Fee income increased $1.499 million, or 19 percent, over the same period last year, driven primarily by an increased number of loan and deposit accounts from internal growth and acquisitions. Gain on sale of loans decreased $114 thousand, or 4 percent, from the second quarter of last year. Loan origination volume in our markets for housing construction continues to remain very active by historical standards and the recent decline was expected with the slow down from unprecedented activity last year and as interest rates continues to rise.
Non-interest expense increased by $4.474 million, or 20 percent, from the same quarter of 2005. Compensation and benefit expense increased $3.265 million, or 26 percent, of which $961 thousand was from expensing stock options with the adoption of SFAS 123(R) in 2006. The remaining increase in compensation and benefit expense was primarily attributed to four acquisitions during 2005 and normal compensation increases for job performance and increased cost for benefits. The number of full-time-equivalent employees has increased from 1,057 to 1,171, an 11 percent increase, since June 30, 2005. Occupancy and equipment expense increased $279 thousand, or 9 percent, reflecting the bank acquisitions, cost of additional branch locations and facility upgrades. Other expenses increased $659 thousand, or 11 percent, primarily from acquisitions, additional marketing expenses, and costs associated with new branch offices. The efficiency ratio (non-interest expense/net interest income + non-interest income) was 53 percent for the 2006 quarter, up from 52 percent for the 2005 quarter.
Non-performing assets as a percentage of total assets at June 30, 2006 were at .23 percent, the same percentage as at June 30, 2005, but decreasing slightly from .26 percent at December 31, 2005. The Company ratios compare favorably to the Federal Reserve Bank Peer Group average of .41 percent at March 31, 2006, the most recent information available. The allowance for loan losses was 461 percent of non-performing assets at June 30, 2006, up from 407 percent a year ago. The allowance, including $2.792 million from 2005 acquisitions, has increased $8.278 million, or 25 percent, from a year ago. The allowance of $41.195 million, is 1.52 percent of June 30, 2006 total loans outstanding, down slightly from the 1.53 percent a year ago. The second quarter provision for loan losses expense was $1.355 million, a decrease of $197 thousand from the same quarter in 2005. Net charge offs remain low at $11 thousand for the second quarter of 2006. Loan growth, average loan size, and credit quality considerations will determine the level of additional provision expense.
Operating Results for Six Months Ended June 30, 2006 Compared to
June 30, 2005
Revenue summary
(Unaudited - $ in thousands) | | Six Months Ended June 30, | |
|
| |
| 2006 | | 2005 | | $ change | | % change | |
| |
|
| |
|
| |
|
| |
|
| |
Net interest income | | $ | 73,934 | | $ | 60,543 | | $ | 13,391 | | | 22 | % |
Non-interest income Service charges, loan fees, and other fees | | | 17,566 | | | 14,332 | | | 3,234 | | | 23 | % |
Gain on sale of loans | | | 4,960 | | | 4,976 | | | (16 | ) | | 0 | % |
Loss on sale of investments | | | — | | | (137 | ) | | 137 | | | -100 | % |
Other income | | | 1,528 | | | 1,450 | | | 78 | | | 5 | % |
Total non-interest income | | | 24,054 | | | 20,621 | | | 3,433 | | | 17 | % |
| | $ | 97,988 | | $ | 81,164 | | $ | 16,824 | | | 21 | % |
Tax equivalent net interest margin | | �� | 4.36 | % | | 4.14 | % | | | | | | |
Net Interest Income
Net interest income for the six months increased $13.391 million, or 22 percent, over the same period in 2005. Total interest income increased $28.833 million, or 33 percent, while total interest expense increased $15.442 million, or 58 percent. The increase in interest expense is primarily attributable to the volume increase in interest bearing deposits, and increases in short term interest rates during 2005 and continuing in 2006. The tax equivalent net interest margin calculation has been changed to an actual 365 day base from a 360 day base. Previously reported net interest margins have been adjusted to reflect the change. The net interest margin as a percentage of earning assets, on a tax equivalent basis, was 4.36 percent which was 22 basis points higher than the restated 4.14 percent result for 2005.
