Glacier Bancorp (GBCI) 10-Q 2012 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2012

¨ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number000-18911

GLACIER BANCORP, INC.

(Exact name of registrant as specified in its charter)

MONTANA	81-0519541
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
49 Commons Loop, Kalispell, Montana	59901
(Address of principal executive offices)	(Zip Code)

(406) 756-4200

Registrant’s telephone number, including area code

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    No  ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting Company	¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

The number of shares of Registrant’s common stock outstanding on April 24, 2012 was 71,931,386. No preferred shares are issued or outstanding.

Glacier Bancorp, Inc.

Quarterly Report on Form 10-Q

Index

			Page
Part I. Financial Information
	Item 1 – Financial Statements
		Unaudited Condensed Consolidated Statements of Financial Condition – March  31, 2012 and December 31, 2011		3
		Unaudited Condensed Consolidated Statements of Operations – Three Months ended March  31, 2012 and 2011		4
		Unaudited Condensed Consolidated Statements of Comprehensive Income – Three Months ended March  31, 2012 and 2011		5
		Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity – Three Months ended March 31, 2012 and 2011		6
		Unaudited Condensed Consolidated Statements of Cash Flows – Three Months ended March  31, 2012 and 2011		7
		Notes to Unaudited Condensed Consolidated Financial Statements		8
	Item  2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
	Item 3 – Quantitative and Qualitative Disclosure about Market Risk			57
	Item 4 – Controls and Procedures			57
Part II. Other Information				57
	Item 1 – Legal Proceedings			57
	Item 1A – Risk Factors			57
	Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds			64
	Item 3 – Defaults upon Senior Securities			64
	Item 4 – Mine Safety Disclosures			64
	Item 5 – Other Information			64
	Item 6 – Exhibits			65
	Signatures			65

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Financial Condition

	March 31,			December 31,
(Dollars in thousands, except per share data)	2012			2011
Assets
Cash on hand and in banks	$	95,687			104,674
Interest bearing cash deposits		36,070			23,358
Cash and cash equivalents		131,757			128,032
Investment securities, available-for-sale		3,239,019			3,126,743
Loans held for sale		77,528			95,457
Loans receivable		3,433,211			3,466,135
Allowance for loan and lease losses		(136,586	)		(137,516	)
Loans receivable, net		3,296,625			3,328,619
Premises and equipment, net		158,646			158,872
Other real estate owned		74,337			78,354
Accrued interest receivable		35,487			34,961
Deferred tax asset		24,511			31,081
Core deposit intangible, net		7,732			8,284
Goodwill		106,100			106,100
Non-marketable equity securities		49,699			49,694
Other assets		40,404			41,709
Total assets	$	7,241,845			7,187,906
Liabilities
Non-interest bearing deposits	$	1,039,068			1,010,899
Interest bearing deposits		3,888,750			3,810,314
Securities sold under agreements to repurchase		259,290			258,643
Federal Home Loan Bank advances		995,038			1,069,046
Other borrowed funds		10,358			9,995
Subordinated debentures		125,311			125,275
Accrued interest payable		5,318			5,825
Other liabilities		54,715			47,682
Total liabilities		6,377,848			6,337,679
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		719			719
Paid-in capital		641,647			642,882
Retained earnings - substantially restricted		180,122			173,139
Accumulated other comprehensive income		41,509			33,487
Total stockholders' equity		863,997			850,227
Total liabilities and stockholders' equity	$	7,241,845			7,187,906
Number of common stock shares issued and outstanding		71,915,073			71,915,073

See accompanying notes to unaudited condensed consolidated financial statements.

3

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Three Months ended March 31,
(Dollars in thousands, except per share data)	2012		2011
Interest Income
Residential real estate loans	$	7,784		8,716
Commercial loans		31,041		33,058
Consumer and other loans		9,170		10,450
Investment securities		19,889		16,149
Total interest income		67,884		68,373
Interest Expense
Deposits		4,954		7,088
Securities sold under agreements to repurchase		299		357
Federal Home Loan Bank advances		3,381		2,548
Federal funds purchased and other borrowed funds		62		33
Subordinated debentures		902		1,643
Total interest expense		9,598		11,669
Net Interest Income		58,286		56,704
Provision for loan losses		8,625		19,500
Net interest income after provision for loan losses		49,661		37,204
Non-Interest Income
Service charges and other fees		10,492		10,208
Miscellaneous loan fees and charges		946		977
Gain on sale of loans		6,813		4,694
Gain on sale of investments		—		124
Other income		2,087		1,392
Total non-interest income		20,338		17,395
Non-Interest Expense
Compensation and employee benefits		23,560		21,603
Occupancy and equipment		5,968		5,954
Advertising and promotions		1,402		1,484
Outsourced data processing		846		773
Other real estate owned		6,822		2,099
Federal Deposit Insurance Corporation premiums		1,712		2,324
Core deposit intangibles amortization		552		727
Other expense		8,183		7,512
Total non-interest expense		49,045		42,476
Income Before Income Taxes		20,954		12,123
Federal and state income tax expense		4,621		1,838
Net Income	$	16,333		10,285
Basic earnings per share	$	0.23		0.14
Diluted earnings per share	$	0.23		0.14
Dividends declared per share	$	0.13		0.13
Average outstanding shares—basic		71,915,073		71,915,073
Average outstanding shares—diluted		71,915,130		71,915,073

See accompanying notes to unaudited condensed consolidated financial statements.

4

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Comprehensive Income

	Three Months ended March 31,
(Dollars in thousands)	2012			2011
Net Income	$	16,333			10,285
Other Comprehensive Income, Net of Tax
Unrealized holding gains on available-for-sale securities		10,018			3,028
Reclassification adjustment for gains included in net income		—			(124	)
Net unrealized gains on securities		10,018			2,904
Tax effect		(3,897	)		(1,138	)
Net of tax amount		6,121			1,766
Change in fair value of derivatives used for cash flow hedges		3,112			—
Tax effect		(1,211	)		—
Net of tax amount		1,901			—
Total other comprehensive income, net of tax		8,022			1,766
Total Comprehensive Income	$	24,355			12,051

See accompanying notes to unaudited condensed consolidated financial statements.

5

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three Months ended March 31, 2012 and 2011

								Retained			Accumulated
								Earnings			Other
	Common Stock				Paid-in			Substantially			Comprehensive
(Dollars in thousands, except per share data)	Shares		Amount		Capital			Restricted			Income		Total
Balance at December 31, 2010		71,915,073	$	719		643,894			193,063			528		838,204
Comprehensive income		—		—		—			10,285			1,766		12,051
Cash dividends declared ($0.13 per share)		—		—		—			(9,348	)		—		(9,348	)
Stock based compensation and related taxes		—		—		(1,018	)		—			—		(1,018	)
Balance at March 31, 2011		71,915,073	$	719		642,876			194,000			2,294		839,889
Balance at December 31, 2011		71,915,073	$	719		642,882			173,139			33,487		850,227
Comprehensive income		—		—		—			16,333			8,022		24,355
Cash dividends declared ($0.13 per share)		—		—		—			(9,350	)		—		(9,350	)
Stock based compensation and related taxes		—		—		(1,235	)		—			—		(1,235	)
Balance at March 31, 2012		71,915,073	$	719		641,647			180,122			41,509		863,997

See accompanying notes to unaudited condensed consolidated financial statements.

6

Glacier Bancorp, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Three Months ended March 31,
(Dollars in thousands)	2012			2011
Operating Activities
Net cash provided by operating activities	$	95,469			226,910
Investing Activities
Proceeds from sales, maturities and prepayments of
investment securities, available-for-sale		398,640			104,065
Purchases of investment securities, available-for-sale		(514,219	)		(420,785	)
Principal collected on loans		210,355			253,029
Loans originated or acquired		(217,549	)		(184,987	)
Net addition of premises and equipment and other real estate owned		(2,245	)		(2,961	)
Proceeds from sale of other real estate owned		8,981			6,033
Net cash used in investment activities		(116,037	)		(245,606	)
Financing Activities
Net increase in deposits		106,605			30,408
Net increase in securities sold under agreements to repurchase		647			1,529
Net decrease in Federal Home Loan Bank advances		(74,008	)		(5,044	)
Net increase (decrease) in federal funds purchased and other borrowed funds		399			(5,835	)
Cash dividends paid		(9,350	)		(9,348	)
Net cash provided by financing activities		24,293			11,710
Net increase (decrease) in cash and cash equivalents		3,725			(6,986	)
Cash and cash equivalents at beginning of period		128,032			105,090
Cash and cash equivalents at end of period	$	131,757			98,104
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	10,105			12,236
Cash paid during the period for income taxes		1,230			—
Sale and refinancing of other real estate owned		512			1,145
Other real estate acquired in settlement of loans		10,959			17,277

See accompanying notes to unaudited condensed consolidated financial statements.

7

Glacier Bancorp, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1) Nature of Operations and Summary of Significant Accounting Policies

General

Glacier Bancorp, Inc. (the “Company”) is a Montana corporation headquartered in Kalispell, Montana. The Company is a regional multi-bank holding company that provides a full range of banking services to individual and corporate customers in Montana, Idaho, Wyoming, Colorado, Utah and Washington through its bank subsidiaries. The bank subsidiaries are subject to competition from other financial service providers. The bank subsidiaries are also subject to the regulations of certain government agencies and undergo periodic examinations by those regulatory authorities.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial condition as of March 31, 2012, and changes in stockholders’ equity, the results of operations, comprehensive income and cash flows for the three month periods ended March 31, 2012 and 2011. The condensed consolidated statement of financial condition of the Company as of December 31, 2011 has been derived from the audited consolidated statements of the Company as of that date.

The accompanying unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results anticipated for the year ending December 31, 2012.

Material estimates that are particularly susceptible to significant change include: 1) the determination of the allowance for loan and lease losses (“ALLL” or “allowance”), 2) the valuations related to investments and real estate acquired in connection with foreclosures or in satisfaction of loans, and 3) the evaluation of goodwill impairment. In connection with the determination of the ALLL and other real estate valuation estimates, management obtains independent appraisals (new or updated) for significant items. Estimates relating to investments are obtained from independent third parties. Estimates relating to the evaluation of goodwill for impairment are determined based on independent party valuations and internal calculations using significant independent party inputs.

Principles of Consolidation

As of March 31, 2012, the Company was the parent holding company (“Parent”) for eleven independent wholly-owned community bank subsidiaries: Glacier Bank (“Glacier”), First Security Bank of Missoula (“First Security”), Western Security Bank (“Western”), Valley Bank of Helena (“Valley”), Big Sky Western Bank (“Big Sky”), and First Bank of Montana (“First Bank-MT”), all located in Montana; Mountain West Bank (“Mountain West”) and Citizens Community Bank (“Citizens”) located in Idaho; 1st Bank (“1st Bank”) and First Bank of Wyoming (“First Bank-WY”) located in Wyoming; and Bank of the San Juans (“San Juans”) located in Colorado. All significant inter-company transactions have been eliminated in consolidation.

8

The Company formed GBCI Other Real Estate (“GORE”) to isolate certain bank foreclosed properties for legal protection and administrative purposes. The remaining properties are currently held for sale.

The Company owns seven trust subsidiaries, Glacier Capital Trust II (“Glacier Trust II”), Glacier Capital Trust III (“Glacier Trust III”), Glacier Capital Trust IV (“Glacier Trust IV”), Citizens (ID) Statutory Trust I (“Citizens Trust I”), Bank of the San Juans Bancorporation Trust I (“San Juans Trust I”), First Company Statutory Trust 2001 (“First Co Trust 01”) and First Company Statutory Trust 2003 (“First Co Trust 03”) for the purpose of issuing trust preferred securities. The trust subsidiaries are not consolidated into the Company’s financial statements.

The following abbreviated organizational chart illustrates the Company’s various relationships as of March 31, 2012:

			Glacier Bancorp. Inc. (Parent Holding Company)
Glacier Bank (MT Community Bank)		Mountain West Bank (ID Community Bank)		First Security Bank of Missoula (MT Community Bank)		Western Security Bank (MT Community Bank)
1st Bank (WY Community Bank)		Valley Bank of Helena (MT Community Bank)		Big Sky Western Bank (MT Community Bank)		First Bank of Wyoming (WY Community Bank)
Citizens Community Bank (ID Community Bank)		First Bank of Montana (MT Community Bank)		Bank of the San Juans (CO Community Bank)		GBCI Other Real Estate
Glacier Capital Trust II		Glacier Capital Trust III		Glacier Capital Trust IV		Citizens (ID) Statutory Trust I
	Bank of the San Juans Bancorporation Trust I		First Company Statutory Trust 2001		First Company Statutory Trust 2003

On April 30, 2012, the Company combined its eleven bank subsidiaries into one single commercial bank. The bank subsidiaries will operate as separate divisions of Glacier under the same names and management teams as before the consolidation.

Variable Interest Entities

The Company has equity investments in Certified Development Entities (“CDE”) which have received allocations of New Markets Tax Credits (“NMTC”). The Company also has equity investments in Low-Income Housing Tax Credit (“LIHTC”) partnerships. The CDEs and the LIHTC partnerships are variable interest entities (“VIE”).

9

The following table summarizes the carrying amounts of the VIE’s assets and liabilities included in the Company’s consolidated financial statements at March 31, 2012 and December 31, 2011:

	March 31, 2012				December 31, 2011
(Dollars in thousands)	CDE (NMTC)		LIHTC		CDE (NMTC)		LIHTC
Assets
Loans receivable	$	34,617		—		32,748		—
Premises and equipment, net		—		15,707		—		15,996
Accrued interest receivable		116		—		116		—
Other assets		1,328		65		1,439		31
Total assets	$	36,061		15,772		34,303		16,027
Liabilities
Other borrowed funds	$	4,629		3,306		4,629		3,306
Accrued interest payable		4		11		4		9
Other liabilities		124		287		186		363
Total liabilities	$	4,757		3,604		4,819		3,678

Amounts presented in the table above are adjusted for intercompany eliminations. All assets presented can be used only to settle obligations of the consolidated VIEs and all liabilities presented consist of liabilities for which creditors and other beneficial interest holders therein have no recourse to the general credit of the Company.

Impact of Recent Authoritative Accounting Guidance

The Accounting Standards Codification^TM (“ASC”) is the Financial Accounting Standards Board’s (“FASB”) officially recognized source of authoritative GAAP applicable to all public and non-public non-governmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under the authority of the federal securities laws are also sources of authoritative GAAP for the Company as an SEC registrant. All other accounting literature is considered non-authoritative.

In September 2011, FASB amended FASB ASC Topic 350,Intangibles - Goodwill and Other. The amendment provides an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount. If the entity concludes it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The amendment is effective prospectively during interim and annual periods beginning after December 15, 2011 and early adoption is permitted. The Company has evaluated the impact of the adoption of this amendment and determined there was not a material effect on the Company’s financial position or results of operations.

In June 2011, FASB amended FASB ASC Topic 220,Comprehensive Income. The amendment provides an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. Accounting Standards Update No. 2011-12, Comprehensive Income (Topic 220) defers the specific requirement of the amendment to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The amendments are effective retrospectively during interim and annual periods beginning after December 15, 2011. The Company has evaluated the impact of the adoption of this amendment and determined there was not a material effect on the Company’s financial position or results of operations.

10

In May 2011, FASB amended FASB ASC Topic 820,Fair Value Measurement. The amendment achieves common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The amendment changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. The amendment is effective prospectively during interim and annual periods beginning after December 15, 2011. The Company has evaluated the impact of the adoption of this amendment and determined there was not a material effect on the Company’s financial position or results of operations.

2) Investment Securities, Available-for-Sale

A comparison of the amortized cost and estimated fair value of the Company’s investment securities designated as available-for-sale is presented below.

