Exhibit 99.1
Glacier Bancorp, Inc. Earnings for Quarter and Six Months Ended June 30, 2003
HIGHLIGHTS:
* Record earnings for quarter of $9.932 million, up 22 percent from last
year's quarter.
* Record diluted earnings per share of $.51, up 21 percent from last
year's quarter.
* Record six month earnings of $18.780 million, up 25 percent from last
year.
* Record diluted earnings per share of $.96 for the six months, up
22 percent from last year.
* Loans increased $91.923 million, or 7 percent, during the second
quarter.
* Non-interest bearing deposits are $29.534 million, or 10 percent,
greater than prior quarter.
* Cash dividend of $.19 declared during the quarter; up 19 percent from
the prior quarter.
Earnings Summary Three months Six months
($ in thousands, except ended June 30, ended June 30,
per share data)
2003 2002 2003 2002
Net earnings $9,932 $8,128 $18,780 $15,025
Diluted earnings per share $0.51 $0.42 $0.96 $0.79
Return on average assets 1.67% 1.51% 1.63% 1.41%
Return on average equity 17.51% 16.77% 16.95% 15.78%
KALISPELL, Mont., July 24 /PRNewswire-FirstCall/ -- Glacier Bancorp, Inc.
(Nasdaq: GBCI) reported record net quarterly earnings of $9.932 million which
is an increase of $1.804 million, or 22 percent, over the $8.128 million for
the second quarter of 2002. Diluted earnings per share of $.51, is an
increase of 21 percent over the per share earnings of $.42 for the same
quarter of 2002.
Return on average assets and return on average equity for the quarter were
1.67 percent and 17.51 percent, respectively, which compares favorably with
prior year returns of 1.51 percent and 16.77 percent.
"Operationally the second quarter exceeded expectations," said Mick
Blodnick, President and CEO. "Excluding the gain on securities sales and
impairment charge on our collateralized mortgage obligations our core
businesses performed well. Pressure to our net interest margin persists, but
growth in earning assets especially in the form of loans is helping to offset
the margin compression."
June 30,
Assets ($ in thousands) 2003 2002 $ change % change
Cash on hand and in banks $71,738 $59,812 $11,926 20%
Investment securities and
interest bearing deposits 940,519 665,534 274,985 41%
Loans:
Real estate 339,057 372,318 (33,261) -9%
Commercial 780,321 650,749 129,572 20%
Consumer 285,411 292,639 (7,228) -2%
Total loans 1,404,789 1,315,706 89,083 7%
Allowance for
loan losses (22,354) (19,941) (2,413) 12%
Total loans net
of allowance
for loan losses 1,382,435 1,295,765 86,670 7%
Other assets 116,669 116,954 (285) 0%
Total Assets $2,511,361 $2,138,065 $373,296 17%
At June 30, 2003 total assets were $2.511 billion which is $373 million
greater than the June 30, 2002 assets of $2.138 billion, an increase of
17 percent.
Total loans, net of the allowance for loan losses, have increased
$87 million from June 30, 2002, with an increase of $91 million occurring
during the current quarter. "One of the real bright spots for the quarter was
the loan growth we generated," Blodnick said. "After nearly two years of
constant run off of our mortgage portfolio we finally saw a slowdown this past
quarter. Together with a continued strong growth in commercial loans our
overall loan growth was a real positive." Commercial loans have increased
$130 million, or 20 percent, and continue to be the focus of our lending. Our
real estate loan origination volume has been at record levels, some of which
refinanced loans previously held by our banks. The refinancing of loans
coupled with our decision to sell the majority of the real estate loan
production has resulted in a reduction in real estate loans of $33 million
from June 30, 2002. Consumer loans have declined $7 million with a
significant portion of the decline attributed to the low rate or zero interest
financing of auto loans by auto manufacturers. Home-equity loans continue to
be the primary source of our consumer loan originations and have increased
approximately $26 million, or 16 percent, from a year ago. Home equity loans
comprise 66 percent of consumer loans at June 30, 2003.
Investment securities, including interest bearing deposits in other
financial institutions, have increased $268 million from June 30, 2002. The
cash received from the reduction in real estate loans has been redeployed in
mortgage related investment securities with characteristics that result in
less interest rate risk, in increasing interest rate environments, than
retaining 30 year loans. Additional investments were made to utilize funding
liquidity that exceeds loan growth opportunities, and to pre-invest expected
principal reductions on mortgage related investments.
