NEWS RELEASE
July 24, 2008
| Contact: Michael J. Blodnick |
| | (406) 751-4701 |
| | Ron J. Copher |
| | (406) 751-7706 |
GLACIER BANCORP, INC.
EARNINGS FOR QUARTER ENDED JUNE 30, 2008
HIGHLIGHTS:
• Record net earnings for the quarter of $18.459 million, up 10 percent from last year’s second quarter.
• Diluted quarterly earnings per share of $.34, up 10 percent from last year’s second quarter.
• Loans grew by $139 million for the quarter (15 percent annualized) with loan growth of $209 million (12 percent annualized) for the first six months.
• Tangible stockholders’ equity increased $53 million, up 15 percent from last year’s second quarter.
• Net interest income increased $7.1 million, up 16 percent from last year’s second quarter.
• Net interest margin (tax equivalent) of 4.75 percent, up 24 basis points from last year’s second quarter.
• Efficiency ratio of 52 percent, a 5 percentage point improvement from the 57 percent in last year’s second quarter.
• Cash dividend of $.13 per share declared, an increase of 8 percent over the prior year second quarter.
Earnings Summary | | Three months | | Six months | |
($ in thousands, except per share data) | | ended June 30, | | ended June 30, | |
| | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Net earnings | | $ | 18,459 | | $ | 16,725 | | $ | 35,858 | | $ | 32,818 | |
| Diluted earnings per share | | $ | 0.34 | | $ | 0.31 | | $ | 0.66 | | $ | 0.61 | |
| Return on average assets (annualized) | | | 1.51 | % | | 1.47 | % | | 1.48 | % | | 1.47 | % |
| Return on average equity (annualized) | | | 13.51 | % | | 13.79 | % | | 13.25 | % | | 13.90 | % |
KALISPELL, MONTANA - Glacier Bancorp, Inc. (Nasdaq: GBCI) reported net earnings of $18.459 million for the second quarter, an increase of $1.734 million, or 10 percent, over the $16.725 million for the second quarter of 2007. Diluted earnings per share of $.34 for the quarter is an increase of 10 percent over the diluted earnings per share of $.31 for the same quarter of 2007. “We are pleased with the results our ten banks produced in a continuing difficult operating environment,” said Mick Blodnick, President and Chief Executive Officer. “However, duplicating this performance the rest of the year will continue to be a challenge.” Annualized return on average assets and return on average equity for the second quarter were 1.51 percent and 13.51 percent, respectively, which compares with prior year returns for the second quarter of 1.47 percent and 13.79 percent, respectively.
Net earnings of $35.858 million for the first half of 2008 is an increase of $3.040 million, or 9 percent over the first half of the prior year. Diluted earnings per share of $0.66 versus $0.61 for the same period last year is an increase of 8 percent. Included in first half of 2007 earnings is a nonrecurring $1.0 million gain ($1.6 million pre-tax) from the sale of Western Security Bank’s Lewistown, Montana branch, which was partially offset by approximately $500 thousand of nonrecurring expenses from the merger of three of the acquired Citizens Development Company’s (“CDC”) five subsidiaries into Glacier Bancorp, Inc. subsidiaries.
As reflected in the table below, total assets at June 30, 2008 were $5.028 billion, which is $211 million, or 4 percent greater than total assets of $4.817 billion at December 31, 2007, and $355 million, or 8 percent, greater than the June 30, 2007 total assets of $4.673 billion.
| | | June 30, | | December 31, | | June 30, | | $ change from | | $ change from | |
| | | 2008 | | 2007 | | 2007 | | December 31, | | June 30, | |
Assets ($ in thousands) | | (unaudited) | | (audited) | | (unaudited) | | 2007 | | 2007 | |
| | | | | | | | | | | | |
| Cash on hand and in banks | | $ | 123,545 | | | 145,697 | | $ | 134,647 | | | (22,152 | ) | | (11,102 | ) |
Investments, interest bearing deposits, FHLB stock, FRB stock, and Fed Funds | | | 800,206 | | | 782,236 | | | 873,405 | | | 17,970 | | | (73,199 | ) |
| Loans: | | | | | | | | | | | | | | | | |
| Real estate | | | 746,193 | | | 725,854 | | | 819,427 | | | 20,339 | | | (73,234 | ) |
| Commercial | | | 2,396,098 | | | 2,247,303 | | | 1,951,995 | | | 148,795 | | | 444,103 | |
| Consumer and other | | | 678,661 | | | 638,378 | | | 612,854 | | | 40,283 | | | 65,807 | |
| Total loans | | | 3,820,952 | | | 3,611,535 | | | 3,384,276 | | | 209,417 | | | 436,676 | |
| Allowance for loan and lease losses | | | (60,807 | ) | | (54,413 | ) | | (52,422 | ) | | (6,394 | ) | | (8,385 | ) |
Total loans net of allowance for loan and lease losses | | | 3,760,145 | | | 3,557,122 | | | 3,331,854 | | | 203,023 | | | 428,291 | |
| Other assets | | | 343,972 | | | 332,275 | | | 333,049 | | | 11,697 | | | 10,923 | |
| Total Assets | | $ | 5,027,868 | | | 4,817,330 | | | 4,672,955 | | | 210,538 | | | 354,913 | |
At June 30, 2008, total loans were $3.821 billion, an increase of $139 million, or 3.8 percent (15 percent annualized) over total loans of $3.682 billion at March 31, 2008, and an increase of $209 million, or 6 percent (12 percent annualized) over total loans of $3.612 billion at December 31, 2007. Over the first half of 2008, commercial loans increased the most with an increase of $149 million, or 7 percent, followed by consumer loans, which are primarily comprised of home equity loans, increasing by $40 million, or 6 percent, while real estate loans increased $20 million, or 3 percent from the fourth quarter of 2007. Since June 30, 2007, total loans have increased $437 million, or 13 percent, of which commercial loans increased $444 million, or 23 percent, consumer loans grew by $66 million, or 11 percent, while real estate loans decreased $73 million, or 9 percent.