	March 31, 2012
(Dollars in thousands)	Weighted			Amortized		Gross Unrealized					Fair
	Yield			Cost		Gains		Losses			Value
U.S. government and federal agency
Maturing after one year through five years		1.62	%	$	203		3		—			206
U.S. government sponsored enterprises
Maturing within one year		1.77	%		3,589		20		—			3,609
Maturing after one year through five years		2.34	%		24,067		566		—			24,633
Maturing after five years through ten years		1.90	%		76		—		—			76
		2.27	%		27,732		586		—			28,318
State and local governments
Maturing within one year		1.01	%		14,546		5		(5	)		14,546
Maturing after one year through five years		2.17	%		105,975		2,804		(46	)		108,733
Maturing after five years through ten years		2.53	%		65,607		1,554		(126	)		67,035
Maturing after ten years		4.80	%		893,053		59,282		(1,738	)		950,597
		4.35	%		1,079,181		63,645		(1,915	)		1,140,911
Corporate bonds
Maturing within one year		1.35	%		10,579		3		(5	)		10,577
Maturing after one year through five years		2.55	%		80,851		786		(190	)		81,447
Maturing after five years through ten years		2.31	%		15,662		28		(221	)		15,469
		2.40	%		107,092		817		(416	)		107,493
Collateralized debt obligations
Maturing after ten years		8.03	%		5,648		—		(282	)		5,366
Residential mortgage-backed securities		1.95	%		1,945,432		14,620		(3,327	)		1,956,725
Total investment securities		2.80	%	$	3,165,288		79,671		(5,940	)		3,239,019

11

	December 31, 2011
(Dollars in thousands)	Weighted Yield			Amortized Cost		Gross Unrealized					Fair Value
						Gains		Losses
U.S. government and federal agency
Maturing after one year through five years		1.62	%	$	204		4		—			208
U.S. government sponsored enterprises
Maturing within one year		1.58	%		3,979		17		—			3,996
Maturing after one year through five years		2.36	%		26,399		682		—			27,081
Maturing after five years through ten years		1.90	%		78		—		—			78
		2.26	%		30,456		699		—			31,155
State and local governments
Maturing within one year		1.31	%		4,786		3		(2	)		4,787
Maturing after one year through five years		2.22	%		89,752		2,660		(22	)		92,390
Maturing after five years through ten years		2.59	%		63,143		2,094		(19	)		65,218
Maturing after ten years		4.84	%		845,657		57,138		(535	)		902,260
		4.44	%		1,003,338		61,895		(578	)		1,064,655
Corporate bonds
Maturing after one year through five years		2.55	%		60,810		261		(1,264	)		59,807
Maturing after five years through ten years		2.38	%		2,409		21		—			2,430
		2.54	%		63,219		282		(1,264	)		62,237
Collateralized debt obligations
Maturing after ten years		8.03	%		5,648		—		(282	)		5,366
Residential mortgage-backed securities		1.70	%		1,960,167		10,138		(7,183	)		1,963,122
Total investment securities		2.64	%	$	3,063,032		73,018		(9,307	)		3,126,743

Included in the residential mortgage-backed securities are $46,928,000 and $49,252,000 as of March 31, 2012 and December 31, 2011, respectively, of non-guaranteed private label whole loan mortgage-backed securities of which none of the underlying collateral is considered “subprime."

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities, nor do they reflect expected shorter maturities based upon early prepayment of principal. Weighted yields are based on the level-yield method taking into account premium amortization and discount accretion. Weighted yields on tax-exempt investment securities exclude the tax benefit.

The cost of each investment sold is determined by specific identification. Gain or loss on sale of investments consists of the following:

	Three Months ended March 31,
(Dollars in thousands)	2012		2011
Gross proceeds	$	—		4,134
Less amortized cost		—		(4,010	)
Net gain on sale of investments	$	—		124
Gross gain on sale of investments	$	—		184
Gross loss on sale of investments		—		(60	)
Net gain on sale of investments	$	—		124

12

Investments with an unrealized loss position are summarized as follows:

		$1,001,588		$1,001,588			$1,001,588		$1,001,588			$1,001,588		$1,001,588
	March 31, 2012
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
State and local governments	$	103,707		(1,588	)		6,415		(327	)		110,122		(1,915	)
Corporate bonds		33,352		(416	)		—		—			33,352		(416	)
Collateralized debt obligations		—		—			5,366		(282	)		5,366		(282	)
Residential mortgage-backed securities		653,430		(2,530	)		10,896		(797	)		664,326		(3,327	)
Total temporarily impaired securities	$	790,489		(4,534	)		22,677		(1,406	)		813,166		(5,940	)

		$1,001,588		$1,001,588			$1,001,588		$1,001,588			$1,001,588		$1,001,588
	December 31, 2011
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Loss			Value		Loss			Value		Loss
State and local governments	$	26,434		(90	)		9,948		(488	)		36,382		(578	)
Corporate bonds		31,782		(1,264	)		—		—			31,782		(1,264	)
Collateralized debt obligations		—		—			5,366		(282	)		5,366		(282	)
Residential mortgage-backed securities		943,372		(6,850	)		8,244		(333	)		951,616		(7,183	)
Total temporarily impaired securities	$	1,001,588		(8,204	)		23,558		(1,103	)		1,025,146		(9,307	)

With respect to its impaired securities at March 31, 2012, management determined that it did not intend to sell and there was no expected requirement to sell any of its impaired securities. Based on an analysis of its impaired securities as of March 31, 2012 and December 31, 2011, the Company determined that none of such securities had other-than-temporary impairment.

3) Loans Receivable, Net

The following schedules summarize the activity in the ALLL on a portfolio class basis:

	Three Months ended March 31, 2012
(Dollars in thousands)	Total			Residential Real Estate			Commercial Real Estate			Other Commercial			Home Equity			Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,516			17,227			76,920			20,833			13,616			8,920
Provision for loan losses		8,625			3,530			1,778			2,373			737			207
Charge-offs		(11,058	)		(1,849	)		(6,123	)		(1,283	)		(1,006	)		(797	)
Recoveries		1,503			95			665			521			17			205
Balance at end of period	$	136,586			19,003			73,240			22,444			13,364			8,535

	Three Months ended March 31, 2011
(Dollars in thousands)	Total			Residential Real Estate			Commercial Real Estate			Other Commercial			Home Equity			Other Consumer
Allowance for loan and lease losses
Balance at beginning of period	$	137,107			20,957			76,147			19,932			13,334			6,737
Provision for loan losses		19,500			(2,260	)		14,267			2,638			2,121			2,734
Charge-offs		(16,504	)		(1,769	)		(10,628	)		(1,753	)		(1,332	)		(1,022	)
Recoveries		726			76			312			143			83			112
Balance at end of period	$	140,829			17,004			80,098			20,960			14,206			8,561

13

The following schedules disclose the ALLL and the recorded investment in loans on a portfolio class basis:

	March 31, 2012
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	20,507		4,148		8,944		5,202		774		1,439
Collectively evaluated for impairment		116,079		14,855		64,296		17,242		12,590		7,096
Total allowance for loan and lease losses	$	136,586		19,003		73,240		22,444		13,364		8,535
Loans receivable
Individually evaluated for impairment	$	271,072		30,280		164,126		54,061		15,535		7,070
Collectively evaluated for impairment		3,162,139		485,125		1,498,164		567,137		413,431		198,282
Total loans receivable	$	3,433,211		515,405		1,662,290		621,198		428,966		205,352

	December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Allowance for loan and lease losses
Individually evaluated for impairment	$	18,828		2,659		9,756		4,233		584		1,596
Collectively evaluated for impairment		118,688		14,568		67,164		16,600		13,032		7,324
Total allowance for loan and lease losses	$	137,516		17,227		76,920		20,833		13,616		8,920
Loans receivable
Individually evaluated for impairment	$	258,659		24,453		162,959		49,962		14,750		6,535
Collectively evaluated for impairment		3,207,476		492,354		1,509,100		573,906		425,819		206,297
Total loans receivable	$	3,466,135		516,807		1,672,059		623,868		440,569		212,832

Substantially all of the Company’s loan receivables are with customers within the Company’s market areas. Although the Company has a diversified loan portfolio, a substantial portion of its customers’ ability to honor their obligations is dependent upon the economic performance in the Company’s market areas. Net deferred fees, costs, premiums, and discounts of $3,125,000 and $3,123,000 were included in the loans receivable balance at March 31, 2012 and December 31, 2011, respectively.

14

The following schedules disclose the impaired loans by portfolio class of loans:

	At or for the Three Months ended March 31, 2012
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	86,675		15,521		40,229		26,072		1,724		3,129
Unpaid principal balance		95,582		15,658		48,723		26,159		1,908		3,134
Valuation allowance		20,507		4,148		8,944		5,202		774		1,439
Average impaired loans		82,196		13,316		40,100		24,080		1,471		3,229
Loans without a specific valuation allowance
Recorded balance	$	184,397		14,759		123,897		27,989		13,811		3,941
Unpaid principal balance		212,328		15,798		141,039		34,676		16,171		4,644
Average impaired loans		182,669		14,050		123,442		27,932		13,671		3,574
Totals
Recorded balance	$	271,072		30,280		164,126		54,061		15,535		7,070
Unpaid principal balance		307,910		31,456		189,762		60,835		18,079		7,778
Valuation allowance		20,507		4,148		8,944		5,202		774		1,439
Average impaired loans		264,865		27,366		163,542		52,012		15,142		6,803

	At or for the Year ended December 31, 2011
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Loans with a specific valuation allowance
Recorded balance	$	77,717		11,111		39,971		22,087		1,219		3,329
Unpaid principal balance		85,514		11,177		47,569		22,196		1,238		3,334
Valuation allowance		18,828		2,659		9,756		4,233		584		1,596
Average impaired loans		66,871		10,330		38,805		13,395		1,284		3,057
Loans without a specific valuation allowance
Recorded balance	$	180,942		13,342		122,988		27,875		13,531		3,206
Unpaid principal balance		208,828		14,741		139,962		35,174		15,097		3,854
Average impaired loans		168,983		14,730		123,231		19,963		8,975		2,084
Totals
Recorded balance	$	258,659		24,453		162,959		49,962		14,750		6,535
Unpaid principal balance		294,342		25,918		187,531		57,370		16,335		7,188
Valuation allowance		18,828		2,659		9,756		4,233		584		1,596
Average impaired loans		235,854		25,060		162,036		33,358		10,259		5,141

Interest income recognized on impaired loans for the periods ended March 31, 2012 and December 31, 2011 was not significant.

15

The following is a loan portfolio aging analysis on a portfolio class basis:

	March 31, 2012
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Accruing loans 30-59 days past due	$	39,468		9,237		17,637		6,502		3,765		2,327
Accruing loans 60-89 days past due		3,113		502		702		1,200		355		354
Accruing loans 90 days or more past due		9,231		147		7,429		1,176		163		316
Non-accrual loans		131,026		13,964		83,746		21,092		10,388		1,836
Total past due and non-accrual loans		182,838		23,850		109,514		29,970		14,671		4,833
Current loans receivable		3,250,373		491,555		1,552,776		591,228		414,295		200,519
Total loans receivable	$	3,433,211		515,405		1,662,290		621,198		428,966		205,352

		December 31, 2011
(Dollars in thousands)		Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Accruing loans 30-59 days past due		$	31,386		9,038		12,683		3,279		4,092		2,294
Accruing loans 60-89 days past due			17,700		2,678		11,660		1,034		1,276		1,052
Accruing loans 90 days or more past due			1,413		59		108		1,060		156		30
Non-accrual loans			133,689		11,881		87,956		21,685		10,272		1,895
Total past due and non-accrual loans			184,188		23,656		112,407		27,058		15,796		5,271
Current loans receivable			3,281,947		493,151		1,559,652		596,810		424,773		207,561
	��
Total loans receivable		$	3,466,135		516,807		1,672,059		623,868		440,569		212,832

The following is a summary of the troubled debt restructurings (“TDR”) that occurred during the period presented and the TDRs that occurred within the previous twelve months that subsequently defaulted during the period presented on a portfolio class basis:

	Three Months ended March 31, 2012
(Dollars in thousands)	Total		Residential Real Estate		Commercial Real Estate		Other Commercial		Home Equity		Other Consumer
Troubled debt restructurings
Number of loans		56		3		25		19		6		3
Pre-modification outstanding balance	$	16,526		359		11,110		4,123		785		149
Post-modification outstanding balance	$	15,819		359		10,393		4,133		785		149
Troubled debt restructurings that subsequently defaulted
Number of loans		15		—		7		4		2		2
Recorded balance	$	4,484		—		3,037		790		599		58

The majority of TDRs occurring in most loan classes was a result of an extension of the maturity date, payment deferral or change to interest only and in total accounted for approximately 61 percent of the TDRs. For commercial real estate, the class with the largest amount of TDRs, approximately 20 percent was due to extension of the maturity date and 48 percent was due to payment deferral or change to interest only.

16

In addition to the TDRs that occurred during the period provided in the preceding table, the Company had TDRs with pre-modification loan balances of $15,550,000 for the three months ended March 31, 2012 for which other real estate owned was received in full or partial satisfaction of the loans. The majority of such TDRs was in commercial real estate.

4) Goodwill

The changes in the carrying amount of goodwill and accumulated impairment charge are as follows:

		December 31,			December 31,
	Three Months ended March 31,
(Dollars in thousands)	2012			2011
Net carrying value at beginning of period	$	106,100			146,259
Impairment charge		—			—
Net carrying value at end of period		106,100			146,259
	March 31,			December 31,
(Dollars in thousands)	2012			2011
Gross carrying value		146,259			146,259
Accumulated impairment charge		(40,159	)		(40,159	)
Net carrying value	$	106,100			106,100

The Company performed its annual goodwill impairment test during the third quarter of 2011. Due to high levels of volatility and dislocation in bank stock prices nationwide, a goodwill impairment charge was recognized during the third quarter 2011. Since there were no events or circumstances that occurred since the third quarter 2011 that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value, the Company did not perform interim testing at March 31, 2012.

5) Derivatives and Hedging Activities

The Company has interest rate swap agreements on a forecasted notional amount of $160,000,000. The effective date of the transaction was October 21, 2011 with the maturity date of October 21, 2021. For the first three years no cash flows will be exchanged and for the following seven years the Company will pay a fixed interest rate of 3.378 percent and the counterparties will pay the Company 3 month LIBOR. The hedging strategy converts the LIBOR based variable interest rate on forecasted borrowings to a fixed interest rate, thereby protecting the Company from floating interest rate variability.

The following table summarizes the Company's interest rate derivative financial instruments:

				Fair Value
(Dollars in thousands)	Balance Sheet Location	Notional Amount		March 31, 2012		December 31, 2011
Interest rate swap	Other liabilities	$	160,000	$	5,794		8,906

Pursuant to the interest rate swap agreements, the Company pledged collateral to the counterparties in the form of investment securities totaling $15,433,000 at March 31, 2012. There was no collateral pledged from the counterparties to the Company as of March 31, 2012. There is the possibility that the Company may need to pledge additional collateral in the future.

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6) Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, included in stockholders’ equity, are as follows:

	March 31,			December 31,
(Dollars in thousands)	2012			2011
Unrealized holding gains on available-for-sale securities	$	73,731			63,711
Tax effect		(28,682	)		(24,783	)
Net of tax amount		45,049			38,928
Change in fair value of derivatives used for cash flow hedges		(5,794	)		(8,906	)
Tax effect		2,254			3,465
Net of tax amount		(3,540	)		(5,441	)
Total accumulated other comprehensive income	$	41,509			33,487

7) Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period presented. Diluted earnings per share is computed by including the net increase in shares as if dilutive outstanding stock options were exercised, using the treasury stock method.

Basic and diluted earnings per share has been computed based on the following:

	Three Months ended March 31,
(Dollars in thousands, except per share data)	2012		2011
Net income available to common stockholders, basic and diluted	$	16,333		10,285
Average outstanding shares - basic		71,915,073		71,915,073
Add: dilutive stock options		57		—
Average outstanding shares - diluted		71,915,130		71,915,073
Basic earnings per share	$	0.23		0.14
Diluted earnings per share	$	0.23		0.14

There were 1,048,184 and 1,746,472 options excluded from the diluted average outstanding share calculation for March 31, 2012 and 2011, respectively, due to the option exercise price exceeding the market price of the Company’s common stock.

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8) Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There is a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are as follows:

Level 1	Quoted prices in active markets for identical assets or liabilities
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

Recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2012.

Investment securities: fair value for available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections, and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. Where Level 1 or Level 2 inputs are not available, such securities are classified as Level 3 within the hierarchy.

Fair value determinations of investment securities are the responsibility of the Company's corporate accounting department. The Company contracts with independent third party pricing vendors to generate fair value estimates on a monthly basis. The Company reviews the vendors’ inputs for fair value estimates and the recommended assignments of levels within the fair value hierarchy. The review includes the extent to which markets for investment securities are determined to have limited or no activity, or are judged to be active markets. The Company reviews the extent to which observable and unobservable inputs are used as well as the appropriateness of the underlying assumptions about risk that a market participant would use in active markets, with adjustments for limited or inactive markets. In considering the inputs to the fair value estimates, the Company places less reliance on quotes that are judged to not reflect orderly transactions, or are non-binding indications. The Company makes independent inquiries of other knowledgeable parties in testing the reliability of the inputs, including consideration for illiquidity, credit risk, and cash flow estimates. In assessing credit risk, the Company reviews payment performance, collateral adequacy, credit rating histories, and issuers’ financial statements with follow-up discussion with issuers. For those markets determined to be inactive, the valuation techniques used are models for which management verifies that discount rates are appropriately adjusted to reflect illiquidity and credit risk. The Company also independently obtains cash flow estimates that are stressed at levels that exceed those used by the independent third party pricing vendors.

19

Interest rate swap derivative agreements: fair values for interest rate swap derivative agreements are based upon the estimated amounts to settle the contracts considering current interest rates and are calculated using discounted cash flows that are observable or that can be corroborated by observable market data and, therefore, are classified within Level 2 of the valuation hierarchy. The inputs used to determine fair value include the 3 month Libor forward curve to estimate variable rate cash inflows and the spot Libor curve to estimate the discount rate. The estimated variable rate cash inflows are compared to the fixed rate outflows and such difference is discounted to a present value to estimate the fair value of the interest rate swaps. The Company also obtains and compares the reasonableness of the pricing from a secondary independent party.

