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 JUNE 30, 2015

HIGHLIGHTS:

• Net income of $29.3 million for the current quarter, an increase of 6 percent from the prior quarter $27.7 million net income and an increase of 2 percent from the prior year second quarter net income of $28.7 million.

• Current quarter diluted earnings per share of $0.39, an increase of 5 percent from the prior quarter $0.37 diluted earnings per share and an increase of 3 percent from the prior year second quarter diluted earnings per share of $0.38.

• The loan portfolio increased $120 million, or 10 percent annualized, during the current quarter.

• Non-interest bearing deposits of $1.731 billion, increased $55.6 million, or 13 percent annualized, during the current quarter.

• Gain of $7.6 million on the sale of residential real estate loans in the current quarter increased $2.2 million, or 40 percent, over the prior quarter and $2.8 million, or 59 percent, over the prior year second quarter.

• Dividend declared of $0.19 per share, an increase of $0.01 per share, or 6 percent, over the prior quarter. The dividend was the 121st consecutive quarterly dividend declared by the Company.

• Announced Randall (“Randy”) M. Chesler to become president of Glacier Bank and to succeed Mick Blodnick as Chief Executive Officer of Glacier Bancorp, Inc. in 2017.

• The Company successfully converted Community Bank, Inc.’s core system over to the Company’s core system during the current quarter.

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Results Summary

	Three Months ended							Six Months ended
(Dollars in thousands, except per share data)	Jun 30, 2015			Mar 31, 2015		Jun 30, 2014		Jun 30, 2015		Jun 30, 2014
Net income	$	29,335		27,670		28,677		57,005		55,407
Diluted earnings per share	$	0.39		0.37		0.38		0.76		0.74
Return on average assets (annualized)	1.39		%	1.36	%	1.47	%	1.37	%	1.43	%
Return on average equity (annualized)	11.05		%	10.72	%	11.45	%	10.89	%	11.25	%

KALISPELL, MONTANA, July 23, 2015 - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net income of $29.3 million for the current quarter, an increase of $658 thousand, or 2 percent, from the $28.7 million of net income for the prior year second quarter. Diluted earnings per share for the current quarter was $0.39 per share, an increase of $0.01, or 3 percent, from the prior year second quarter diluted earnings per share of $0.38. Included in the current quarter non-interest expense was $1.4 million of one-time expenses including conversion related expenses. “It was another very strong quarter for earnings especially in the area of non-interest income as we exceeded our projections in most categories,” said Mick Blodnick, President and Chief Executive Officer.  “We generated excellent organic loan growth, once again allowing us to reduce the investment portfolio and still increase net interest income.  Hopefully, the pace of loan growth we achieved in the first half of the year can be carried through the last half,” Blodnick said.

Net income for the six months ended June 30, 2015 was $57.0 million, an increase of $1.6 million, or 3 percent, from the $55.4 million of net income for the same period in the prior year. Diluted earnings per share for the six months ended June 30, 2015 was $0.76 per share, an increase of $0.02, or 3 percent, from the diluted earnings per share for the same period in the prior year.

On February 28, 2015, the Company completed the acquisition of Montana Community Banks, Inc. and its subsidiary, Community Bank, Inc. (collectively, “CB”). The Company successfully converted CB’s core system over to the Company’s core system during the current quarter. The Company incurred $833 thousand of legal and professional expenses in connection with the CB acquisition and conversion during the current year. Goodwill of $1.1 million 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 CB 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)	February 28, 2015
Total assets	$	175,774
Investment securities	42,350
Loans receivable	84,689
Non-interest bearing deposits	41,779
Interest bearing deposits	105,041
Federal Home Loan Bank advances and other borrowed funds	3,292

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Asset Summary

										$ Change from
(Dollars in thousands)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Jun 30, 2014		Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Cash and cash equivalents	$	355,719		183,466		442,409		202,358		172,253		(86,690	)	153,361
Investment securities, available-for-sale	2,361,830			2,544,093		2,387,428		2,559,411		(182,263	)	(25,598	)	(197,581	)
Investment securities, held-to-maturity	593,314			570,285		520,997		483,557		23,029		72,317		109,757
Total investment securities	2,955,144			3,114,378		2,908,425		3,042,968		(159,234	)	46,719		(87,824	)
Loans receivable
Residential real estate	635,674			637,465		611,463		587,340		(1,791	)	24,211		48,334
Commercial	3,529,274			3,426,016		3,263,448		3,023,915		103,258		265,826		505,359
Consumer and other	642,483			624,188		613,184		592,024		18,295		29,299		50,459
Loans receivable	4,807,431			4,687,669		4,488,095		4,203,279		119,762		319,336		604,152
Allowance for loan and lease losses	(130,519		)	(129,856	)	(129,753	)	(130,636	)	(663	)	(766	)	117
Loans receivable, net	4,676,912			4,557,813		4,358,342		4,072,643		119,099		318,570		604,269
Other assets	602,035			619,439		597,331		572,125		(17,404	)	4,704		29,910
Total assets	$	8,589,810		8,475,096		8,306,507		7,890,094		114,714		283,303		699,716

Total investment securities decreased $159 million, or 5 percent, during the current quarter and decreased $88 million, or 3 percent, from June 30, 2014. The decrease in the investment portfolio during the current quarter was the result of the Company redeploying security payments into the loan portfolio, although the Company continues to selectively purchase investment securities in the volatile market with its excess liquidity. Investment securities represented 34 percent of total assets at June 30, 2015 compared to 35 percent at December 31, 2014 and 39 percent at June 30, 2014.