Investment securities, including interest bearing deposits in other financial institutions and federal funds sold, have increased $18 million, or 2 percent, from December 31, 2007 and have decreased $73 million, or 8 percent, from June 30, 2007. Investment securities at June 30, 2008 represented 16 percent of total assets at June 30, 2008 and at December 31, 2007 compared to 19 percent at June 30, 2007.
| | | June 30, | | December 31, | | June 30, | | $ change from | | $ change from | |
| | | 2008 | | 2007 | | 2007 | | December 31, | | June 30, | |
Liabilities ($ in thousands) | | (unaudited) | | (audited) | | (unaudited) | | 2007 | | 2007 | |
| | | | | | | | | | | | |
| Non-interest bearing deposits | | $ | 778,786 | | $ | 788,087 | | $ | 820,728 | | | (9,301 | ) | | (41,942 | ) |
| Interest bearing deposits | | | 2,347,137 | | | 2,396,391 | | | 2,533,957 | | | (49,254 | ) | | (186,820 | ) |
| Advances from Federal Home Loan Bank | | | 658,211 | | | 538,949 | | | 260,224 | | | 119,262 | | | 397,987 | |
| Securities sold under agreements to | | | | | | | | | | | | | | | | |
| repurchase and other borrowed funds | | | 531,648 | | | 401,621 | | | 390,780 | | | 130,027 | | | 140,868 | |
| Other liabilities | | | 43,884 | | | 45,147 | | | 49,036 | | | (1,263 | ) | | (5,152 | ) |
| Subordinated debentures | | | 118,559 | | | 118,559 | | | 118,559 | | | - | | | - | |
| Total liabilities | | $ | 4,478,225 | | $ | 4,288,754 | | | 4,173,284 | | | 189,471 | | | 304,941 | |
Non-interest bearing deposits increased $8 million, or 1 percent, since March 31, 2008, decreased $9 million, or 1 percent, since December 31, 2007, and decreased $42 million, or 5 percent, since June 30, 2007. Interest bearing deposits decreased $49 million from December 31, 2007. The decrease of $187 million in interest bearing deposits since June 30, 2007 includes a $226 million decrease in higher cost brokered CD’s in favor of lower cost interest bearing deposits. Federal Home Loan Bank (“FHLB”) advances increased $398 million from June 30, 2007 and increased $119 million from December 31, 2007. Repurchase agreements and other borrowed funds were $532 million at June 30, 2008, an increase of $141 million from June 30, 2007, and an increase of $130 million from December 31, 2007. Included in this latter category are U.S. Treasury Tax and Loan funds of $199 million at June 30, 2008, a decrease of $17 million from December 31, 2007, and a decrease of $27 million from June 30, 2007.
| | | June 30, | | December 31, | | June 30, | | $ change from | | $ change from | |
Stockholders' equity | | 2008 | | 2007 | | 2007 | | December 31, | | June 30, | |
($ in thousands except per share data) | | (unaudited) | | (audited) | | (unaudited) | | 2007 | | 2007 | |
| | | | | | | | | | | | |
| Common equity | | $ | 551,718 | | $ | 525,459 | | $ | 500,179 | | | 26,259 | | | 51,539 | |
| Accumulated other comprehensive (loss) income | | | (2,075 | ) | | 3,117 | | | (508 | ) | | (5,192 | ) | | (1,567 | ) |
| Total stockholders' equity | | | 549,643 | | | 528,576 | | | 499,671 | | | 21,067 | | | 49,972 | |
| Core deposit intangible, net, and goodwill | | | (152,717 | ) | | (154,264 | ) | | (155,593 | ) | | 1,547 | | | 2,876 | |
| Tangible stockholders' equity | | $ | 396,926 | | | 374,312 | | $ | 344,078 | | | 22,614 | | | 52,848 | |
| | | | | | | | | | | | | | | | | |
| Stockholders' equity to total assets | | | 10.93 | % | | 10.97 | % | | 10.69 | % | | | | | | |
| Tangible stockholders' equity to total tangible assets | | | 8.14 | % | | 8.03 | % | | 7.62 | % | | | | | | |
| Book value per common share | | $ | 10.18 | | $ | 9.85 | | $ | 9.34 | | | 0.33 | | | 0.84 | |
| Market price per share at end of period | | $ | 15.99 | | $ | 18.74 | | $ | 20.35 | | | (2.75 | ) | | (4.36 | ) |
Total stockholders’ equity and book value per share amounts have increased $50 million and $.84 per share, respectively, from June 30, 2007, the result of earnings retention and exercised stock options. Tangible stockholders equity has increased $53 million, or 15 percent since June 30, 2007, with tangible stockholders’ equity at 8.14 percent of total tangible assets at June 30, 2008, up from 7.62 percent at June 30, 2007. Accumulated other comprehensive income, representing net unrealized gains or losses on investment securities designated as available for sale, decreased $2 million from June 30, 2007. “Capital for banks has become very valuable, but increasingly hard to come by,” said Blodnick. “Our plans are to hopefully build our equity base through the rest of 2008.”
