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

NEWS RELEASE

January 28, 2010

FOR IMMEDIATE RELEASE	Contact: Michael J. Blodnick
	(406) 751-4701
	Ron J. Copher
	(406) 751-7706

GLACIER BANCORP, INC. ANNOUNCES

RESULTS FOR QUARTER AND YEAR ENDED DECEMBER 31, 2009

HIGHLIGHTS:

· Net earnings for the quarter of $9.474 million and year-to-date of $34.374 million.

· Diluted earnings per share of $0.15 for the quarter and $0.56 year-to-date.

· Acquisition of First National Bank & Trust completed as of October 2, 2009 resulting in a one-time $3.5 million bargain purchase gain.

· Provision for loan losses increased to $37 million for the quarter and $125 million for the year bringing the allowance for loan losses to 3.46 percent of loans.

· Net interest income increased $6 million, or 10 percent, from last year’s fourth quarter and increased $33 million, or 15 percent, from last year’s twelve months.

· Net interest margin (tax equivalent) of 4.82 percent, up 12 basis points, from last year’s twelve months.

· Efficiency ratio of 51 percent for the year, an improvement of 1 percentage point from last year, excluding non-recurring items.

Results Summary	Three months						Twelve months
($ in thousands, except per share data)	ended December 31,						ended December 31,
	(unaudited)			(unaudited)			(unaudited)			(audited)
	2009			2008			2009			2008
Net earnings	$	9,474		$	17,014		$	34,374		$	65,657
Diluted earnings per share	$	0.15		$	0.29		$	0.56		$	1.19
Return on average assets (annualized)		0.62	%		1.27	%		0.60	%		1.31	%
Return on average equity (annualized)		5.43	%		11.02	%		4.97	%		11.63	%

KALISPELL, MONTANA - Glacier Bancorp, Inc. (Nasdaq GS: GBCI) reported net earnings of $9.474 million for the fourth quarter, a decrease of $7.540 million, or 44 percent, from the $17.014 million net earnings reported for the fourth quarter of 2008.  The diluted earnings per share of $0.15 for the quarter represented a 48 percent decrease from the diluted earnings per share of $0.29 for the same quarter of 2008. Annualized return on average assets and return on average equity for the fourth quarter were 0.62 percent and 5.43 percent, which compares with prior year returns for the fourth quarter of 1.27 percent and 11.02 percent, respectively.

Net earnings for the twelve months ended December 31, 2009 were $34.374 million, which is a decrease of $31.283 million, or 48 percent, over the prior year.  Diluted earnings per share of $0.56, is a decrease of 53 percent from the $1.19 earned in 2008.

“It was great to finally complete the transaction with First Company and its subsidiary First National Bank & Trust.  We are excited to have the Nelson family and all the staff become a part of Glacier Bancorp, Inc.  We expect it to be an excellent addition,” said Mick Blodnick, President and Chief Executive Officer.  “The transaction however did make for a noisy quarter as the bargain purchase and security gains elevated our earnings.” Blodnick said.  “Although our earnings were much better than the previous quarter, we were still disappointed with the results.  One bright spot however continues to be our pre-tax pre-provision earnings.”

The results of operations and financial condition include the acquisition of First Company and its subsidiary First National Bank & Trust (“First National”) from October 2, 2009.  Cash of $621 thousand and 99,995 shares of the Company’s common stock were issued in the acquisition.  The Company also contributed $15.3 million in capital to the bank.  The acquisition resulted in a $3.5 million one-time bargain purchase gain which was based on the estimated fair value of the assets acquired and liabilities assumed.  The following table provides information on the fair value of selected classifications of assets and liabilities acquired.

	First National
(Unaudited - $ in thousands)	Bank & Trust
Total assets	$	272,280
Investments, including fed funds		60,802
Loans		160,538
Non-interest bearing deposits		39,221
Interest bearing deposits		197,308
Borrowed funds		26,686

As reflected in the following table, total assets at December 31, 2009 were $6.192 billion, which is $638 million, or 11 percent, greater than the total assets of $5.554 billion at December 31, 2008.

	December 31,			December 31,			$ Change From
	2009			2008			December 31,
Assets  ($ in thousands)	(unaudited)			(audited)			2008
Cash on hand and in banks	$	120,731		$	125,123		$	(4,392	)
Investments, interest bearing deposits,
FHLB stock, FRB stock, and fed funds		1,596,238			1,000,224			596,014
Loans:
Real estate		797,626			838,375			(40,749	)
Commercial		2,613,218			2,575,828			37,390
Consumer and other		719,401			715,990			3,411
Total loans		4,130,245			4,130,193			52
Allowance for loan and lease losses		(142,927	)		(76,739	)		(66,188	)
Total loans net of allowance for
loan and lease losses		3,987,318			4,053,454			(66,136	)
Other assets		487,508			375,169			112,339
Total Assets	$	6,191,795		$	5,553,970		$	637,825

2

At December 31, 2009, total loans were $4.130 billion, an increase of $84 million over total loans of $4.046 billion at September 30, 2009 and an increase of $52 thousand over total loans at December 31, 2008.  Real estate loans increased $10 million, or 1 percent, during the fourth quarter.  Consumer loans, which are primarily comprised of home equity loans, increased by $19 million, or 3 percent, and commercial loans increased by $55 million, or 2 percent, during the fourth quarter of 2009.  Excluding the loan growth of $153 million attributable to the acquisition of First National, the loan portfolio decreased organically 4 percent for 2009 and 2 percent during the fourth quarter, primarily the result of decreased loan demand.

Investment securities, including interest bearing deposits in other financial institutions and federal funds sold, have increased $334 million, or 26 percent, from September 30, 2009 and increased $596 million, or 60 percent, from December 31, 2008.  The increase in investments for the fourth quarter includes $112 million for First National.  Investment securities represented 26 percent of total assets at December 31, 2009 versus 18 percent of total assets at December 31, 2008. The Company continues to purchase investment securities when loan originations slow.