Non-interest Income
Total non-interest income increased $3.433 million, or 17 percent in 2006. Fee income increased $3.234 million, or 23 percent, over last year, driven primarily by an increased number of loan and deposit accounts, acquisitions, and additional customer product and services offered. Gain on sale of loans decreased $16 thousand, or less than 1 percent, from the first six months of last year. Loan origination volume in our markets for housing construction continues to remain very active by historical standards and the recent decline was expected with the slow down from unprecedented activity last year and as interest rates continue to rise.
Non-interest expense summary
(Unaudited - $ in thousands) | | Six Months Ended June 30, | |
|
| |
| 2006 | | 2005 | | $ change | | % change | |
| |
|
| |
|
| |
|
| |
|
| |
Compensation and employee benefits | | $ | 31,050 | | $ | 23,418 | | $ | 7,632 | | | 33 | % |
Occupancy and equipment expense | | | 6,922 | | | 6,007 | | | 915 | | | 15 | % |
Outsourced data processing | | | 1,402 | | | 655 | | | 747 | | | 114 | % |
Core deposit intangibles amortization | | | 820 | | | 667 | | | 153 | | | 23 | % |
Other expenses | | | 12,583 | | | 10,803 | | | 1,780 | | | 16 | % |
Total non-interest expense | | $ | 52,777 | | $ | 41,550 | | $ | 11,227 | | | 27 | % |
Non-interest Expense
Non-interest expense increased by $11.227 million, or 27 percent, from the same six months of 2005. Compensation and benefit expense increased $7.632 million, or 33 percent, of which $1.684 million was from expensing stock options with the adoption of SFAS 123(R) in 2006. The remaining increase in compensation and benefit expense was primarily attributed to four acquisitions during 2005, the addition of four new bank branches in 2006, and normal compensation increases for job performance and increased costs for benefits. Occupancy and equipment expense increased $915 thousand, or 15 percent, reflecting the acquisitions, cost of additional locations and facility upgrades. Other expenses increased $1.780 million, or 16 percent, primarily from acquisitions, additional marketing expenses, and costs associated with new branch offices. The efficiency ratio (non-interest expense/net interest income + non-interest income) increased to 54 percent from 51 percent for the first six months of 2005 largely a result of the recent acquisitions and branch openings.
Allowance for Loan Loss and Non-Performing Assets
The provision for loan losses expense was $2.520 million for the first six months of 2006, a decrease of $522,000, or 17 percent, from the same period in 2005. Recovery of previously charged-off loans exceeded amounts charged-off during the six months ended June 30, 2006 by $20,000.
Cash dividend
On June 28, 2006, the board of directors declared a cash dividend of $0.16 payable July 20, 2006 to shareholders of record on July 11, 2006, which is an increase of 7 percent over the $0.15 dividend declared in the second quarter of last year.
Status of Pending Bank Acquisitions
On April 21, 2006, Glacier announced the signing of a definitive agreement to acquire Citizens Development Company in a transaction valued at approximately $77 million. Citizens is a Billings, Montana-based bank holding company that owns five community banks located throughout Montana, with principal banking offices in Billings, Lewiston, Hamilton, Columbia Falls and Chinook. At March 31, 2006, Citizens had total assets of $410 million, net loans of $285 million, total deposits of $360 million, and stockholders’ equity of $36 million. The acquisition of the Citizens banks will strengthen the Company’s presence in three of Montana’s strongest markets-Billings, the Flathead Valley, and the Bitterroot Valley, while expanding its operations in central Montana.
On May 31, 2006, Glacier announced the signing of a definitive agreement to acquire First National Bank of Morgan in a transaction valued at approximately $20 million. First National Bank of Morgan is a national banking association with its main office in Morgan, Utah and one branch office in Mountain Green, Utah. At March 31, 2006, First National Bank of Morgan had total assets of $70 million, net loans of $44 million, total deposits of $61 million, and stockholders’ equity of $9 million. The acquisition of First National Bank of Morgan will be the Company’s first whole-bank acquisition in Utah, expanding Glacier’s focused community bank strategy in Utah and complementing its two existing Utah branches.