Operating Results for Three Months Ended June 30, 2008
Compared to March 31, 2008 and June 30, 2007
Revenue summary | | | | | | | |
($ in thousands) | | Three months ended | |
| | | June 30, | | March 31, | | June 30, | |
| | | 2008 | | 2008 | | 2007 | |
| | | (unaudited) | | (unaudited) | | (unaudited) | |
| Net interest income | | | | | | | | | | |
| Interest income | | $ | 74,573 | | $ | 76,016 | | $ | 75,293 | |
| Interest expense | | | 22,273 | | | 27,387 | | | 30,097 | |
| Net interest income | | | 52,300 | | | 48,629 | | | 45,196 | |
| | | | | | | | | | | |
| Non-interest income | | | | | | | | | | |
| Service charges, loan fees, and other fees | | | 12,223 | | | 10,961 | | | 11,758 | |
| Gain on sale of loans | | | 4,245 | | | 3,880 | | | 3,708 | |
| Gain on sale of investments | | | - | | | 248 | | | - | |
| Other income | | | 913 | | | 1,173 | | | 945 | |
| Total non-interest income | | | 17,381 | | | 16,262 | | | 16,411 | |
| | | $ | 69,681 | | $ | 64,891 | | $ | 61,607 | |
| | | | | | | | | | | |
| Tax equivalent net interest margin | | | 4.75 | % | | 4.54 | % | | 4.51 | % |
| | | $ change from | | $ change from | | % change from | | % change from | |
| | | March 31, | | June 30, | | March 31, | | June 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| Net interest income | | | | | | | | | | | | | |
| Interest income | | $ | (1,443 | ) | $ | (720 | ) | | -2 | % | | -1 | % |
| Interest expense | | $ | (5,114 | ) | $ | (7,824 | ) | | -19 | % | | -26 | % |
| Net interest income | | | 3,671 | | | 7,104 | | | 8 | % | | 16 | % |
| | | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | | |
| Service charges, loan fees, and other fees | | | 1,262 | | | 465 | | | 12 | % | | 4 | % |
| Gain on sale of loans | | | 365 | | | 537 | | | 9 | % | | 14 | % |
| Gain on sale of investments | | | (248 | ) | | - | | | -100 | % | | n/m | |
| Other income | | | (260 | ) | | (32 | ) | | -22 | % | | -3 | % |
| Total non-interest income | | | 1,119 | | | 970 | | | 7 | % | | 6 | % |
| | | $ | 4,790 | | $ | 8,074 | | | 7 | % | | 13 | % |
| n/m - not measurable | | | | | | | | | | | | | |
Net Interest Income
Net interest income for the quarter increased $4 million, or 8 percent, from the prior quarter, and increased $7 million, or 16 percent, over the same period in 2007. While total interest income has decreased by $1 million, or 1 percent, from the same period last year, total interest expense has decreased by $8 million, or 26 percent, from the same period last year. The decrease in total interest expense is primarily attributable to rate decreases in interest bearing deposits and lower cost borrowings. The net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.75 percent which is 21 basis points higher than the 4.54 percent achieved for the prior quarter and 24 basis points higher than the 4.51 percent result for the second quarter of 2007. “The continued improvement in the net interest margin is primarily attributable to lower funding costs achieved by our banks diligently managing deposit funding costs in the markets served,” said Ron Copher, Chief Financial Officer.
Non-interest Income
Non-interest income for the quarter increased $1 million, or 7 percent, from the prior quarter, and also increased $1 million, or 6 percent, over the same period in 2007. Fee income increased $1.3 million, or 12 percent, during the quarter, compared to the $465 million, or 4 percent, increase over the same period last year. The fee income increases are attributable to the continued growth in the number of checking accounts. Gain on sale of loans for the quarter increased $365 thousand, or 9 percent, and increased $537 thousand, or 14 percent, over the same period last year, such increases resulting from a greater volume of real estate and other loans sold. There were no sales of investments in the quarter, unlike the first quarter which included $248 thousand in gain from the sale of shares in Principal Financial Group (PFG) and a mandatory redemption of a portion of Visa, Inc. shares from its initial public offering. For the quarter, other income decreased by $260 thousand, or 22 percent, compared to a decrease of $32 thousand, or 3 percent, over the same period last year.