	December 31,		December 31,		$ Change From
	2009		2008		December 31,
Liabilities  ($ in thousands)	(unaudited)		(audited)		2008
Non-interest bearing deposits	$	810,550	$	747,439	$	63,111
Interest bearing deposits		3,289,602		2,515,036		774,566
Advances from Federal Home Loan Bank		790,367		338,456		451,911
Federal Reserve Bank Discount Window		225,000		914,000		(689,000	)
Securities sold under agreements to
repurchase and other borrowed funds		226,251		196,731		29,520
Other liabilities		39,147		44,331		(5,184	)
Subordinated debentures		124,988		121,037		3,951
Total liabilities	$	5,505,905	$	4,877,030	$	628,875

As of December 31, 2009, non-interest bearing deposits increased $9 million, or 1 percent, since September 30, 2009 and increased $63 million, or 8 percent, since December 31, 2008.  Interest bearing deposits of $3.290 billion at December 31, 2009 includes wholesale deposits of $351 million, of which $151 million are issued through the Certificate of Deposit Account Registry System.  Interest bearing deposits increased $480 million, or 17 percent from September 30, 2009, of which $117 million is from wholesale deposits.  Interest bearing deposits increased $775 million, or 31 percent from December 31, 2008, of which $321 million is from wholesale deposits.  The increase in non-interest bearing deposits and interest bearing deposits includes $41 million and $206 million, respectively, for First National as of year end.  “One of our strategic initiatives in 2009 was to focus on deposit growth and capture additional market share,” Blodnick said.  “The banks did an excellent job of not only growing their deposits, but at the same time controlling their cost of funds.”

3

Federal Home Loan Bank (“FHLB”) advances increased $150 million, or 23 percent, from September 30, 2009 and increased $452 million, or 134 percent, from December 31, 2008.  Federal Reserve Bank Discount Window borrowings decreased $145 million, or 39 percent, from September 30, 2009 and decreased $689 million, or 75 percent, from December 31, 2008.  Repurchase agreements and other borrowed funds were $226 million at December 31, 2009, an increase of $668 thousand from September 30, 2009 and an increase of $30 million, or 15 percent, from December 31, 2008.

	December 31,			December 31,			$ Change From
Stockholders' equity	2009			2008			December 31,
($ in thousands except per share data)	(unaudited)			(audited)			2008
Common equity	$	686,238		$	678,183		$	8,055
Accumulated other comprehensive loss		(348	)		(1,243	)		895
Total stockholders' equity		685,890			676,940			8,950
Goodwill and core deposit intangible, net		(160,196	)		(159,765	)		(431	)
Tangible stockholders' equity	$	525,694		$	517,175		$	8,519
Stockholders' equity to total assets		11.08	%		12.19	%
Tangible stockholders' equity to total tangible assets		8.72	%		9.59	%
Book value per common share	$	11.13		$	11.04		$	0.09
Tangible book value per common share	$	8.53		$	8.43		$	0.10
Market price per share at end of period	$	13.72		$	19.02		$	(5.30	)

Total stockholders’ equity and book value per share amounts have increased $9 million and $0.09 per share, respectively, from December 31, 2008, the result of earnings retention, exercised stock options, decrease in accumulated comprehensive loss, and stock issued in connection with the First National acquisition.  Tangible stockholders’ equity has increased $9 million, or 2 percent since December 31, 2008, with tangible stockholders’ equity at 8.72 percent of total tangible assets at December 31, 2009, down from 9.59 percent at December 31, 2008.  Accumulated other comprehensive loss, representing net unrealized losses (net of tax) on investment securities designated as available for sale, decreased $1 million from December 31, 2008.  “Our capital levels continue to be a real strength for the Company,” Blodnick said.  “Not only are our capital levels well above the regulatory well capitalized requirements, but during a year of crisis for the banking industry we increased our capital while maintaining the level of our dividend and avoiding the need to participate in the Troubled Asset Relief Program (TARP).”

4

Operating Results for Three Months Ended December 31, 2009

Compared to September 30, 2009 and December 31, 2008

Revenue summary
($ in thousands)	Three months ended
	December 31,			September 30,			December 31,
	2009			2009			2008
	(unaudited)			(unaudited)			(unaudited)
Net interest income
Interest income	$	78,112		$	74,430		$	76,707
Interest expense		14,273			13,801			18,599
Net interest income		63,839			60,629			58,108
Non-interest income
Service charges, loan fees, and other fees		12,212			12,103			11,522
Gain on sale of loans		6,089			5,613			3,195
Gain on sale of investments		3,328			2,667			-
Other income		4,450			1,317			920
Total non-interest income		26,079			21,700			15,637
	$	89,918		$	82,329		$	73,745
Tax equivalent net interest margin		4.70	%		4.80	%		4.81	%

($ in thousands)	$ Change From		$ Change From			% Change From			% Change From
	September 30,		December 31,			September 30,			December 31,
	2009		2008			2009			2008
Net interest income
Interest income	$	3,682	$	1,405			5	%		2	%
Interest expense		472		(4,326	)		3	%		-23	%
Net interest income		3,210		5,731			5	%		10	%
Non-interest income
Service charges, loan fees, and other fees		109		690			1	%		6	%
Gain on sale of loans		476		2,894			8	%		91	%
Gain on sale of investments		661		3,328			25	%		n/m
Other income		3,133		3,530			238	%		384	%
Total non-interest income		4,379		10,442			20	%		67	%
	$	7,589	$	16,173			9	%		22	%
n/m - not measurable

Net Interest Income

Net interest income for the current quarter increased $3.2 million with interest income increasing $3.7 million, or 5 percent, compared to the prior quarter.  Net interest income for the year increased $6 million, or 10 percent, with interest expense decreasing $4 million, or 23 percent, over the same period in 2008.  The decrease in total interest expense from the prior year fourth quarter is attributable to rate decreases in interest bearing deposits and lower cost borrowings.  The current quarter net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.70 percent which is 10 basis points lower than the 4.80 percent achieved for the prior quarter, and 11 basis points lower than the 4.81 percent result for the fourth quarter of 2008.  “Since hitting a high of 4.92 percent in the first quarter of 2009, our net interest margin as expected has experienced some compression the last three quarters,” said Ron Copher, Chief Financial Officer. “Higher levels of non accruing loans and the growth of our investment portfolio that carries lower yields were the main reasons for the reduction.”