The loan portfolio increased $120 million, or 3 percent, during the current quarter. The loan category with the largest dollar and percent increase during the current quarter was commercial loans which increased $103 million, or 3 percent. Excluding the CB acquisition and the First National Bank of the Rockies (“FNBR”) acquisition in August 2014, the loan portfolio increased $382 million, or 9 percent, since June 30, 2014 with $322 million of the increase coming from growth in commercial loans.

During the current quarter, the merger of the Federal Home Loan Bank (“FHLB”) of Seattle and the FHLB of Des Moines was completed with minimal disruption to the Company. As a result of the merger, FHLB of Seattle stock of $29.4 million was redeemed by FHLB of Des Moines.

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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)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Allowance for loan and lease losses
Balance at beginning of period	$	129,753		129,753		130,351		130,351
Provision for loan losses	1,047			765		1,912		1,361
Charge-offs	(2,598		)	(1,297	)	(7,603	)	(3,324	)
Recoveries	2,317			635		5,093		2,248
Balance at end of period	$	130,519		129,856		129,753		130,636
Other real estate owned	$	26,686		28,124		27,804		26,338
Accruing loans 90 days or more past due	618			2,357		214		980
Non-accrual loans	56,918			60,287		61,882		75,147
Total non-performing assets 1	$	84,222		90,768		89,900		102,465
Non-performing assets as a percentage of subsidiary assets	0.98		%	1.07	%	1.08	%	1.30	%
Allowance for loan and lease losses as a percentage of non-performing loans	227		%	207	%	209	%	172	%
Allowance for loan and lease losses as a percentage of total loans	2.71		%	2.77	%	2.89	%	3.11	%
Net charge-offs as a percentage of total loans	0.01		%	0.01	%	0.06	%	0.03	%
Accruing loans 30-89 days past due	$	28,474		33,450		25,904		18,592
Accruing troubled debt restructurings	$	64,336		69,397		69,129		73,981
Non-accrual troubled debt restructurings	$	32,664		34,237		33,714		35,786

^__________ 

¹As of June 30, 2015, non-performing assets have not been reduced by U.S. government guarantees of $5.0 million.

Non-performing assets at June 30, 2015 were $84.2 million, a decrease of $6.5 million, or 7 percent, during the current quarter. Non-performing assets at June 30, 2015 decreased $18.2 million, or 18 percent, from a year ago. Land, lot and other construction loans (i.e., regulatory classification) continues to be the largest category and was $42.8 million, or 51 percent, of the non-performing assets at June 30, 2015. The Company has continued to make progress by reducing this category the past few years and the category decreased $2.8 million, or 6 percent, from the prior quarter. Early stage delinquencies (accruing loans 30-89 days past due) of $28.5 million at June 30, 2015 decreased $5.0 million from the prior quarter and increased $9.9 million from the prior year second quarter.

The allowance for loan and lease losses (“allowance”) was $131 million at June 30, 2015 and continued to remain stable compared to the prior periods. The allowance was 2.71 percent of total loans outstanding at June 30, 2015 compared to 2.89 percent at December 31, 2014 and 3.11 percent for the same quarter last year. The reduction in the allowance as a percentage of total loans was driven primarily by loan growth, stabilizing credit quality, and no allowance carried over from bank acquisitions as a result of the acquired loans recorded at fair value.

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Credit Quality Trends and Provision for Loan Losses

(Dollars in thousands)	Provision for Loan Losses		Net (Recoveries) 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 2015	$	282	$	(381	)	2.71	%	0.59	%	0.98	%
First quarter 2015	765		662			2.77	%	0.71	%	1.07	%
Fourth quarter 2014	191		1,070			2.89	%	0.58	%	1.08	%
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	%

Net recoveries of loans for the current quarter were $381 thousand compared to net charge-offs of $662 thousand for the prior quarter and $332 thousand from the same quarter last year. The current quarter provision for loan losses of $282 thousand decreased $483 thousand from the prior quarter and increased $43 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 the loan loss provision. 

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, 2015		Mar 31, 2015	Dec 31, 2014	Jun 30, 2014	Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Non-interest bearing deposits	$	1,731,015	1,675,451	1,632,403	1,464,938	55,564		98,612		266,077
Interest bearing deposits	4,827,642		4,783,341	4,712,809	4,280,898	44,301		114,833		546,744
Repurchase agreements	408,935		425,652	397,107	315,240	(16,717	)	11,828		93,695
Federal Home Loan Bank advances	329,470		298,148	296,944	607,305	31,322		32,526		(277,835	)
Other borrowed funds	6,665		6,703	7,311	7,367	(38	)	(646	)	(702	)
Subordinated debentures	125,776		125,741	125,705	125,633	35		71		143
Other liabilities	103,856		106,536	106,181	78,698	(2,680	)	(2,325	)	25,158
Total liabilities	$	7,533,359	7,421,572	7,278,460	6,880,079	111,787		254,899		653,280

Non-interest bearing deposits of $1.731 billion at June 30, 2015, increased $55.6 million, or 3 percent, from the prior quarter. Excluding the CB and FNBR acquisitions, non-interest bearing deposits increased $144 million, or 10 percent, from June 30, 2014. Interest bearing deposits of $4.828 billion at June 30, 2015 included $197 million of wholesale deposits (i.e., brokered deposits classified as NOW, money market deposits and certificate accounts). Excluding the $14.1 million decrease in wholesale deposits, interest bearing deposits at June 30, 2015 increased $58.4 million, or 1 percent, during the current quarter. Excluding the CB and FNBR acquisitions and the decrease of $18.1 million in wholesale deposits, interest bearing deposits at June 30, 2015 increased $230 million, or 6 percent, from June 30, 2014.

