	)%	28	%	2	%
Other construction	149,207			112,081			103,807			99,868			33	%	44	%	49	%
Total land, lot, and other construction	434,922			378,530			365,072			369,256			15	%	19	%	18	%
Owner occupied	834,742			816,859			811,479			815,401			2	%	3	%	2	%
Non-owner occupied	658,429			617,693			588,114			541,688			7	%	12	%	22	%
Total commercial real estate	1,493,171			1,434,552			1,399,593			1,357,089			4	%	7	%	10	%
Commercial and industrial	573,617			549,143			523,354			528,792			4	%	10	%	8	%
Agriculture	317,506			288,555			279,959			283,801			10	%	13	%	12	%
1st lien	782,116			757,954			733,406			738,842			3	%	7	%	6	%
Junior lien	71,678			73,130			73,348			76,277			(2	)%	(2	)%	(6	)%
Total 1-4 family	853,794			831,084			806,754			815,119			3	%	6	%	5	%
Multifamily residential	168,760			152,169			123,154			113,880			11	%	37	%	48	%
Home equity lines of credit	322,442			309,282			298,119			298,935			4	%	8	%	8	%
Other consumer	139,045			134,414			130,758			128,374			3	%	6	%	8	%
Total consumer	461,487			443,696			428,877			427,309			4	%	8	%	8	%
Other	118,234			95,960			98,244			88,469			23	%	20	%	34	%
Total loans receivable, including loans held for sale	4,524,697			4,259,300			4,109,576			4,062,604			6	%	10	%	11	%
Less loans held for sale 1	(65,598		)	(56,021		)	(46,738		)	(61,505		)	17	%	40	%	7	%
Total loans receivable	$	4,459,099		$	4,203,279		$	4,062,838		$	4,001,099		6	%	10	%	11	%

_______

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

16

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)	Sep 30, 2014		Jun 30, 2014	Dec 31, 2013	Sep 30, 2013	Sep 30, 2014	Sep 30, 2014		Sep 30, 2014
Custom and owner occupied construction	$	1,164	1,196	1,248	1,270	1,164	—		—
Pre-sold and spec construction	222		609	828	1,157	222	—		—
Total residential construction	1,386		1,805	2,076	2,427	1,386	—		—
Land development	24,803		23,718	25,062	25,834	16,037	—		8,766
Consumer land or lots	3,451		2,804	2,588	3,500	2,008	—		1,443
Unimproved land	13,659		12,421	13,630	14,977	11,233	—		2,426
Developed lots for operative builders	1,672		2,186	2,215	2,284	988	—		684
Commercial lots	2,697		2,787	2,899	2,978	271	—		2,426
Other construction	5,154		5,156	5,167	5,776	165	—		4,989
Total land, lot and other construction	51,436		49,072	51,561	55,349	30,702	—		20,734
Owner occupied	14,913		14,595	14,270	19,224	13,044	95	��	1,774
Non-owner occupied	3,768		3,956	4,301	5,453	1,790	272		1,706
Total commercial real estate	18,681		18,551	18,571	24,677	14,834	367		3,480
Commercial and industrial	4,833		5,850	6,400	7,452	4,307	320		206
Agriculture	3,430		3,506	3,529	2,488	2,491	11		928
1st lien	13,236		17,240	17,630	20,959	10,441	787		2,008
Junior lien	481		1,146	4,767	5,648	389	92		—
Total 1-4 family	13,717		18,386	22,397	26,607	10,830	879		2,008
Multifamily residential	450		729	—	—	—	—		450
Home equity lines of credit	3,985		4,289	4,544	5,599	3,400	17		568
Other consumer	222		277	342	399	199	23		—
Total consumer	4,207		4,566	4,886	5,998	3,599	40		568
Total	$	98,140	102,465	109,420	124,998	68,149	1,617		28,374

17

Glacier Bancorp, Inc.