5

Non-interest Income

Non-interest income for the current quarter totaled $26 million, an increase of $4 million over the prior quarter.  Other income had a $3.5 million one-time bargain purchase gain from the acquisition of First National.  Excluding the gain, non-interest income increased $897 thousand, or 4 percent, from the prior quarter, and increased $7.0 million, or 45 percent, over the same period in 2008.  Fee income increased $109 thousand, or 1 percent, during the quarter, compared to the increase of $690 thousand, or 6 percent, over the same period last year.  Gain on sale of loans increased $476 thousand, or 8 percent, for the quarter, and $2.894 million, or 91 percent, over the same period last year, primarily the result of increased residential loans originated and sold in the secondary market during 2009.  Net gain on sale of investments was $3.328 million for the fourth quarter 2009 compared to $2.667 million for the previous quarter, a 25 percent increase.

Non-interest expense summary	Three months ended
($ in thousands)	December 31,		September 30,		December 31,
	2009		2009		2008
	(unaudited)		(unaudited)		(unaudited)
Compensation and employee benefits	$	21,376	$	20,935	$	18,775
Occupancy and equipment expense		6,130		5,835		5,923
Advertising and promotion expense		1,435		1,596		1,675
Outsourced data processing		850		830		638
Core deposit intangibles amortization		822		758		741
Other expenses		13,720		11,942		8,340
Total non-interest expense	$	44,333	$	41,896	$	36,092

($ in thousands)	$ Change From			$ Change From			% Change From			% Change From
	September 30,			December 31,			September 30,			December 31,
	2009			2008			2009			2008
Compensation and employee benefits	$	441		$	2,601			2	%		14	%
Occupancy and equipment expense		295			207			5	%		3	%
Advertising and promotion expense		(161	)		(240	)		-10	%		-14	%
Outsourced data processing		20			212			2	%		33	%
Core deposit intangibles amortization		64			81			8	%		11	%
Other expenses		1,778			5,380			15	%		65	%
Total non-interest expense	$	2,437		$	8,241			6	%		23	%

Non-interest Expense

Non-interest expense for the current quarter increased by $2.4 million, or 6 percent from the prior quarter and increased $8.2 million, or 23 percent, from the prior year’s fourth quarter.  Compensation and employee benefits increased $441 thousand, or 2 percent, from prior quarter and increased $2.6 million, or 14 percent, from prior year’s fourth quarter.  The current quarter increase in compensation and employee benefits is primarily a result of the acquisition of First National, and the increase over the prior year quarter is due to the acquisitions of First National and Bank of San Juan which was acquired December 1, 2008.  The number of full-time equivalent employees increased from 1,577 to 1,643 during the quarter, and increased from 1,571 since the end of the 2008, primarily the result of First National which has 75 full-time equivalent employees.

6

Occupancy and equipment expense has increased $295 thousand, or 5 percent, and $207 thousand, or 3 percent, from the prior quarter and the prior year’s fourth quarter, respectively, reflecting the acquisitions of First National and Bank of the San Juans.  Advertising and promotion expense decreased $161 thousand, or 10 percent, from prior quarter and decreased $240 thousand, or 14 percent, from the same quarter of 2008 as the banks continue to focus on operating cost reduction.  The increase of $1.8 million, or 15 percent, in other expense from the prior quarter includes increases of $413 thousand in expenses associated with repossessed assets, $300 thousand in legal and outside service expenses, the majority of which relate to the acquisition of First National, $240 thousand in FDIC insurance expense, $266 thousand in commercial loan expense, and general increases with the acquisition of First National.  The increase of $5.4 million, or 65 percent, in other expense from the prior year’s fourth quarter is a result of an increase of $1.5 million in FDIC insurance premiums, $1.5 million of loss from sales of other real estate owned, and $1.2 million in expenses associated with repossessed assets.

Efficiency Ratio

Excluding the bargain purchase gain, the efficiency ratio (non-interest expense / net interest income plus non-interest income) was 51 percent for the quarter, compared to 49 percent for the 2008 fourth quarter.  The increase in the efficiency ratio from the prior year fourth quarter is the result of the increase in other expenses primarily from FDIC insurance premiums and other real estate owned expenses and losses.

	December 31,			September 30,			December 31,
Credit Quality Summary	2009			2009			2008
($ in thousands)	(unaudited)			(unaudited)			(audited)
Allowance for loan and lease losses - beginning of year	$	76,739			76,739			54,413
Provision		124,618			87,905			28,480
Acquisition		-			-			2,625
Charge-offs		(60,896	)		(40,991	)		(9,839	)
Recoveries		2,466			1,677			1,060
Allowance for loan and lease losses - end of period	$	142,927			125,330			76,739
Real estate and other assets owned	$	57,320			54,537			11,539
Accruing loans 90 days or more overdue		5,537			2,891			8,613
Non-accrual loans		198,281			185,577			64,301
Total non-performing assets	$	261,138			243,005			84,453
Allowance for loan and lease losses as a
percentage of non-performing assets		55	%		52	%		91	%
Non-performing assets as a percentage of total bank assets		4.13	%		4.10	%		1.46	%
Allowance for loan and lease losses as a
percentage of total loans		3.46	%		3.10	%		1.86	%
Net charge-offs as a percentage of total loans		(1.415	)%		(0.972	)%		(0.213	)%
Accruing loans 30-89 days or more overdue	$	87,491			43,606			54,787

7

Allowance for Loan and Lease Losses and Non-performing Assets

At December 31, 2009, the allowance for loan and lease losses was $142.9 million, an increase of $66 million, or 86 percent, from a year ago.  The allowance was 3.46 percent of total loans outstanding at December 31, 2009, up from 3.10 percent at the prior quarter end, and up from 1.86 percent at December 31, 2008.  The allowance was 55 percent of non-performing assets at December 31, 2009, up from 52 percent for the prior quarter end and down from 91 percent a year ago.  Non-performing assets as a percentage of total bank assets at December 31, 2009 were at 4.13 percent, up from 4.10 percent as of prior quarter end, and up from 1.46 percent at December 31, 2008.  Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of additional provision expense.