June 30,
Liabilities ($ in thousands) 2003 2002 $ change % change
Non-interest bearing
deposits $337,193 $256,519 $80,674 31%
Interest-bearing
deposits 1,165,386 1,175,893 (10,507) -1%
Advances from Federal
Home Loan Bank 625,670 406,603 219,067 54%
Other borrowed funds 87,191 43,201 43,990 102%
Other liabilities 30,656 25,743 4,913 19%
Trust preferred
securities 35,000 35,000 -- 0%
Total liabilities $2,281,096 $1,942,959 $338,137 17%
Total deposits have increased $70 million from the June 30, 2002 balances.
There was a significant increase of $81 million, or 31 percent, in non-
interest bearing deposits. This growth in low cost stable funding gives us
increased flexibility in managing our asset mix. During the quarter the High
Performance Checking program was started in the four banks not previously
enrolled in the program. This is expected to increase our base of customers,
provide additional low cost deposit balances and enhance fee income.
Interest-bearing deposits are down $11 million, or 1 percent, most of which
was a reduction in certificates of deposit. Federal Home Loan Bank advances,
other borrowed funds, and repurchase agreements, have also increased
$263 million as we continue to take advantage of the flexibility of these
funding sources in this current period of low interest rates.
Stockholders' equity
($ in thousands except June 30,
per share data) 2003 2002 $ change % change
Common equity $217,728 $188,290 $29,438 16%
Net unrealized gain
on securities 12,537 6,816 5,721 84%
Total stockholders'
equity $230,265 $195,106 $35,159 18%
Stockholders' equity
to total assets 9.17% 9.13%
Tangible equity to
total assets 7.72% 7.36%
Book value per common
share $11.94 $10.32 $1.62 16%
Tangible book value
per common share $9.90 $8.17 $1.73 21%
Market price per share
at end of quarter $24.62 $22.27 $2.35 11%
Each of the equity ratios and book value per share amounts have increased
substantially from the prior year, primarily the result of earnings retention,
stock options exercised, and net unrealized gains on securities. Our equity
to asset ratio is near historic highs for the Company providing flexibility
for dividend increases, expansion opportunities, and stock repurchase.
Operating Results for Three Months Ended June 30, 2003
Compared to June 30, 2002
Revenue summary
($ in thousands) Three months ended June 30,
2003 2002 $ change % change
Net interest income $21,963 $21,601 $362 2%
Fees and other revenue:
Service charges and fees 4,978 4,542 436 10%
Gain on sale of loans 3,211 1,258 1,953 155%
Gain on sale of
investments, net of
impairment charge 1,685 2 1,683 84150%
Other income 439 532 (93) -17%
Total non-interest
income 10,313 6,334 3,979 63%
Total revenue $32,276 $27,935 $4,341 16%
Tax equivalent net
interest margin 4.17% 4.57%
Net Interest Income
Net interest income for the quarter increased $362 thousand, or 2 percent,
over the same period in 2002. Total interest income is $1.895 million, or
6 percent lower than the same quarter in 2002, while total interest expense is
$2.257 million or 19 percent lower. The increase in non-interest bearing
deposits reduced the need to borrow additional funds and helped reduce
interest expense. The net interest margin as a percentage of earning assets,
on a tax equivalent basis, decreased from 4.57 percent for the 2002 quarter,
4.35 for the first quarter of 2003, to 4.17 percent in the current quarter.
We continue to deploy a strategy of investing in short term securities that
carry lower current yields. We believe it is inappropriate in this rate
environment to extend maturities in order to achieve higher yields. This
strategy in the near term will put pressure on our net interest margin,
however from a longer term perspective we are more comfortable with this
approach.
Non-interest Income
Fee income increased 10 percent over the same period last year, driven
primarily by increased account activity. Gain on sale of loans increased
$1.953 million reflecting the low level of mortgage interest rates and
resulting purchase and refinancing activity. The income from mortgage
origination activity serves as a counter-balance to net interest income
reductions from low interest rates. Other income was lower in the current
years' quarter by $93 thousand primarily the result of reduced loan servicing
income.