Non-interest expense summary | | Three months ended | |
| | | June 30, | | March 31, | | June 30, | |
($ in thousands) | | 2008 | | 2008 | | 2007 | |
| | | (unaudited) | | (unaudited) | | (unaudited) | |
| | | | | | | | |
| Compensation and employee benefits | | $ | 20,967 | | $ | 21,097 | | $ | 20,594 | |
| Occupancy and equipment expense | | | 5,116 | | | 5,133 | | | 4,812 | |
| Advertising and promotion expense | | | 1,833 | | | 1,539 | | | 1,582 | |
| Outsourced data processing | | | 647 | | | 667 | | | 680 | |
| Core deposit intangibles amortization | | | 767 | | | 779 | | | 809 | |
| Other expenses | | | 7,113 | | | 6,398 | | | 6,597 | |
| Total non-interest expense | | $ | 36,443 | | $ | 35,613 | | $ | 35,074 | |
| | | $ change from | | $ change from | | % change from | | % change from | |
| | | March 31, | | June 30, | | March 31, | | June 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Compensation and employee benefits | | $ | (130 | ) | $ | 373 | | | -1 | % | | 2 | % |
| Occupancy and equipment expense | | | (17 | ) | | 304 | | | 0 | % | | 6 | % |
| Advertising and promotion expense | | | 294 | | | 251 | | | 19 | % | | 16 | % |
| Outsourced data processing | | | (20 | ) | | (33 | ) | | -3 | % | | -5 | % |
| Core deposit intangibles amortization | | | (12 | ) | | (42 | ) | | -2 | % | | -5 | % |
| Other expenses | | | 715 | | | 516 | | | 11 | % | | 8 | % |
| Total non-interest expense | | $ | 830 | | $ | 1,369 | | | 2 | % | | 4 | % |
Non-interest Expense
Non-interest expense increased by $830 thousand, or 2 percent, from the prior quarter and increased by $1.4 million, or 4 percent, from the same quarter of 2007. Compensation and benefit expense decreased $130 thousand, or 1 percent, over the prior quarter, and increased $373 thousand, or 2 percent, over the same quarter of 2007. The year-over-year increase is primarily attributable to increased staffing levels, including new branches, as well as increased compensation, including commissions tied to increased production, and benefits, including health insurance. The number of full-time-equivalent employees has increased from 1,469 to 1,537, a 5 percent increase since June 30, 2007.
Occupancy and equipment expense increased $304 thousand, or 6 percent, while other expenses increased $516 thousand, or 8 percent, since June 30, 2007, reflecting the cost of additional branch locations, facility upgrades, and other general and administrative costs. Advertising and promotion expense increased $294 thousand, or 19 percent, from the prior quarter, and increased $251 thousand, or 16 percent, from the same quarter of 2007, such increases primarily attributable to new branch promotions, and the banks continuing focus on attracting and retaining non-interest bearing deposits.
The efficiency ratio (non-interest expense/net interest income plus non-interest income) was 52 percent for the 2008 second quarter, compared to 57 percent for the 2007 second quarter, a five percentage point improvement. “Our banks have done an excellent job of controlling staffing and other operating non-interest expenses,” said Copher.
| | | June 30, | | March 31, | | December 31, | | June 30, | |
Credit quality information | | 2008 | | 2008 | | 2007 | | 2007 | |
($ in thousands) | | (unaudited) | | (unaudited) | | (audited) | | (unaudited) | |
| | | | | | | | | | |
| Allowance for loan and lease losses | | $ | 60,807 | | $ | 56,680 | | $ | 54,413 | | $ | 52,422 | |
| | | | | | | | | | | | | | |
| Real estate and other assets owned | | | 6,523 | | | 2,098 | | | 2,043 | | | 2,153 | |
| Accruing Loans 90 days or more overdue | | | 3,700 | | | 4,717 | | | 2,685 | | | 4,592 | |
| Non-accrual loans | | | 19,674 | | | 21,747 | | | 8,560 | | | 5,235 | |
| Total non-performing assets | | | 29,897 | | | 28,562 | | | 13,288 | | | 11,980 | |
| | | | | | | | | | | | | | |
| Allowance for loan and lease losses as a | | | | | | | | | | | | | |
| percentage of non performing assets | | | 203 | % | | 198 | % | | 409 | % | | 438 | % |
| | | | | | | | | | | | | | |
| Non-performing assets as a percentage of total bank assets | | | 0.58 | % | | 0.57 | % | | 0.27 | % | | 0.25 | % |
| | | | | | | | | | | | | | |
| Allowance for loan and lease losses as a | | | | | | | | | | | | | |
| percentage of total loans | | | 1.59 | % | | 1.54 | % | | 1.51 | % | | 1.55 | % |
| | | | | | | | | | | | | | |
| Net (charge-offs) recoveries as a percentage of loans | | | (0.030 | )% | | (0.006 | )% | | (0.060 | )% | | 0.004 | % |
Allowance for Loan and Lease Losses and Non-Performing Assets
At June 30, 2008, the allowance for loan and lease losses was $60.807 million, an increase of $8 million, or 16 percent, from a year ago, and is 1.59 percent of total loans outstanding at June 30, 2008, up from 1.54 percent at the prior quarter end, and up from 1.55 percent at June 30, 2007. The allowance for loan and lease losses at June 30, 2008 was 203 percent of non-performing assets at June 30, 2008, up from 198 percent for the prior quarter end and down from 438 percent a year ago. The second quarter 2008 provision for loan loss expense was $5 million, an increase of $4 million from the same quarter in 2007. Charged-off loans for the second quarter 2008 exceeded recoveries of previously charged-off loans by $915 thousand. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will determine the level of additional provision expense.