The two announced acquisitions, which are subject to bank regulatory approval, are both presently expected to close in the later part of August, 2006. The transactions are expected to be immediately accretive to Glacier’s earnings per share. “We are excited to complete the First National Bank of Morgan and Citizens Development Company acquisitions,” Blodnick said. “We are adding some very talented and energetic bankers to our Company who will make a positive impact going forward.”
Headquartered in Kalispell, Montana, Glacier Bancorp, Inc. conducts business from Glacier Bank of Kalispell, First Security Bank of Missoula, Glacier Bank of Whitefish, Valley Bank of Helena, Big Sky Western Bank of Bozeman, Western Security Bank of Billings, all located in Montana, Mountain West Bank located in Idaho with two branches in Utah and two in Washington, 1st Bank, Evanston, Wyoming, and Citizens Community Bank, Pocatello, Idaho.
This news release includes forward looking statements, which describe management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of the Company’ style of banking and the strength of the local economies in which it operates. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in the Company’s public filings, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on the Company than expected and adversely affect the company’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new banks and/or branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which the Company is engaged.
Visit our website at www.glacierbancorp.com
GLACIER BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
($ in thousands except per share data)
| | June 30,
2006 | | December 31,
2005 | | June 30,
2005 | |
| |
|
| |
|
| |
|
| |
| | (unaudited) | | (audited) | | (unaudited) | |
Assets: | | | | | | | | | | |
Cash on hand and in banks | | $ | 124,872 | | | 111,418 | | | 109,402 | |
Federal funds sold | | | 4,880 | | | 7,537 | | | 10,576 | |
Interest bearing cash deposits | | | 33,559 | | | 15,739 | | | 19,657 | |
Investment securities, available-for-sale | | | 870,460 | | | 967,970 | | | 1,084,101 | |
Net loans receivable: | | | | | | | | | | |
Real estate loans | | | 697,351 | | | 607,627 | | | 505,296 | |
Commercial loans | | | 1,486,847 | | | 1,357,051 | | | 1,215,919 | |
Consumer and other loans | | | 517,847 | | | 471,164 | | | 433,900 | |
Allowance for losses | | | (41,195 | ) | | (38,655 | ) | | (32,917 | ) |
Total loans, net | | | 2,660,850 | | | 2,397,187 | | | 2,122,198 | |
Premises and equipment, net | | | 88,883 | | | 79,952 | | | 69,280 | |
Real estate and other assets owned, net | | | 605 | | | 332 | | | 2,319 | |
Accrued interest receivable | | | 20,449 | | | 19,923 | | | 17,820 | |
Deferred tax asset | | | 1,199 | | | — | | | — | |
Core deposit intangible, net | | | 7,195 | | | 8,015 | | | 7,904 | |
Goodwill | | | 79,099 | | | 79,099 | | | 72,382 | |
Other assets | | | 21,331 | | | 19,172 | | | 16,296 | |
| | $ | 3,913,382 | | | 3,706,344 | | | 3,531,935 | |
Liabilities and stockholders’ equity: | | | | | | | | | | |
Non-interest bearing deposits | | $ | 720,473 | | | 667,008 | | | 630,983 | |
Interest bearing deposits | | | 1,972,296 | | | 1,867,704 | | | 1,576,872 | |