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FHLB advances of $329 million at June 30, 2015 increased $31.3 million, or 11 percent, during the current quarter as the Company took advantage of attractive term borrowings that were available from the FHLB of Seattle prior to the merger with FHLB of Des Moines. FHLB advances as of June 30, 2015, decreased $278 million, or 46 percent, from June 30, 2014 as growth in deposits and continued balance sheet restructuring reduced the need for additional borrowings.

Stockholders’ Equity Summary

										$ Change from
(Dollars in thousands, except per share data)	Jun 30, 2015			Mar 31, 2015		Dec 31, 2014		Jun 30, 2014		Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Common equity	$	1,051,011		1,035,497		1,010,303		985,809		15,514		40,708		65,202
Accumulated other comprehensive income	5,440			18,027		17,744		24,206		(12,587	)	(12,304	)	(18,766	)
Total stockholders’ equity	1,056,451			1,053,524		1,028,047		1,010,015		2,927		28,404		46,436
Goodwill and core deposit intangible, net	(142,344		)	(143,099	)	(140,606	)	(137,815	)	755		(1,738	)	(4,529	)
Tangible stockholders’ equity	$	914,107		910,425		887,441		872,200		3,682		26,666		41,907

Stockholders’ equity to total assets	12.30		%	12.43	%	12.38	%	12.80	%
Tangible stockholders’ equity to total tangible assets	10.82		%	10.93	%	10.87	%	11.25	%
Book value per common share	$	13.99		13.95		13.70		13.56		0.04	0.29	0.43
Tangible book value per common share	$	12.10		12.05		11.83		11.71		0.05	0.27	0.39
Market price per share at end of period	$	29.42		25.15		27.77		28.38		4.27	1.65	1.04

Tangible stockholders’ equity of $914 million at June 30, 2015 increased $3.7 million, or less than 1 percent, from the prior quarter which was primarily the result of earnings retention which offset the decrease in accumulated other comprehensive income. Tangible stockholders’ equity increased $41.9 million from a year ago as the result of earnings retention and Company stock issued in connection with the CB and FNBR acquisitions, both of which offset the decrease in accumulated other comprehensive income. Tangible book value per common share of $12.10 increased $0.05 per share from the prior quarter and increased $0.39 per share from the prior year second quarter.

Cash Dividend

On June 30, 2015, the Company’s Board of Directors declared a cash dividend of $0.19 per share, an increase of $0.01 per share, or 6 percent, over the prior quarter. The dividend was payable July 16, 2015 to shareholders of record on July 10, 2015. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

6

Operating Results for Three Months Ended June 30, 2015 

Compared to March 31, 2015 and June 30, 2014

Income Summary

	Three Months ended							$ Change from
(Dollars in thousands)	Jun 30, 2015			Mar 31, 2015		Jun 30, 2014		Mar 31, 2015		Jun 30, 2014
Net interest income
Interest income	$	78,617		77,486		73,963		1,131		4,654
Interest expense	7,369			7,382		6,528		(13	)	841
Total net interest income	71,248			70,104		67,435		1,144		3,813
Non-interest income
Service charges, loan fees, and other fees	15,445			14,156		14,747		1,289		698
Gain on sale of loans	7,600			5,430		4,778		2,170		2,822
(Loss) gain on sale of investments	(98		)	5		(48	)	(103	)	(50	)
Other income	2,855			3,102		3,027		(247	)	(172	)
Total non-interest income	25,802			22,693		22,504		3,109		3,298
	$	97,050		92,797		89,939		4,253		7,111
Net interest margin (tax-equivalent)	3.98		%	4.03	%	3.99	%

Net Interest Income

In the current quarter, interest income of $78.6 million increased $1.1 million, or 1 percent from the prior quarter. The current quarter increase in interest income was primarily driven by increases in interest income on commercial loans. Income on commercial loans of $40.7 million increased $1.7 million, or 4 percent, from the prior quarter. In addition, interest income increased $4.7 million, or 6 percent, over the prior year second quarter and was also attributable to higher interest income on commercial loans. The current quarter interest income on commercial loans increased $5.4 million, or 15 percent, over the prior year second quarter primarily the result of an increased volume in commercial loans. Interest income on investment securities of $22.0 million decreased $1.0 million, or 4 percent, over the prior quarter and decreased $1.9 million, or 8 percent, over the prior year second quarter principally due to a decreased volume of investment securities.

The current quarter interest expense of $7.4 million decreased $13 thousand, or less than 1 percent, from the prior quarter. The current quarter interest expense increased $841 thousand from the prior year second quarter, such increase attributed to the interest expense associated with the interest rate swap which started interest expense accruals in the fourth quarter of 2014. The total cost of funding (including non-interest bearing deposits) for the current quarter was 40 basis points compared to 42 basis points for the prior quarter and 39 basis points in the prior year second quarter.