Non-performing assets as a percentage of total bank assets at June 30, 2008 were at .58 percent, up from .57 percent as of March 31, 2008, and up from .25 percent at June 30, 2007. These ratios compare favorably to the Federal Reserve Bank Peer Group average of 1.06 percent at March 31, 2008, the most recent information available. “Non-performing assets were up slightly from the first quarter and elevated from what we have historically experienced. Net charge-offs were higher in the second quarter, but still below our expectations given the challenges of the current credit cycle,” Blodnick said. “Our banks continue to work diligently to keep both our non-performing assets and net charge-offs contained.”
Operating Results for Six Months Ended June 30, 2008 Compared to June 30, 2007
Revenue summary | | | | | | | | | |
($ in thousands) | | Six months ended | | | | | |
| | | June 30, | | June 30, | | $ change from | | % change from | |
| | | 2008 | | 2007 | | June 30, | | June 30, | |
| | | (unaudited) | | (unaudited) | | 2007 | | 2007 | |
| Net interest income | | | | | | | | | | | | | |
| Interest income | | $ | 150,589 | | $ | 147,213 | | $ | 3,376 | | | 2 | % |
| Interest expense | | | 49,660 | | | 58,926 | | $ | (9,266 | ) | | -16 | % |
| Net interest income | | | 100,929 | | | 88,287 | | | 12,642 | | | 14 | % |
| | | | | | | | | | | | | | |
| Non-interest income | | | | | | | | | | | | | |
| Service charges, loan fees, and other fees | | | 23,184 | | | 21,843 | | | 1,341 | | | 6 | % |
| Gain on sale of loans | | | 8,125 | | | 6,750 | | | 1,375 | | | 20 | % |
| Gain (Loss) on sale of investments | | | 248 | | | (8 | ) | | 256 | | | -3200 | % |
| Other income | | | 2,086 | | | 3,518 | | | (1,432 | ) | | -41 | % |
| Total non-interest income | | | 33,643 | | | 32,103 | | | 1,540 | | | 5 | % |
| | | $ | 134,572 | | $ | 120,390 | | $ | 14,182 | | | 12 | % |
| | | | | | | | | | | | | | |
| Tax equivalent net interest margin | | | 4.65 | % | | 4.49 | % | | | | | | |
Net Interest Income
Net interest income for the six months increased $13 million, or 14 percent, over the same period in 2007. Total interest income increased $3 million, or 2 percent, while total interest expense decreased $9 million, or 16 percent. The decrease in interest expense is primarily attributable to the rate decreases on interest bearing deposits and lower cost borrowings. The net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.65 percent, an increase of 16 basis points from the 4.49 percent for the same period in 2007.
Non-interest Income
Total non-interest income increased $14 million, or 12 percent in 2008. Fee income for the first half of 2008 increased $1 million, or 6 percent, over the first half of 2007, driven primarily by an increased number of loan and deposit accounts, and additional customer products and services offered. Gain on sale of loans increased $1.4 million, or 20 percent, from the first six months of last year. Gain from the sale of investments during the first half of 2008 included a first quarter mandatory redemption of a portion of Visa, Inc. shares from its initial public offering, and the sale of shares in Principal Financial Group (PFG). Other income for the six months decreased $1.4 million, or 41 percent, over the same period in 2007. Such decrease is attributable to a gain of $1.6 million from the January 19, 2007 sale of Western Security Bank’s Lewistown branch, a regulatory requirement imposed to complete the acquisition of CDC.
Non-interest expense summary | | Six months ended | | | | | |
| | | June 30, | | June 30, | | $ change from | | % change from | |
($ in thousands) | | 2008 | | 2007 | | June 30, | | June 30, | |
| | | (unaudited) | | (unaudited) | | 2007 | | 2007 | |
| | | | | | | | | | |
| Compensation and employee benefits | | $ | 42,064 | | $ | 40,100 | | $ | 1,964 | | | 5 | % |
| Occupancy and equipment expense | | | 10,249 | | | 9,270 | | | 979 | | | 11 | % |
| Advertising and promotion expense | | | 3,372 | | | 3,021 | | | 351 | | | 12 | % |
| Outsourced data processing | | | 1,314 | | | 1,492 | | | (178 | ) | | -12 | % |
| Core deposit intangibles amortization | | | 1,546 | | | 1,589 | | | (43 | ) | | -3 | % |
| Other expenses | | | 13,511 | | | 12,785 | | | 726 | | | 6 | % |
| Total non-interest expense | | $ | 72,056 | | $ | 68,257 | | $ | 3,799 | | | 6 | % |
Non-interest Expense
Non-interest expense increased by $4 million, or 6 percent, from the same six months of 2007. The first half of 2007 included approximately $500,000 of non-recurring expenses and costs, including overtime, associated with the January 26, 2007 merger of three of the five CDC subsidiaries into Glacier Bancorp, Inc.’s subsidiaries, and related operating system conversions. Compensation and employee benefit expense increased $2 million, or 5 percent, from the first half of 2007, due largely to the increased number of employees added since June 30, 2007. Occupancy and equipment expense increased $979 thousand, or 11 percent, while other expenses increased $726 thousand, or 6 percent, since June 30, 2007, reflecting the cost of additional locations and facility upgrades. Advertising and promotion expense increased $351 thousand, or 12 percent, from the first half of 2007, due primarily to new branch promotions, and the banks continuing focus on attracting and retaining non-interest bearing deposits. The efficiency ratio (non-interest expense/net interest income plus non-interest income) was 54 percent for the first half of 2008 compared favorably to 57 percent for the first six months of 2007.