The following schedules disclose the fair value measurement of assets and liabilities measured at fair value on a recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value 3/31/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale      U.S. government and federal agency	$	206		—		206		—
U.S. government sponsored enterprises		28,318		—		28,318		—
State and local governments		1,140,911		—		1,140,911		—
Corporate bonds		107,493		—		107,493		—
Collateralized debt obligations		5,366		—		5,366		—
Residential mortgage-backed securities		1,956,725		—		1,956,725		—
Total assets measured at fair value on a recurring basis	$	3,239,019		—		3,239,019		—
Interest rate swap agreements	$	5,794		—		5,794		—
Total liabilities measured at fair value on a recurring basis	$	5,794		—		5,794		—

20

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value 12/31/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investment securities, available-for-sale      U.S. government and federal agency	$	208		—		208		—
U.S. government sponsored enterprises		31,155		—		31,155		—
State and local governments		1,064,655		—		1,064,655		—
Corporate bonds		62,237		—		62,237		—
Collateralized debt obligations		5,366		—		5,366		—
Residential mortgage-backed securities		1,963,122		—		1,963,122		—
Total assets measured at fair value on a recurring basis	$	3,126,743		—		3,126,743		—
Interest rate swap agreements	$	8,906		—		8,906		—
Total liabilities measured at fair value on a recurring basis	$	8,906		—		8,906		—

Level 3 Reconciliation

There were no Level 3 fair value measurements during the three month period ended March 31, 2012.

The following schedule reconciles the opening and closing balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period ended March 31, 2011:

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
			Investment Securities
(Dollars in thousands)	Total		Collateralized Debt Obligations		Residential Mortgage-backed Securities
Balance as of December 31, 2010	$	6,751		6,595		156
Total unrealized gains for the period included in other comprehensive income		522		480		42
Balance as of March 31, 2011	$	7,273		7,075		198

Non-recurring Measurements

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a non-recurring basis, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2012.

Other real estate owned (“OREO”): OREO is carried at the lower of fair value at acquisition date or estimated fair value, less estimated cost to sell. Estimated fair value of other real estate owned is based on appraisals or evaluations. OREO is classified within Level 3 of the fair value hierarchy.

21

Collateral-dependent impaired loans, net of ALLL: loans included in the Company’s financials for which it is probable that the Company will not collect all principal and interest due according to contractual terms are considered impaired. Estimated fair value of collateral-dependent impaired loans is based on the fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The bank subsidiaries’ credit departments review appraisals for OREO and collateral-dependent loans, giving consideration to the highest and best use of the collateral. The appraisal or evaluation (new or updated) is considered the starting point for determining fair value. The Company also considers other factors and events in the environment that may affect the fair value. The fair values are reduced by discounts to consider lack of marketability and estimated cost to sell. The appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to the impaired loan or OREO may occur. The Company generally obtains new or updated appraisals or evaluations annually.

Goodwill: Goodwill is evaluated for impairment at the bank subsidiary level at least annually. As a result of a goodwill impairment assessment performed by an independent valuation firm for two of the Company’s bank subsidiaries, Mountain West and 1st Bank, a goodwill impairment charge was recorded during the third quarter of 2011. The key inputs used to determine the implied fair value of such bank subsidiaries and the corresponding amount of the impairment charge included quoted market prices of other banks, discounted cash flows and inputs from comparable transactions. These inputs are classified within Level 3 of the fair value hierarchy. The goodwill impairment evaluation is the responsibility of the Company’s corporate accounting department. Valuations and significant inputs developed by the independent valuation firm are reviewed by the Company for accuracy and reasonableness.

The following schedules disclose the fair value measurement of assets with a recorded change during the period resulting from re-measuring the assets at fair value on a non-recurring basis:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value 3/31/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other real estate owned	$	28,004		—		—		28,004
Collateral-dependent impaired loans, net of ALLL		39,733		—		—		39,733
Total assets measured at fair value on a non-recurring basis	$	67,737		—		—		67,737

22

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Fair Value 12/31/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Other real estate owned	$	38,076		—		—		38,076
Collateral-dependent impaired loans, net of ALLL		55,339		—		—		55,339
Goodwill		24,718		—		—		24,718
Total assets measured at fair value on a non-recurring basis	$	118,133		—		—		118,133

Fair Value of Financial Instruments

The following is a description of the methods used to estimate the fair value of all other assets and liabilities recognized at amounts other than fair value.

Cash and cash equivalents: fair value is estimated at book value.

Loans held for sale: fair value is estimated at book value due to the insignificant time between origination date and sale date.

Loans receivable, net of ALLL: fair value is estimated by discounting the future cash flows using the rates at which similar notes would be written for the same remaining maturities. The market rates used are based on current rates the Banks would impose for similar loans and reflect a market participant assumption about risks associated with non-performance, illiquidity, and the structure and term of the loans along with local economic and market conditions. Estimated fair value of impaired loans is based on the fair value of the collateral, less estimated cost to sell, or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate). All impaired loans are classified as Level 3 and all other loans are classified as Level 2 within the hierarchy.

Accrued interest receivable: fair value is estimated at book value.

Non-marketable equity securities: fair value is estimated at book value due to restrictions that limit the sale or transfer of such securities.

Deposits: fair value of term deposits is estimated by discounting the future cash flows using rates of similar deposits with similar maturities. The market rates used were obtained from a knowledgeable independent third party and reviewed by the Company. The rates were the average of current rates offered by local competitors of the bank subsidiaries. The estimated fair value of demand, NOW, savings, and money market deposits is the book value since rates are regularly adjusted to market rates and such deposits are classified in Level 1 of the valuation hierarchy. Certificate accounts and wholesale deposits are classified as Level 2 within the hierarchy.

Federal Home Loan Bank (“FHLB”) advances: fair value of non-callable FHLB advances is estimated by discounting the future cash flows using rates of similar advances with similar maturities. These rates were obtained from current rates offered by FHLB. The estimated fair value of callable FHLB advances was obtained from FHLB and the model was reviewed by the Company through discussions with FHLB.

23

Securities sold under agreements to repurchase (“repurchase agreements”) and other borrowed funds: fair value of term repurchase agreements and other term borrowings is estimated based on current repurchase rates and borrowing rates currently available to the Company for repurchases and borrowings with similar terms and maturities. The estimated fair value for overnight repurchase agreements and other borrowings is book value.

Subordinated debentures: fair value of the subordinated debt is estimated by discounting the estimated future cash flows using current estimated market rates. The market rates used were averages of currently traded trust preferred securities with similar characteristics to the Company’s issuances and obtained from an independent third party.

Accrued interest payable: fair value is estimated at book value.

Off-balance sheet financial instruments: commitments to extend credit and letters of credit represent the principal categories of off-balance sheet financial instruments. Rates for these commitments are set at time of loan closing, such that no adjustment is necessary to reflect these commitments at market value. The Company has an insignificant amount of off-balance sheet financial instruments.

The following schedules present the carrying amounts, estimated fair values and the level within the fair value hierarchy of the Company’s financial instruments:

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount 3/31/12		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	131,757		131,757		—		—
Investment securities, available-for-sale		3,239,019		—		3,239,019		—
Loans held for sale		77,528		77,528		—		—
Loans receivable, net of ALLL		3,296,625		—		3,118,606		250,565
Accrued interest receivable		35,487		35,487		—		—
Non-marketable equity securities		49,699		—		49,699		—
Total financial assets	$	6,830,115		244,772		6,407,324		250,565
Financial liabilities
Deposits	$	4,927,818		3,218,761		1,717,782		—
FHLB advances		995,038		—		1,021,483		—
Repurchase agreements and other borrowed funds		269,648		—		269,648		—
Subordinated debentures		125,311		—		—		67,145
Accrued interest payable		5,318		5,318		—		—
Total financial liabilities	$	6,323,133		3,224,079		3,008,913		67,145

24

			Fair Value Measurements At the End of the Reporting Period Using
(Dollars in thousands)	Carrying Amount 12/31/11		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial assets
Cash and cash equivalents	$	128,032		128,032		—		—
Investment securities, available-for-sale		3,126,743		—		3,126,743		—
Loans held for sale		95,457		95,457		—		—
Loans receivable, net of ALLL		3,328,619		—		3,146,502		239,831
Accrued interest receivable		34,961		34,961		—		—
Non-marketable equity securities		49,694		—		49,694		—
Total financial assets	$	6,763,506		258,450		6,322,939		239,831
Financial liabilities
Deposits	$	4,821,213		3,132,261		1,698,382		—
FHLB advances		1,069,046		—		1,099,699		—
Repurchase agreements and other borrowed funds		268,638		—		268,642		—
Subordinated debentures		125,275		—		—		65,903
Accrued interest payable		5,825		5,825		—		—
Total financial liabilities	$	6,289,997		3,138,086		3,066,723		65,903

9) Operating Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. The Company’s operating segments include each of the individual bank subsidiaries, GORE and the Parent.

The accounting policies of the individual operating segments are the same as those of the Company. Transactions between operating segments are conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations. Intersegment income primarily represents interest income on intercompany borrowings, management fees, and data processing fees received by individual bank subsidiaries or the Parent. Intersegment income, expenses and assets are eliminated in order to report results in accordance with GAAP. Expenses for centrally provided services are allocated based on the estimated usage of those services.

25

The following schedules provide selected financial data for the Company’s operating segments:

		Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations
	At or for the Three Months ended March 31, 2012
(Dollars in thousands)	Glacier			Mountain West			First Security			Western			1st Bank			Valley			Big Sky			First Bank- WY
External revenues	$	17,450			17,407			13,447			8,603			7,379			5,363			4,510			3,632
Intersegment revenues		62			99			19			6			38			111			7			10
Expenses		(13,417	)		(16,949	)		(10,712	)		(6,220	)		(5,563	)		(3,747	)		(3,917	)		(2,773	)
Net earnings (loss)	$	4,095			557			2,754			2,389			1,854			1,727			600			869
Total assets	$	1,399,271			1,111,517			1,120,373			825,354			768,606			465,247			380,778			402,907
	Citizens			First Bank- MT			San Juans			GORE			Parent			Eliminations and Other						Total Consolidated
External revenues	$	4,707			2,628			2,833			9			173			81						88,222
Intersegment revenues		—			10			17			—			21,163			(21,542	)					—
Expenses		(3,725	)		(1,613	)		(2,129	)		(229	)		(5,003	)		4,108						(71,889	)
Net earnings (loss)	$	982			1,025			721			(220	)		16,333			(17,353	)					16,333
Total assets	$	368,792			280,110			237,625			6,055			1,006,887			(1,131,677	)					7,241,845

		Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations			Eliminations
	At or for the Three Months ended March 31, 2011
(Dollars in thousands)	Glacier			Mountain West			First Security			Western			1st Bank			Valley			Big Sky			First Bank- WY
External revenues	$	17,334			17,469			12,657			8,194			7,613			4,969			4,741			3,261
Intersegment revenues		66			142			20			55			3			59			3			35
Expenses		(15,041	)		(18,509	)		(10,714	)		(6,305	)		(6,515	)		(3,493	)		(3,782	)		(2,753	)
Net earnings (loss)	$	2,359			(898	)		1,963			1,944			1,101			1,535			962			543
Total assets	$	1,387,078			1,172,141			1,062,765			764,396			746,074			398,690			363,805			360,346
	Citizens			First Bank- MT			San Juans			GORE			Parent			Eliminations and Other						Total Consolidated
External revenues	$	4,156			2,314			2,629			30			401			—						85,768
Intersegment revenues		18			35			44			—			14,686			(15,166	)					—
Expenses		(3,583	)		(1,481	)		(2,210	)		(324	)		(4,862	)		4,089						(75,483	)
Net earnings (loss)	$	591			868			463			(294	)		10,225			(11,077	)					10,285
Total assets	$	317,353			254,958			234,195			21,232			984,190			(1,157,359	)					6,909,864

10) Subsequent Event

On April 30, 2012, the Company combined its eleven bank subsidiaries into one single commercial bank. The bank subsidiaries will operate as separate divisions of Glacier under the same names and management teams as before the consolidation. The resulting bank Board of Directors and executive officers will be the Board of Directors and senior management team of the Company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Form 10-Q 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 Form 10-Q:

• the risks associated with lending and potential adverse changes of the credit quality of loans in the Company’s portfolio, including as a result of declines in the housing and real estate markets in its geographic areas;

• increased loan delinquency rates;

• the risks presented by a continued economic downturn, which could adversely affect credit quality, loan collateral values, other real estate owned values, investment values, liquidity and capital levels, dividends and loan originations;

• changes in market interest rates, which could adversely affect the Company’s net interest income and profitability;

• legislative or regulatory changes that adversely affect the Company’s business, ability to complete pending or prospective future acquisitions, limit certain sources of revenue, or increase cost of operations;

• costs or difficulties related to the integration of acquisitions;

• the goodwill the Company has recorded in connection with acquisitions could become additionally impaired, which may have an adverse impact on our earnings and capital;

• reduced demand for banking products and services;

• the risks presented by public stock market volatility, which could adversely affect the market price of our common stock and our ability to raise additional capital in the future;

• competition from other financial services companies in our markets;

• loss of services from the senior management team; and

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

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in “Part II. Item 1A. Risk Factors.” Please take into account that forward-looking statements speak only as of the date of this Form 10-Q. 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.

27

Financial Condition Analysis

Assets

The following table summarizes the asset balances as of the dates indicated, and the amount of change from December 31, 2011 and March 31, 2011:

(Unaudited - Dollars in thousands)	March 31, 2012			December 31, 2011			March 31, 2011			$ Change from December 31, 2011			$ Change from March 31, 2011
Cash and cash equivalents	$	131,757			128,032			98,104			3,725			33,653
Investment securities, available-for-sale		3,239,019			3,126,743			2,705,709			112,276			533,310
Loans receivable
Residential real estate		515,405			516,807			543,229			(1,402	)		(27,824	)
Commercial		2,283,488			2,295,927			2,404,731			(12,439	)		(121,243	)
Consumer and other		634,318			653,401			699,026			(19,083	)		(64,708	)
Loans receivable		3,433,211			3,466,135			3,646,986			(32,924	)		(213,775	)
Allowance for loan and lease losses		(136,586	)		(137,516	)		(140,829	)		930			4,243
Loans receivable, net		3,296,625			3,328,619			3,506,157			(31,994	)		(209,532	)
Other assets		574,444			604,512			599,894			(30,068	)		(25,450	)
Total assets	$	7,241,845			7,187,906			6,909,864			53,939			331,981

Investment securities increased $112 million, or 4 percent, during the current quarter and increased $533 million, or 20 percent, from March 31, 2011. During the current quarter and previous twelve months, the Company purchased investment securities to primarily offset the lack of loan growth and to maintain interest income. The increase in investment securities for the current quarter occurred primarily in corporate and municipal bonds. Investment securities represent 45 percent of total assets at March 31, 2012 versus 44 percent at December 31, 2011 and 39 percent at March 31, 2011.

At March 31, 2012, the loan portfolio was $3.433 billion, a decrease of $32.9 million, or 1 percent, during the current quarter. During the past twelve months, the loan portfolio decreased $214 million, or 6 percent, from total loans of $3.647 billion at March 31, 2011. The continued downturn in the economy and resulting lack of loan demand were the primary reasons for the decrease in the loan portfolio. Although there was a decrease in the loan portfolio during the current quarter, the Company was encouraged by the slowing rate of decline which hasn't occurred since 2009. The largest decrease in dollars and percentage decrease during the current quarter was in consumer and other loans which decreased $19.1 million, or 3 percent, from December 31, 2011. The decrease in consumer and other loans was primarily driven by the Company reducing its exposure to consumer land and lot loans in combination with customers paying down their lines of credit and reducing other debt. Excluding net charge-offs of $9.6 million and loans transferred to other real estate owned of $11.0 million, loans decreased $12.3 million, or 0.4 percent, during the current quarter. The Company continues to reduce its exposure to land, lot and other construction loans which totaled $361 million as of March 31, 2012, a decrease of $139 million, or 28 percent, since the prior year first quarter.

28

Liabilities

The following table summarizes the liability balances as of the dates indicated, and the amount of change from December 31, 2011 and March 31, 2011:

(Unaudited - Dollars in thousands)	March 31, 2012		December 31, 2011		March 31, 2011		$ Change from December 31, 2011			$ Change from March 31, 2011
Non-interest bearing deposits	$	1,039,068		1,010,899		888,311		28,169			150,757
Interest bearing deposits		3,888,750		3,810,314		3,663,999		78,436			224,751
Repurchase agreements		259,290		258,643		250,932		647			8,358
FHLB advances		995,038		1,069,046		960,097		(74,008	)		34,941
Other borrowed funds		10,358		9,995		14,135		363			(3,777	)
Subordinated debentures		125,311		125,275		125,167		36			144
Other liabilities		60,033		53,507		167,334		6,526			(107,301	)
Total liabilities	$	6,377,848		6,337,679		6,069,975		40,169			307,873

At March 31, 2012, non-interest bearing deposits of $1.039 billion increased $28.2 million, or 3 percent, since December 31, 2011 and increased $151 million, or 17 percent, since March 31, 2011. Interest bearing deposits of $3.889 billion at March 31, 2012 included $649 million of wholesale deposits of which $117 million were reciprocal deposits (e.g., Certificate of Deposit Account Registry System deposits). In addition to reciprocal deposits, wholesale deposits include brokered deposits classified as NOW, money market deposit and certificate accounts. Interest bearing deposits increased $78.4 million, or 2 percent, since December 31, 2011 and included an increase of $41.2 million in wholesale deposits. Interest bearing deposits increased $225 million, or 6 percent, from March 31, 2011 and included an increase of $75.7 million in wholesale deposits. The increase in deposits during the current quarter and throughout 2011 has been driven by the banks’ success in generating new personal and business customer relationships, as well as existing customers retaining cash deposits for liquidity purposes due to the continued uncertainty in the current economic environment. These deposit increases have been beneficial to the Company in funding the investment securities portfolio growth at low costs over the prior twelve months.