Advances from Federal Home Loan Bank of Seattle | | | 435,978 | | | 402,191 | | | 804,047 | |
Securities sold under agreements to repurchase | | | 151,098 | | | 129,530 | | | 95,235 | |
Other borrowed funds | | | 162,296 | | | 187,692 | | | 5,576 | |
Accrued interest payable | | | 9,453 | | | 7,437 | | | 6,574 | |
Deferred tax liability | | | — | | | 2,746 | | | 9,262 | |
Subordinated debentures | | | 85,000 | | | 85,000 | | | 85,000 | |
Other liabilities | | | 23,958 | | | 23,797 | | | 20,627 | |
Total liabilities | | | 3,560,552 | | | 3,373,105 | | | 3,234,176 | |
Preferred shares, $.01 par value per share. 1,000,000 shares authorized | | | | | | | | | | |
None issued or outstanding | | | — | | | — | | | — | |
Common stock, $.01 par value per share. 78,125,000 shares authorized | | | 324 | | | 322 | | | 313 | |
Paid-in capital | | | 269,340 | | | 262,383 | | | 238,941 | |
Retained earnings - substantially restricted | | | 87,644 | | | 69,713 | | | 51,808 | |
Accumulated other comprehensive (loss) income | | | (4,478 | ) | | 821 | | | 6,697 | |
Total stockholders’ equity | | | 352,830 | | | 333,239 | | | 297,759 | |
| | $ | 3,913,382 | | | 3,706,344 | | | 3,531,935 | |
Number of shares outstanding | | | 32,439,173 | | | 32,172,547 | | | 31,258,586 | |
Book value of equity per share | | | 10.88 | | | 10.36 | | | 9.53 | |
GLACIER BANCORP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands except per share data)
| | Three months ended
June 30, | | Six months ended
June 30, | |
| |
| |
| |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| |
|
| |
|
| |
|
| |
|
| |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
Interest income: | | | | | | | | | | | | | |
Real estate loans | | $ | 12,242 | | | 8,097 | | | 23,231 | | | 14,712 | |
Commercial loans | | | 27,479 | | | 19,588 | | | 53,004 | | | 36,112 | |
Consumer and other loans | | | 9,654 | | | 7,011 | | | 18,519 | | | 12,741 | |
Investment securities and other | | | 10,558 | | | 11,849 | | | 21,131 | | | 23,487 | |
Total interest income | | | 59,933 | | | 46,545 | | | 115,885 | | | 87,052 | |
Interest expense: | | | | | | | | | | | | | |
Deposits | | | 13,761 | | | 5,582 | | | 25,052 | | | 9,651 | |
Federal Home Loan Bank of Seattle advances | | | 4,417 | | | 5,770 | | | 9,213 | | | 11,013 | |
Securities sold under agreements to repurchase | | | 1,471 | | | 601 | | | 2,761 | | | 999 | |
Subordinated debentures | | | 1,284 | | | 1,629 | | | 2,713 | | | 3,184 | |
Other borrowed funds | | | 1,374 | | | 876 | | | 2,212 | | | 1,662 | |
Total interest expense | | | 22,307 | | | 14,458 | | | 41,951 | | | 26,509 | |
Net interest income | | | 37,626 | | | 32,087 | | | 73,934 | | | 60,543 | |
Provision for loan losses | | | 1,355 | | | 1,552 | | | 2,520 | | | 3,042 | |
Net interest income after provision for loan losses | | | 36,271 | | | 30,535 | | | 71,414 | | | 57,501 | |
Non-interest income: | | | | | | | | | | | | | |
Service charges and other fees | | | 7,392 | | | 6,241 | | | 13,798 | | | 11,445 | |
Miscellaneous loan fees and charges | | | 1,957 | | | 1,609 | | | 3,768 | | | 2,887 | |
Gain on sale of loans | | | 2,770 | | | 2,884 | | | 4,960 | | | 4,976 | |
Loss on sale of investments | | | — | | | (107 | ) | | — | | | (137 | ) |