Allowance for Loan and Lease Losses and Non-Performing Assets
The provision for loan loss expense was $8 million for the first six months of 2008, an increase of $5 million, or 214 percent, from the same period in 2007. Net charged-off loans during the six months ended June 30, 2008 was $1.148 million.
Merger of Bank Subsidiaries
Effective April 30, 2008, Glacier Bank of Whitefish, Montana merged into Glacier Bank with operations conducted under the Glacier Bank charter. In connection with the merger, Russ Porter, President of Glacier Bank of Whitefish, joined Mountain West Bank of Coeur d’Alene, Idaho as President and Chief Operating Officer.
Cash dividend
On June 25, 2008, the board of directors declared a cash dividend of $.13 per share, payable July 17, 2008 to shareholders of record on July 8, 2008, which is an increase of 8 percent over the $.12 dividend declared in the second quarter of last year.
About Glacier Bancorp, Inc.
Glacier Bancorp, Inc. is a regional multi-bank holding company providing commercial banking services in 53 communities in Montana, Idaho, Utah, Washington, and Wyoming. Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and conducts its operations principally through ten community bank subsidiaries. These subsidiaries include six Montana banks: Glacier Bank of Kalispell, First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, First Bank of Montana of Lewistown; as well as Mountain West Bank in Idaho, Utah and Washington; 1st Bank in Wyoming, Citizens Community Bank in Idaho, and First National Bank of Morgan in Utah.
This news release includes forward looking statements, which describe management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’s style of banking and the strength of the local economies in which it operates. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in the Company’s public filings, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on the Company than expected and adversely affect the company’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new banks and/or branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which the Company is engaged.
Visit our website at www.glacierbancorp.com
GLACIER BANCORP, INC. | |
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION | |
| ($ in thousands except per share data) | | | June 30, | | December 31, | | June 30, | |
| | | | | | | 2008 | | 2007 | | 2007 | |
| | | | | | | (unaudited) | | (audited) | | (unaudited) | |
| Assets: | | | | | | | | | | | |
| Cash on hand and in banks | $ | 123,545 | | | 145,697 | | | 134,647 | |
| Federal funds sold | | | | | 135 | | | 135 | | | 11,735 | |
| Interest bearing cash deposits | | 26,654 | | | 81,777 | | | 124,566 | |
| | | | | | | | | | | | | | | | | |
| Investment securities, available-for-sale | | 773,417 | | | 700,324 | | | 737,104 | |
| | | | | | | | | | | | | | | | | |
| Net loans receivable: | | | | | | | | | | | | |
| Real estate loans | | | | 746,193 | | | 725,854 | | | 819,427 | |
| Commercial loans | | | | 2,396,098 | | | 2,247,303 | | | 1,951,995 | |
| Consumer and other loans | | | | 678,661 | | | 638,378 | | | 612,854 | |
| Allowance for loan and lease losses | | | | (60,807 | ) | | (54,413 | ) | | (52,422 | ) |
| Total loans, net | | | | 3,760,145 | | | 3,557,122 | | | 3,331,854 | |
| | | | | | | | | | | | | | | | | |
| Premises and equipment, net | | 125,398 | | | 123,749 | | | 119,320 | |
| Real estate and other assets owned, net | | 6,523 | | | 2,043 | | | 2,153 | |
| Accrued interest receivable | | 28,128 | | | 26,168 | | | 27,621 | |
| Deferred tax asset | | | | | 3,624 | | | - | | | 2,504 | |
| Core deposit intangible, net | | 12,416 | | | 13,963 | | | 15,575 | |
| Goodwill | | 140,301 | | | 140,301 | | | 140,018 | |
| Other assets | | 27,582 | | | 26,051 | | | 25,858 | |
| Total assets | | | | | | | | $ | 5,027,868 | | | 4,817,330 | | | 4,672,955 | |
| | | | | | | | | | | | | | | | | |
| Liabilities and stockholders' equity: | | | | | | | | | | | | | | | | |
| Non-interest bearing deposits | $ | 778,786 | | | 788,087 | | | 820,728 | |
| Interest bearing deposits | | 2,347,137 | | | 2,396,391 | | | 2,533,957 | |
| Advances from Federal Home Loan Bank of Seattle | | 658,211 | | | 538,949 | | | 260,224 | |
| Securities sold under agreements to repurchase | | 176,211 | | | 178,041 | | | 156,794 | |
| Other borrowed funds | | 355,437 | | | 223,580 | | | 233,986 | |
| Accrued interest payable | | 11,922 | | | 13,281 | | | 15,388 | |