The Company’s level of borrowings has fluctuated as needed to supplement deposit growth and to fund the growth in investment securities. Since the prior quarter end, Federal Home Loan Bank (“FHLB”) advances decreased $74.0 million and have increased $34.9 million since March 31, 2011. Included in the other liabilities at March 31, 2011 was a $129 million obligation for securities purchased on March 31, 2011 which were settled in April 2011.

29

Stockholders’ Equity

The following table summarizes the stockholders’ equity balances as of the dates indicated, and the amount of change from December 31, 2011 and March 31, 2011:

(Unaudited - Dollars in thousands, except per share data)	March 31, 2012			December 31, 2011			March 31, 2011			$ Change from December 31, 2011		$ Change from March 31, 2011
Common equity	$	822,488			816,740			837,595			5,748		(15,107	)
Accumulated other comprehensive income		41,509			33,487			2,294			8,022		39,215
Total stockholders’ equity		863,997			850,227			839,889			13,770		24,108
Goodwill and core deposit intangible, net		(113,832	)		(114,384	)		(156,289	)		552		42,457
Tangible stockholders’ equity	$	750,165			735,843			683,600			14,322		66,565
Stockholders’ equity to total assets		11.93	%		11.83	%		12.15	%
Tangible stockholders’ equity to total tangible assets		10.52	%		10.40	%		10.12	%
Book value per common share	$	12.01			11.82			11.68			0.19		0.33
Tangible book value per common share	$	10.43			10.23			9.51			0.20		0.92
Market price per share at end of period	$	14.94			12.03			15.05			2.91		(0.11	)

Tangible stockholders’ equity and book value per share increased $14.3 million and $0.20 per share from the prior year end, resulting in tangible stockholders’ equity to tangible assets of 10.52 percent and tangible book value per share of $10.43 as of March 31, 2012. The increases came from earnings retention and an increase in accumulated other comprehensive income. Tangible stockholders’ equity increased $66.6 million, or $0.92 per share since March 31, 2011, primarily a result of an increase in accumulated other comprehensive income. The $15.1 million decrease in common equity from March 31, 2011 included a third quarter 2011 goodwill impairment charge (net of tax) of $32.6 million.

On March 28, 2012, the Company’s Board of Directors declared a cash dividend of $0.13 per share, payable April 19, 2012 to shareholders of record on April 10, 2012. Future cash dividends will depend on a variety of factors, including net income, capital, asset quality, general economic conditions and regulatory considerations.

Results of Operations – The Three Months ended March 31, 2012

Compared to the Three Months ended December 31, 2011 and March 31, 2011

Performance Summary

	Three Months ended
(Unaudited - Dollars in thousands, except per share data)	March 31, 2012			December 31, 2011			March 31, 2011
Net income	$	16,333			14,348			10,285
Diluted earnings per share	$	0.23			0.20			0.14
Return on average assets (annualized)		0.91	%		0.80	%		0.62	%
Return on average equity (annualized)		7.58	%		6.69	%		4.95	%

The Company reported net income for the current quarter of $16.3 million, an increase of $6.0 million, or 59 percent, compared to $10.3 million for the prior year first quarter. Diluted earnings per share for the current quarter was $0.23 per share, an increase of 64 percent from the prior year first quarter earnings per share of $0.14.

30

Revenue Summary

The following tables summarize revenue for the periods indicated, including the amount and percentage change from December 31, 2011 and March 31, 2011:

	Three Months ended
(Unaudited - Dollars in thousands)	March 31, 2012			December 31, 2011			March 31, 2011
Net interest income
Interest income	$	67,884			68,741			68,373
Interest expense		9,598			10,197			11,669
Total net interest income		58,286			58,544			56,704
Non-interest income
Service charges, loan fees, and other fees		11,438			12,134			11,185
Gain on sale of loans		6,813			7,026			4,694
Gain on sale of investments		—			—			124
Other income		2,087			2,857			1,392
Total non-interest income		20,338			22,017			17,395
	$	78,624			80,561			74,099
Net interest margin (tax-equivalent)		3.73	%		3.74	%		3.91	%

(Unaudited - Dollars in thousands)	$ Change from December 31, 2011			$ Change from March 31, 2011			% Change from December 31, 2011			% Change from March 31, 2011
Net interest income
Interest income	$	(857	)	$	(489	)		-1	%		-1	%
Interest expense		(599	)		(2,071	)		-6	%		-18	%
Total net interest income		(258	)		1,582			0	%		3	%
Non-interest income
Service charges, loan fees, and other fees		(696	)		253			-6	%		2	%
Gain on sale of loans		(213	)		2,119			-3	%		45	%
Gain on sale of investments		—			(124	)		n/m			-100	%
Other income		(770	)		695			-27	%		50	%
Total non-interest income		(1,679	)		2,943			-8	%		17	%
	$	(1,937	)	$	4,525			-2	%		6	%

Net Interest Income

The current quarter net interest income of $58.3 million decreased $258 thousand, or 0.4 percent, over the prior quarter and increased $1.6 million, or 3 percent, over the prior year first quarter. In spite of the significant collateralized mortgage obligation (“CMO”) premium amortization (net of discount accretion) in the current quarter, interest income has remained relatively stable with only small decreases compared to the prior quarter and the prior year first quarter. The current quarter CMO premium amortization was $12.8 million, an increase of $1.3 million over the prior quarter and an increase of $3.2 million over the prior year first quarter. The decrease in interest expense of $599 thousand, or 6 percent, from the prior quarter and the decrease of $2.1 million, or 18 percent, in interest expense from the prior year first quarter was primarily driven by the decrease in interest rates on deposits as a result of the bank subsidiaries’ continued focus on reducing funding costs. The funding cost for the current quarter was 72 basis points compared to 77 basis points for the prior quarter and 96 basis points for the prior year first quarter.

31

The current quarter net interest margin as a percentage of earning assets, on a tax-equivalent basis, was 3.73 percent, a decrease of 1 basis point from the prior quarter net interest margin of 3.74 percent and a decrease of 18 basis points from the prior year first quarter net interest margin of 3.91 percent. Such decreases were a result of the reduction in yields on earning assets, the majority of which was from lower yielding investment securities and the increase in CMO premium amortization during the current quarter. The CMO premium amortization in the current quarter accounted for a 76 basis point reduction in the net interest margin compared to a 69 basis point reduction in the prior quarter and 63 basis point reduction in the net interest margin in the prior year first quarter. As a result of fewer loans moving to non-accrual status and the greater dispositions of existing non-accrual loans, the reversal of interest income on non-accrual loans accounted for only a 1 basis point reduction in the net interest margin during the current quarter.

Non-interest Income

Non-interest income for the current quarter totaled $20.3 million, a decrease of $1.7 million over the prior quarter and an increase of $2.9 million over the same quarter last year. Gain on sale of loans decreased $213 thousand, or 3 percent, over the prior quarter as there was a slight reduction in origination volume. However, gain on sale of loans increased $2.1 million, or 45 percent, over the same quarter last year, the result of an increase in refinance activity during the first quarter of 2012 compared to the first quarter of 2011. Service charge fee income decreased $696 thousand from the linked quarter, the majority of which was from lower overdraft fees driven by the increased regulatory restrictions. Service charge fee income increased $253 thousand from the prior year first quarter primarily due to the gain in debit card income as a result of the larger number of deposit accounts and greater volume of transactions. Other income of $2.1 million for the current quarter was a decrease of $770 thousand from the prior quarter and an increase of $695 thousand from the prior year first quarter. Included in other income was operating revenue of $51.2 thousand from other real estate owned and gains of $477 thousand on the sale of other real estate owned, which total $528 thousand for the current quarter compared to $822 thousand for the prior quarter and $268 thousand for the prior year first quarter.

32

Non-interest Expense

The following tables summarize non-interest expense for the periods indicated, including the amount and percentage change from December 31, 2011 and March 31, 2011:

	Three Months ended
(Unaudited - Dollars in thousands)	March 31, 2012		December 31, 2011		March 31, 2011
Compensation and employee benefits	$	23,560		21,311		21,603
Occupancy and equipment		5,968		5,890		5,954
Advertising and promotions		1,402		1,588		1,484
Outsourced data processing		846		849		773
Other real estate owned		6,822		12,896		2,099
Federal Deposit Insurance Corporation premiums		1,712		2,010		2,324
Core deposit intangibles amortization		552		557		727
Other expense		8,183		10,029		7,512
Total non-interest expense	$	49,045		55,130		42,476

(Unaudited - Dollars in thousands)	$ Change from December 31, 2011			$ Change from March 31, 2011			% Change from December 31, 2011			% Change from March 31, 2011
Compensation and employee benefits	$	2,249		$	1,957			11	%		9	%
Occupancy and equipment		78			14			1	%		0	%
Advertising and promotions		(186	)		(82	)		-12	%		-6	%
Outsourced data processing		(3	)		73			0	%		9	%
Other real estate owned		(6,074	)		4,723			-47	%		225	%
Federal Deposit Insurance Corporation premiums		(298	)		(612	)		-15	%		-26	%
Core deposit intangibles amortization		(5	)		(175	)		-1	%		-24	%
Other expense		(1,846	)		671			-18	%		9	%
Total non-interest expense	$	(6,085	)	$	6,569			-11	%		15	%

Non-interest expense of $49.0 million for the current quarter decreased by $6.1 million, or 11 percent, from the prior quarter and increased by $6.6 million, or 15 percent, from the prior year first quarter. The changes over the prior quarter and the prior year first quarter were driven primarily by other real estate owned expense. Other real estate owned expense decreased $6.1 million, or 47 percent, from the prior quarter and increased $4.7 million, or 225 percent, from the prior year first quarter. The current quarter other real estate owned expense of $6.8 million included $864 thousand of operating expense, $5.4 million of fair value write-downs, and $549 thousand of loss on sale of other real estate owned. Other real estate owned expense will fluctuate as the Company continues to work through non-performing loans and dispose of foreclosure properties.

Excluding other real estate owned expense, non-interest expense decreased $11 thousand, or 3 basis points, from the prior quarter and increased $1.8 million, or 5 percent, from the prior year first quarter. Compensation and employee benefits increased by $2.2 million, or 11 percent, from the prior quarter and increased $2.0 million, or 9 percent, from the prior year first quarter. Such increases were attributable to a revised Company incentive program and the restoration in 2012 of certain compensation cuts made in 2011. Other expense decreased $1.8 million, or 18 percent, from the prior quarter as a result of decreases in several categories including loan expenses, outside service expense, and expenses associated with New Markets Tax Credit Investments. The banks continue to work diligently in reducing expenses in areas where they have direct control.

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Efficiency Ratio

The efficiency ratio for the current quarter was 51 percent compared to 53 percent for the prior year first quarter. The lower efficiency ratio was the result of an increase in net interest income and non-interest income which more than offset the increase in non-interest expense.

Provision for Loan Losses

(Unaudited - Dollars in thousands)	Provision for Loan Losses		Net Charge-Offs		ALLL as a Percent of Loans			Accruing Loans 30-89 Days Past Due as a Percent of Loans			Non-Performing Assets to Total Subsidiary Assets
Q1 2012	$	8,625		9,555		3.98	%		1.24	%		2.91	%
Q4 2011		8,675		9,252		3.97	%		1.42	%		2.92	%
Q3 2011		17,175		18,877		3.92	%		0.60	%		3.49	%
Q2 2011		19,150		20,184		3.88	%		1.14	%		3.68	%
Q1 2011		19,500		15,778		3.86	%		1.44	%		3.78	%
Q4 2010		27,375		24,525		3.66	%		1.21	%		3.91	%
Q3 2010		19,162		26,570		3.47	%		1.06	%		4.03	%
Q2 2010		17,246		19,181		3.58	%		0.92	%		4.01	%

Net charged-off loans during the current quarter of $9.6 million remained stable compared to the prior quarter and decreased $6.2 million, or 39 percent, compared to the prior year first quarter. The current quarter provision for loan losses was $8.6 million, which was nearly the same as the prior quarter and a decrease of $10.9 million from the first quarter of 2011. Loan portfolio growth, composition, average loan size, credit quality considerations, and other environmental factors will continue to determine the level of additional provision for loan loss expense.

The determination of the allowance for loan and lease losses (“ALLL” or “allowance”) and the related provision for loan losses is a critical accounting estimate that involves management’s judgments about current environmental factors which affect loan losses, such factors including economic conditions, changes in collateral values, net charge-offs, and other factors discussed below in “Additional Management’s Discussion and Analysis.”

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Additional Management’s Discussion and Analysis

Lending Activity and Practices

The Banks focus their lending activity primarily on the following types of loans: 1) first-mortgage, conventional loans secured by residential properties, particularly single-family, 2) commercial lending that concentrates on targeted businesses and 3) installment lending for consumer purposes (e.g., auto, home equity, etc.). Note 3 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements” provides more information about the loan portfolio.

The following table summarizes the Company’s loan portfolio by regulatory classification:

	Loans Receivable, by Loan Type									%  Change from 12/31/11			%  Change from 3/31/11
(Unaudited - Dollars in thousands)	Balance 3/31/12			Balance 12/31/11			Balance 3/31/11
Custom and owner occupied construction	$	38,540			35,422			37,841			9	%		2	%
Pre-sold and spec construction		50,699			58,811			55,817			-14	%		-9	%
Total residential construction		89,239			94,233			93,658			-5	%		-5	%
Land development		98,315			103,881			172,134			-5	%		-43	%
Consumer land or lots		118,689			125,396			144,885			-5	%		-18	%
Unimproved land		61,462			66,074			79,234			-7	%		-22	%
Developed lots for operative builders		23,910			25,180			29,543			-5	%		-19	%
Commercial lots		26,228			26,621			29,334			-1	%		-11	%
Other construction		32,503			34,346			44,588			-5	%		-27	%
Total land, lot, and other construction		361,107			381,498			499,718			-5	%		-28	%
Owner occupied		709,979			697,131			685,484			2	%		4	%
Non-owner occupied		445,118			436,021			434,179			2	%		3	%
Total commercial real estate		1,155,097			1,133,152			1,119,663			2	%		3	%
Commercial and industrial		399,889			408,054			416,343			-2	%		-4	%
1st lien		667,341			688,455			659,480			-3	%		1	%
Junior lien		92,578			95,508			99,898			-3	%		-7	%
Total 1-4 family		759,919			783,963			759,378			-3	%		0	%
Home equity lines of credit		342,693			350,229			374,949			-2	%		-9	%
Other consumer		107,933			109,235			112,499			-1	%		-4	%
Total consumer		450,626			459,464			487,448			-2	%		-8	%
Agriculture		146,943			151,031			149,689			-3	%		-2	%
Other		147,919			150,197			144,993			-2	%		2	%
Loans held for sale		(77,528	)		(95,457	)		(23,904	)		-19	%		224	%
Total	$	3,433,211			3,466,135			3,646,986			-1	%		-6	%

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Non-performing Assets

The following table summarizes information regarding non-performing assets at the dates indicated:

(Unaudited - Dollars in thousands)	At or for the Three Months ended March 31, 2012			At or for the Year ended December 31, 2011			At or for the Three Months ended March 31, 2011
Other real estate owned	$	74,337			78,354			82,594
Accruing loans 90 days or more past due
Residential real estate		147			59			191
Commercial		8,605			1,168			3,550
Consumer and other		479			186			2,837
Total		9,231			1,413			6,578
Non-accrual loans
Residential real estate		13,964			11,881			16,949
Commercial		104,838			109,641			151,290
Consumer and other		12,224			12,167			10,163
Total		131,026			133,689			178,402
Total non-performing assets1	$	214,594			213,456			267,574
Non-performing assets as a percentage of subsidiary assets		2.91	%		2.92	%		3.78	%
Allowance for loan and lease losses as a percentage of non-performing loans		97	%		102	%		76	%
Accruing loans 30-89 days past due	$	42,581			49,086			52,402
Troubled debt restructurings not included in non-performing assets	$	89,218			98,859			25,630
Interest income2	$	1,777			7,441			2,471

¹  As of March 31, 2012, non-performing assets have not been reduced by U.S. government guarantees of $3.2 million.

²  Amounts represent estimated interest income that would have been recognized on loans accounted for on a non-accrual basis as of the end of each period had such loans performed pursuant to contractual terms.

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The following tables summarize selected information identified by regulatory classification on the Company’s non-performing assets.