Credit Quality Trends
(Unaudited - $ in thousands)								Accruing
								Loans			Non-Performing
	Provision				ALLL			30-89 days			Assets to
	for Loan		Net		as a Percent			as a Percent of			Total Bank
	Losses		Charge-Offs		of Loans			Loans			Assets
Q4 2009	$	36,713		19,116		3.46	%		2.12	%		4.13	%
Q3 2009		47,050		19,094		3.10	%		1.08	%		4.10	%
Q2 2009		25,140		11,543		2.36	%		1.52	%		3.06	%
Q1 2009		15,715		8,677		2.01	%		1.60	%		1.97	%
Q4 2008		12,223		3,742		1.86	%		1.33	%		1.46	%
Q3 2008		8,715		3,889		1.67	%		0.65	%		1.30	%
Q2 2008		5,042		915		1.59	%		0.92	%		0.58	%
Q1 2008		2,500		233		1.54	%		0.87	%		0.57	%

The current quarter provision for loan loss expense was $37 million, a decrease of $10 million from prior quarter and an increase of $24 million from the same quarter in 2008.  Net charged-off loans for the current quarter were $19 million compared to $19 million for the prior quarter and $4 million for the same quarter in 2008.  For the quarter, the provision covered net charge-offs 1.9 times. ”Although we are seeing some signs of credit quality beginning to stabilize, it’s still uncertain if the trend will continue,” Blodnick said.  “Non-performing assets did not expand at the pace of the prior two quarters, however, they did move higher,” Blodnick said.  “The two loan categories we have experienced most of the increase in non-performing assets this year were spec residential construction and land development.  In the quarter we saw a significant decrease in spec construction non-performing assets and only a moderate increase to land development, but as the economy continues to struggle we did see non-performing assets increase in commercial real estate, C & I, and 1-4 family loans.”

For additional information regarding credit quality and a breakout of the loan portfolio by regulatory classification see exhibits at the end of this press release.

8

Operating Results for Twelve Months Ended December 31, 2009 Compared to

December 31, 2008

Revenue summary
($ in thousands)	Twelve months ended
	December 31,			December 31,			$ Change From			% Change From
	2009			2008			December 31,			December 31,
	(unaudited)			(audited)			2008			2008
Net interest income
Interest income	$	302,494		$	302,985		$	(491	)		0	%
Interest expense		57,167			90,372			(33,205	)		-37	%
Net interest income		245,327			212,613			32,714			15	%
Non-interest income
Service charges, loan fees, and other fees		45,871			47,506			(1,635	)		-3	%
Gain on sale of loans		26,923			14,849			12,074			81	%
Gain (loss) on investments		5,995			(7,345	)		13,340			182	%
Other income		7,685			6,024			1,661			28	%
Total non-interest income		86,474			61,034			25,440			42	%
	$	331,801		$	273,647		$	58,154			21	%
Tax equivalent net interest margin		4.82	%		4.70	%

Net Interest Income

Net interest income for the current year increased $33 million, or 15 percent, over the same period in 2008.  Total interest income decreased $491 thousand, or less than 1 percent, while total interest expense decreased $33 million, or 37 percent.  The decrease in total interest expense from prior year 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 for the year, was 4.82 percent for the current year, an increase of 12 basis points from the 4.70 percent for the same period in 2008.

Non-interest Income

Total non-interest income increased $25 million, or 42 percent over the same period in 2008.  Fee income for the year decreased $1.6 million, or 3 percent, as compared to 2008.  Gain on sale of loans increased $12 million, or 81 percent, primarily the result of the increase in purchase and refinance residential loans originated and sold in the secondary market.  Gain on investments during 2009 of $6.0 million is the net gain from sales of investment securities.  Loss from investments during 2008 included a non-recurring $7.6 million other than temporary impairment charge on investments in Freddie Mac preferred stock and Fannie Mae common stock.  Other income of $7.7 million includes a $3.5 million one-time bargain purchase gain from the acquisition of First National in 2009.  In 2008 other income of $6.0 million included a $1.7 million gain from the sale and relocation of Mountain West Bank’s office facility in Ketchum, Idaho.

9

Non-interest expense summary	Twelve months ended
($ in thousands)	December 31,		December 31,		$ Change From			% Change From
	2009		2008		December 31,			December 31,
	(unaudited)		(audited)		2008			2008
Compensation and employee benefits	$	84,965	$	82,027	$	2,938			4	%
Occupancy and equipment expense		23,471		21,674		1,797			8	%
Advertising and promotion expense		6,477		6,989		(512	)		-7	%
Outsourced data processing		3,031		2,508		523			21	%
Core deposit intangibles amortization		3,116		3,051		65			2	%
Other expenses		47,758		29,660		18,098			61	%
Total non-interest expense	$	168,818	$	145,909	$	22,909			16	%

Non-interest Expense

Non-interest expense increased by $23 million, or 16 percent, during 2009.  Compensation and employee benefit expense increased $2.9 million, or 4 percent, from 2008, due to the increased number of employees from the acquisition of Bank of the San Juans in December 2008 and First National in October 2009.  Occupancy and equipment expense increased $2 million, or 8 percent, reflecting the cost of additional locations and facility upgrades.  Advertising and promotion expense decreased $512 thousand, or 7 percent, from 2008 reflecting the banks’ continuing focus on reducing operating expenses.  Outsourced data processing expenses increased $523 thousand, or 21 percent, from 2008 as a result of additional locations and general operating increases.  Other expenses increased $18 million, or 61 percent, from 2008.  The increase in other expenses includes $7.3 million in FDIC insurance premiums, $5.2 million loss from sales of other real estate owned, $2.7 million expense associated with repossessed assets and $1.4 million in legal and outside firm expense.  Of the increase in FDIC insurance premiums, $2.5 million is attributable to the second quarter asset-based special assessment.