| Deferred tax liability | | - | | | 481 | | | - | |
| Subordinated debentures | | 118,559 | | | 118,559 | | | 118,559 | |
| Other liabilities | | 31,962 | | | 31,385 | | | 33,648 | |
| Total liabilities | | | | 4,478,225 | | | 4,288,754 | | | 4,173,284 | |
| | | | | | | | | | | | | | | | | |
| Preferred shares, $.01 par value per share. 1,000,000 shares authorized | | | | | | | | | |
| None issued or outstanding | | - | | | - | | | - | |
| Common stock, $.01 par value per share. 117,187,500 shares authorized | | 540 | | | 536 | | | 535 | |
| Paid-in capital | | 380,161 | | | 374,728 | | | 371,289 | |
| Retained earnings - substantially restricted | | 171,017 | | | 150,195 | | | 128,355 | |
| Accumulated other comprehensive (loss) income | | (2,075 | ) | | 3,117 | | | (508 | ) |
| Total stockholders' equity | | | | 549,643 | | | 528,576 | | | 499,671 | |
| Total liabilities and stockholders' equity | | | $ | 5,027,868 | | | 4,817,330 | | | 4,672,955 | |
| Number of shares outstanding | | | | | 53,985,813 | | | 53,646,480 | | | 53,525,651 | |
| Book value of equity per share | | | | | 10.18 | | | 9.85 | | | 9.34 | |
GLACIER BANCORP, INC. | |
CONSOLIDATED STATEMENT OF OPERATIONS | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| ($ in thousands except per share data) | | | Three months ended June 30, | | | Six months ended June 30, | |
| | | | 2008 | | | | 2007 | | | 2008 | | | 2007 | |
| | | | (unaudited) | | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
Interest income: | | | | | | | | | | | | | | |
| Real estate loans | | $ | 12,399 | | | | 15,201 | | | 24,991 | | | 29,642 | |
| Commercial loans | | | 41,100 | | | | 38,170 | | | 83,633 | | | 74,822 | |
| Consumer and other loans | | | 11,790 | | | | 11,870 | | | 23,897 | | | 23,184 | |
| Investment securities and other | | | 9,284 | | | | 10,052 | | | 18,068 | | | 19,565 | |
| Total interest income | | | 74,573 | | | | 75,293 | | | 150,589 | | | 147,213 | |
| | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | |
| Deposits | | | 13,474 | | | | 20,530 | | | 30,343 | | | 39,337 | |
| Federal Home Loan Bank of Seattle advances | | | 4,821 | | | | 4,050 | | | 10,539 | | | 9,092 | |
| Securities sold under agreements to repurchase | | | 808 | | | | 1,724 | | | 2,149 | | | 3,611 | |
| Subordinated debentures | | | 1,853 | | | | 1,816 | | | 3,726 | | | 3,630 | |
| Other borrowed funds | | | 1,317 | | | | 1,977 | | | 2,903 | | | 3,256 | |
| Total interest expense | | | 22,273 | | | | 30,097 | | | 49,660 | | | 58,926 | |
| | | | | | | | | | | | | | | |
Net interest income | | | 52,300 | | | | 45,196 | | | 100,929 | | | 88,287 | |
| Provision for loan losses | | | 5,042 | | | | 1,210 | | | 7,542 | | | 2,405 | |
| Net interest income after provision for loan losses | | | 47,258 | | | | 43,986 | | | 93,387 | | | 85,882 | |
| | | | | | | | | | | | | | | |
Non-interest income: | | | | | | | | | | | | | | |
| Service charges and other fees | | | 10,599 | | | | 9,483 | | | 20,070 | | | 17,746 | |
| Miscellaneous loan fees and charges | | | 1,624 | | | | 2,275 | | | 3,114 | | | 4,097 | |
| Gain on sale of loans | | | 4,245 | | | | 3,708 | | | 8,125 | | | 6,750 | |
| Gain (loss) on sale of investments | | | - | | | | - | | | 248 | | | (8 | ) |
| Other income | | | 913 | | | | 945 | | | 2,086 | | | 3,518 | |
| Total non-interest income | | | 17,381 | | | | 16,411 | | | 33,643 | | | 32,103 | |
Non-interest expense: | | | | | | | | | | | | | | |
| Compensation, employee benefits | | | | | | | | | | | | | | |
| and related expenses | | | 20,967 | | | | 20,594 | | | 42,064 | | | 40,100 | |
| Occupancy and equipment expense | | | 5,116 | | | | 4,812 | | | 10,249 | | | 9,270 | |
| Advertising and promotion expense | | | 1,833 | | | | 1,582 | | | 3,372 | | | 3,021 | |
| Outsourced data processing expense | | | 647 | | | | 680 | | | 1,314 | | | 1,492 | |
| Core deposit intangibles amortization | | | 767 | | | | 809 | | | 1,546 | | | 1,589 | |
| Other expenses | | | 7,113 | | | | 6,597 | | | 13,511 | | | 12,785 | |
| Total non-interest expense | | | 36,443 | | | | 35,074 | | | 72,056 | | | 68,257 | |
Earnings before income taxes | | | 28,196 | | | | 25,323 | | | 54,974 | | | 49,728 | |
| | | | | | | | | | | | | | | |
| Federal and state income tax expense | | | 9,737 | | | | 8,598 | | | 19,116 | | | 16,910 | |
Net earnings | | $ | 18,459 | | | | 16,725 | | | 35,858 | | | 32,818 | |
| | | | | | | | | | | | | | | |
| Basic earnings per share | | | 0.35 | | | | 0.31 | | | 0.67 | | | 0.62 | |