Gains on sale of investments of $3.480 million were realized during the
quarter from the sale of approximately $14 million of long term corporate
bonds. These bonds were acquired two years ago with the intent of exercising
put options available in the bond structures. Market conditions provided an
opportunity to sell the bonds, record a significant gain, reinvest the
principal and gain proceeds into similar maturity municipal bonds, and retain
the investment yield. There was an impairment charge in the current quarter
of $1.795 million for impairment of value on collateralized mortgage
obligations.
Non-interest expense summary
($ in thousands) Three months ended June 30,
2003 2002 $ change % change
Compensation and employee benefits $9,050 $7,533 $1,517 20%
Occupancy and equipment expense 2,295 2,324 (29) -1%
Outsourced data processing 266 515 (249) -48%
Core deposit intangibles
amortization 291 360 (69) -19%
Other expenses 4,417 3,610 807 22%
Total non-interest expense $16,319 $14,342 $1,977 14%
Non-interest Expense
Non-interest expense increased by $1.977 million, or 14 percent, from the
same quarter of 2002. Compensation and benefit expense increased
$1.517 million, or 20 percent from the second quarter of 2002, with
commissions for loan originators, other incentives, additional support staff
for increased volumes, and two additional branches in operation in Boise
accounting for the majority of the increase. Occupancy and equipment expense
decreased $29 thousand, or 1 percent, the net result of adding additional
facilities and fully depreciating an investment in computer systems in prior
periods. Outsourced data processing expense decreased by $249 thousand, or
48 percent, resulting from bringing the core processing for each subsidiary
bank onto our in-house data system. Other expenses increased $807 thousand,
or 22 percent, resulting primarily from charges for data conversion of
Mountain West Bank to the in-house data system, and start up expenses on
implementing the High Performance Checking program at the four banks not
previously on the program. The efficiency ratio (non-interest expense/net
interest income + non-interest income) was 51 percent for the 2003 quarter
which is comparable to the 51 percent for the 2002 quarter.
Credit quality
information June 30, March 31, December 31, June 30,
($ in thousands) 2003 2003 2002 2002
Allowance for loan losses $22,354 $21,627 $20,944 $19,941
Non-performing assets 10,675 10,026 11,582 9,214
Allowance as a percentage
of non performing assets 209.41% 215.71% 180.83% 216.42%
Non-performing assets as
a percentage of total
assets 0.42% 0.43% 0.51% 0.43%
Allowance as a percentage
of total loans 1.59% 1.65% 1.58% 1.52%
Net charge-offs as a
percentage of loans 0.034% 0.012% 0.261% 0.097%
Allowance for Loan Loss and Non-Performing Assets
Non-performing assets as a percentage of total assets at June 30, 2003
were at .42 percent, a slight decrease from .43 percent at June 30, 2002 and
from the December 31, 2002 .51 percent. This compares to the Peer Group
average of .65 percent at March 31, 2003, the most recent information
available. The reserve for loan losses was 209 percent of non-performing
assets at June 30, 2003, compared to 216 percent a year ago. "Through the
first half of the year charge offs have been far below our historic trends,"
Blodnick said. "Non-performing loans are still slightly higher than where we
have been in the past. We need to continue to work hard to lower this
number."
With the continuing change in loan mix from residential real estate to
commercial and consumer loans, which historically have greater credit risk,
the Company has continued to increase the balance in the reserve for loan
losses account. The reserve balance has increased $2.413 million, or
12 percent, to $22.354 million, which is 1.59 percent of total loans
outstanding, up from 1.52 percent a year ago. The second quarter provision
expense for loan losses was $1.051 million, a decrease of $209 thousand from
the same quarter in 2002.
Operating Results for Six Months Ended June 30, 2003
Compared to June 30, 2002
Revenue summary
($ in thousands) Six months ended June 30,
2003 2002 $ change % change
Net interest income $43,795 $41,968 $1,827 4%
Fees and other revenue:
Service charges and fees 9,597 8,470 1,127 13%
Gain on sale of loans 5,482 2,433 3,049 125%
Gain on sale of investments,
net of impairment charge 1,248 2 1,246 62300%
Other income 999 1,278 (279) -22%
Total non-interest income 17,326 12,183 5,143 42%
Total revenue $61,121 $54,151 $6,970 13%
Tax equivalent net
interest margin 4.22% 4.48%
Net Interest Income
Net interest income increased $1.827 thousand, or 4 percent, over the same
period in 2002. Total interest income is $2.911 million, or 4 percent lower
than in 2002, while total interest expense is $4.738 million or 19 percent
lower. Lower interest rates were the main reason for the reduction in
interest income and interest expense. The net interest margin as a percentage
of earning assets, on a tax equivalent basis, decreased from 4.48 percent in
2002 to 4.22 percent in 2003.