Efficiency Ratio

The efficiency ratio (non-interest expense/net interest income plus non-interest income) was 51 percent for 2009 compared favorably to 52 percent for 2008, excluding non-recurring items.  “The banks continue to work hard to improve on all their components of efficiency,” Copher said.  “Non interest expense in particular is an area the banks have specifically focused their attention.”

Allowance for Loan and Lease Losses

The provision for loan loss expense was $125 million for 2009, an increase of $96 million, or 338 percent, from 2008.  Net charged-off loans during 2009 was $58 million, an increase of $50 million from 2008.

Recent Acquisition

On October 2, 2009, the Company completed the acquisition of First Company and its subsidiary First National Bank & Trust, a community bank based in Powell, Wyoming.  First National Bank & Trust provides community banking services from three branch locations in Powell, Cody, and Lovell, Wyoming.  As of the acquisition, First National Bank & Trust had total assets of approximately $272 million.  First National Bank & Trust will operate as a separate wholly-owned subsidiary of the Company.

Cash Dividend

On December 15, 2009, the board of directors declared a cash dividend of $.13 per share, payable January 14, 2010 to shareholders of record on January 5, 2010.  Future cash dividends will depend on a variety of factors, including net income, capital, asset quality and general economic conditions.

10

About Glacier Bancorp, Inc.

Glacier Bancorp, Inc. is a regional multi-bank holding company providing commercial banking services in 60 communities in Montana, Idaho, Utah, Washington, Wyoming and Colorado.  Glacier Bancorp, Inc. is headquartered in Kalispell, Montana, and conducts its operations principally through eleven community bank subsidiaries.  These subsidiaries include six Montana banks: Glacier Bank of Kalispell, First Security Bank of Missoula, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, First Bank of Montana of Lewistown; as well as Mountain West Bank in Idaho, Utah and Washington; 1st Bank in Wyoming and Utah; First National Bank & Trust in Wyoming; Citizens Community Bank in Idaho; and Bank of the San Juans in Colorado.

This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, statements about management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this news release:

§ the risks associated with lending and potential adverse changes in credit quality;

§ increased loan delinquency rates;

§ the risks presented by a continued economic slowdown, which could adversely affect credit quality, loan collateral values, investment values, liquidity levels, and loan originations;

§ changes in market interest rates, which could adversely affect our net interest income and profitability;

§ legislative or regulatory changes that adversely affect our business or our ability to complete pending or prospective future acquisitions;

§ costs or difficulties related to the integration of acquisitions;

§ reduced demand for banking products and services;

§ the risks presented by public stock market volatility, which could adversely affect the Company’s stock value and the ability to raise capital in the future;

§ competition from other financial services companies in our markets; and

§ the Company’s success in managing risks involved in the foregoing.

The Company does not undertake any obligation to publicly correct or update any forward-looking statement if we later become aware that it is not likely to be achieved.

Visit our website at www.glacierbancorp.com

11

Glacier Bancorp, Inc.

Consolidated Condensed Statements of Financial Condition

($ in thousands except per share data)	December 31,			December 31,
	2009			2008
	(unaudited)			(audited)
Assets:
Cash on hand and in banks	$	120,731			125,123
Federal funds sold		87,155			6,480
Interest bearing cash deposits		2,689			3,652
Investment securities, available-for-sale		1,506,394			990,092
Net loans receivable:
Real estate loans		797,626			838,375
Commercial loans		2,613,218			2,575,828
Consumer and other loans		719,401			715,990
Total loans, gross		4,130,245			4,130,193
Allowance for loan and lease losses		(142,927	)		(76,739	)
Total loans, net		3,987,318			4,053,454
Premises and equipment, net		140,921			133,949
Real estate and other assets owned, net		57,320			11,539
Accrued interest receivable		29,729			28,777
Deferred tax asset		41,082			14,292
Core deposit intangible, net		13,937			13,013
Goodwill		146,259			146,752
Other assets		58,260			26,847
Total assets	$	6,191,795			5,553,970
Liabilities and stockholders' equity:
Non-interest bearing deposits	$	810,550			747,439
Interest bearing deposits		3,289,602			2,515,036
Advances from Federal Home Loan Bank		790,367			338,456
Securities sold under agreements to repurchase		212,506			188,363
Federal Reserve Discount Window		225,000			914,000
Other borrowed funds		13,745			8,368
Accrued interest payable		7,928			9,751
Subordinated debentures		124,988			121,037
Other liabilities		31,219			34,580
Total liabilities		5,505,905			4,877,030
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		616			613
Paid-in capital		497,493			491,794
Retained earnings - substantially restricted		188,129			185,776
Accumulated other comprehensive loss		(348	)		(1,243	)
Total stockholders' equity		685,890			676,940
Total liabilities and stockholders' equity	$	6,191,795			5,553,970
Number of shares outstanding		61,619,803			61,331,273
Book value of equity per share		11.13			11.04

12

Glacier Bancorp, Inc.