Other income | | | 779 | | | 886 | | | 1,528 | | | 1,450 | |
Total non-interest income | | | 12,898 | | | 11,513 | | | 24,054 | | | 20,621 | |
Non-interest expense: | | | | | | | | | | | | | |
Compensation, employee benefits and related expenses | | | 15,739 | | | 12,474 | | | 31,050 | | | 23,418 | |
Occupancy and equipment expense | | | 3,431 | | | 3,152 | | | 6,922 | | | 6,007 | |
Outsourced data processing expense | | | 678 | | | 423 | | | 1,402 | | | 655 | |
Core deposit intangibles amortization | | | 400 | | | 384 | | | 820 | | | 667 | |
Other expenses | | | 6,702 | | | 6,043 | | | 12,583 | | | 10,803 | |
Total non-interest expense | | | 26,950 | | | 22,476 | | | 52,777 | | | 41,550 | |
Earnings before income taxes | | | 22,219 | | | 19,572 | | | 42,691 | | | 36,572 | |
Federal and state income tax expense | | | 7,553 | | | 6,482 | | | 14,396 | | | 11,962 | |
Net earnings | | $ | 14,666 | | | 13,090 | | | 28,295 | | | 24,610 | |
Basic earnings per share | | | 0.45 | | | 0.42 | | | 0.87 | | | 0.79 | |
Diluted earnings per share | | | 0.45 | | | 0.41 | | | 0.86 | | | 0.78 | |
Dividends declared per share | | | 0.16 | | | 0.15 | | | 0.32 | | | 0.29 | |
Return on average assets (annualized) | | | 1.52 | % | | 1.52 | % | | 1.50 | % | | 1.51 | % |
Return on average equity (annualized) | | | 16.81 | % | | 18.03 | % | | 16.51 | % | | 17.56 | % |
Return on average tangible equity (annualized) | | | 22.95 | % | | 24.66 | % | | 22.72 | % | | 22.80 | % |
Average outstanding shares - basic | | | 32,439,173 | | | 31,228,123 | | | 32,346,182 | | | 30,997,527 | |
Average outstanding shares - diluted | | | 32,897,320 | | | 31,753,966 | | | 32,861,724 | | | 31,530,648 | |
| | For the Three months ended 06-30-06 | |
| |
| |
AVERAGE BALANCE SHEET
(Unaudited - $ in Thousands) | | Average
Balance | | Interest
and
Dividends | | Average
Yield/
Rate | |
| |
|
| |
|
| |
|
| |
ASSETS | | | | | | | | | | |
Real Estate Loans | | $ | 671,013 | | | 12,242 | | | 7.30 | % |
Commercial Loans | | | 1,459,494 | | | 27,479 | | | 7.55 | % |
Consumer and Other Loans | | | 504,591 | | | 9,654 | | | 7.67 | % |
Total Loans | | | 2,635,098 | | | 49,375 | | | 7.52 | % |
Tax -Exempt Investment Securities(1) | | | 282,941 | | | 3,459 | | | 4.89 | % |
Other Investment Securities | | | 673,506 | | | 7,099 | | | 4.22 | % |
Total Earning Assets | | | 3,591,545 | | | 59,933 | | | 6.68 | % |
Goodwill and Core Deposit Intangible | | | 86,521 | | | | | | | |
Other Non-Earning Assets | | | 193,026 | | | | | | | |
TOTAL ASSETS | | $ | 3,871,092 | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
NOW Accounts | | $ | 389,133 | | | 702 | | | 0.72 | % |
Savings Accounts | | | 232,209 | | | 501 | | | 0.86 | % |
Money Market Accounts | | | 544,161 | | | 3,907 | | | 2.88 | % |
Certificates of Deposit | | | 882,475 | | | 8,651 | | | 3.93 | % |
FHLB Advances | | | 449,519 | | | 4,417 | | | 3.94 | % |
Repurchase Agreements and Other Borrowed Funds | | | 337,955 | | | 4,129 | | | 4.90 | % |
Total Interest Bearing Liabilities | | | 2,835,452 | | | 22,307 | | | 3.16 | % |
Non-interest Bearing Deposits | | | 653,834 | | | | | | | |
Other Liabilities | | | 31,928 | | | | | | | |
Total Liabilities | | | 3,521,214 | | | | | | | |