	Non-performing Assets, by Loan Type						Non- Accruing Loans 3/31/12		Accruing Loans 90  Days or More Past Due 3/31/12		Other Real  Estate Owned 3/31/12
(Unaudited - Dollars in thousands)	Balance 3/31/12		Balance 12/31/11		Balance 3/31/11
Custom and owner occupied construction	$	2,688		1,531		2,362		1,825		—		863
Pre-sold and spec construction		9,085		5,506		12,410		5,627		358		3,100
Total residential construction		11,773		7,037		14,772		7,452		358		3,963
Land development		50,746		56,152		82,465		26,544		2,385		21,817
Consumer land or lots		8,271		8,878		12,763		2,567		304		5,400
Unimproved land		31,891		35,771		42,755		18,807		255		12,829
Developed lots for operative builders		8,918		9,001		7,079		6,438		652		1,828
Commercial lots		2,643		2,032		2,630		548		449		1,646
Other construction		5,128		5,133		4,302		217		—		4,911
Total land, lot and other construction		107,597		116,967		151,994		55,121		4,045		48,431
Owner occupied		20,818		23,931		23,104		11,479		1,287		8,052
Non-owner occupied		3,645		4,897		12,694		2,211		—		1,434
Total commercial real estate		24,463		28,828		35,798		13,690		1,287		9,486
Commercial and industrial		12,818		12,855		17,577		11,915		371		532
1st lien		29,199		31,083		30,336		20,643		156		8,400
Junior lien		10,749		2,506		2,568		10,749		—		—
Total 1-4 family		39,948		33,589		32,904		31,392		156		8,400
Home equity lines of credit		6,607		6,361		5,697		6,195		154		258
Other consumer		307		360		641		207		12		88
Total consumer		6,914		6,721		6,338		6,402		166		346
Agriculture		10,738		7,010		7,112		4,964		2,848		2,926
Other		343		449		1,079		90		—		253
Total	$	214,594		213,456		267,574		131,026		9,231		74,337

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	Accruing 30-89 Days Delinquent Loans, by Loan Type
(Unaudited - Dollars in thousands)	Balance 3/31/12		Balance 12/31/11		Balance 3/31/11
Custom and owner occupied construction	$	415		—		—
Pre-sold and spec construction		303		250		2,968
Total residential construction		718		250		2,968
Land development		870		458		2,874
Consumer land or lots		3,844		1,801		6,294
Unimproved land		117		1,342		3,473
Developed lots for operative builders		253		1,336		324
Commercial lots		—		—		403
Other construction		122		—		525
Total land, lot and other construction		5,206		4,937		13,893
Owner occupied		12,003		8,187		6,027
Non-owner occupied		2,116		1,791		711
Total commercial real estate		14,119		9,978		6,738
Commercial and industrial		4,490		4,637		3,712
1st lien		10,861		14,405		19,590
Junior lien		1,815		6,471		477
Total 1-4 family		12,676		20,876		20,067
Home equity lines of credit		2,609		3,416		2,862
Other consumer		915		1,172		1,308
Total consumer		3,524		4,588		4,170
Agriculture		1,174		3,428		776
Other		674		392		78
Total	$	42,581		49,086		52,402

The non-performing assets of $215 million remained stable compared to the prior quarter and decreased $53.0 million, or 20 percent, from the prior year first quarter. The Company’s early stage delinquencies (accruing loans 30-89 days past due) of $42.6 million at March 31, 2012 decreased from the prior quarter early stage delinquencies of $49.1 million and early stage delinquencies of $52.4 million at March 31, 2011. The banks continue to actively manage the disposition of non-performing assets.

The largest category of non-performing assets was the land, lot and other construction category which was $108 million, or 50 percent, of the non-performing assets at March 31, 2012. Included in this category was $50.7 million of land development assets and $31.9 million in unimproved land assets at March 31, 2012. Although land, lot and other construction assets have historically put pressure on the Company’s credit quality, the Company has continued to reduce this category. During the current quarter, land, lot and other construction non-performing assets were reduced by $9.4 million, or 8 percent.

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Most of the Company’s non-performing assets are secured by real estate, and based on the most current information available to management, including updated appraisals or evaluations, the Company believes the value of the underlying real estate collateral is adequate to minimize significant charge-offs or loss to the Company. Each bank subsidiary evaluates the level of its non-performing assets, the values of the underlying real estate and other collateral, and related trends in net charge-offs in determining the adequacy of the ALLL. Through pro-active credit administration, the Banks work closely with borrowers to seek favorable resolution to the extent possible, thereby attempting to minimize net charge-offs or losses to the Company. Throughout the year, the Company has maintained an adequate allowance for loan and lease losses while working to reduce non-performing assets. The improvement in the credit quality ratios during the previous twelve months are a product of this effort.

For non-performing construction loans involving residential structures, the percentage of completion exceeds 95 percent at March 31, 2012. For construction loans involving commercial structures, the percentage of completion ranges from projects not started to projects completed at March 31, 2012. During the construction loan term, all construction loan collateral properties are inspected at least monthly, or more frequently as needed, until completion. Draws on construction loans are predicated upon the results of the inspection and advanced based upon a percentage of completion basis versus original budget percentages. When construction loans become non-performing and the associated project is not complete, the Company on a case-by-case basis makes the decision to advance additional funds or to initiate collection/foreclosure proceedings. Such decision includes obtaining “as-is” and “at completion” appraisals for consideration of potential increases or decreases in the collateral’s value. The Company also considers the increased costs of monitoring progress to completion, and the related collection/holding period costs should collateral ownership be transferred to the Company. With very limited exception, the Company does not disburse additional funds on non-performing loans. Instead, the Company has proceeded to collection and foreclosure actions in order to reduce the Company’s exposure to loss on such loans.

As identified below, the following four bank subsidiaries had non-accrual construction loans that aggregated 5 percent or more of the Company’s $62.6 million of non-accrual construction loans at March 31, 2012. Also identified below are the principal areas of the bank subsidiaries’ operations in which the collateral properties of such non-accrual construction loans are located:

Glacier	44 percent	Western Montana
First Security	23 percent	Western Montana
Mountain West	18 percent	Northern Idaho and Boise and Sun Valley, Idaho
Big Sky	8 percent	Western Montana

Unimproved land and land development loans collectively account for the bulk of the non-accrual commercial construction loans at the four bank subsidiaries. With locations and operations in the contiguous northern Rocky Mountain states of Idaho and Montana, the geography and economies of each of the four bank subsidiaries are predominantly tied to real estate development given the sprawling abundance of timbered valleys and mountainous terrain with significant lakes, streams and watershed areas. Consistent with the general economic downturn, the market for upscale primary, secondary and other housing as well as the associated construction and building industries have stalled after years of significant growth. As the housing market (rental and owner-occupied) and related industries continue to recover from the downturn, the Company continues to reduce its exposure to loss in the construction loan and other segments of the total loan portfolio.

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Impaired Loans

Loans are designated impaired when, based upon current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement and therefore, the Company has serious doubts as to the ability of such borrowers to fulfill the contractual obligation. When the ultimate collectability of the total principal of an impaired loan is in doubt and designated as non-accrual, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal on an impaired loan is not in doubt, contractual interest is generally credited to interest income when received under the cash basis method. Impaired loans were $271 million and $259 million as of March 31, 2012 and December 31, 2011, respectively. The ALLL includes valuation allowances of $20.5 million and $18.8 million specific to impaired loans as of March 31, 2012 and December 31, 2011, respectively. Of the total impaired loans at March 31, 2012, there were 42 commercial real estate and other commercial loans that accounted for $113 million, or 42 percent, of the impaired loans. The 42 loans were collateralized by 152 percent of the loan value, the majority of which had appraisals (new or updated) during the last year, such appraisals reviewed at least quarterly taking into account current market conditions. Of the total impaired loans at March 31, 2012, there were 290 loans aggregating to $150 million, or 55 percent, whereby the borrowers had more than one impaired loan. The amount of impaired loans that have had partial charge-offs during the year for which the Company continues to have concern about the collectability of the remaining loan balance was $16.7 million. Of these loans, there were charge-offs of $5.5 million during 2012.

For collateral-dependent loans and real estate loans for which foreclosure or a deed-in-lieu of foreclosure is probable, impairment is measured by the fair value of the collateral, less estimated cost to sell. The fair value of the collateral is determined primarily based upon appraisal or evaluation (new or updated) of the underlying property value. The Company reviews appraisals or evaluations, giving consideration to the highest and best use of the collateral, with values reduced by discounts to consider lack of marketability and estimated cost to sell. Appraisals or evaluations (new or updated) are reviewed at least quarterly and more frequently based on current market conditions, including deterioration in a borrower’s financial condition and when property values may be subject to significant volatility. After review and acceptance of the collateral appraisal or evaluation (new or updated), adjustments to an impaired loan’s value may occur.

In deciding whether to obtain a new or updated appraisal or evaluation, the Company considers the impact of the following factors and environmental events:

• passage of time;

• improvements to, or lack of maintenance of, the collateral property;

• stressed and volatile economic conditions, including market values;

• changes in the performance, risk profile, size and complexity of the credit exposure;

• limited or specific use collateral property;

• high loan-to-value credit exposures;

• changes in the adequacy of the collateral protections, including loan covenants and financially responsible guarantors;

• competing properties in the market area;

• changes in zoning and environmental contamination;

• the nature of subsequent transactions (e.g., modification, restructuring, refinancing); and

• the availability of alternative financing sources.

The Company also takes into account 1) the Company’s experience with whether the appraised values of impaired collateral-dependent loans are actually realized, and 2) the timing of cash flows expected to be received from the underlying collateral to the extent such timing is significantly different than anticipated in the most recent appraisal.

40

The Company generally obtains new or updated appraisals or evaluations annually for collateral underlying impaired loans. For collateral-dependent loans for which the appraisal of the underlying collateral is more than twelve months old, the Company updates collateral valuations through procedures that include obtaining current inspections of the collateral property, broker price opinions, comprehensive market analyses and current data for conditions and assumptions (e.g., discounts, comparable sales and trends) underlying the appraisals’ valuation techniques. The Company’s impairment/valuation procedures take into account new and updated appraisals on similar properties in the same area in order to capture current market valuation changes, unfavorable and favorable.

Restructured Loans

A restructured loan is considered a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. The Company had TDR loans of $155 million as of March 31, 2012. The Company’s TDR loans are considered impaired loans of which $65.4 million are designated as non-accrual.

Each restructured debt is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s prospective ability to service the debt as modified. The Company discourages the multiple loan strategy when restructuring loans regardless of whether or not the notes are TDR loans. The Company does not have any commercial TDR loans as of March 31, 2012 that have repayment dates extended at or near the original maturity date for which the Company has not classified as impaired. The Company has TDR loans of $28.8 million that are in non-accrual status or that have had partial charge-offs during the year, the borrowers of which continue to have $39.7 million in other loans that are on accrual status.

Other Real Estate Owned

The loan book value prior to the acquisition and transfer of the loan into other real estate owned (“OREO”) during 2012 was $15.5 million of which $5.6 million was residential real estate, $9.4 million was commercial, and $506 thousand was consumer loans. The loan collateral acquired in foreclosure during 2012 was $11.0 million of which $2.9 million was residential real estate, $7.8 million was commercial, and $330 thousand was consumer loans. The following table sets forth the changes in OREO for the periods indicated:

(Unaudited - Dollars in thousands)	Three Months ended March  31, 2012			Year ended December 31, 2011			Three Months ended March  31, 2011
Balance at beginning of period	$	78,354			73,485			73,485
Additions		10,957			79,295			17,277
Capital improvements		—			669			—
Write-downs		(5,408	)		(16,246	)		(758	)
Sales		(9,566	)		(58,849	)		(7,410	)
Balance at end of period	$	74,337			78,354			82,594

The Company believes that the write-downs in 2012 and 2011 are not indicative of a trend in that several of such properties have characteristics unique to the property, including special or limited use, and locations of such properties. The Company determined that the write-downs were not indicative of a trend which would likely affect the future operating results in light of the remaining holdings of real property and each particular bank subsidiary’s experience in its particular markets. However, there can be no assurance that future significant write-downs will not occur.

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Allowance for Loan and Lease Losses

Determining the adequacy of the ALLL involves a high degree of judgment and is inevitably imprecise as the risk of loss is difficult to quantify. The ALLL methodology is designed to reasonably estimate the probable loan and lease losses within each bank subsidiary’s loan portfolios. Accordingly, the ALLL is maintained within a range of estimated losses. The determination of the ALLL, including the provision for loan losses and net charge-offs, is a critical accounting estimate that involves management’s judgments about all known relevant internal and external environmental factors that affect loan losses, including the credit risk inherent in the loan portfolios, economic conditions nationally and in the local markets in which the community bank subsidiaries operate, changes in collateral values, delinquencies, non-performing assets and net charge-offs.

Although the Company and Banks continue to actively monitor economic trends, soft economic conditions combined with potential declines in the values of real estate that collateralize most of the Company’s loan portfolios may adversely affect the credit risk and potential for loss to the Company.

The ALLL evaluation is well documented and approved by each bank subsidiary’s Board of Directors and reviewed by the Parent’s Board of Directors. In addition, the policy and procedures for determining the balance of the ALLL are reviewed annually by each bank subsidiary’s Board of Directors, the Parent’s Board of Directors, the internal audit department, independent credit reviewers and state and federal bank regulatory agencies.

At the end of each quarter, each of the community bank subsidiaries analyzes its loan portfolio and maintain an ALLL at a level that is appropriate and determined in accordance with accounting principles generally accepted in the United States of America. The allowance consists of a specific valuation allowance component and a general valuation allowance component. The specific valuation allowance component relates to loans that are determined to be impaired. A specific valuation allowance is established when the fair value of a collateral-dependent loan or the present value of the loan’s expected future cash flows (discounted at the loan’s effective interest rate) is lower than the carrying value of the impaired loan. The general valuation allowance component relates to probable credit losses inherent in the balance of the loan portfolio based on prior loss experience, adjusted for changes in trends and conditions of qualitative or environmental factors.

Management of each bank subsidiary exercises significant judgment when evaluating the effect of applicable qualitative or environmental factors on each bank subsidiary’s historical loss experience for loans not identified as impaired. Quantification of the impact upon each bank subsidiary’s ALLL is inherently subjective as data for any factor may not be directly applicable, consistently relevant, or reasonably available for management to determine the precise impact of a factor on the collectability of the Bank’s unimpaired loan portfolio as of each evaluation date. Bank management documents its conclusions and rationale for changes that occur in each applicable factor’s weight (i.e., measurement) and ensures that such changes are directionally consistent based on the underlying current trends and conditions for the factor. To have directional consistency, the provision for loan losses and credit quality should move in the same direction.

The Company is committed to a conservative management of the credit risk within the loan portfolios, including the early recognition of problem loans. The Company’s credit risk management includes stringent credit policies, individual loan approval limits, limits on concentrations of credit, and committee approval of larger loan requests. Management practices also include regular internal and external credit examinations, identification and review of individual loans and leases experiencing deterioration of credit quality, procedures for the collection of non-performing assets, quarterly monitoring of the loan portfolios, semi-annual review of loans by industry, and periodic stress testing of the loans secured by real estate.

42

The Company’s model of eleven independent wholly-owned community banks, each with its own loan committee, chief credit officer and Board of Directors, provides substantial local oversight to the lending and credit management function. The Company’s decentralized business model affords multiple reviews of larger loans before credit is extended, a significant benefit in mitigating and managing the Company’s credit risk. The geographic dispersion of the market areas in which the Company and the community bank subsidiaries operate further mitigates the risk of credit loss. While this process is intended to limit credit exposure, there can be no assurance that further problem credits will not arise and additional loan losses incurred, particularly in periods of rapid economic downturns.

The primary responsibility for credit risk assessment and identification of problem loans rests with the loan officer of the account. This continuous process, utilizing each of the Banks’ internal credit risk rating process, is necessary to support management’s evaluation of the ALLL adequacy. An independent loan review function verifying credit risk ratings evaluates the loan officer and management’s evaluation of the loan portfolio credit quality. The loan review function also assesses the evaluation process and provides an independent analysis of the adequacy of the ALLL.

The Company considers the ALLL balance of $137 million adequate to cover inherent losses in the loan portfolios as of March 31, 2012. However, no assurance can be given that the Company will not, in any particular period, sustain losses that are significant relative to the ALLL amount, or that subsequent evaluations of the loan portfolios applying management’s judgment about then current factors, including economic and regulatory developments, will not require significant changes in the ALLL. Under such circumstances, this could result in enhanced provisions for loan losses. See additional risk factors in “Part II. Item 1A. Risk Factors.”