Consolidated Condensed Statements of Operations

($ in thousands except per share data)	Three months ended December 31,						Twelve months ended December 31,
	2009			2008			2009			2008
	(unaudited)			(unaudited)			(unaudited)			(audited)
Interest income:
Real estate loans	$	12,956			13,374			54,498			51,166
Commercial loans		39,278			40,274			151,580			165,119
Consumer and other loans		11,213			11,861			44,844			47,725
Investment securities and other		14,665			11,198			51,572			38,975
Total interest income		78,112			76,707			302,494			302,985
Interest expense:
Deposits		9,630			12,151			38,429			55,012
Federal Home Loan Bank advances		2,194			2,478			7,952			15,355
Securities sold under agreements to repurchase		557			756			2,007			3,823
Subordinated debentures		1,594			1,852			6,818			7,430
Other borrowed funds		298			1,362			1,961			8,752
Total interest expense		14,273			18,599			57,167			90,372
Net interest income		63,839			58,108			245,327			212,613
Provision for loan losses		36,713			12,223			124,618			28,480
Net interest income after provision for loan losses		27,126			45,885			120,709			184,133
Non-interest income:
Service charges and other fees		10,627			10,195			40,465			41,550
Miscellaneous loan fees and charges		1,585			1,327			5,406			5,956
Gain on sale of loans		6,089			3,195			26,923			14,849
Gain (loss) on investments		3,328			-			5,995			(7,345	)
Other income		4,450			920			7,685			6,024
Total non-interest income		26,079			15,637			86,474			61,034
Non-interest expense:
Compensation, employee benefits and related expenses		21,376			18,775			84,965			82,027
Occupancy and equipment expense		6,130			5,923			23,471			21,674
Advertising and promotion expense		1,435			1,675			6,477			6,989
Outsourced data processing expense		850			638			3,031			2,508
Core deposit intangibles amortization		822			741			3,116			3,051
Other expenses		13,720			8,340			47,758			29,660
Total non-interest expense		44,333			36,092			168,818			145,909
Earnings before income taxes		8,872			25,430			38,365			99,258
Federal and state income tax (benefit) expense		(602	)		8,416			3,991			33,601
Net earnings	$	9,474			17,014			34,374			65,657
Basic earnings per share		0.15			0.30			0.56			1.20
Diluted earnings per share		0.15			0.29			0.56			1.19
Dividends declared per share		0.13			0.13			0.52			0.52
Return on average assets (annualized)		0.62	%		1.27	%		0.60	%		1.31	%
Return on average equity (annualized)		5.43	%		11.02	%		4.97	%		11.63	%
Average outstanding shares - basic		61,619,803			57,458,743			61,529,944			54,851,145
Average outstanding shares - diluted		61,619,803			57,556,778			61,531,640			55,003,814

13

Glacier Bancorp, Inc.

Average Balance Sheet

	For the three months ended 12-31-09							For the twelve months ended 12-31-09
(Unaudited - $ in thousands)			Interest		Average					Interest		Average
	Average		and		Yield/			Average		and		Yield/
	Balance		Dividends		Rate			Balance		Dividends		Rate
ASSETS
Real Estate Loans	$	818,364	$	12,956		6.33	%	$	829,348	$	54,498		6.57	%
Commercial Loans		2,642,721		39,278		5.90	%		2,608,961		151,580		5.81	%
Consumer and Other Loans		703,435		11,213		6.32	%		702,232		44,844		6.39	%
Total Loans		4,164,520		63,447		6.04	%		4,140,541		250,922		6.06	%
Tax -Exempt Investment Securities (1)		460,512		5,504		4.78	%		445,063		22,196		4.99	%
Other Investment Securities		968,255		9,161		3.78	%		707,062		29,376		4.15	%
Total Earning Assets		5,593,287		78,112		5.59	%		5,292,666		302,494		5.72	%
Goodwill and Core Deposit Intangible		160,674							158,896
Other Non-Earning Assets		262,851							240,367
TOTAL ASSETS	$	6,016,812						$	5,691,929
LIABILITIES
AND STOCKHOLDERS' EQUITY
NOW Accounts	$	685,340	$	756		0.44	%	$	572,260	$	2,275		0.40	%
Savings Accounts		304,284		167		0.22	%		303,794		947		0.31	%
Money Market Accounts		815,166		2,029		0.99	%		768,939		8,436		1.10	%
Certificates of Deposit		1,046,689		5,833		2.21	%		960,403		24,719		2.57	%
Wholesale Deposits		282,904		845		1.18	%		133,083		2,052		1.54	%
FHLB Advances		649,871		2,194		1.34	%		473,038		7,952		1.68	%
Repurchase Agreements and Other Borrowed Funds		672,681		2,449		1.44	%		995,006		10,786		1.08	%
Total Interest Bearing Liabilities		4,456,935		14,273		1.27	%		4,206,523		57,167		1.36	%
Non-interest Bearing Deposits		817,677							755,128
Other Liabilities		49,661							38,356
Total Liabilities		5,324,273							5,000,007
Common Stock		616							615
Paid-In Capital		497,230							495,340
Retained Earnings		189,613							193,973
Accumulated Other
Comprehensive Gain		5,080							1,994
Total Stockholders' Equity		692,539							691,922
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,016,812						$	5,691,929
Net Interest Income			$	63,839						$	245,327
Net Interest Spread						4.32	%						4.36	%
Net Interest Margin						4.53	%						4.64	%
Net Interest Margin (Tax Equivalent)						4.70	%						4.82	%
Return on Average Assets (annualized)						0.62	%						0.60	%
Return on Average Equity (annualized)						5.43	%						4.97	%

(1) Excludes tax effect of $9,827,000 and $2,437,000 on non-taxable investment security income for the year to date and quarter ended December 31, 2009, respectively.

14

Glacier Bancorp, Inc.