The Company’s net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the current quarter was 3.98 percent compared to 4.03 percent in the prior quarter. The 5 basis points decrease in the current quarter net interest margin was primarily driven by an 8 basis points reduction attributable to the investment portfolio. The reduction in the investment portfolio coupled with additional liquidity caused the cash balance to build through the quarter. The Company’s current quarter net interest margin decreased 1 basis point from the prior year second quarter net interest margin of 3.99 percent. “The Bank divisions continue to achieve strong growth in their non-interest bearing deposit balances as well as low-cost interest bearing deposit balances,” said

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Ron Copher, Chief Financial Officer. “Moreover, the Bank divisions maintained discipline over the pricing of their interest bearing balances,” Copher said.

Non-interest Income

Non-interest income for the current quarter totaled $25.8 million, an increase of $3.1 million, or 14 percent, over the prior quarter and an increase of $3.3 million, or 15 percent, over the same quarter last year. Service fee income of $15.4 million, increased $1.3 million, or 9 percent, from the prior quarter as a result of seasonal activity and increased $698 thousand, or 5 percent, from the prior year second quarter as a result of the increased number of deposit accounts. “Fee income has been exceptional through the first six months of the year, but especially the most recent quarter,” said Blodnick.  “All the hard work our banks have done the past five years to build their customer base is paying off. A larger customer base allows us more engagement with these individuals and businesses and the opportunity to provide more products and services resulting in greater revenue.” Gain of $7.6 million on the sale of the residential loans in the current quarter increased $2.2 million, or 40 percent, from the prior quarter and increased $2.8 million, or 59 percent, from the prior year second quarter as a result of an increase in mortgage refinancing and purchase activity. Other non-interest income for the current quarter decreased $247 thousand, or 8 percent, over the prior quarter and decreased $172 thousand, or 6 percent, over the prior year second quarter. Included in other income was operating revenue of $5 thousand from other real estate owned (“OREO”) and a gain of $318 thousand from the sale of OREO, a combined total of $323 thousand for the current quarter compared to $417 thousand for the prior quarter and $615 thousand for the prior year second quarter.

Non-interest Expense Summary

	Three Months ended				$ Change from
(Dollars in thousands)	Jun 30, 2015		Mar 31, 2015	Jun 30, 2014	Mar 31, 2015		Jun 30, 2014
Compensation and employee benefits	$	32,729	32,244	28,988	485		3,741
Occupancy and equipment	7,810		7,362	6,733	448		1,077
Advertising and promotions	2,240		1,927	1,948	313		292
Data processing	1,593		1,249	2,032	344		(439	)
Other real estate owned	1,377		758	566	619		811
Regulatory assessments and insurance	1,006		1,305	1,028	(299	)	(22	)
Core deposit intangibles amortization	755		731	693	24		62
Other expenses	12,435		9,921	10,685	2,514		1,750
Total non-interest expense	$	59,945	55,497	52,673	4,448		7,272

Compensation and employee benefits for the current quarter increased by $485 thousand, or 2 percent, from the prior quarter due to the increased number of employees from the CB acquisition. Compensation and employee benefits for the current quarter increased by $3.7 million from the prior year second quarter due to of the increased number of employees from the CB and FNBR acquisitions and salary increases. Current quarter occupancy and equipment expense increased $1.1 million, or 16 percent, from the prior year second quarter as a result of added costs associated with the CB and FNBR acquisitions. The current quarter advertising expense increased $313 thousand, or 16 percent, from the prior quarter and increased $292 thousand, or 15 percent, as a result of the Company actively marketing to its customer base. The current quarter data processing expense increased $344 thousand, or 28 percent, from the prior quarter as a result of conversion related expenses and general increases during the current quarter. The current quarter data processing expense decreased $439 thousand, or 22 percent, from the prior year second quarter as a result of conversion related expenses in the prior year second quarter. The current quarter OREO expense of $1.4 million included $437 thousand of operating expense, $846 thousand of fair value write-downs, and $93 thousand of loss from the sales of OREO. Current quarter other expenses of $12.4 million increased by $2.5 million, or 25 percent, from the prior quarter primarily from expenses connected with

8

equity investments in New Market Tax Credits (“NMTC”) projects and conversion related expenses. The NMTC expenses are more than offset by the tax benefits included in federal income tax expense. Current quarter other expense increased $1.8 million, or 16 percent, from the prior year second quarter due to conversion related expenses.

Efficiency Ratio

The efficiency ratio for the current quarter was 55.91 percent and the prior year second quarter was 54.73 percent. The 1.18 percent increase in efficiency ratio resulted from increases in non-interest expense driven by increased compensation and other operational expenses, which exceeded the increases in net interest income from an increase in earning assets and increases in non-interest income from greater mortgage refinancing activity. The efficiency ratio was also negatively impacted by the higher efficiency ratios from the recently acquired banks; however, the Company expects synergies to be realized in the near term.