The following table summarizes the allocation of the ALLL as of the dates indicated:

	March 31, 2012						December 31, 2011					March 31, 2011
(Unaudited - Dollars in thousands)	Allowance for Loan and Lease  Losses			Percent of Loans in Category			Allowance for Loan and Lease Losses		Percent of Loans in Category			Allowance for Loan and Lease Losses		Percent of Loans in Category
Residential real estate	$	19,003	��		15	%		17,227		15	%		17,004		15	%
Commercial real estate		73,240			48	%		76,920		48	%		80,098		48	%
Other commercial		22,444			18	%		20,833		18	%		20,960		18	%
Home equity		13,364			13	%		13,616		13	%		14,206		13	%
Other consumer		8,535			6	%		8,920		6	%		8,561		6	%
Totals	$	136,586			100	%		137,516		100	%		140,829		100	%

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The following table summarizes the ALLL experience for the periods indicated:

(Unaudited - Dollars in thousands)	Three Months ended March  31, 2012			Year ended December 31, 2011			Three Months ended March  31, 2011
Balance at beginning of period	$	137,516			137,107			137,107
Provision for loan losses		8,625			64,500			19,500
Charge-offs
Residential real estate		(1,849	)		(5,671	)		(5,281	)
Commercial loans		(7,406	)		(52,428	)		(10,098	)
Consumer and other loans		(1,803	)		(11,267	)		(1,125	)
Total charge-offs		(11,058	)		(69,366	)		(16,504	)
Recoveries
Residential real estate		95			486			95
Commercial loans		1,186			3,830			439
Consumer and other loans		222			959			192
Total recoveries		1,503			5,275			726
Charge-offs, net of recoveries		(9,555	)		(64,091	)		(15,778	)
Balance at end of period	$	136,586			137,516			140,829
Allowance for loan and lease losses as a percentage of total loans		3.98	%		3.97	%		3.86	%
Net charge-offs as a percentage of total loans		0.28	%		1.85	%		0.43	%

44

The following table summarizes net charge-offs at the dates indicated, including identification by regulatory classification:

	Net Charge-Offs (Recoveries), Year-to-Date Period Ending, By Loan Type
(Unaudited - Dollars in thousands)	Balance 3/31/12			Balance 12/31/11		Balance 3/31/11			Charge-Offs 3/31/12		Recoveries 3/31/12
Custom and owner occupied construction	$	—			206		97			—		—
Pre-sold and spec construction		1,919			4,069		2,735			2,013		94
Total residential construction		1,919			4,275		2,832			2,013		94
Land development		1,236			17,055		3,511			1,467		231
Consumer land or lots		1,195			7,456		1,751			1,304		109
Unimproved land		130			4,047		1,776			321		191
Developed lots for operative builders		394			943		129			397		3
Commercial lots		(120	)		237		267			—		120
Other construction		—			1,568		—			—		—
Total land, lot and other construction		2,835			31,306		7,434			3,489		654
Owner occupied		1,372			3,815		890			1,404		32
Non-owner occupied		546			3,861		—			549		3
Total commercial real estate		1,918			7,676		890			1,953		35
Commercial and industrial		334			7,871		1,344			691		357
1st lien		893			7,031		2,309			951		58
Junior lien		1,176			1,663		615			1,335		159
Total 1-4 family		2,069			8,694		2,924			2,286		217
Home equity lines of credit		346			3,261		285			371		25
Other consumer		36			615		31			151		115
Total consumer		382			3,876		316			522		140
Agriculture		—			134		(1	)		—		—
Other		98			259		39			104		6
Total	$	9,555			64,091		15,778			11,058		1,503

The allowance determined by each of the eleven community bank subsidiaries is combined together into a single allowance for the Company. Each of the Bank’s ALLL is considered adequate to absorb losses from any class of its loan portfolio. For the periods ended March 31, 2012 and 2011, the Company believes the allowance is commensurate with the risk in the Company’s loan portfolio and is directionally consistent with the change in the quality of the Company’s loan portfolio as determined at each bank subsidiary. At March 31, 2012, the allowance for loan and lease losses (“allowance”) was $137 million, a decrease of $930 thousand from the prior quarter and a decrease of $4.2 million from a year ago. The allowance was 3.98 percent of total loans outstanding at March 31, 2012, compared to 3.97 percent at December 31, 2011. The allowance was 97 percent of non-performing loans at March 31, 2012, a decrease from 102 percent at the prior quarter end and an increase from 76 percent from the prior year first quarter.

45

The Company’s allowance consisted of the following components as of the dates indicated:

(Unaudited - Dollars in thousands)	March 31, 2012		December 31, 2011		March 31, 2011
Specific valuation allowance	$	20,507		18,828		15,402
General valuation allowance		116,079		118,688		125,427
Total ALLL	$	136,586		137,516		140,829

During 2012, the ALLL decreased by $930 thousand, the net result of a $1.7 million increase in the specific valuation allowance and a $2.6 million decrease in the general valuation allowance. The increase in the specific valuation allowance since the prior year end was primarily due to the increase in loans individually reviewed for impairment of $12.4 million. The decrease in the general valuation allowance since the prior year end was due to a decrease in loans collectively evaluated for impaired of $45 million.

Presented below are select aggregated statistics that were also considered when determining the adequacy of the Company’s ALLL at March 31, 2012:

Positive Trends

• Non-accrual construction loans (i.e., residential construction and land, lot and other construction) were $62.6 million, or 48 percent, of the $131 million of non-accrual loans at March 31, 2012, a decrease of $5.3 million from the prior year end and decreased $36.0 million from March 31, 2011. Non-accrual construction loans accounted for 51 percent of the $134 million of non-accrual loans at year end 2011 and 55 percent of the $178 million of non-accrual loans at March 31, 2011.

• The $25.6 million total of non-accrual loans in the commercial real estate and commercial and industrial at March 31, 2012 decreased by $5.8 million from the prior year end and decreased $17.4 million from March 31, 2011.

• Charge-offs, net of recoveries, in 2012 were $9.6 million, a decrease of $6.2 million from the same period in 2011.

• Net charge-offs of construction loans were $4.8 million, or 50 percent, of the $9.6 million of net charge-offs in 2012 compared to net charge-offs of construction loans of $10.3 million, or 65 percent, of the $15.8 million of net charge-offs during the same period in 2011.

• Early stage delinquencies (accruing loans 30-89 days past due) decreased to $42.6 million at March 31, 2012 from $49.1 million at the prior year end and $52.4 million at March 31, 2011.

Negative Trends

• The $42.8 million total of non-accrual loans in the agriculture, 1-4 family, home equity lines of credit, consumer, and other loans at March 31, 2012 increased by $8.4 million from year end 2011 and increased by $6.0 million from March 31, 2011.

• Non-performing loans as a percent of total loans increased to 4.09 percent at March 31, 2012 as compared to 3.90 percent at year end 2011.

• The allowance as a percent of non-performing loans was 97 percent at March 31, 2012, compared to 102 percent at year end 2011.

• Impaired loans as a percent of total loans increased to 7.90 percent at March 31, 2012 as compared to 7.46 percent and 6.00 percent at year end 2011 and March 31, 2011, respectively.

46

When applied to each bank subsidiary’s historical loss experience, the environmental factors result in the provision for loan losses being recorded in the period in which the loss has probably occurred. When the loss is confirmed at a later date, a charge-off is recorded. During 2012, loan charge-offs, net of recoveries, exceeded the provision for loan losses by $930 thousand. During the same period in 2011, the provision for loan losses exceeded loan charge-offs, net of recoveries, by $3.7 million.

The eleven bank subsidiaries provide commercial services to individuals, small to medium size businesses, community organizations and public entities from 106 locations, including 97 branches, across Montana, Idaho, Wyoming, Colorado, Utah, and Washington. The Rocky Mountain areas in which the bank subsidiaries operate have diverse economies and markets that are tied to commodities (crops, livestock, minerals, oil and natural gas), tourism, real estate and land development and an assortment of industries, both manufacturing and service-related. Thus, the changes in the global, national, and local economies are not uniform across each of the bank subsidiaries.

Though stabilizing, the soft economic conditions during much of 2010 continued during 2011 and the first quarter of 2012, including declining sales of existing real property (e.g., single family residential, multi-family, commercial buildings and land), an increase in existing inventory of real property, increase in real property delinquencies and foreclosures, and corresponding decrease in absorption rates, and lower values of real property that collateralize most of the Company’s loan portfolios, among other factors. National unemployment rates increased steadily from 5.0 in the first part of 2008 to a range of 8.5 to 10.0 during 2009 through 2011 and has recently declined to 8.2 in March of 2012. The unemployment rates for most states in which the community bank subsidiaries conduct operations were generally lower throughout this time period compared to the national unemployment rate. Agricultural price declines in livestock and grain in 2009 have recovered significantly and remain strong. While prices for oil have held strong, prices for natural gas currently remain weak (due to excess supply) especially when compared to the exceptionally high price levels of natural gas during 2008. Although the cost of living (as reflected in Consumer Price Index measures) has slowly increased during 2011 and the first quarter of 2012, the overall decline in the cost of living during 2010 and 2009 helped buffer the general softening of the economy nationally, regionally and locally, and the impact of lower real property values. The tourism industry and related lodging continues to be a source of strength for those banks whose market areas have national parks and similar recreational areas in the market areas served. Such changes affected the bank subsidiaries in distinctly different ways as each bank has its own geographic area and local economic influences over both a short-term and long-term horizon.

In evaluating the need for a specific or general valuation allowance for impaired and unimpaired loans, respectively, within the Company’s construction loan portfolio, including residential construction and land, lot and other construction loans, the credit risk related to such loans was considered in the ongoing monitoring of such loans, including assessments based on current information, including new or updated appraisals or evaluations of the underlying collateral, expected cash flows and the timing thereof, as well as the estimated cost to sell when such costs are expected to reduce the cash flows available to repay or otherwise satisfy the construction loan. Construction loans are 13 percent of the Company’s total loan portfolio and account for 48 percent of the Company’s non-accrual loans at March 31, 2012. Collateral securing construction loans includes residential buildings (e.g., single/multi-family and condominiums), commercial buildings, and associated land (multi-acre parcels and individual lots, with and without shorelines). Outstanding balances are centered in Western Montana and Northern Idaho, as well as Boise and Sun Valley, Idaho. None of the individual bank subsidiaries have a concentration of construction loans exceeding 5 percent of the Company’s total loan portfolio.

For additional information regarding the ALLL, its relation to the provision for loan losses and risk related to asset quality, see Note 3 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

47

Investment Activity

It has generally been the Company’s policy to maintain a liquid portfolio above policy limits. The Company’s investment securities are generally classified as available-for-sale and are carried at estimated fair value with unrealized gains or losses, net of tax, reflected as an adjustment to stockholders’ equity. The Company’s investment portfolio is primarily comprised of residential mortgage-backed securities and state and local government securities which are largely exempt from federal income tax. The Company uses the federal statutory rate of 35 percent in calculating its tax-equivalent yield. The residential mortgage-backed securities are typically short-term and provide the Company with on-going liquidity as scheduled and pre-paid principal payments are made on the securities. The Company assesses individual securities in its investment securities portfolio for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant.

For additional investment activity information, see Note 2 to the Consolidated Financial Statements in “Part I. Item 1. Financial Statements.”

Other-Than-Temporary Impairment on Securities Analysis

Non-marketable equity securities owned at March 31, 2012 primarily consisted of stock issued by the FHLB of Seattle and Topeka, such shares measured at cost in recognition of the transferability restrictions imposed by the issuers. Other non-marketable equity securities include Federal Agriculture Mortgage Corporation and Bankers’ Bank of the West Bancorporation, Inc.

With respect to FHLB stock, the Company evaluates such stock for other-than-temporary impairment. Such evaluation takes into consideration 1) FHLB deficiency, if any, in meeting applicable regulatory capital targets, including risk-based capital requirements, 2) the significance of any decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the time period for any such decline, 3) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, 4) the impact of legislative and regulatory changes on the FHLB, and 5) the liquidity position of the FHLB.

Based on the Company’s analysis of its impaired non-marketable equity securities as of March 31, 2012, the Company determined that none of such securities had other-than-temporary impairment.

In evaluating debt securities for other-than-temporary impairment losses, management assesses whether the Company intends to sell the security or if it is more-likely-than-not that the Company will be required to sell the debt security. In so doing, management considers contractual constraints, liquidity, capital, asset / liability management and securities portfolio objectives.

The Company believes that macroeconomic conditions occurring during the first quarter of 2012 and throughout 2011 have unfavorably impacted the fair value of certain debt securities in its investment portfolio. On August 5, 2011, Standard and Poor’s downgraded the United States long-term debt rating from its AAA rating to AA+. On August 8, 2011, Standard and Poor’s downgraded from AAA to AA+ the credit ratings of certain long-term debt instruments issued by Fannie Mae and Freddie Mac and other U.S. government agencies linked to long-term United States debt. For debt securities with limited or inactive markets, the impact of these macroeconomic conditions upon fair value estimates includes higher risk-adjusted discount rates and downgrades in credit ratings provided by nationally recognized credit rating agencies, (e.g., Moody’s, S&P, Fitch, and DBRS).

48

The following table separates investments with an unrealized loss position at March 31, 2012 into two categories: investments purchased prior to 2012 and those purchased during the first quarter of 2012. Of those investments purchased prior to 2012, the fair value and unrealized loss of the same investments at December 31, 2011 is also presented.

	March 31, 2012								December 31, 2011
(Unaudited - Dollars in thousands)	Fair Value		Unrealized Loss			Unrealized Loss as a Percent of Fair Value			Fair Value		Unrealized Loss			Unrealized Loss as a Percent of Fair Value
Temporarily impaired securities purchased prior to 2012      State and local governments	$	30,620		(463	)		-1.51	%		30,649		(466	)		-1.52	%
Corporate bonds		12,532		(173	)		-1.38	%		11,990		(793	)		-6.61	%
Collateralized debt obligations		5,366		(282	)		-5.26	%		5,366		(282	)		-5.26	%
Residential mortgage-backed securities		538,318		(3,052	)		-0.57	%		670,652		(6,426	)		-0.96	%
Total	$	586,836		(3,970	)		-0.68	%		718,657		(7,967	)		-1.11	%
Temporarily impaired securities purchased during 2012      State and local governments	$	79,502		(1,452	)		-1.83	%
Corporate bonds		20,820		(243	)		-1.17	%
Residential mortgage-backed securities		126,008		(275	)		-0.22	%
Total	$	226,330		(1,970	)		-0.87	%
Temporarily impaired securities      State and local governments	$	110,122		(1,915	)		-1.74	%
Corporate bonds		33,352		(416	)		-1.25	%
Collateralized debt obligations		5,366		(282	)		-5.26	%
Residential mortgage-backed securities		664,326		(3,327	)		-0.50	%
Total	$	813,166		(5,940	)		-0.73	%

With respect to severity, the following table provides the number of securities and amount of unrealized loss in the various ranges of unrealized loss as a percent of book value.

(Unaudited - Dollars in thousands)	Number of Debt Securities		Unrealized Loss
Greater than 20.0%		—	$	—
15.1% to 20.0%		1		(5	)
10.1% to 15.0%		2		(348	)
5.1% to 10.0%		3		(446	)
0.1% to 5.0%		410		(5,141	)
Total		416	$	(5,940	)

49

With respect to the duration of the impaired debt securities, the Company identified 20 securities which have been continuously impaired for the twelve months ending March 31, 2012. The valuation history of such securities in the prior year(s) was also reviewed to determine the number of months in prior year(s) in which the identified securities was in an unrealized loss position.

The following table provides details of the 20 securities which have been continuously impaired for the twelve months ended March 31, 2012, including the most notable loss for any one bond in each category.

(Unaudited - Dollars in thousands)	Number of Debt Securities		Unrealized Loss for 12 Months Or More			Most Notable Loss
State and local governments		8	$	(327	)		(137	)
Collateralized debt obligations		6		(282	)		(71	)
Residential mortgage-backed securities		6		(797	)		(282	)
Total		20	$	(1,406	)

With respect to the collateralized debt obligation securities, each is in the form of a pooled trust preferred structure of which the Company owns a portion of the Senior Notes tranche. All of the assets underlying the pooled trust preferred structure are capital securities issued by trust subsidiaries of holding companies of banks and thrifts.

Of the 6 non-guaranteed private label whole loan mortgages, 2 are collateralized by 30-year fixed rate residential mortgages considered to be “Prime” and 4 are collateralized by 30-year fixed rate residential mortgages considered to be “ALT - A.” Moreover, none of the underlying mortgage collateral is considered “subprime.” The Company engages a third-party to perform detailed analysis for other-than-temporary impairment of such securities. Such analysis takes into consideration original and current data for the tranche and CMO structure, the non-guaranteed classification of each CMO tranche, current and deal inception credit ratings, credit support (protection) afforded the tranche through the subordination of other tranches in the CMO structure, the nature of the collateral (e.g., Prime or Alt-A) underlying each CMO tranche, and realized cash flows since purchase.

Based on the Company’s analysis of its impaired debt securities as of March 31, 2012, the Company determined that none of such securities had other-than-temporary impairment.

Sources of Funds

Deposits obtained through the Banks have traditionally been the principal source of funds for use in lending and other business purposes. The Banks have a number of different deposit programs designed to attract both short-term and long-term deposits from the general public by providing a wide selection of accounts and rates. These programs include non-interest bearing demand accounts, interest bearing checking, regular statement savings, money market deposit accounts, and fixed rate certificates of deposit with maturities ranging from three months to five years, negotiated-rate jumbo certificates, and individual retirement accounts. In addition, the Banks obtain wholesale deposits through various programs including reciprocal deposit programs (e,g, Certificate of Deposit Account Registry System).

50

The Banks also obtain funds from repayment of loans and investment securities, securities sold under agreements to repurchase (“repurchase agreements”), advances from the FHLB, other borrowings, and sale of loans and investment securities. Loan repayments are a relatively stable source of funds, while interest bearing deposit inflows and outflows are significantly influenced by general interest rate levels and market conditions. Borrowings and advances may be used on a short-term basis to compensate for reductions in normal sources of funds such as deposit inflows at less than projected levels. Borrowings also may be used on a long-term basis to support expanded activities and to match maturities of longer-term assets.