Credit Quality Summary by Regulatory Classification (continued)

	Accruing 30-89 Days Delinquent Loans,  by Loan Type								% Change from
(Dollars in thousands)	Sep 30, 2014		Jun 30, 2014		Dec 31, 2013		Sep 30, 2013		Jun 30, 2014		Dec 31, 2013		Sep 30, 2013
Custom and owner occupied construction	$	—	$	—	$	202	$	—	n/m		(100	)%	n/m
Pre-sold and spec construction	179		144		—		772		24	%	n/m		(77	)%
Total residential construction	179		144		202		772		24	%	(11	)%	(77	)%
Land development	—		—		—		917		n/m		n/m		(100	)%
Consumer land or lots	62		267		1,716		504		(77	)%	(96	)%	(88	)%
Unimproved land	1,177		899		615		311		31	%	91	%	278	%
Developed lots for operative builders	21		—		8		9		n/m		163	%	133	%
Commercial lots	106		—		—		68		n/m		n/m		56	%
Other construction	660		—		—		—		n/m		n/m		n/m
Total land, lot and other construction	2,026		1,166		2,339		1,809		74	%	(13	)%	12	%
Owner occupied	4,341		6,125		5,321		7,261		(29	)%	(18	)%	(40	)%
Non-owner occupied	266		1,665		2,338		2,509		(84	)%	(89	)%	(89	)%
Total commercial real estate	4,607		7,790		7,659		9,770		(41	)%	(40	)%	(53	)%
Commercial and industrial	3,376		2,528		3,542		4,176		34	%	(5	)%	(19	)%
Agriculture	152		497		1,366		725		(69	)%	(89	)%	(79	)%
1st lien	3,738		2,408		12,386		5,142		55	%	(70	)%	(27	)%
Junior lien	275		536		482		881		(49	)%	(43	)%	(69	)%
Total 1-4 family	4,013		2,944		12,868		6,023		36	%	(69	)%	(33	)%
Multifamily Residential	684		689		1,075		226		(1	)%	(36	)%	203	%
Home equity lines of credit	1,725		1,839		1,999		1,770		(6	)%	(14	)%	(3	)%
Other consumer	789		938		1,066		1,130		(16	)%	(26	)%	(30	)%
Total consumer	2,514		2,777		3,065		2,900		(9	)%	(18	)%	(13	)%
Other	19		57		—		—		(67	)%	n/m		n/m
Total	$	17,570	$	18,592	$	32,116	$	26,401	(5	)%	(45	)%	(33	)%

_______

n/m - not measurable

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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)	Sep 30, 2014			Jun 30, 2014		Dec 31, 2013		Sep 30, 2013		Sep 30, 2014	Sep 30, 2014
Custom and owner occupied construction	$	—		—		(51	)	(1	)	—	—
Pre-sold and spec construction	(58		)	(39	)	(10	)	128		—	58
Total residential construction	(58		)	(39	)	(61	)	127		—	58
Land development	(319		)	(333	)	(383	)	(97	)	148	467
Consumer land or lots	69			97		843		486		325	256
Unimproved land	(186		)	(126	)	715		435		25	211
Developed lots for operative builders	(125		)	(117	)	(81	)	(36	)	13	138
Commercial lots	(5		)	(3	)	248		250		—	5
Other construction	—			—		(473	)	(130	)	—	—
Total land, lot and other construction	(566		)	(482	)	869		908		511	1,077
Owner occupied	201			(7	)	350		271		487	286
Non-owner occupied	(44		)	(184	)	397		375		201	245
Total commercial real estate	157			(191	)	747		646		688	531
Commercial and industrial	932			1,343		3,096		1,382		2,146	1,214
Agriculture	(1		)	—		53		21		—	1
1st lien	207			298		681		347		698	491
Junior lien	199			91		106		145		491	292
Total 1-4 family	406			389		787		492		1,189	783
Multifamily residential	138			1		(39	)	(31	)	160	22
Home equity lines of credit	222			(120	)	1,606		1,516		500	278
Other consumer	210			175		324		109		373	163
Total consumer	432			55		1,930		1,625		873	441
Other	—			—		8		4		—	—
Total	$	1,440		1,076		7,390		5,174		5,567	4,127

Visit our website atwww.glacierbancorp.com

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