Loan Portfolio - by Regulatory Classification

(Unaudited - - $ in thousands)

	Loans Receivable, Gross						% Change			% Change
	Balance		Balance		Balance		From			From
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008
Glacier	$	942,254		950,000		982,098		-1	%		-4	%
Mountain West		957,451		971,240		971,468		-1	%		-1	%
First Security		566,713		574,371		573,228		-1	%		-1	%
1st Bank		296,913		299,095		326,381		-1	%		-9	%
Western		323,375		332,709		361,261		-3	%		-10	%
Big Sky		270,970		283,110		293,626		-4	%		-8	%
Valley		187,283		188,221		199,085		0	%		-6	%
First National		153,058		-		-		n/m			n/m
Citizens		166,049		172,769		162,133		-4	%		2	%
First Bank - MT		117,017		123,846		116,122		-6	%		1	%
San Juans		149,162		150,889		144,791		-1	%		3	%
Total	$	4,130,245		4,046,250		4,130,193		2	%		0	%

	Land, Lot and Other Construction Loans						% Change			% Change
	Balance		Balance		Balance		From			From
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008
Glacier	$	165,734		164,448		204,479		1	%		-19	%
Mountain West		217,078		238,268		249,916		-9	%		-13	%
First Security		71,404		73,432		95,960		-3	%		-26	%
1st Bank		36,888		39,218		41,667		-6	%		-11	%
Western		32,045		37,887		45,457		-15	%		-30	%
Big Sky		71,365		73,944		81,869		-3	%		-13	%
Valley		14,704		15,450		17,918		-5	%		-18	%
First National		10,303		-		-		n/m			n/m
Citizens		13,263		21,816		14,827		-39	%		-11	%
First Bank - MT		1,010		5,804		4,507		-83	%		-78	%
San Juans		39,621		36,202		36,793		9	%		8	%
Total	$	673,415		706,469		793,393		-5	%		-15	%

	Land, Lot and Other Construction Loans at 12/31/09
			Consumer				Developed		Commercial
	Land		Land or		Unimproved		Lots for		Developed		Other
	Development		Lot		Land		Operative Builders		Lot		Construction
Glacier	$	80,881		33,025		29,850		8,625		13,353		-
Mountain West		55,908		74,914		29,684		31,655		10,664		14,253
First Security		30,569		7,208		26,372		4,525		518		2,212
1st Bank		14,447		12,223		4,448		225		2,513		3,032
Western		16,309		7,823		5,159		587		1,914		253
Big Sky		22,909		18,882		9,925		1,992		8,420		9,237
Valley		2,597		5,867		4,513		159		349		1,219
First National		1,961		2,990		733		250		2,245		2,124
Citizens		2,868		2,633		2,652		506		655		3,949
First Bank - MT		-		65		820		-		-		125
San Juans		417		26,838		45		-		3,878		8,443
Total	$	228,866		192,468		114,201		48,524		44,509		44,847

													Custom &
	Residential Construction Loans						% Change			% Change			Owner		Pre-Sold
	Balance		Balance		Balance		From			From			Occupied		& Spec
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008			12/31/2009		12/31/2009
Glacier	$	57,183		72,828		84,161		-21	%		-32	%	$	9,762		47,421
Mountain West		57,437		63,572		100,289		-10	%		-43	%		23,606		33,831
First Security		19,664		15,981		19,910		23	%		-1	%		9,985		9,679
1st Bank		17,633		18,783		30,742		-6	%		-43	%		11,010		6,623
Western		2,245		3,709		6,993		-39	%		-68	%		1,830		415
Big Sky		20,679		27,803		28,356		-26	%		-27	%		3,169		17,510
Valley		5,170		5,380		8,265		-4	%		-37	%		4,222		948
First National		2,612		-		-		n/m			n/m			1,505		1,107
Citizens		13,211		16,705		17,909		-21	%		-26	%		6,619		6,592
First Bank - MT		234		179		1,384		31	%		-83	%		174		60
San Juans		13,811		13,549		11,425		2	%		21	%		6,753		7,058
Total	$	209,879		238,489		309,434		-12	%		-32	%	$	78,635		131,244

n/m - not measurable

15

Glacier Bancorp, Inc.

Loan Portfolio - by Regulatory Classification (continued)

(Unaudited - - $ in thousands)

	Single Family Residential Loans						% Change			% Change			1st		Junior
	Balance		Balance		Balance		From			From			Lien		Lien
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008			12/31/2009		12/31/2009
Glacier	$	204,789		205,203		198,654		0	%		3	%		183,647		21,142
Mountain West		278,158		275,936		274,119		1	%		1	%		236,962		41,196
First Security		82,141		82,349		79,107		0	%		4	%		68,266		13,875
1st Bank		65,555		63,893		62,954		3	%		4	%		60,566		4,989
Western		50,502		45,764		56,789		10	%		-11	%		48,099		2,403
Big Sky		33,308		33,840		29,493		-2	%		13	%		29,482		3,826
Valley		66,644		65,261		70,935		2	%		-6	%		54,255		12,389
First National		19,239		-		-		n/m			n/m			16,150		3,089
Citizens		20,937		21,659		18,903		-3	%		11	%		18,695		2,242
First Bank - MT		10,003		10,592		10,341		-6	%		-3	%		8,536		1,467
San Juans		22,811		22,790		23,605		0	%		-3	%		21,305		1,506
Total	$	854,087		827,287		824,900		3	%		4	%		745,963		108,124

	Commercial Real Estate Loans						% Change			% Change			Owner		Non-Owner
	Balance		Balance		Balance		From			From			Occupied		Occupied
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008			12/31/2009		12/31/2009
Glacier	$	232,552		235,576		223,449		-1	%		4	%		117,243		115,309
Mountain West		230,383		212,865		180,215		8	%		28	%		164,625		65,758
First Security		224,425		223,756		192,352		0	%		17	%		150,733		73,692
1st Bank		64,008		66,924		67,249		-4	%		-5	%		54,852		9,156
Western		107,173		104,450		98,290		3	%		9	%		54,113		53,060
Big Sky		82,303		83,489		80,053		-1	%		3	%		50,699		31,604
Valley		48,144		48,202		46,850		0	%		3	%		31,353		16,791
First National		26,647		-		-		n/m			n/m			18,329		8,318
Citizens		55,660		53,424		53,813		4	%		3	%		42,786		12,874
First Bank - MT		18,827		13,772		17,397		37	%		8	%		12,597		6,230
San Juans		47,838		54,525		50,925		-12	%		-6	%		27,306		20,532
Total	$	1,137,960		1,096,983		1,010,593		4	%		13	%		724,636		413,324