Short-term borrowings

A critical component of the Company’s liquidity and capital resources is access to short-term borrowings to fund its operations. Short-term borrowings are accompanied by increased risks managed by asset liability committees (“ALCO”) such as rate increases or unfavorable change in terms which would make it more costly to obtain future short-term borrowings. The Company’s short-term borrowing sources include FHLB advances, discount window borrowings, federal funds purchased, wholesale deposits, and retail and wholesale repurchase agreements. FHLB advances and certain other short-term borrowings may be extended as long-term borrowings to decrease certain risks such as liquidity or interest rate risk; however, the reduction in risks are weighed against the increased cost of funds.

The following table provides information relating to short-term borrowings which consists of borrowings that mature within one year of period end:

(Unaudited - Dollars in thousands)	At or for the Three Months ended March 31, 2012			At or for the Year ended December 31, 2011
Repurchase agreements
Amount outstanding at end of period	$	259,290			258,643
Weighted interest rate on outstanding amount		0.35	%		0.42	%
Maximum outstanding at any month-end	$	389,452			338,352
Average balance	$	313,611			267,058
Weighted average interest rate		0.38	%		0.51	%
FHLB advances
Amount outstanding at end of period	$	718,000			792,000
Weighted interest rate on outstanding amount		0.61	%		0.68	%
Maximum outstanding at any month-end	$	774,000			877,017
Average balance	$	734,670			721,226
Weighted average interest rate		0.63	%		0.76	%

Contractual Obligations and Off-Balance Sheet Arrangements

In the normal course of business, there are various outstanding commitments to extend credit, such as letters of credit and un-advanced loan commitments, which are not reflected in the accompanying condensed consolidated financial statements. Management does not anticipate any material losses as a result of these transactions. The Company has outstanding debt maturities, the largest aggregate amount of which were FHLB advances.

51

Liquidity Risk

Liquidity risk is the possibility that the Company will not be able to fund present and future obligations as they come due because of an inability to liquidate assets or obtain adequate funding at a reasonable cost. The objective of liquidity management is to maintain cash flows adequate to meet current and future needs for credit demand, deposit withdrawals, maturing liabilities and corporate operating expenses. Effective liquidity management entails three elements:

1. Assessing on an ongoing basis, the current and expected future needs for funds, and ensuring that sufficient funds or access to funds exist to meet those needs at the appropriate time.

2. Providing for an adequate cushion of liquidity to meet unanticipated cash flow needs that may arise from potential adverse circumstances ranging from high probability/low severity events to low probability/high severity.

3. Balancing the benefits between providing for adequate liquidity to mitigate potential adverse events and the cost of that liquidity.

The following table identifies certain liquidity sources and capacity available to the Company at March 31, 2012:

(Unaudited - Dollars in thousands)	March 31, 2012
FHLB advances
Borrowing capacity	$	1,105,571
Amount utilized		(995,038	)
Amount available	$	110,533
Federal Reserve Bank discount window
Borrowing capacity	$	231,637
Amount utilized		—
Amount available	$	231,637
Unsecured lines of credit available	$	183,860
Unencumbered securities
U.S. government and federal agency	$	206
U.S. government sponsored enterprises		3,687
State and local governments		1,022,790
Corporate bonds		107,493
Collateralized debt obligations		5,366
Residential mortgage-backed securities		932,863
Total unencumbered securities	$	2,072,405

The Company and each of the bank subsidiaries have a wide range of versatility in managing the liquidity and asset/liability mix across each of the bank subsidiaries as well as the Company as a whole. ALCO committees are maintained at the Parent and bank subsidiary levels with the ALCO committees meeting regularly to assess liquidity risk, among other matters. The Company monitors liquidity and contingency funding alternatives through management reports of liquid assets (e.g., investment securities), both unencumbered and pledged, as well as borrowing capacity, both secured and unsecured.

52

Capital Resources

Maintaining capital strength continues to be a long-term objective. Abundant capital is necessary to sustain growth, provide protection against unanticipated declines in asset values, and to safeguard the funds of depositors. Capital also is a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. Taking these considerations into account, the Company may, as it has done in the past, decide to utilize a portion of its strong capital position to repurchase shares of its outstanding common stock, from time to time, depending on market price and other relevant considerations.

The Federal Reserve Board has adopted capital adequacy guidelines that are used to assess the adequacy of capital in supervising a bank holding company. Each bank subsidiary was considered well capitalized by their respective regulator as of March 31, 2012 and 2011. There are no conditions or events since March 31, 2012 that management believes have changed the Company’s or bank subsidiaries’ risk-based capital category.

The following table illustrates the Federal Reserve Board’s capital adequacy guidelines and the Company’s compliance with those guidelines as of March 31, 2012.

(Unaudited - Dollars in thousands)	Tier 1 (Core) Capital			Tier 2 (Total) Capital			Leverage Capital
Total stockholders’ equity	$	863,997			863,997			863,997
Less:
Goodwill and intangibles		(112,307	)		(112,307	)		(112,307	)
Net unrealized gains on investment securities and change in fair value of derivatives used for cash flow hedges		(41,509	)		(41,509	)		(41,509	)
Other adjustments		(50	)		(50	)		(50	)
Plus:
Allowance for loan and lease losses		—			55,994			—
Subordinated debentures		124,500			124,500			124,500
Total regulatory capital	$	834,631			890,625			834,631
Risk weighted assets	$	4,398,418			4,398,418
Total adjusted average assets							$	7,124,111
Capital as % of risk weighted assets		18.98	%		20.25	%		11.72	%
Regulatory “well capitalized” requirement		6.00	%		10.00	%
Excess over “well capitalized” requirement		12.98	%		10.25	%

Dividend payments were $0.13 per share for both periods ended March 31, 2012 and 2011. The payment of dividends is subject to government regulation in that regulatory authorities may prohibit banks and bank holding companies from paying dividends that would constitute an unsafe or unsound banking practice. Additionally, current guidance from the Federal Reserve provides, among other things, that dividends per share on the Company’s common stock generally should not exceed earnings per share measured over the previous four fiscal quarters.

In addition to the primary and safeguard liquidity sources available, the Company has the capacity to issue 117,187,500 shares of common stock of which 71,915,073 has been issued as of March 31, 2012. The Company also has the capacity to issue 1,000,000 shares of preferred shares of which none are currently issued.

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Federal and State Income Taxes

The Company files a consolidated federal income tax return, using the accrual method of accounting. All required tax returns have been timely filed. Financial institutions are subject to the provisions of the Internal Revenue Code of 1986, as amended, in the same general manner as other corporations.

Under Montana, Idaho, Colorado and Utah law, financial institutions are subject to a corporation tax, which incorporates or is substantially similar to applicable provisions of the Internal Revenue Code. The corporation tax is imposed on federal taxable income, subject to certain adjustments. State taxes are incurred at the rate of 6.75 percent in Montana, 7.6 percent in Idaho, 5 percent in Utah and 4.63 percent in Colorado. Wyoming and Washington do not impose a corporate income tax.

The Company has equity investments in Certified Development Entities which have received allocations of New Markets Tax Credits (“NMTC”). Administered by the Community Development Financial Institutions Fund of the U.S. Department of the Treasury, the NMTC program is aimed at stimulating economic and community development and job creation in low-income communities. The federal income tax credits received are claimed over a seven-year credit allowance period. The Company also has equity investments in Low-Income Housing Tax Credits which are indirect federal subsidies used to finance the development of affordable rental housing for low-income households. The federal income tax credits received are claimed over a ten-year credit allowance period. The Company has investments in Qualified Zone Academy and Qualified School Construction bonds whereby the Company receives quarterly federal income tax credits in lieu of taxable interest income until the bonds mature. The federal income tax credits on these bonds are subject to federal and state income tax.

Following is a list of expected federal income tax credits to be received in the years indicated.

(Unaudited - (Dollars in thousands)	New Markets Tax Credits		Low-Income Housing Tax Credits		Investment Securities Tax Credits		Total
2012	$	2,681		1,270		943		4,894
2013		2,775		1,270		926		4,971
2014		2,850		1,270		904		5,024
2015		2,850		1,174		880		4,904
2016		1,014		1,172		855		3,041
Thereafter		450		4,207		4,432		9,089
	$	12,620		10,363		8,940		31,923

Income tax expense for the three months ended March 31, 2012 and 2011 was $4.6 million and $1.8 million, respectively. The Company’s effective tax rate for the three months ended March 31, 2012 and 2011 was 22.1 percent and 15.2 percent, respectively. The primary reason for the low effective rates is the amount of tax-exempt investment income and federal tax credits. The tax-exempt income was $9.7 million and $6.8 million for the three months ended March 31, 2012 and 2011, respectively. The federal tax credit benefits were $432 thousand and $418 thousand for the three months ended March 31, 2012 and 2011, respectively. The Company continues its investments in select municipal securities and variable interest entities whereby the Company receives federal tax credits.

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Average Balance Sheet

The following schedule provides 1) the total dollar amount of interest and dividend income of the Company for earning assets and the average yield; 2) the total dollar amount of interest expense on interest bearing liabilities and the average rate; 3) net interest and dividend income and interest rate spread; and 4) net interest margin and net interest margin tax-equivalent.

	Three Months ended 3/31/12							Three Months ended 3/31/11
(Unaudited - Dollars in thousands)	Average Balance		Interest & Dividends		Average Yield/ Rate			Average Balance		Interest & Dividends		Average Yield/ Rate
Assets
Residential real estate loans	$	584,758		7,784		5.32	%	$	601,640		8,716		5.79	%
Commercial loans		2,290,236		31,041		5.44	%		2,411,846		33,058		5.56	%
Consumer and other loans		639,302		9,170		5.75	%		702,248		10,450		6.03	%
Total loans1		3,514,296		47,995		5.48	%		3,715,734		52,224		5.70	%
Tax-exempt investment securities2		867,621		9,673		4.46	%		583,904		6,778		4.64	%
Taxable investment securities3		2,382,119		10,216		1.72	%		1,936,316		9,371		1.94	%
Total earning assets		6,764,036		67,884		4.03	%		6,235,954		68,373		4.45	%
Goodwill and intangibles		114,138							156,703
Non-earning assets		358,294							284,631
Total assets	$	7,236,468						$	6,677,288
Liabilities
NOW accounts	$	830,821		369		0.18	%	$	748,058		525		0.28	%
Savings accounts		427,129		91		0.09	%		374,031		148		0.16	%
Money market deposit accounts		874,239		600		0.28	%		878,391		1,106		0.51	%
Certificate accounts		1,071,999		3,285		1.23	%		1,082,083		4,483		1.68	%
Wholesale deposits4		643,507		609		0.38	%		537,008		826		0.62	%
FHLB advances		1,011,711		3,381		1.34	%		946,997		2,548		1.09	%
Repurchase agreements and other borrowed funds		456,340		1,263		1.11	%		387,060		2,033		2.13	%
Total interest bearing liabilities		5,315,746		9,598		0.72	%		4,953,628		11,669		0.96	%
Non-interest bearing deposits		1,003,604							851,900
Other liabilities		50,850							29,436
Total liabilities		6,370,200							5,834,964
Stockholders’ Equity
Common stock		719							719
Paid-in capital		642,869							643,937
Retained earnings		181,972							194,596
Accumulated other comprehensive income		40,708							3,072
Total stockholders’ equity		866,268							842,324
Total liabilities and stockholders’ equity	$	7,236,468						$	6,677,288
Net interest income			$	58,286						$	56,704
Net interest spread						3.31	%						3.49	%
Net interest margin						3.46	%						3.69	%
Net interest margin (tax-equivalent)						3.73	%						3.91	%

¹  Total loans are gross of the allowance for loan and lease losses, net of unearned income and include loans held for sale. Non-accrual loans were included in the average volume for the entire period.

²  Excludes tax effect of $4,282,000 and $3,001,000 on tax-exempt investment security income for the three months ended March 31, 2012 and 2011, respectively.

³  Excludes tax effect of $386,000 and $392,000 on investment security tax credits for the three months ended March 31, 2012 and 2011, respectively.

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

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Rate/Volume Analysis

Net interest income can be evaluated from the perspective of relative dollars of change in each period. Interest income and interest expense, which are the components of net interest income, are shown in the following table on the basis of the amount of any increases (or decreases) attributable to changes in the dollar levels of the Company’s interest earning assets and interest bearing liabilities (“Volume”) and the yields earned and rates paid on such assets and liabilities (“Rate”). The change in interest income and interest expense attributable to changes in both volume and rates has been allocated proportionately to the change due to volume and the change due to rate.

	Three Months ended March 31, 2012 vs. 2011 Increase (Decrease) Due to:
(Unaudited - Dollars in thousands)	Volume			Rate			Net
Interest income
Residential real estate loans	$	(245	)		(687	)		(932	)
Commercial loans		(1,666	)		(351	)		(2,017	)
Consumer and other loans		(937	)		(343	)		(1,280	)
Investment securities		4,675			(935	)		3,740
Total interest income		1,827			(2,316	)		(489	)
Interest expense
NOW accounts		58			(214	)		(156	)
Savings accounts		21			(78	)		(57	)
Money market deposit accounts		(5	)		(501	)		(506	)
Certificate accounts		(42	)		(1,156	)		(1,198	)
Wholesale deposits		164			(381	)		(217	)
FHLB advances		174			659			833
Repurchase agreements and other borrowed funds		364			(1,134	)		(770	)
Total interest expense		734			(2,805	)		(2,071	)
Net interest income	$	1,093			489			1,582

Net interest income increased $1.6 million for the current quarter compared to the prior year first quarter. The increase in interest income was a result of a decrease in interest expense which was primarily driven by lower funding costs most notably in interest bearing deposits. Additionally, the Company has continued to purchase investment securities to offset the lower volume of loans and maintain interest income.

Effect of inflation and changing prices

Generally accepted accounting principles often require the measurement of financial position and operating results in terms of historical dollars, without consideration for change in relative purchasing power over time due to inflation. Virtually all assets of the Company and each bank subsidiary are monetary in nature; therefore, interest rates generally have a more significant impact on a company’s performance than does the effect of inflation.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company believes that there have not been any material changes in information about the Company’s market risk than was provided in the Form 10-K report for the year ended December 31, 2011.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as required by Exchange Act Rules 240.13a-15(b) and 15d-14(c)) as of the date of this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s current disclosure controls and procedures are effective and timely, providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter 2012, to which this report relates that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

There are no pending material legal proceedings to which the registrant or its subsidiaries are a party.

Item 1A. Risk Factors

The Company is exposed to certain risks. The following is a discussion of the most significant risks and uncertainties that may affect the Company’s business, financial condition and future results.

The continued challenges in the economy could have a material adverse effect on the Company’s future results of operations or market price of stock.

The national economy, and the financial services sector in particular, are still facing significant challenges. Substantially all of the Company’s loans are to businesses and individuals in Montana, Idaho, Wyoming, Utah, Colorado and Washington, markets facing many of the same challenges as the national economy, including elevated unemployment and softness in commercial and residential real estate. Although some economic indicators are improving both nationally and in the Company’s markets, unemployment remains high and there remains uncertainty regarding when and how strongly a sustained economic recovery will occur. These economic conditions can cause borrowers to be unable to pay their loans. The inability of borrowers to repay loans can erode earnings by reducing net interest income and by requiring the Company to add to its allowance for loan and lease losses. While the Company cannot accurately predict how long these conditions may exist, the economy could continue to present risks for some time for the industry and Company. A continued slow economic recovery could result in the following consequences, any of which could have an adverse impact, which may be material, on the Company’s business, financial condition, results of operations and prospects, and could also cause the market price of the Company’s stock to decline:

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• loan delinquencies may increase further;

• problem assets and foreclosures may increase further;

• collateral for loans made may decline further in value, in turn reducing customers’ borrowing power, reducing the value of assets and collateral associated with existing loans and increasing the potential severity of loss in the event of loan defaults;

• demand for banking products and services may decline; and

• low cost or non-interest bearing deposits may decrease.

The allowance for loan and lease losses may not be adequate to cover actual loan losses, which could adversely affect earnings.

The Company maintains an allowance for loan and lease losses in an amount that it believes is adequate to provide for losses in the loan portfolio. While the Company strives to carefully manage and monitor credit quality and to identify loans that may become non-performing, at any time there are loans included in the portfolio that will result in losses, but that have not been identified as non-performing or potential problem loans. With respect to real estate loans and property taken in satisfaction of such loans, the Company can be required to recognize significant declines in the value of the underlying real estate collateral or OREO quite suddenly as values are updated through appraisals and evaluations performed in the normal course of monitoring the credit quality of the loans. There are many factors that can cause the value of real estate to decline, including declines in the general real estate market, changes in methodology applied by appraisers, and/or using a different appraiser than was used for the prior appraisal or evaluation. The Company’s ability to recover on real estate loans by selling or disposing of the underlying real estate collateral is adversely impacted by declining values, which increases the likelihood the Company will suffer losses on defaulted loans beyond the amounts provided for in the ALLL. This, in turn, could require material increases in the Company’s provision for loan losses and ALLL. By closely monitoring credit quality, the Company attempts to identify deteriorating loans before they become non-performing assets and adjust the ALLL accordingly. However, because future events are uncertain, and if difficult economic conditions continue or worsen, there may be loans that deteriorate to a non-performing status in an accelerated time frame. As a result, future additions to the ALLL may be necessary. Because the loan portfolio contains a number of loans with relatively large balances, the deterioration of one or a few of these loans may cause a significant increase in non-performing loans, requiring an increase to the ALLL. Additionally, future significant additions to the ALLL may be required based on changes in the mix of loans comprising the portfolio, changes in the financial condition of borrowers, which may result from changes in economic conditions, or changes in the assumptions used in determining the ALLL. Additionally, federal banking regulators, as an integral part of their supervisory function, periodically review the Company’s loan portfolio and the adequacy of the ALLL. These regulatory agencies may require the Company to recognize further loan loss provisions or charge-offs based upon their judgments, which may be different from the Company’s judgments. Any increase in the ALLL would have an adverse effect, which could be material, on the Company’s financial condition and results of operations.