Operating Results for Six Months ended June 30, 2015

Compared to June 30, 2014

Income Summary

	Six Months ended						$ Change		% Change
(Dollars in thousands)	Jun 30, 2015			Jun 30, 2014
Net interest income
Interest income	$	156,103		$	148,050		$	8,053	5	%
Interest expense	14,751			13,168			1,583		12	%
Total net interest income	141,352			134,882			6,470		5	%
Non-interest income
Service charges, loan fees, and other fees	29,601			27,995			1,606		6	%
Gain on sale of loans	13,030			8,373			4,657		56	%
Loss on sale of investments	(93		)	(99		)	6		(6	)%
Other income	5,957			5,623			334		6	%
Total non-interest income	48,495			41,892			6,603		16	%
	$	189,847		$	176,774		$	13,073	7	%
Net interest margin (tax-equivalent)	4.00		%	4.01		%

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Net Interest Income

Net interest income for the first six months of the current year was $141 million, an increase of $6.5 million, or 5 percent, over the same period last year. Interest income for the first six months of the current year increased $8.1 million, or 5 percent, from the prior year first six months and was principally due to an increase in income from commercial loans. Current year interest income of $79.7 million on commercial loans increased $9.4 million, or 13 percent, from the first half of last year and was primarily the result of an increased volume of commercial loans. Current year interest income of $44.9 million on investment securities decreased $3.3 million, or 7 percent, over the same period last year, as a result of a combined decreased rate on investment securities and decreased volume of investment securities.

Interest expense for the first six months of the current year increased $1.6 million, or 12 percent, from the prior year first six months and was due to the interest expense associated with the interest rate swap which started interest expense accruals in the fourth quarter of 2014. The total funding cost (including non-interest bearing deposits) for the first six months of 2015 was 41 basis points compared to 39 basis points for the first six months of 2014. 

The net interest margin as a percentage of earning assets, on a tax-equivalent basis, for the first six months of 2015 was 4.00 percent, a 1 basis point decrease from the net interest margin of 4.01 percent for the first six months of 2014.

Non-interest Income

Non-interest income of $48.5 million for the first half of 2015 increased $6.6 million, or 16 percent, over the same period last year. Service charges and other fees of $29.6 million for the first six months of 2015 increased $1.6 million, or 6 percent, from the same period last year driven by the increased number of deposit accounts and increases from recent acquisitions. The gains of $13.0 million on the sale of residential loans for the first half of 2015 increased $4.7 million, or 56 percent, from the first half of 2014 resulting from a pickup in mortgage refinancing and purchase activity. Included in other income was operating revenue of $75 thousand from OREO and gains of $665 thousand from the sales of OREO, which totaled $740 thousand for the first half of 2015 compared to $1.4 million for the same period in the prior year.

Non-interest Expense Summary

	Six Months ended				$ Change			% Change
(Dollars in thousands)	Jun 30, 2015		Jun 30, 2014
Compensation and employee benefits	$	64,973	$	57,622	$	7,351		13	%
Occupancy and equipment	15,172		13,346		1,826			14	%
Advertising and promotions	4,167		3,725		442			12	%
Data processing	2,842		3,320		(478		)	(14	)%
Other real estate owned	2,135		1,073		1,062			99	%
Regulatory assessments and insurance	2,311		2,620		(309		)	(12	)%
Core deposit intangible amortization	1,486		1,403		83			6	%
Other expenses	22,356		19,634		2,722			14	%
Total non-interest expense	$	115,442	$	102,743	$	12,699		12	%

Compensation and employee benefits for the first six months of 2015 increased $7.4 million, or 13 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 $1.8 million, or 14 percent, as a result of increased costs associated with the CB and FNBR acquisitions. Outsourced data processing expense decreased $478 thousand, or 14 percent, from the prior year first six months as a result of a decrease in conversion

10

related expenses. OREO expense of $2.1 million in the first six months of 2015 increased $1.1 million, or 99 percent, from the first six months of the prior year. OREO expense for the first six months of 2015 included $851 thousand of operating expenses, $1.1 million of fair value write-downs, and $214 thousand of loss from the sales of OREO. OREO expenses tend to fluctuate based on the level of activity in various quarters. Other expense of $22.4 million for the first half of 2015 increased by $2.7 million, or 14 percent, from the first half of the prior year primarily from increases in conversion related expenses.

Provision for Loan Losses

The provision for loan losses was $1.0 million for the first six months of 2015, a decrease of $314 thousand, or 23 percent, from the same period in the prior year. Net charged-off loans during the first six months of 2015 was $281 thousand, a decrease of $795 thousand from the first six months of 2014.

Efficiency Ratio

The efficiency ratio was 55.36 percent for the first six months of 2015 and 54.11 percent for the first six months of 2014. The increase in the efficiency ratio resulted from compensation expense and increased costs from acquisitions outpacing the increase in net interest income and increases in gains on sale of loans.

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional bank holding company providing commercial banking services in 82 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;

• 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 impaired, which may have an adverse impact on earnings and capital;

• reduced demand for banking products and services;

11

• 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 or grow the Company through acquisitions;