| Diluted earnings per share | | | 0.34 | | | | 0.31 | | | 0.66 | | | 0.61 | |
| Dividends declared per share | | | 0.13 | | | | 0.12 | | | 0.26 | | | 0.24 | |
| Return on average assets (annualized) | | | 1.51 | % | | | 1.47 | % | | 1.48 | % | | 1.47 | % |
| Return on average equity (annualized) | | | 13.51 | % | | | 13.79 | % | | 13.25 | % | | 13.90 | % |
| Average outstanding shares - basic | | | 53,971,220 | | | | 53,164,813 | | | 53,910,414 | | | 52,836,255 | |
| Average outstanding shares - diluted | | | 54,151,290 | | | | 53,601,696 | | | 54,084,193 | | | 53,414,992 | |
AVERAGE BALANCE SHEET | | For the Three months ended 6-30-08 | | For the Six months ended 6-30-08 | |
(Unaudited - $ in Thousands) | | | | Interest | | Average | | | | Interest | | Average | |
| | | Average | | and | | Yield/ | | Average | | and | | Yield/ | |
| | | | Balance | | | Dividends | | | Rate | | | Balance | | | Dividends | | | Rate | |
| ASSETS | | | | | | | | | | | | | | | | | | | |
| Real Estate Loans | | $ | 728,127 | | | 12,399 | | | 6.81 | % | $ | 723,749 | | | 24,991 | | | 6.91 | % |
| Commercial Loans | | | 2,351,722 | | | 41,100 | | | 7.01 | % | | 2,313,383 | | | 83,633 | | | 7.25 | % |
| Consumer and Other Loans | | | 659,960 | | | 11,790 | | | 7.17 | % | | 649,525 | | | 23,897 | | | 7.38 | % |
| Total Loans | | | 3,739,809 | | | 65,289 | | | 7.00 | % | | 3,686,657 | | | 132,521 | | | 7.21 | % |
| Tax -Exempt Investment Securities (1) | | | 255,227 | | | 3,174 | | | 4.97 | % | | 257,560 | | | 6,348 | | | 4.93 | % |
| Other Investment Securities | | | 537,735 | | | 6,110 | | | 4.55 | % | | 530,123 | | | 11,720 | | | 4.42 | % |
| Total Earning Assets | | | 4,532,771 | | | 74,573 | | | 6.58 | % | | 4,474,340 | | | 150,589 | | | 6.73 | % |
| Goodwill and Core Deposit Intangible | | | 153,157 | | | | | | | | | 153,587 | | | | | | | |
| Other Non-Earning Assets | | | 229,029 | | | | | | | | | 234,279 | | | | | | | |
TOTAL ASSETS | | $ | 4,914,957 | | | | | | | | $ | 4,862,206 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | |
AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | | | | | | | |
| NOW Accounts | | $ | 467,852 | | | 698 | | | 0.60 | % | $ | 465,784 | | | 1,609 | | | 0.69 | % |
| Savings Accounts | | | 272,941 | | | 446 | | | 0.66 | % | | 270,113 | | | 993 | | | 0.74 | % |
| Money Market Accounts | | | 763,838 | | | 3,904 | | | 2.05 | % | | 781,622 | | | 9,855 | | | 2.53 | % |
| Certificates of Deposit | | | 854,667 | | | 8,426 | | | 3.95 | % | | 857,610 | | | 17,886 | | | 4.18 | % |
| FHLB Advances | | | 701,324 | | | 4,821 | | | 2.76 | % | | 648,296 | | | 10,539 | | | 3.26 | % |
| Repurchase Agreements | | | | | | | | | | | | | | | | | | | |
| and Other Borrowed Funds | | | 521,139 | | | 3,978 | | | 3.06 | % | | 512,717 | | | 8,778 | | | 3.43 | % |
| Total Interest Bearing Liabilities | | | 3,581,761 | | | 22,273 | | | 2.49 | % | | 3,536,142 | | | 49,660 | | | 2.82 | % |
| Non-interest Bearing Deposits | | | 735,953 | | | | | | | | | 735,579 | | | | | | | |
| Other Liabilities | | | 58,100 | | | | | | | | | 51,343 | | | | | | | |
| Total Liabilities | | | 4,375,814 | | | | | | | | | 4,323,064 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Common Stock | | | 540 | | | | | | | | | 539 | | | | | | | |
| Paid-In Capital | | | 379,265 | | | | | | | | | 377,858 | | | | | | | |
| Retained Earnings | | | 155,848 | | | | | | | | | 156,313 | | | | | | | |
| Accumulated Other | | | | | | | | | | | | | | | | | | | |
| Comprehensive Income | | | 3,490 | | | | | | | | | 4,432 | | | | | | | |
| Total Stockholders' Equity | | | 539,143 | | | | | | | | | 539,142 | | | | | | | |
TOTAL LIABILITIES AND | | | | | | | | | | | | | | | | | | | |
STOCKHOLDERS' EQUITY | | $ | 4,914,957 | | | | | | | | $ | 4,862,206 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Net Interest Income | | | | | $ | 52,300 | | | | | | | | $ | 100,929 | | | | |
| Net Interest Spread | | | | | | | | | 4.09 | % | | | | | | | | 3.91 | % |
| Net Interest Margin | | | | | | | | | 4.63 | % | | | | | | | | 4.52 | % |
| Net Interest Margin (Tax Equivalent) | | | | | | | | | 4.75 | % | | | | | | | | 4.65 | % |
| Return on Average Assets (annualized) | | | | | | | | | 1.51 | % | | | | | | | | 1.48 | % |
| Return on Average Equity (annualized) | | | | | | | | | 13.51 | % | | | | | | | | 13.25 | % |
| (1) | Excludes tax effect of $2,810 and $1,405 on non-taxable investment security income for the year and quarter ended June 30, 2008, respectively. |