Common Stock | | | 324 | | | | | | | |
Paid-In Capital | | | 267,148 | | | | | | | |
Retained Earnings | | | 83,848 | | | | | | | |
Accumulated Other | | | | | | | | | | |
Comprehensive Income | | | (1,442 | ) | | | | | | |
Total Stockholders’ Equity | | | 349,878 | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 3,871,092 | | | | | | | |
Net Interest Income | | | | | $ | 37,626 | | | | |
Net Interest Spread | | | | | | | | | 3.52 | % |
Net Interest Margin on Average Earning Assets | | | | | | | | | 4.20 | % |
Return on Average Assets (annualized) | | | | | | | | | 1.52 | % |
Return on Average Equity (annualized) | | | | | | | | | 16.81 | % |
|
(1) | Excludes tax effect on non-taxable investment security income |
| | For the Six months ended 06-30-06 | |
| |
| |
AVERAGE BALANCE SHEET
(Unaudited - $ in Thousands) | | Average
Balance | | Interest
and
Dividends | | Average
Yield/
Rate | |
| |
|
| |
|
| |
|
| |
ASSETS | | | | | | | | | | |
Real Estate Loans | | $ | 645,077 | | | 23,231 | | | 7.20 | % |
Commercial Loans | | | 1,428,464 | | | 53,004 | | | 7.48 | % |
Consumer and Other Loans | | | 493,009 | | | 18,519 | | | 7.57 | % |
Total Loans | | | 2,566,550 | | | 94,754 | | | 7.44 | % |
Tax -Exempt Investment Securities(1) | | | 283,325 | | | 6,948 | | | 4.90 | % |
Other Investment Securities | | | 680,194 | | | 14,183 | | | 4.17 | % |
Total Earning Assets | | | 3,530,069 | | | 115,885 | | | 6.57 | % |
Goodwill and Core Deposit Intangible | | | 87,065 | | | | | | | |
Other Non-Earning Assets | | | 189,191 | | | | | | | |
TOTAL ASSETS | | $ | 3,806,325 | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
NOW Accounts | | $ | 368,148 | | | 1,172 | | | 0.64 | % |
Savings Accounts | | | 239,031 | | | 1,078 | | | 0.91 | % |
Money Market Accounts | | | 519,732 | | | 6,750 | | | 2.62 | % |
Certificates of Deposit | | | 856,079 | | | 16,052 | | | 3.78 | % |
FHLB Advances | | | 485,746 | | | 9,213 | | | 3.82 | % |
Repurchase Agreements and Other Borrowed Funds | | | 316,285 | | | 7,686 | | | 4.90 | % |
Total Interest Bearing Liabilities | | | 2,785,021 | | | 41,951 | | | 3.04 | % |
Non-interest Bearing Deposits | | | 642,227 | | | | | | | |
Other Liabilities | | | 33,573 | | | | | | | |
Total Liabilities | | | 3,460,821 | | | | | | | |
Common Stock | | | 323 | | | | | | | |
Paid-In Capital | | | 265,354 | | | | | | | |
Retained Earnings | | | 79,716 | | | | | | | |
Accumulated Other | | | 111 | | | | | | | |
Comprehensive Income | | | 111 | | | | | | | |
Total Stockholders’ Equity | | | 345,504 | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 3,806,325 | | | | | | | |
Net Interest Income | | | | | $ | 73,934 | | | | |
Net Interest Spread | | | | | | | | | 3.53 | % |
Net Interest Margin on Average Earning Assets | | | | | | | | | 4.22 | % |
Return on Average Assets (annualized) | | | | | | | | | 1.50 | % |
Return on Average Equity (annualized) | | | | | | | | | 16.51 | % |
|
(1) | Excludes tax effect on non-taxable investment security income |
SOURCE Glacier Bancorp, Inc.
-0- 07/27/2006
/CONTACT: Michael J. Blodnick, +1-406-751-4701, or James H. Strosahl, +1-406-751-4702, both of Glacier Bancorp, Inc./
/Web site: http://www.glacierbancorp.com /