Non-interest Income
Fee income increased $1.127 million, or 13 percent, over the same period
last year, driven primarily by increased account activity. Gain on sale of
loans increased $3.049 million reflecting the low level of mortgage interest
rates and resulting purchase and refinancing activity. Other income was lower
in the current year by $279 thousand primarily the result of reduced loan
servicing income.
Gain on sale of investments of $3.497 million were realized from the sale
of approximately $16 million of long term corporate bonds. Market conditions
provided an opportunity to realize currently the interest income that would
have been generated over several years. The proceeds of the sale were
reinvested in municipal securities of like maturity with similar future
interest income. There was an impairment charge in the first six months of
2003 of $2.249 million for impairment of value on collateralized mortgage
obligations.
Non-interest expense summary
($ in thousands) Six months ended June 30,
2003 2002 $ change % change
Compensation and employee
benefits $17,029 $15,315 $1,714 11%
Occupancy and equipment
expense 4,730 4,625 105 2%
Outsourced data processing 828 961 (133) -14%
Core deposit intangibles
amortization 629 721 (92) -13%
Other expenses 7,986 7,085 901 13%
Total non-interest
expense $31,202 $28,707 $2,495 9%
Non-interest Expense
Non-interest expense increased by $2.495 million, or 9 percent, from 2002.
Compensation and benefit expense increased $1.714 million, or 11 percent from
2002, with commissions for loan originators, other incentives, additional
support staff for increased volumes, and two additional branches in operation
in Boise accounting for the majority of the increase. Occupancy and equipment
expense increased $105 thousand, or 2 percent, the net result of adding
additional facilities and fully depreciating an investment in computer systems
in prior periods. Outsourced data processing expense decreased by
$133 thousand, or 14 percent, resulting from bringing the core processing for
each subsidiary bank onto our in-house data system. Other expenses increased
$901 thousand, or 13 percent, resulting from charges for data conversion of
Mountain West Bank to the in-house data system, start up expenses on
implementing the High Performance Checking program at the four banks not
previously on the program, loan collection expenses, operations losses on
deposit accounts, losses on other real estate sales, and volume related
increases. The efficiency ratio (non-interest expense/net interest income +
non-interest income) was 51 percent for 2003 which is down from the 53 percent
for 2002.
Allowance for Loan Loss and Non-Performing Assets
The provision expense for loan losses was $1.892 million which is a
decrease of $668 thousand from the prior years' six month provision. The
reserve balance has increased $2.413 million, or 12 percent, to
$22.354 million, which is 1.59 percent of total loans outstanding, up from
1.52 percent a year ago. Net charge off loans as a percentage of loans
outstanding were .034 percent for the first six months of 2003 which is down
from .097 percent for the same period in 2002.
Cash dividend
On June 25, 2003 the board of directors declared a cash dividend of
$.19 payable July 17, 2003 to shareholders of record on July 8, 2003. This
was a $.04 increase from the same quarters' dividend in 2002, or a 27 percent
increase, and is a 19 percent increase over the dividend declared in the first
quarter.
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,
Western Security Bank, all located in Montana, and Mountain West Bank located
in Idaho with two branches in Utah.