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

• dependence on the Chief Executive Officer, 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)	June 30, 2015			March 31, 2015		December 31, 2014		June 30, 2014
Assets
Cash on hand and in banks	$	120,783		109,746		122,834		130,114
Federal funds sold	—			—		1,025		2,852
Interest bearing cash deposits	234,936			73,720		318,550		69,392
Cash and cash equivalents	355,719			183,466		442,409		202,358
Investment securities, available-for-sale	2,361,830			2,544,093		2,387,428		2,559,411
Investment securities, held-to-maturity	593,314			570,285		520,997		483,557
Total investment securities	2,955,144			3,114,378		2,908,425		3,042,968
Loans held for sale	53,201			54,132		46,726		56,021
Loans receivable	4,807,431			4,687,669		4,488,095		4,203,279
Allowance for loan and lease losses	(130,519		)	(129,856	)	(129,753	)	(130,636	)
Loans receivable, net	4,676,912			4,557,813		4,358,342		4,072,643
Premises and equipment, net	186,858			187,067		179,175		167,741
Other real estate owned	26,686			28,124		27,804		26,338
Accrued interest receivable	44,563			43,260		40,587		41,765
Deferred tax asset	56,571			41,220		41,737		34,505
Core deposit intangible, net	11,501			12,256		10,900		8,109
Goodwill	130,843			130,843		129,706		129,706
Non-marketable equity securities	24,914			54,277		52,868		52,715
Other assets	66,898			68,260		67,828		55,225
Total assets	$	8,589,810		8,475,096		8,306,507		7,890,094
Liabilities
Non-interest bearing deposits	$	1,731,015		1,675,451		1,632,403		1,464,938
Interest bearing deposits	4,827,642			4,783,341		4,712,809		4,280,898
Securities sold under agreements to repurchase	408,935			425,652		397,107		315,240
FHLB advances	329,470			298,148		296,944		607,305
Other borrowed funds	6,665			6,703		7,311		7,367
Subordinated debentures	125,776			125,741		125,705		125,633
Accrued interest payable	3,790			3,893		4,155		3,163
Other liabilities	100,066			102,643		102,026		75,535
Total liabilities	7,533,359			7,421,572		7,278,460		6,880,079
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	755			755		750		745
Paid-in capital	720,073			719,506		708,356		692,343
Retained earnings - substantially restricted	330,183			315,236		301,197		292,721
Accumulated other comprehensive income	5,440			18,027		17,744		24,206
Total stockholders’ equity	1,056,451			1,053,524		1,028,047		1,010,015
Total liabilities and stockholders’ equity	$	8,589,810		8,475,096		8,306,507		7,890,094
Number of common stock shares issued and outstanding	75,531,258			75,530,030		75,026,092		74,467,908

13

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months ended						Six Months ended
(Dollars in thousands, except per share data)	June 30, 2015			March 31, 2015	June 30, 2014		June 30, 2015		June 30, 2014
Interest Income
Residential real estate loans	$	7,942		7,761	7,220		15,703		14,307
Commercial loans	40,698			39,022	35,267		79,720		70,309
Consumer and other loans	8,018			7,744	7,583		15,762		15,226
Investment securities	21,959			22,959	23,893		44,918		48,208
Total interest income	78,617			77,486	73,963		156,103		148,050
Interest Expense
Deposits	4,112			4,147	3,061		8,259		6,150
Securities sold under agreements to repurchase	232			241	192		473		402
Federal Home Loan Bank advances	2,217			2,195	2,447		4,412		4,961
Federal funds purchased and other borrowed funds	15			27	48		42		101
Subordinated debentures	793			772	780		1,565		1,554
Total interest expense	7,369			7,382	6,528		14,751		13,168
Net Interest Income	71,248			70,104	67,435		141,352		134,882
Provision for loan losses	282			765	239		1,047		1,361
Net interest income after provision for loan losses	70,966			69,339	67,196		140,305		133,521
Non-Interest Income
Service charges and other fees	14,303			12,999	13,547		27,302		25,766
Miscellaneous loan fees and charges	1,142			1,157	1,200		2,299		2,229
Gain on sale of loans	7,600			5,430	4,778		13,030		8,373
(Loss) gain on sale of investments	(98		)	5	(48	)	(93	)	(99	)
Other income	2,855			3,102	3,027		5,957		5,623
Total non-interest income	25,802			22,693	22,504		48,495		41,892
Non-Interest Expense
Compensation and employee benefits	32,729			32,244	28,988		64,973		57,622
Occupancy and equipment	7,810			7,362	6,733		15,172		13,346
Advertising and promotions	2,240			1,927	1,948		4,167		3,725
Data processing	1,593			1,249	2,032		2,842		3,320
Other real estate owned	1,377			758	566		2,135		1,073
Regulatory assessments and insurance	1,006			1,305	1,028		2,311		2,620
Core deposit intangibles amortization	755			731	693		1,486		1,403
Other expenses	12,435			9,921	10,685		22,356		19,634
Total non-interest expense	59,945			55,497	52,673		115,442		102,743
Income Before Income Taxes	36,823			36,535	37,027		73,358		72,670
Federal and state income tax expense	7,488			8,865	8,350		16,353		17,263
Net Income	$	29,335		27,670	28,677		57,005		55,407
Basic earnings per share	$	0.39		0.37	0.38		0.76		0.74
Diluted earnings per share	$	0.39		0.37	0.38		0.76		0.74
Dividends declared per share	$	0.19		0.18	0.17		0.37		0.33
Average outstanding shares - basic	75,530,591			75,206,348	74,467,576		75,369,366		74,452,568
Average outstanding shares - diluted	75,565,655			75,244,959	74,499,660		75,407,621		74,491,459

14

Glacier Bancorp, Inc.