	Consumer Loans						% Change			% Change			Home Equity		Other
	Balance		Balance		Balance		From			From			Line of Credit		Consumer
	12/31/2009		9/30/2009		12/31/2008		9/30/2009			12/31/2008			12/31/2009		12/31/2009
Glacier	$	162,723		161,416		170,713		1	%		-5	%		145,377		17,346
Mountain West		71,702		72,696		72,584		-1	%		-1	%		61,896		9,806
First Security		78,345		80,444		85,646		-3	%		-9	%		51,110		27,235
1st Bank		46,455		46,686		50,723		0	%		-8	%		17,575		28,880
Western		48,946		49,912		55,714		-2	%		-12	%		33,679		15,267
Big Sky		28,903		28,906		33,147		0	%		-13	%		25,569		3,334
Valley		24,625		25,753		25,802		-4	%		-5	%		15,938		8,687
First National		27,320		-		-		n/m			n/m			16,803		10,517
Citizens		29,253		28,276		28,633		3	%		2	%		22,872		6,381
First Bank - MT		7,650		7,699		7,251		-1	%		6	%		3,777		3,873
San Juans		14,189		13,935		12,204		2	%		16	%		12,439		1,750
Total	$	540,111		515,723		542,417		5	%		0	%		407,035		133,076
n/m - not measurable

16

Glacier Bancorp, Inc.

Credit Quality Summary

(Unaudited - - $ in thousands)

	Non-Performing Assets, Net of Govt. Guarantees						Non-		Accruing		Other
	By Loan Type						Accruing		Loans 90		Real Estate
	Balance		Balance		Balance		Loans		Days or More		Owned
	12/31/2009		9/30/2009		12/31/2008		12/31/2009		12/31/2009		12/31/2009
Custom & Owner Occupied Construction	$	3,281		1,131		451		2,499		-		782
Pre-Sold & Spec Construction		29,580		39,812		21,903		20,849		420		8,311
Land Development		88,488		84,929		23,597		70,277		-		18,211
Consumer Land or Lots		10,120		12,092		1,511		6,161		54		3,905
Unimproved land		32,453		29,779		8,920		20,303		135		12,015
Developed Lots for Operative Builders		11,565		10,909		5,567		6,350		114		5,101
Commercial Lots		909		1,011		280		909		-		-
Other Construction		-		-		2,668		-		-		-
Commercial Real Estate		32,300		21,475		3,391		29,859		144		2,297
Commercial & Industrial		12,271		9,235		6,983		11,669		565		37
1-4 Family		30,868		24,615		6,666		22,596		2,750		5,522
Home Equity Line of Credits		6,234		5,539		1,807		4,711		1,183		340
Consumer		1,042		923		602		476		172		394
Other		2,027		1,555		107		1,622		-		405
Total	$	261,138		243,005		84,453		198,281		5,537		57,320

	Accruing 30 - 89 Days Delinquent Loans and						Accruing		Non-Accrual &		Other
	Non-Performing Assets, Net of Govt. Guarantees by Bank						30-89 Days		Accruing Loans 90		Real Estate
	Balance		Balance		Balance		Delinquent		Days or More		Owned
	12/31/2009		9/30/2009		12/31/2008		12/31/2009		12/31/2009		12/31/2009
Glacier	$	97,666		99,792		41,691		18,677		72,157		6,832
Mountain West		109,187		76,073		41,415		32,506		62,855		13,826
First Security		59,351		46,321		18,793		14,934		31,665		12,752
1st Bank		21,117		19,744		14,355		4,210		7,673		9,234
Western		9,315		8,917		3,364		1,796		3,295		4,224
Big Sky		31,711		26,941		10,978		5,280		17,908		8,523
Valley		2,542		1,638		2,855		1,783		679		80
First National		9,290		-		-		5,744		3,407		139
Citizens		5,340		5,653		5,080		1,910		1,873		1,557
First Bank - MT		800		538		563		608		39		153
San Juans		2,310		994		146		43		2,267		-
Total	$	348,629		286,611		139,240		87,491		203,818		57,320

									Provision for
							Provision		the Year		ALLL
	Allowance for Loan and Lease Losses						for Year		Ended 12/31/09		as a Percent
	Balance		Balance		Balance		Ended		Over Net		of Loans
	12/31/2009		9/30/2009		12/31/2008		12/31/2009		Charge-Offs		12/31/2009
Glacier	$	38,978		35,835		18,990		32,000		2.7		4.14	%
Mountain West		37,551		32,686		15,982		50,500		1.7		3.92	%
First Security		18,242		15,673		11,537		10,450		2.8		3.22	%
1st Bank		10,895		10,038		6,012		10,800		1.8		3.67	%
Western		8,762		8,020		7,062		3,200		2.1		2.71	%
Big Sky		10,536		8,862		6,232		9,200		1.9		3.89	%
Valley		4,367		4,132		3,581		1,200		2.9		2.33	%
First National		1,679		-		-		1,683		420.8		1.10	%
Citizens		4,865		4,064		2,721		2,800		4.3		2.93	%
First Bank - MT		2,904		2,699		1,945		985		37.9		2.48	%
San Juans		4,148		3,321		2,677		1,800		5.5		2.78	%
Total	$	142,927		125,330		76,739		124,618		2.1		3.46	%

	Net Charge-Offs, Year-to-Date Period Ending						Charge-Offs		Recoveries
	12/31/2009		9/30/2009		12/31/2008		12/31/2009		12/31/2009
Glacier	$	12,012		4,155		1,121		12,117		105
Mountain West		28,931		21,296		5,557		29,766		835
First Security		3,745		1,889		425		3,931		186
1st Bank		5,917		5,024		347		6,215		298
Western		1,500		1,342		282		1,896		396
Big Sky		4,896		4,370		600		5,433		537
Valley		414		349		127		457		43
First National		4		-		-		4		-
Citizens		656		532		302		683		27
First Bank - MT		26		31		17		57		31
San Juans		329		326		1		337		8
Total	$	58,430		39,314		8,779		60,896		2,466

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