GLACIER BANCORP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Unaudited - $ in thousands
except per share data) June 30, December 31, June 30,
2003 2002 2002
Assets:
Cash on hand and in banks $71,738 74,624 59,812
Interest bearing cash deposits 11,387 4,753 7,410
Cash and cash equivalents 83,125 79,377 67,222
Investment securities,
available-for-sale 884,451 739,961 616,781
Net loans receivable:
Real estate loans 339,057 361,522 372,318
Commercial Loans 780,321 673,256 650,749
Consumer and other loans 285,411 286,819 292,639
Allowance for losses (22,354) (20,944) (19,941)
Total Loans, net 1,382,435 1,300,653 1,295,765
Premises and equipment,
net 48,658 47,215 47,455
Real estate and other
assets owned, net 682 1,542 699
Federal Home Loan Bank of
Seattle stock, at cost 39,431 38,286 37,093
Federal Reserve Bank stock,
at cost 5,250 4,578 4,250
Accrued interest receivable 13,213 13,421 13,047
Core deposit intangible, net 6,193 6,822 7,541
Goodwill, net 33,189 33,189 33,189
Other assets 14,734 16,300 15,023
$2,511,361 2,281,344 2,138,065
Liabilities and
stockholders' equity:
Non-interest bearing deposits $337,193 295,016 256,519
Interest bearing deposits 1,165,386 1,164,907 1,175,893
Advances from Federal
Home Loan Bank of Seattle 625,670 483,660 406,603
Securities sold under
agreements to repurchase 74,808 46,206 34,744
Other borrowed funds 12,383 15,087 8,457
Accrued interest payable 5,092 6,090 6,452
Current income taxes 1,314 815 737
Deferred tax liability 10,244 8,629 5,083
Trust preferred securities 35,000 35,000 35,000
Other liabilities 14,006 13,685 13,471
Total liabilities 2,281,096 2,069,095 1,942,959
Preferred shares, 1,000,000
shares authorized.
None outstanding -- -- --
Common stock, $.01 par
value per share.
50,000,000 shares
authorized 193 173 172
Paid-in capital 220,624 173,408 170,894
Retained earnings -
substantially restricted (3,089) 28,557 17,224
Accumulated other
comprehensive income 12,537 10,111 6,816
Total stockholders' equity 230,265 212,249 195,106
$2,511,361 2,281,344 2,138,065
Number of shares
outstanding 19,280,059 19,014,400 18,898,098
Book value of equity
per share 11.94 11.16 10.32
Tangible book value
per share 9.90 9.06 8.17
GLACIER BANCORP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited - $ in thousands
except per share data) Three months ended Six months ended
June 30 June 30,
2003 2002 2003 2002
Interest income:
Real estate loans $5,849 7,225 12,101 15,063
Commercial loans 12,362 11,649 23,979 23,081
Consumer and
other loans 5,030 5,686 10,132 11,499
Investment
securities
and other 8,371 8,947 17,462 16,942
Total interest
income 31,612 33,507 63,674 66,585
Interest expense:
Deposits 4,431 6,673 9,378 14,115
FHLB Advances 4,087 4,181 8,299 8,366
Securities sold
under agreements
to repurchase 175 133 333 289
Trust preferred
securities 909 903 1,813 1,807
Other borrowed
funds 47 16 56 40
Total interest
expense 9,649 11,906 19,879 24,617
Net interest income 21,963 21,601 43,795 41,968
Provision for
loan losses 1,051 1,260 1,892 2,560
Net Interest income
after provision for
loan losses 20,912 20,341 41,903 39,408
Non-interest income:
Service charges
and other fees 3,846 3,443 7,435 6,606
Miscellaneous loan
fees and charges 1,132 1,099 2,162 1,864
Gain on sale
of loans 3,211 1,258 5,482 2,433
Gain on sale
of investments,
net of impairment
charge 1,685 2 1,248 2
Other income 439 532 999 1,278
Total fees and
other income 10,313 6,334 17,326 12,183
Non-interest expense:
Compensation,
employee
benefits
and related
expenses 9,050 7,533 17,029 15,315
Occupancy and
equipment
expense 2,295 2,324 4,730 4,625
Outsourced data
processing
expense 266 515 828 961
Core deposit
intangibles
amortization 291 360 629 721
Other expenses 4,417 3,610 7,986 7,085
Total non-
interest
expense 16,319 14,342 31,202 28,707
Earnings before
income taxes 14,906 12,333 28,027 22,884
Federal and
state income
tax expense 4,974 4,205 9,247 7,859
Net earnings $9,932 8,128 18,780 15,025
Basic earnings
per share 0.52 0.43 0.98 0.80
Diluted earnings
per share 0.51 0.42 0.96 0.79
Dividends
declared
per share 0.19 0.15 0.35 0.29
Return on
average
assets
(annualized) 1.67% 1.51% 1.63% 1.41%
Return on
average
equity
(annualized) 17.51% 16.77% 16.95% 15.78%
Return on
tangible
average
equity
(annualized) 21.20% 21.40% 20.62% 20.31%
Average
outstanding
shares - basic 19,267,556 18,852,953 19,211,468 18,784,258
Average
outstanding
shares - diluted 19,569,414 19,197,076 19,495,418 19,116,131