The Company has a high concentration of loans secured by real estate, so any further deterioration in the real estate markets could require material increases in the ALLL and adversely affect the Company’s financial condition and results of operations.

The Company has a high degree of concentration in loans secured by real estate. A sluggish recovery, or a continuation of the downturn in the economic conditions or real estate values of the Company’s market areas, could adversely impact borrowers’ ability to repay loans secured by real estate and the value of real estate collateral, thereby increasing the credit risk associated with the loan portfolio. The Company’s ability to recover on these loans by selling or disposing of the underlying real estate collateral is adversely impacted by declining real estate values, which increases the likelihood that the Company will suffer losses on defaulted loans secured by real estate beyond the amounts provided for in the ALLL. This, in turn, could require material increases in the ALLL which would adversely affect the Company’s financial condition and results of operations, perhaps materially.

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There can be no assurance the Company will be able to continue paying dividends on the common stock at recent levels.

The ability to pay dividends on the Company’s common stock depends on a variety of factors. The Company paid dividends of $0.13 per share in each quarter of 2010, 2011 and 2012. The Company may not be able to continue paying quarterly dividends commensurate with recent levels. In that regard, the Federal Reserve now is requiring the Company to provide prior written notice and related information for staff review before declaring or paying dividends. In addition, current guidance from the Federal Reserve provides, among other things, that dividends per share generally should not exceed earnings per share. As a result, future dividends will generally depend on the sufficiency of earnings. Furthermore, the Company’s ability to pay dividends depends on the amount of dividends paid to the Company by its subsidiaries, which is also subject to government regulation, oversight and review. In addition, the ability of some of the bank subsidiaries to pay dividends to the Company is subject to prior regulatory approval.

The Company may not be able to continue to grow organically or through acquisitions.

Historically, the Company has expanded through a combination of organic growth and acquisitions. If market and regulatory conditions remain challenging, the Company may be unable to grow organically or successfully complete potential future acquisitions. In particular, while the Company intends to focus any near-term acquisition efforts on FDIC-assisted transactions within its existing market areas, there can be no assurance that such opportunities will become available on terms that are acceptable to the Company. Furthermore, there can be no assurance that the Company can successfully complete such transactions, since they are subject to a formal bid process and regulatory review and approval.

The FDIC has increased insurance premiums to rebuild and maintain the federal Deposit Insurance Fund and there may be additional future premium increases and special assessments.

In 2009, the FDIC imposed a special deposit insurance assessment of five basis points on all insured institutions, and also required insured institutions to prepay estimated quarterly risk-based assessments for periods through 2012.

The Dodd-Frank Act established 1.35 percent as the minimum Deposit Insurance Fund reserve ratio. The FDIC has determined that the fund reserve ratio should be 2.0 percent and has adopted a plan under which it will meet the statutory minimum fund reserve ratio of 1.35 percent by the statutory deadline of September 30, 2020. The Dodd-Frank Act requires the FDIC to offset the effect on institutions with assets less than $10 billion of the increase in the statutory minimum fund reserve ratio to 1.35 percent from the former statutory minimum of 1.15 percent. The FDIC has not announced how it will implement this offset or how larger institutions will be affected by it.

Despite the FDIC’s actions to restore the Deposit Insurance Fund, the fund will suffer additional losses in the future due to failures of insured institutions. There could be additional significant deposit insurance premium increases, special assessments or prepayments in order to restore the insurance fund’s reserve ratio. Any significant premium increases or special assessments could have a material adverse effect on the Company’s financial condition and results of operations.

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The Company’s loan portfolio mix increases the exposure to credit risks tied to deteriorating conditions.

The loan portfolio contains a high percentage of commercial, commercial real estate, real estate acquisition and development loans in relation to the total loans and total assets. These types of loans have historically been viewed as having more risk of default than residential real estate loans or certain other types of loans or investments. In fact, the FDIC has issued pronouncements alerting banks of its concern about banks with a heavy concentration of commercial real estate loans. These types of loans also typically are larger than residential real estate loans and other commercial loans. Because the Company’s loan portfolio contains a significant number of commercial and commercial real estate loans with relatively large balances, the deterioration of one or more of these loans may cause a significant increase in non-performing loans. An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the provision for loan losses, or an increase in loan charge-offs, which could have a material adverse impact on results of operations and financial condition.

Non-performing assets have increased and could continue to increase, which could adversely affect the Company’s results of operations and financial condition.

Non-performing assets (which include OREO) adversely affect the Company’s net income and financial condition in various ways. The Company does not record interest income on non-accrual loans or OREO, thereby adversely affecting the Company’s income. When the Company takes collateral in foreclosures and similar proceedings, it is required to mark the related asset to the then fair value of the collateral, less estimated cost to sell, which may result in a charge-off of the value of the asset and lead the Company to increase the provision for loan losses. An increase in the level of non-performing assets also increases the Company’s risk profile and may impact the capital levels its regulators believe are appropriate in light of such risks. Continued decreases in the value of these assets, or the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond the Company’s control, could adversely affect the Company’s business, results of operations and financial condition, perhaps materially. In addition to the carrying costs to maintain OREO, the resolution of non-performing assets increases the Company’s loan administration costs generally, and requires significant commitments of time from management and the Company’s directors, which reduces the time they have to focus on profitably growing the Company’s business. The Company may experience further increases in non-performing assets in the future.

A decline in the fair value of the Company’s investment portfolio could adversely affect earnings.

The fair value of the Company’s investment securities could decline as a result of factors including changes in market interest rates, credit quality and credit ratings, lack of market liquidity and other economic conditions. An investment security is impaired if the fair value of the security is less than the carrying value. When a security is impaired, the Company determines whether the impairment is temporary or other-than-temporary. If an impairment is determined to be other-than temporary, an impairment loss is recognized by reducing the amortized cost only for the credit loss associated with the other-than-temporary loss with a corresponding charge to earnings for a like amount. Any such impairment charge would have an adverse effect, which could be material, on the Company’s results of operations and financial condition.

With relatively soft loan demand and increased market liquidity, the investment securities portfolio has grown significantly and represented 45 percent of total assets at March 31, 2012. While the Company believes that the term of such investments has been kept relatively short, the Company is subject to interest rate risk exposure if rates were to increase sharply. Further, the change in the mix of the Company’s assets to more investment securities presents a different type of asset quality risk than the loan portfolio. While the Company believes a relatively conservative approach has been applied to the investment portfolio, there is always potential loss exposure under changing economic conditions. The Company’s investment securities portfolio has increased and now constitutes a much larger portion of assets with any attendant risks of such investments.

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Recent and/or future U.S. credit downgrades or changes in outlook by major credit rating agencies may have an adverse effect on financial markets, including financial institutions and the financial industry.

On August 5, 2011, Standard and Poor’s downgraded the United States long-term debt rating from its AAA rating to AA+. On August 8, 2011, Standard and Poor’s downgraded from AAA to AA+ the credit ratings of certain long-term debt instruments issued by Fannie Mae and Freddie Mac and other U.S. government agencies linked to long-term United States debt. It is difficult to predict the effect of these actions, or any future downgrades or changes in outlook by Standard & Poor’s or either of the other two major credit rating agencies. However, these events could impact the trading market for U.S. government securities, including U.S. agency securities, and the securities markets more broadly, and consequently could impact the value and liquidity of financial assets, including assets in the Company’s investment portfolio. These actions could also create broader financial turmoil and uncertainty, which may negatively affect the global banking system and limit the availability of funding, including borrowing under securities sold under agreements to repurchase, at reasonable terms. In turn, this could have a material adverse effect on the Company’s liquidity, financial condition and results of operations.

Fluctuating interest rates can adversely affect profitability.

The Company’s profitability is dependent to a large extent upon net interest income, which is the difference (or “spread”) between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings, and other interest-bearing liabilities. Because of the differences in maturities and repricing characteristics of interest-earning assets and interest-bearing liabilities, changes in interest rates do not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Accordingly, fluctuations in interest rates could adversely affect the Company’s interest rate spread, and, in turn, profitability. The Company seeks to manage its interest rate risk within well established guidelines. Generally, the Company seeks an asset and liability structure that insulates net interest income from large deviations attributable to changes in market rates. However, the Company’s structures and practices to manage interest rate risk may not be effective in a highly volatile rate environment.

Interest rate swaps expose the Company to certain risks, and may not be effective in mitigating exposure to changes in interest rates.

The Company has interest rate swap agreements in order to manage a portion of the risk to interest rate volatility. The Company anticipates that additional interest rate swaps may be entered into in the future. These swap agreements involve other risks, such as the risk that counterparties may fail to honor their obligations under these arrangements, leaving the Company vulnerable to interest rate movements. There can be no assurance that these arrangements will be effective in reducing the Company’s exposure to changes in interest rates.

If goodwill recorded in connection with acquisitions becomes additionally impaired, it could have an adverse impact on earnings and capital.

Accounting standards require the Company account for acquisitions using the acquisition method of accounting. Under acquisition accounting, if the purchase price of an acquired company exceeds the fair value of its net assets, the excess is carried on the acquirer’s balance sheet as goodwill. In accordance with accounting principles generally accepted in the United States of America, goodwill is not amortized but rather is evaluated for impairment on an annual basis or more frequently if events or circumstances indicate that a potential impairment exists. The Company maintains $106 million in goodwill on its balance sheet and there can be no assurance that future evaluations of goodwill will not result in findings of additional impairment and write-downs, which could be material. While a non-cash item, additional impairment of goodwill could have a material adverse effect on the Company’s business, financial condition and results of operations. Furthermore, additional impairment of goodwill could subject the Company to regulatory limitations, including the ability to pay dividends on its common stock.

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Growth through future acquisitions could, in some circumstances, adversely affect profitability or other performance measures.

The Company has in recent years acquired other financial institutions. The Company may in the future engage in selected acquisitions of additional financial institutions, including transactions that may receive assistance from the FDIC, although the Company may not be able to successfully complete any such transactions. There are risks associated with any such acquisitions that could adversely affect profitability and other performance measures. These risks include, among other things, incorrectly assessing the asset quality of a financial institution being acquired, encountering greater than anticipated cost of integrating acquired businesses into the Company’s operations, and being unable to profitably deploy funds acquired in an acquisition. The Company may not be able to continue to grow through acquisitions, and if it does, there is a risk of negative impacts of such acquisitions on the Company’s operating results and financial condition.

The Company anticipates that it might issue capital stock in connection with future acquisitions. Acquisitions and related issuances of stock may have a dilutive effect on earnings per share and the percentage ownership of current shareholders.

A tightening of the credit markets may make it difficult to obtain adequate funding for loan growth, which could adversely affect earnings.

A tightening of the credit markets and the inability to obtain or retain adequate funds for continued loan growth at an acceptable cost may negatively affect the Company’s asset growth and liquidity position and, therefore, earnings capability. In addition to core deposit growth, maturity of investment securities and loan payments, the Company also relies on alternative funding sources through correspondent banking, and borrowing lines with the Federal Reserve Bank and the FHLB to fund loans. In the event the current economic downturn continues, particularly in the housing market, these resources could be negatively affected, both as to price and availability, which would limit and or raise the cost of the funds available to the Company.

The Company may pursue additional capital in the future, which could dilute the holders of the Company’s outstanding common stock and may adversely affect the market price of common stock.

In the current economic environment, the Company believes it is prudent to consider alternatives for raising capital when opportunities to raise capital at attractive prices present themselves, in order to further strengthen the Company’s capital and better position itself to take advantage of opportunities that may arise in the future. Such alternatives may include issuance and sale of common or preferred stock or borrowings by the Company, with proceeds contributed to the bank subsidiaries. Any such capital raising alternatives could dilute the holders of the Company’s outstanding common stock, and may adversely affect the market price of the Company’s common stock and performance measures such as earnings per share.

Business would be harmed if the Company lost the services of any of the senior management team.

The Company believes its success to date has been substantially dependent on its Chief Executive Officer and other members of the executive management team, and on the Presidents of its bank subsidiaries. The loss of any of these persons could have an adverse effect on the Company’s business and future growth prospects.

Competition in the Company’s market areas may limit future success.

Commercial banking is a highly competitive business. The Company competes with other commercial banks, thrifts, credit unions, finance, insurance and other non-depository companies operating in its market areas. The Company is subject to substantial competition for loans and deposits from other financial institutions. Some of its competitors are not subject to the same degree of regulation and restriction as the Company. Some of the Company’s competitors have greater financial resources than the Company. If the Company is unable to effectively compete in its market areas, the Company’s business, results of operations and prospects could be adversely affected.

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The Company operates in a highly regulated environment and changes or increases in, or supervisory enforcement of, banking or other laws and regulations or governmental fiscal or monetary policies could adversely affect the Company.

The Company is subject to extensive regulation, supervision and examination by federal and state banking authorities. In addition, as a publicly-traded company, the Company is subject to regulation by the SEC. Any change in applicable regulations or federal, state or local legislation or in policies or interpretations or regulatory approaches to compliance and enforcement, income tax laws and accounting principles could have a substantial impact on the Company and its operations. Changes in laws and regulations may also increase expenses by imposing additional fees or taxes or restrictions on operations. Additional legislation and regulations that could significantly affect powers, authority and operations may be enacted or adopted in the future, which could have a material adverse effect on the Company’s financial condition and results of operations. Failure to appropriately comply with any such laws, regulations or principles could result in sanctions by regulatory agencies or damage to the Company’s reputation, all of which could adversely affect the Company’s business, financial condition or results of operations.

In that regard, sweeping financial regulatory reform legislation was enacted in July 2010. Among other provisions, the new legislation 1) creates a new Bureau of Consumer Financial Protection with broad powers to regulate consumer financial products such as credit cards and mortgages; 2) creates a Financial Stability Oversight Council comprised of the heads of other regulatory agencies; 3) will lead to new capital requirements from federal banking regulatory agencies; 4) places new limits on electronic debt card interchange fees; and 5) requires the SEC and national stock exchanges to adopt significant new corporate governance and executive compensation reforms. The new legislation and regulations are expected to increase the overall costs of regulatory compliance.

Further, regulators have significant discretion and authority to prevent or remedy unsafe or unsound practices or violations of laws or regulations by financial institutions and bank holding companies in the performance of their supervisory and enforcement duties. Recently, these powers have been utilized more frequently due to the challenging national, regional and local economic conditions. The exercise of regulatory authority may have a negative impact on the Company’s financial condition and results of operations. Additionally, the Company’s business is affected significantly by the fiscal and monetary policies of the U.S. federal government and its agencies, including the Federal Reserve Board.

The Company cannot accurately predict the full effects of recent legislation or the various other governmental, regulatory, monetary and fiscal initiatives which have been and may be enacted on the financial markets, on the Company and on its bank subsidiaries. The terms and costs of these activities, or the failure of these actions to help stabilize the financial markets, asset prices, market liquidity and a continuation or worsening of current financial market and economic conditions could materially and adversely affect the Company’s business, financial condition, results of operations, and the trading price of the Company’s common stock.

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The Company has various anti-takeover measures that could impede a takeover.

The Company’s articles of incorporation include certain provisions that could make more difficult the acquisition of the Company by means of a tender offer, a proxy contest, merger or otherwise. These provisions include a requirement that any “Business Combination” (as defined in the articles of incorporation) be approved by at least 80 percent of the voting power of the then-outstanding shares, unless it is either approved by the Board of Directors or certain price and procedural requirements are satisfied. In addition, the authorization of preferred stock, which is intended primarily as a financing tool and not as a defensive measure against takeovers, may potentially be used by management to make more difficult uninvited attempts to acquire control of the Company. These provisions may have the effect of lengthening the time required for a person to acquire control of the Company through a tender offer, proxy contest or otherwise, and may deter any potentially unfriendly offers or other efforts to obtain control of the Company. This could deprive the Company’s shareholders of opportunities to realize a premium for their Glacier Bancorp, Inc. common stock, even in circumstances where such action is favored by a majority of the Company’s shareholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not Applicable

(b) Not Applicable

(c) Not Applicable

Item 3. Defaults upon Senior Securities

(a) Not Applicable

(b) Not Applicable

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

(a) Not Applicable

(b) Not Applicable

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Item 6. Exhibits

Exhibit 31.1	-	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Exhibit 31.2	-	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Exhibit 32	-	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002
Exhibit 101	-	The following financial information from Glacier Bancorp, Inc’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 is formatted in XBRL: (i) the Unaudited Condensed Consolidated Statements of Financial Condition, (ii) the Unaudited Condensed Consolidated Statements of Operations, (iii) the Unaudited Condensed Consolidated Statements of Stockholders’ Equity and Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	GLACIER BANCORP, INC.
May 9, 2012	/s/ Michael J. Blodnick
	Michael J. Blodnick
	President/CEO
May 9, 2012	/s/ Ron J. Copher
	Ron J. Copher
	Executive Vice President/CFO

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