Average Balance Sheet

	Three Months ended						Six Months ended
	June 30, 2015						June 30, 2015
(Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate		Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	688,214	$	7,942	4.62	%	$	670,058	$	15,703	4.69	%
Commercial loans 1	3,439,432		41,343		4.82	%	3,361,582		80,948		4.86	%
Consumer and other loans	627,847		8,018		5.12	%	618,900		15,762		5.14	%
Total loans 2	4,755,493		57,303		4.83	%	4,650,540		112,413		4.87	%
Tax-exempt investment securities 3	1,315,849		19,022		5.78	%	1,309,049		37,515		5.73	%
Taxable investment securities 4	1,848,222		9,655		2.09	%	1,876,372		20,409		2.18	%
Total earning assets	7,919,564		85,980		4.35	%	7,835,961		170,337		4.38	%
Goodwill and intangibles	142,781						141,759
Non-earning assets	391,562						385,605
Total assets	$	8,453,907					$	8,363,325
Liabilities
Non-interest bearing deposits	$	1,693,414	$	—	—	%	$	1,655,981	$	—	—	%
NOW accounts	1,343,474		258		0.08	%	1,327,491		526		0.08	%
Savings accounts	744,845		84		0.05	%	729,456		173		0.05	%
Money market deposit accounts	1,336,889		513		0.15	%	1,320,538		1,030		0.16	%
Certificate accounts	1,153,143		1,784		0.62	%	1,159,279		3,627		0.63	%
Wholesale deposits 5	215,138		1,473		2.75	%	217,746		2,903		2.69	%
FHLB advances	315,104		2,217		2.78	%	307,581		4,412		2.85	%
Repurchase agreements and other borrowed funds	497,638		1,040		0.84	%	500,710		2,080		0.84	%
Total funding liabilities	7,299,645		7,369		0.40	%	7,218,782		14,751		0.41	%
Other liabilities	89,751						88,952
Total liabilities	7,389,396						7,307,734
Stockholders’ Equity
Common stock	755						754
Paid-in capital	719,730						715,949
Retained earnings	329,781						321,936
Accumulated other comprehensive income	14,245						16,952
Total stockholders’ equity	1,064,511						1,055,591
Total liabilities and stockholders’ equity	$	8,453,907					$	8,363,325
Net interest income (tax-equivalent)			$	78,611					$	155,586
Net interest spread (tax-equivalent)					3.95	%					3.97	%
Net interest margin (tax-equivalent)					3.98	%					4.00	%

^__________ 

¹  Includes tax effect of $645 thousand and $1.2 million on tax-exempt municipal loan and lease income for the three and six months ended June 30, 2015.

²  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.

³  Includes tax effect of $6.4 million and $12.3 million on tax-exempt investment security income for the three and six months ended June 30, 2015.

⁴  Includes tax effect of $362 thousand and $724 thousand on federal income tax credits for the three and six months ended June 30, 2015.

⁵  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)	Jun 30, 2015			Mar 31, 2015			Dec 31, 2014			Jun 30, 2014			Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Custom and owner occupied construction	$	56,460		$	51,693		$	56,689		$	51,497		9	%	—	%	10	%
Pre-sold and spec construction	45,063			44,865			47,406			34,114			—	%	(5	)%	32	%
Total residential construction	101,523			96,558			104,095			85,611			5	%	(2	)%	19	%
Land development	78,059			81,488			82,829			81,589			(4	)%	(6	)%	(4	)%
Consumer land or lots	98,365			97,519			101,818			101,042			1	%	(3	)%	(3	)%
Unimproved land	76,726			80,206			86,116			51,457			(4	)%	(11	)%	49	%
Developed lots for operative builders	13,673			14,210			14,126			15,123			(4	)%	(3	)%	(10	)%
Commercial lots	20,047			21,059			16,205			17,238			(5	)%	24	%	16	%
Other construction	126,966			148,535			150,075			112,081			(15	)%	(15	)%	13	%
Total land, lot, and other construction	413,836			443,017			451,169			378,530			(7	)%	(8	)%	9	%
Owner occupied	874,651			877,293			849,148			816,859			—	%	3	%	7	%
Non-owner occupied	718,024			704,990			674,381			617,693			2	%	6	%	16	%
Total commercial real estate	1,592,675			1,582,283			1,523,529			1,434,552			1	%	5	%	11	%
Commercial and industrial	635,259			585,501			547,910			549,143			8	%	16	%	16	%
Agriculture	374,258			340,364			310,785			288,555			10	%	20	%	30	%
1st lien	802,152			796,947			775,785			757,954			1	%	3	%	6	%
Junior lien	67,019			67,217			68,358			73,130			—	%	(2	)%	(8	)%
Total 1-4 family	869,171			864,164			844,143			831,084			1	%	3	%	5	%
Multifamily residential	195,674			177,187			160,426			152,169			10	%	22	%	29	%
Home equity lines of credit	356,077			347,693			334,788			309,282			2	%	6	%	15	%
Other consumer	147,427			141,347			133,773			134,414			4	%	10	%	10	%
Total consumer	503,504			489,040			468,561			443,696			3	%	7	%	13	%
Other	174,732			163,687			124,203			95,960			7	%	41	%	82	%
Total loans receivable, including loans held for sale	4,860,632			4,741,801			4,534,821			4,259,300			3	%	7	%	14	%
Less loans held for sale 1	(53,201		)	(54,132		)	(46,726		)	(56,021		)	(2	)%	14	%	(5	)%
Total loans receivable	$	4,807,431		$	4,687,669		$	4,488,095		$	4,203,279		3	%	7	%	14	%

_______

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)	Jun 30, 2015		Mar 31, 2015	Dec 31, 2014	Jun 30, 2014	Jun 30, 2015	Jun 30, 2015	Jun 30, 2015
Custom and owner occupied construction	$	1,079	1,101	1,132	1,196	1,079	—	—
Pre-sold and spec construction	18		218	218	609	18	—	—
Total residential construction	1,097		1,319	1,350	1,805	1,097	—	—
Land development	20,405		21,220	20,842	23,718	10,301	—	10,104
Consumer land or lots	2,647		2,531	3,581	2,804	1,062	177	1,408
Unimproved land	12,580		13,448	14,170	12,421	10,579	—	2,001
Developed lots for operative builders	848		929	1,318	2,186	436	201	211
Commercial lots	2,050		2,496	2,660	2,787	241	—	1,809
Other construction	4,244		4,989	5,151	5,156	—	—	4,244
Total land, lot and other construction	42,774		45,613	47,722	49,072	22,619	378	19,777
Owner occupied	13,057		13,121	13,574	14,595	9,781	11	3,265
Non-owner occupied	3,179		3,771	3,013	3,956	1,577	164	1,438
Total commercial real estate	16,236		16,892	16,587	18,551	11,358	175	4,703
Commercial and industrial	5,805		6,367	4,375	5,850	5,698	22	85
Agriculture	2,769		2,845	3,074	3,506	2,321	—	448
1st lien	9,867		9,502	9,580	17,240	8,210	31	1,626
Junior lien	739		680	442	1,146	739	—	—
Total 1-4 family	10,606		10,182	10,022	18,386	8,949	31	1,626
Multifamily residential	—		—	440	729	—	—	—
Home equity lines of credit	4,742		5,507	6,099	4,289	4,742	—	—
Other consumer	164		243	231	277	105	12	47
Total consumer	4,906		5,750	6,330	4,566	4,847	12	47
Other	29		1,800	—	—	29	—	—
Total	$	84,222	90,768	89,900	102,465	56,918	618	26,686

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)	Jun 30, 2015		Mar 31, 2015		Dec 31, 2014		Jun 30, 2014		Mar 31, 2015		Dec 31, 2014		Jun 30, 2014
Pre-sold and spec construction	$	—	$	—	$	869	$	144	n/m		(100	)%	(100	)%
Consumer land or lots	158		365		391		267		(57	)%	(60	)%	(41	)%
Unimproved land	755		278		267		899		172	%	183	%	(16	)%
Developed lots for operative builders	—		19		—		—		(100	)%	n/m		n/m
Commercial lots	66		585		21		—		(89	)%	214	%	n/m
Total land, lot and other construction	979		1,247		679		1,166		(21	)%	44	%	(16	)%
Owner occupied	4,727		4,841		5,971		6,125		(2	)%	(21	)%	(23	)%
Non-owner occupied	8,257		4,327		3,131		1,665		91	%	164	%	396	%
Total commercial real estate	12,984		9,168		9,102		7,790		42	%	43	%	67	%
Commercial and industrial	6,760		6,600		2,915		2,528		2	%	132	%	167	%
Agriculture	353		3,715		994		497		(90	)%	(64	)%	(29	)%
1st lien	2,891		7,307		6,804		2,408		(60	)%	(58	)%	20	%
Junior lien	335		384		491		536		(13	)%	(32	)%	(38	)%
Total 1-4 family	3,226		7,691		7,295		2,944		(58	)%	(56	)%	10	%
Multifamily Residential	671		676		—		689		(1	)%	n/m		(3	)%
Home equity lines of credit	2,464		3,350		1,288		1,839		(26	)%	91	%	34	%
Other consumer	996		1,003		928		938		(1	)%	7	%	6	%
Total consumer	3,460		4,353		2,216		2,777		(21	)%	56	%	25	%
Other	41		—		1,834		57		n/m		(98	)%	(28	)%
Total	$	28,474	$	33,450	$	25,904	$	18,592	(15	)%	10	%	53	%

_______

n/m - not measurable

18

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, 2015			Mar 31, 2015		Dec 31, 2014		Jun 30, 2014		Jun 30, 2015	Jun 30, 2015
Pre-sold and spec construction	$	(23	)	(9	)	(94	)	(39	)	—	23
Land development	(807		)	(23	)	(390	)	(333	)	256	1,063
Consumer land or lots	(77		)	(15	)	375		97		71	148
Unimproved land	(86		)	(50	)	52		(126	)	—	86
Developed lots for operative builders	(98		)	(96	)	(140	)	(117	)	13	111
Commercial lots	(3		)	(1	)	(6	)	(3	)	—	3
Other construction	(1		)	(1	)	—		—		—	1
Total land, lot and other construction	(1,072		)	(186	)	(109	)	(482	)	340	1,412
Owner occupied	271			316		669		(7	)	349	78
Non-owner occupied	109			82		(162	)	(184	)	116	7
Total commercial real estate	380			398		507		(191	)	465	85
Commercial and industrial	1,007			426		1,069		1,343		1,272	265
Agriculture	(7		)	(4	)	28		—		—	7
1st lien	(49		)	(30	)	372		298		19	68
Junior lien	(129		)	(54	)	183		91		29	158
Total 1-4 family	(178		)	(84	)	555		389		48	226
Multifamily residential	(29		)	(20	)	138		1		—	29
Home equity lines of credit	206			121		190		(120	)	227	21
Other consumer	(3		)	20		226		175		246	249
Total consumer	203			141		416		55		473	270
Total	$	281		662		2,510		1,076		2,598	2,317

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